The casting of lots to decide fates and other matters has a long record in human history, and is mentioned several times in the Bible. The use of lotteries for material gain, however, is relatively modern, although it has gained popularity since the late fifteenth and early sixteenth centuries. Lottery prizes have varied widely, from food and livestock to fine jewelry and houses, but the most common prize is money or a car. Lotteries are also popular for sports team drafts and charity events.

In the United States, state governments sponsor and regulate the vast majority of lotteries. The process of drawing winners is largely the same in each lottery, although some differences are evident in marketing strategies and in the size of prize pools. Most lottery organizations are structured as a monopoly, but others are private enterprises licensed to sell tickets. The monopoly model is particularly attractive to the state because of its low cost and low risk. In addition, it allows the organization to raise significant sums of money without increasing taxes or cutting services.

The success of a lottery depends on a number of factors, including the size of the jackpot, the number of tickets sold, the percentage of total ticket sales, and the number of winners. Large jackpots are especially appealing to players because they can offer a life-changing sum of money, and they also earn the lottery considerable publicity. Smaller jackpots, on the other hand, may not attract as many players and therefore are less likely to reach a high-profile figure.

State governments usually legislate a monopoly for themselves, then establish an agency or public corporation to run the lottery (as opposed to licensing a private company in return for a portion of the profits). In addition, they typically begin with a modest number of fairly simple games and expand gradually in response to pressure for additional revenues. This expansion often involves adding new games such as keno and video poker, and it can include an extensive effort at promotion.

As a result of the proliferation of lotteries, a number of different sets of issues have emerged, ranging from concerns about compulsive gambling to alleged regressive impacts on lower-income groups. Nevertheless, the fact that state governments are able to raise substantial amounts of money for a wide range of purposes with little onerous taxation has given them broad public support, even in good economic conditions.

Lottery profits tend to flow primarily to convenience store owners, who are the primary vendors for tickets; lottery suppliers (heavy contributions by these companies to state political campaigns are frequently reported); teachers, whose wages are subsidized by lottery revenue; and state legislators, who quickly become accustomed to a steady stream of extra cash. As a consequence, most states have adopted the lottery as an integral part of their budgeting process. In general, lottery profits have grown rapidly, but that pace is slowing. This has shifted the focus of criticism of the lottery to more specific features of its operations and alleged shortcomings in the way that it is administered.