What is a Lottery?


In a lottery, people buy tickets and win prizes. A lottery is a gambling game in which winners are determined by chance, such as a roll of dice or the drawing of numbers. A lottery may be held to decide such things as who gets a room in a school, who can get a green card, or who will get a promotion.

The first European lotteries were organized in the Low Countries in the 15th century, with towns attempting to raise money for town fortifications and to aid the poor. The earliest records of lotteries that offered prize money in the form of cash or goods are from that period, though some historians have suggested that the first public lotteries were akin to distribution of gifts among guests at dinner parties.

Lotteries became a common method of raising funds for state government programs in the immediate post-World War II period, when states had larger social safety nets and were seeking revenue sources that did not increase taxes on middle and working class citizens. Alexander Hamilton believed that “everybody will be willing to hazard trifling sums for the hope of considerable gain,” and that lotteries could be a painless way to fund public projects.

Buying lottery tickets cannot be accounted for by decision models based on expected value maximization, as the ticket price is typically more than the expected winnings. However, more general utility functions can incorporate risk-seeking behavior and can account for the purchase of lottery tickets, particularly when the expected winnings are relatively large.

Posted in: Gambling