The lottery is a scheme for the distribution of prizes, wherein applicants pay a sum of money and then have a chance to win. Prizes may be cash, goods, services or even real estate or a car. There is a wide variety of lotteries, ranging from those with very small prizes to those with large prize pools. The latter are known as super-lotteries and generate a great deal of interest and publicity.
A lottery is an arrangement based on chance wherein participants submit applications and the winners are selected by a process which depends wholly on luck. This is contrasted with a contest based on skill where the results can be predicted in advance. A lottery is often used to allocate things of value which cannot reasonably be allocated in any other way, such as units in a subsidized housing block or kindergarten placements at a reputable public school.
Almost all states now have some sort of state lottery. Most started in the Northeast, where legislators were hoping to add new services without raising taxes on the middle and working classes, or feared that inflation was running out of control. Lotteries proved to be a way to raise money and avoid such tax increases.
The success of the lottery has spawned a number of special interests, including convenience store owners (the primary distributors of tickets); suppliers to the lottery (heavy contributions to state political campaigns are often reported); teachers (in those states where a portion of the proceeds is earmarked for education); state legislators (who quickly become accustomed to a steady flow of additional revenues); and a general constituency of people who play the lottery frequently.
As the popularity of the lottery grows, a variety of issues are raised, particularly those related to problem gambling and its potential regressive impact on lower-income groups. There are also concerns about the proliferation of state-sponsored gambling and about whether or not a state is appropriate to be involved in the business of gambling.
A key question is whether lottery revenue should be considered part of the general treasury. Many states have adopted a policy of limiting the total amount of lottery proceeds to about 10 percent of state general funds. This limit is a reflection of the concern that the lottery promotes gambling among those who could not afford to gamble otherwise and that the lottery may contribute to problems with compulsive gambling.
While these are serious concerns, the fact is that a state does not have much control over the lottery once it is established. Once the initial legislative decisions have been made, the lottery develops a life of its own, driven by the need to grow revenues and the desire to increase the size and complexity of the games offered. The result is that public policy is often at cross-purposes with the lottery industry. A classic example is the way in which a lottery grows to enormously inflated jackpots, earning its creators a windfall of free publicity on news sites and television and encouraging people to buy more tickets to have an apparently improbable chance of winning.