Lottery is the act or process of distributing something (generally money or prizes) among a group of people according to chance. The drawing of lots has a long history in human society and is attested by numerous references in the Bible. The use of lotteries for material gain is less ancient, however. The earliest known public lottery to distribute prize money was held in 1466 in Bruges, Belgium, to fund municipal repairs.

In the United States, state governments sponsor lotteries to raise funds for a variety of purposes. Unlike private businesses, which typically operate lotteries for their own profit, government-sponsored lotteries are legally regulated. Each state establishes its own monopoly for the lottery and selects a public agency or corporation to run it. The state-run monopoly generally begins operations with a modest number of relatively simple games and, under constant pressure for additional revenues, gradually expands its portfolio of offerings.

The principal argument used to promote the adoption of a lottery is that it is an effective way for states to raise substantial amounts of revenue without significantly burdening lower-income households or raising general taxes. Lotteries have proven remarkably popular, and the vast majority of states have now established them.

Despite the success of this argument, there are many problems with the way state lotteries are structured and operated. For example, lottery proceeds tend to increase in times of economic stress, when people are worried about cuts in their social safety net or increased taxes. This dynamic explains why the state governments that introduced lotteries in the immediate postwar period did so under circumstances of financial stress.