A lottery is a game in which participants are paid to chance for an event with uncertain outcome. Prizes are usually money, goods or services. It is a form of gambling and can be addictive. Some states have outlawed it, while others regulate and promote it. The term is also used to refer to a random draw for other purposes, such as units in a subsidized housing block or kindergarten placements.

The distribution of property and other valuables by lot has a long record in human history, with several examples in the Bible and in ancient Roman games such as the apophoreta, a popular dinner entertainment where lots were drawn for slaves or goods that guests would take home. A modern example is a lottery drawing for prizes at public events, such as a sports game.

State governments often organize a lottery in order to raise funds for various projects. They may establish a monopoly for themselves and control the operation directly or license private firms in exchange for a percentage of proceeds. Despite their popularity, lotteries generate controversy due to their reliance on non-tax revenues and the perceived regressive impact on lower-income groups.

Although the majority of the winnings tend to go to winners, there are administrative costs associated with running a lottery, such as commissions paid to retailers and promotional expenses. This is a source of criticism about lottery advertising, which is alleged to mislead consumers by exaggerating the odds of winning and inflating the value of the money won (as opposed to distributing the prize in equal annual installments over 20 years, which allows for compound interest to increase the amount). In addition, many states use some portion of the proceeds to fund programs related to gambling addiction and other state issues.