A lottery is an arrangement in which the allocation of a prize, or multiple prizes, to individuals or groups is determined by random chance. This type of arrangement is often used when demand for something in limited supply exceeds its availability, such as a place on a university’s graduate program or a unit of housing in a subsidized housing block.

Although many people view lotteries as a form of gambling, the truth is that the proceeds from their sales are generally used for public purposes. They help to reduce government deficits, especially in states that are unwilling or unable to increase taxes and raise other forms of revenue. Lotteries are also a popular way to fund governmental projects that would otherwise be too costly or take a long time to complete.

In general, lottery operations start with state legislation to create a legal monopoly; a state agency or public corporation is established to run the lottery; the lottery starts out small with a few games and progressively expands over time with the introduction of new games. The expansion is usually driven by pressure to generate additional revenues and reflects the fact that lottery profits are a relatively easy source of money for governments.

Lotteries have been criticized for their social impacts and their ability to promote addictive forms of gambling. Critics argue that they disproportionately target lower-income individuals who are more likely to spend money on tickets despite the low odds and that they can exacerbate existing inequalities. Others point to the fact that lottery winnings can be difficult to manage and that winners frequently mismanage their wealth, resulting in substantial losses over the course of their lifetime.