Lottery is an arrangement for the distribution of prizes by chance among persons purchasing tickets. The correspondingly numbered slips, or lots, representing prizes or blanks, are drawn on a day previously announced in connection with the scheme of intended prizes. The word is probably a contraction of Italian lotteria and Middle Dutch loterje, both of which are derived from the Germanic base hlot “lot, portion, share” (see lottery).

It is common for state governments to promote the sale of lottery tickets to raise money for education or other public purposes. However, the large percentage of proceeds from ticket sales that go to prize payments reduces the amount available for state taxes or other public expenditures. Consumers are generally unaware that they are paying an implicit tax on every lottery ticket purchased.

Many people buy lottery tickets in the hope that they will win the jackpot, which often exceeds the value of the ticket itself. Even though it is very unlikely that they will, they feel the need to purchase a ticket in order to experience the thrill and indulge in a fantasy of becoming rich. This behavior is not easily accounted for by decision models based on expected value maximization, but it can be explained by models that include risk-seeking and the curvature of utility functions defined on things other than lottery outcomes. A lottery may be used in sports team drafts or the allocation of scarce medical treatment, as well as in gambling.