What Is a Lottery?
A lottery is a form of gambling in which people pay a small sum of money to be in with a chance of winning a large prize. It is popular in many countries, and is administered mostly by state governments. Lottery prizes are typically cash or goods. Some states also use the lottery to raise funds for education, infrastructure, or public services. The United States has one of the largest lotteries in the world, with annual revenue exceeding $150 billion.
A person can win the lottery by matching all of the correct numbers in a drawing or choosing the right combination of letters in a word puzzle. People can play the lottery on the Internet, in land-based casinos and at some private clubs. In some countries, the government controls all lotteries. In others, private companies operate them under license from the government.
The first lottery games in Europe were probably organized in the 15th century to raise money for town fortifications and to help the poor. Records of the early lotteries in the Netherlands are found in town records at Ghent, Bruges and elsewhere. The English word lotteries is probably a calque of the Dutch word loetje or loterie, but may be a calque on Middle Dutch loodje, “lot” or lotinge, “action of drawing lots.”
Lottery sales are divided into three categories: prizes, administrative costs and retailer commissions. In the United States, 50% to 60% of lottery sales are paid out as prizes, and approximately 1% to 10% goes toward administrative expenses, such as advertising. Retailers receive 5% to 8% of lottery ticket sales in the form of commissions and bonuses. The remaining 30% to 40% is turned over to the state.
In the United States, most states and the District of Columbia have a lottery. In addition to the traditional game of choice, which requires players to select numbers, some lotteries offer scratch-off tickets and games in which participants match words or phrases.
Most lottery profits are allocated to education, public works projects, and other state or local government purposes. In 2005, New York Lottery profits totaled $17.1 billion. The money is used to build schools, roads, bridges and other projects, and it helps the state pay its bills.
Although most Americans approve of lotteries, the number who participate is smaller than for some other forms of gambling, including casinos and racetracks. Most people who play the lottery are male and high-school or college educated. About one-third of them are “frequent players,” playing the lottery at least once a week. The rest are occasional or infrequent players, and they are more likely to be white than any other group.
In general, the very rich tend to spend more on lottery tickets than do those in the middle and lower income brackets. However, the very poor, in the bottom quintile of income, do not have enough discretionary income to be able to afford to spend much on tickets. Thus, the lottery can be seen as a type of regressive tax on the very poor that provides little economic benefit to them.
