What is a Lottery?
2 min readA lottery is a type of gambling in which tickets are sold for a chance to win prizes based on random chance. Modern lotteries are often used to raise money for public or charitable purposes.
People in the United States spent more than $100 billion on lottery tickets in 2021, making it the country’s most popular form of gambling. But it’s also a very expensive way to lose money, especially for the economically disadvantaged who spend much more than others on lottery tickets. It’s been argued that the government’s promotion of lotteries preys on these people, that it essentially offers them the opportunity to gamble away their income with the false promise of instant riches.
The purchase of lottery tickets cannot be accounted for by decision models based on expected value maximization because the ticket cost is greater than the expected gain. However, a more general model that considers utility functions defined on things other than the lottery outcomes can account for some lottery purchases. For example, the purchase of a ticket could be rational if the entertainment or other non-monetary gain that is obtained outweighs the disutility of a monetary loss.
The term lottery is derived from the Dutch word lot, meaning “fate, God’s will” or “portion.” Its English usage dates back to 1560s, when it was first used for raising money for public or charitable causes. The first European lotteries in the modern sense of the word appeared in 15th-century Burgundy and Flanders with towns attempting to fortify defenses or aid the poor. Francis I of France allowed the establishment of lotteries for private and public profit in several cities between 1520 and 1539.