A lottery is a competition based on chance, in which numbered tickets are sold and prizes are given to the holders of numbers drawn at random. It is often used as a painless way to raise money for state or charitable purposes. It may also be referred to as a raffle, sweepstakes, or bonanza.

Lotteries have a long history, and their use for raising money for public projects has been widespread since ancient times. The first lottery to offer prizes in the form of money was a public competition held by Roman Emperor Augustus Caesar to fund repairs for the city of Rome. Earlier, lottery-style games involving the casting of lots had been used to determine fates or to distribute gifts, including fancy dinnerware.

In colonial America, lotteries were widely used to finance private and public ventures, including canals, roads, churches, colleges, libraries, and hospitals, as well as for military operations. Benjamin Franklin, for example, sponsored a lottery to help pay for cannons for the defense of Philadelphia during the Revolutionary War.

In modern times, the lottery has been an important source of revenue for state governments. While most of the ticket sales go to prize winners, lottery administrators keep a percentage of the funds for operational costs. These include commissions paid to retail outlets, the salaries of lottery officials, and advertising expenses. In addition, the overhead cost of running the lottery system requires a significant investment in technology. As a result, most states have diversified their lottery offerings.