A competition based on chance, in which numbered tickets are sold and prizes are awarded to ticket holders whose numbers are drawn at random. Lotteries are typically run as a means of raising funds for public purposes. The practice of using lots to determine ownership or other rights is recorded in ancient documents, and the modern lottery dates back to the late fifteenth and early sixteenth centuries. George Washington and Benjamin Franklin both ran lotteries, and the first American state lottery was launched in 1612.
The prize pool for a lottery is typically smaller than the advertised jackpot amount, because winnings are reduced by commissions and overhead for lottery retailers, as well as by income taxes on the winners. The remaining amount available to the winner is then divided up according to a set of rules, and the winnings are paid out accordingly. In the United States, for example, winners can choose to receive their prizes as an annuity (payments over 30 years) or in a lump sum.
Lotteries depend on the idea that people are irrational and gullible, which is why they often advertise big jackpot prizes and rollover drawings. But if the chances of winning are so small, why do people play them? I’ve talked to a few people who are regular lottery players, and they describe spending $50 or $100 a week on tickets. The reason, they tell me, is that they feel like it’s their civic duty to support the state.