The lottery is a type of gambling in which numbered tickets are sold for a chance to win a prize, often a cash sum or goods. It is also a form of fundraising, where the money raised is used for public benefits such as schooling or subsidized housing. Lottery games are criticized for their high levels of addiction and regressive impact on lower-income groups, and as contributing to economic inequality.

States adopt state-run lotteries to raise a significant portion of their revenues without taxing citizens directly. They set up a government agency or corporation to run the operation; establish rules governing participation; begin operations with a modest number of relatively simple games; and, driven by pressure for new revenue, progressively expand the size and complexity of their offerings.

Lottery participants are largely motivated by the desire to win large amounts of money. Winners are typically offered the choice of taking their winnings in a lump sum or as annual installments. The latter option is generally viewed as more advantageous for taxation purposes.

While there is a great deal of competition among convenience stores and other vendors to sell lottery tickets, the overwhelming majority of tickets are sold by government-owned agencies. While some of the proceeds go toward prizes, a large portion is retained by lottery administrators to cover operational costs. The remainder of the money is paid out in various ways including commissions to retailers, payments to a state’s gambling addiction programs, and salaries for lottery officials.