A lottery is a game where participants pay for the privilege of entering a competition in which the prizes are awarded on the basis of chance. The games may involve anything from a contest for apartments in a subsidized housing block to kindergarten placements at a public school. But the lottery that gets the most press is the financial one, in which paying participants have a shot at winning large cash prizes by matching numbers or symbols. In America, there are state-run lotteries for a variety of different games. Each game has its own rules, but the overall principle is the same: people buy tickets and hope that their numbers will match those randomly spit out by machines or drawn by human officials. The likelihood of winning is usually on the order of one in a hundred. The games are popular with Americans of all ages, though the proportion who play at any given time tends to rise sharply in their twenties and thirties and then decline slightly as they get older. Among those who do play, men do so more frequently than women.

The modern incarnation of the lottery began in 1964, when New Hampshire became the first state to introduce it. Other states followed in short order, mostly in the northeast and the Rust Belt. They did so in part because state legislatures faced budget crises, and balancing the budget with cuts or tax increases was politically unthinkable with many voters. Lotteries seemed like a promising alternative that would raise money without angering anti-tax advocates.

In the beginning, state lotteries were basically traditional raffles. People bought tickets for a drawing at some future date, often weeks or months away. But innovations in the 1970s radically changed the business model. In addition to the standard drawings, there are instant games where players can purchase tickets and win prizes immediately. The instant games typically have lower prize amounts but much higher odds of winning, on the order of one in four. They also generally draw more customers. As a result, revenues typically expand rapidly after an instant game is introduced and then begin to level off or even decline. The lottery industry has thus been forced to introduce new games and strategies in a constant struggle to maintain or increase revenue.

Despite the long odds of winning, lottery participation is quite high. Almost half of all adults play at least once a year. The likelihood of playing at any particular point in life is highest for people in their twenties and thirties, and it dips to about two-thirds for those in their forties and fifties. Men play more frequently than women do, and they do so about 18.7 days per year on average.

Lottery games are also big business for their operators and suppliers, as well as the government. But they are expensive to organize and promote, and they tend to eat into savings that would otherwise go for things like retirement or college tuition. Moreover, most lottery players do not invest their proceeds wisely. They spend billions of dollars on tickets, and as a group they are likely to forgo thousands in additional savings that they could have had if they had invested their lottery winnings in stocks or mutual funds.