What is a Lottery?

A lottery is a game of chance where winning is determined by a random drawing. People who buy tickets pay a small sum of money in order to have a chance of winning a much larger amount. Lottery games are often run by state or federal governments. They have a wide popular appeal. Many people have used lottery money to purchase goods and services they would not otherwise be able to afford, and have thus been able to increase their overall utility.

A basic element of all lotteries is some way to record the identities of bettors and the amounts staked by each. The bettor may write his name on a ticket that is then deposited with the lottery organization for shuffling and possible selection in the drawing, or he may simply give the organizers a list of numbers he wishes to try for. There must also be a means of collecting and pooling all the money placed as stakes, with a percentage being deducted for organizing costs and profit.

The resulting pool is normally divided into a number of prizes, with a smaller prize being offered for each drawing and a higher prize being offered for the “rollover” drawings. Potential bettors must decide whether the entertainment value and other non-monetary benefits of playing outweigh the disutility of a monetary loss.

New Hampshire pioneered the modern state lottery in 1964. Since then, there has been a steady expansion of the lottery industry. However, revenue growth tends to level off and eventually begin to decline. This has prompted the introduction of new games, such as video poker and keno, in an attempt to sustain revenues.