A competition based on chance, in which numbers are drawn at random and prizes given to the holders of tickets. A lottery is usually run by a state or a charitable organization and may offer cash or goods. It is sometimes criticized as a form of gambling and as a waste of money, as well as for its alleged regressive impact on lower-income groups.

In theory, the entertainment value of a lottery ticket could justify a purchase by an individual in spite of a monetary loss, if the total expected utility of the non-monetary prize exceeds the disutility of the monetary loss. In practice, however, the cost of a lottery ticket is normally not offset by the expected utility and many potential bettors are deterred by the high odds of winning.

The emergence of a state lottery is a classic example of public policy being developed piecemeal and incrementally, with the result that authority and pressures are often fragmented between departments and between legislative and executive branches. The result is that, once a lottery has been established, it tends to develop its own set of policy issues, including (among others) the tendency to deceive consumers with misleading information about odds and other features of the game; the development of broad, highly specific constituencies for lottery revenues, from convenience store operators to suppliers to teachers; state legislators’ dependency on a source of “painless” revenue; the exploitation of compulsive gamblers; and so on.