The lottery is a game in which players pay a nominal sum and have the chance to win a prize. The prizes vary and may be money, goods, services, or even houses and cars. The term is most often applied to state-sponsored games, but private lotteries exist as well. The rules and regulations of these games are generally based on laws regulating gambling. The terms and conditions are usually printed on the ticket.

Until the 1970s, most state-sponsored lotteries were little more than traditional raffles, in which the public purchased tickets and received a prize if their numbers were drawn. Then innovations in lottery game design opened up new possibilities and increased revenues to record levels, which then began to level off or even decline. To maintain or increase revenue, lotteries introduced new games, including instant-game products such as scratch-off tickets.

People buy lottery tickets to gain a monetary reward, and the purchase can be explained by decision models based on expected value maximization. If the monetary gain is large enough, the disutility of purchasing a lottery ticket can be outweighed by the combined utility of entertainment and non-monetary gains.

A lottery is a form of gambling, and critics argue that it promotes gambling among the poor and other vulnerable populations. However, lotteries have broad support and generate significant revenues for state governments. They also develop extensive, specific constituencies, such as convenience store operators (the typical vendors for the games); lottery suppliers (heavy contributions by these businesses to state political campaigns are reported); teachers (in states that earmark lottery proceeds for education); and legislators (who quickly become accustomed to the extra funds). In addition, lotteries can raise money for a wide range of public purposes, including subsidized housing units and kindergarten placements.