What is a Lottery?

A scheme for the distribution of prizes by lot or chance, especially a gaming scheme in which one or more tickets bearing particular numbers draw prizes and the rest are blanks. Also used figuratively: A situation or event in which the outcome depends on fate: They considered combat duty to be something of a lottery.

Lottery is a popular activity, with Americans spending more than $10 billion per year on state and national games. Those who play regularly are called “frequent players.” In a recent survey, 13% of respondents said they played the lottery more than once a week, and another 20% played one to three times a month (“regular”). The remaining 31% of people reported playing less frequently than that, or only occasionally.

The word lottery derives from the Dutch noun lot, meaning fate or fortune, and it refers to a game in which numbered tickets are sold for a chance to win a prize, usually money. The first modern lotteries were held in the Low Countries in the 15th century, to raise funds for town fortifications and to help the poor. They were enormously successful and were hailed as a painless form of taxation.

In the United States, state legislatures enacted laws authorizing a variety of lotteries and establishing the procedures for conducting them. Most states delegate the administration of their lotteries to a separate state lottery division, which will select and license retailers, train them to use lottery terminals to sell and redeem tickets, provide promotional support for retailers and players, pay winning ticket holders, and ensure that all lottery activities are conducted according to legal requirements.

Many of the retailers that sell state-approved lottery products are convenience stores, although a wide range of other outlets offer them as well, including supermarkets, gas stations, drugstores, restaurants and bars, bowling alleys, nonprofit organizations (including churches and fraternal organizations), and newsstands. In 2003, a total of about 186,000 retailers sold lottery tickets. Of these, 34% were convenience stores.

Lottery games are often marketed using a variety of promotions, including merchandising deals with popular brands. For example, a New Jersey Lottery scratch-off game in 2008 featured a Harley-Davidson motorcycle as the top prize. These merchandising programs are important to the success of lotteries, because they increase brand awareness and sales of lottery products.

Despite their popularity, the odds of winning a lottery are relatively slim. NerdWallet recommends you treat lottery play as an entertainment expense, and avoid gambling with your money. To stay up to date on the latest in personal finance, subscribe to NerdWallet’s free newsletters.