A competition based on chance, in which numbered tickets are sold for the chance to win a prize (usually money). The first recorded lotteries were held in the Low Countries in the 15th century. They were often used to raise money for poor relief or town fortifications. The word lottery is probably derived from Middle Dutch loterie, which may be a calque of Middle French loterie or the action of drawing lots (lot), as in the tally system of medieval France.

While there is always a risk of losing some or all of the money invested in a lottery ticket, the chances of winning are typically very low. For example, according to a 2023 Empower Money Talks study, the odds of winning the Powerball jackpot are one in 27,925.

Most states rely on the sale of lotteries to generate substantial revenues for public services, including education. Some states use them to supplement their general fund, while others earmark lottery funds for specific projects.

State-run lotteries usually have a variety of games, including scratch-off tickets, daily games and games where participants pick the correct numbers. The prize amounts are generally set by state law and vary from game to game, but the top prizes are usually very large.

While buying a lottery ticket might not make much sense from an economic perspective, many people do so because of the entertainment value and the fantasy of becoming rich. If these non-monetary values are factored into a person’s utility function, lottery tickets can be considered a rational purchase under decision theory.