Buying lottery tickets can seem like a low-risk investment: A couple dollars for a chance to win hundreds of millions of dollars. But those small purchases add up over time. And even when you do win, there are tax implications, and those taxes can eat up your winnings. That’s why it’s important to know what you’re investing in before you buy that ticket.

In colonial America, public lotteries played a key role in funding private and public ventures such as roads, churches, canals, canal locks, colleges, and libraries. Benjamin Franklin ran a lottery to raise funds for cannons to defend Philadelphia during the Revolutionary War. The colonists also relied on lotteries to fund their militia and local governments.

While most of the proceeds go to paying out prizes, administrators like state governments keep a portion for their own operations. And the rest is split among retailers who sell the tickets and the lottery’s own advertising costs.

Critics argue that the lottery’s promotion of gambling has negative consequences for low-income groups and compulsive gamblers, and that it’s inherently at cross-purposes with the state’s duty to protect its citizens from addiction and other abuses. Others question whether the lottery is a sound source of revenue for states that are strapped for cash.