A lottery is an arrangement of prizes for a draw of numbers based on chance. The term “lottery” is derived from the Dutch word lot, meaning fate or fortune. Lotteries are legalized gambling games with the purpose of raising funds for public or private benefit. In most states, the establishment of a lottery requires legislative approval. Many state agencies or public corporations run the lotteries; in some, private firms are licensed to operate them. Most lotteries initially start with a relatively modest number of simple games. But constant pressure for additional revenues leads them to progressively expand their portfolio of games.
A typical lottery consists of a pool of prize money from which costs of organization and promotion must be deducted, along with a percentage that normally goes to the state or sponsor. The remainder of the pool is available to be won by individuals who purchase tickets. Many people buy lottery tickets primarily for the entertainment value they expect to receive from playing, even though it is mathematically impossible for them to win. Consequently, the disutility of a monetary loss is outweighed by the combined utility of the non-monetary benefits.
In the United States, colonial lotteries played a significant role in financing public and private projects. For example, road construction, canals, churches, and colleges were all financed through them. The University of Pennsylvania was founded by a lottery in 1755, and Princeton and Columbia universities were also funded by lotteries.
