A lottery is a scheme for raising money by selling chances to win prizes, usually cash. The winners are selected by chance in a process that relies entirely on luck. Lotteries are popular in many countries and have raised money for a wide variety of public works projects, including roads, canals, bridges, schools, churches, libraries, and museums. Lotteries are also used to raise funds for sporting events. In colonial America, they played a major role in financing private and public ventures.
A prize is usually a fixed amount of cash, but some lotteries offer a range of goods. In either case, the total value of the prizes will be less than or equal to the sum of the tickets sold. The difference between the prize fund and the tickets sales will cover profits for the promoters, costs of promotion, and taxes or other revenues.
Buying a ticket in a lottery may be a rational decision for an individual if the expected utility of the non-monetary prizes is high enough to outweigh the negative utility of the monetary loss. If, for example, the winner of a jackpot is given the choice between a lump-sum payment and an annuity payout, she may decide to choose the latter because it will allow her to spend more of her life in retirement.
The word lottery is from Old English hlot, from the object used to determine someone’s share (anything from dice to straw to a chip of wood with a name inscribed on it). It is closely related to the Old Norse word klutom “what falls to a person by chance” and the Germanic helot, hellot, and hlot, all meaning a share or an allotment; see cast lots.