A lottery is an arrangement by which prizes are allocated to people in a manner which depends on chance. The term is most commonly used in reference to state-sponsored lotteries, but it can also refer to any game where the allocation of prizes is wholly or partly determined by random chance (for example, some games of bingo).
Typically, participants pay for a ticket, select a group of numbers or have machines randomly spit out tickets, and win prizes if their selection matches a set of numbers drawn from a machine or another means. The prize can be anything from cash to goods.
The first recorded lottery to offer tickets for sale and award prizes based on chance was the lottery organized by Roman Emperor Augustus in the early 1st century. Later, a number of towns in the Low Countries held public lotteries to raise funds for town fortifications and other civic purposes, with prizes in the form of goods of unequal value. The name lottery is probably derived from the Dutch word for fate, referring to drawing lots for different outcomes.
A key feature of most modern lotteries is that a substantial percentage of the money collected from ticket sales is used for promotional costs and profits, while only a small proportion goes toward prizes. This is necessary to keep ticket prices competitive and draw enough people to make the system profitable.
A second feature is that states and other organizers of lotteries often earmark a significant portion of the proceeds for specific public benefits, such as education. This enables the state to gain broad support for the lottery by promoting it as a painless source of tax revenue, which is an attractive argument in times of economic stress and when politicians fear that their regular taxes will be increased or cut.