A lottery is a system whereby participants pay a small sum of money to participate in a random drawing for a prize. It is typically administered by state governments, although private entities may also administer lotteries. Lottery proceeds can be used for a variety of purposes, including paying out prizes to winners and funding state programs. A portion of proceeds may also be paid out in commissions to retailers who sell tickets and to lottery administrators. In addition, lottery proceeds may be used for other operational expenses such as advertising and salaries for lottery officials.

The term lottery was originally used to describe a game of chance in which a prize (often money) is awarded by a random process. It is similar to other types of gambling, such as horse racing and playing cards. While many people play for the thrill of winning, others participate to help a particular cause or charity. For example, a charitable lottery might award prizes such as units in a subsidized housing block or kindergarten placements in a reputable public school.

The first modern state lottery began in New Hampshire in 1964. Since then, most states have adopted lotteries. Many state governments argue that the revenue from lotteries is a valuable source of “painless” revenues, since it is money that players voluntarily spend to fund education, veterans’ health programs, and other state services without additional taxes. This logic has gained popularity in an anti-tax era where state budget crises are common. However, research has shown that the objective fiscal condition of a state does not seem to affect its adoption of a lottery.