What is a Lottery?

A lottery is a form of gambling in which a small number of people pay a small price for the opportunity to win a large prize by chance. Governments often hold lotteries as a way to raise money for public projects. Learn more about the history and practice of lotteries in this article from the wikiHow Financial Literacy guide.

State lotteries generally follow the same pattern: a government legislates a monopoly for itself; establishes a state agency or public corporation to run the lottery (as opposed to licensing a private firm in exchange for a share of profits); begins operations with a modest number of relatively simple games; and, due to constant pressure for additional revenues, gradually expands the game offerings. For many players, lottery games can become a costly habit. Research shows that low-income residents play lotteries at disproportionately higher rates than those from wealthier neighborhoods. Some critics argue that this amounts to a hidden tax on those least able to afford it.