Lottery Basics


Lottery is a game of chance in which players pay for a chance to win a prize, often a cash jackpot. The winnings are determined by a random drawing of numbers or symbols on a ticket. The odds of winning are very low, but if the player’s ticket matches a winning combination, he or she receives the prize. Lottery games are a popular form of gambling and are widely used around the world.

In the United States, all state governments operate a lottery. The profits from these lotteries are used to fund various public programs. Lottery winners are typically required to pay state income tax on their prizes. Many people play lotteries as a means of saving for retirement or paying for college tuition, but others do it for the excitement and the possibility of becoming rich.

Almost all modern lottery games are based on a random number generator, which selects winning numbers from a pool of entries at the time that a drawing is held. Most tickets cost a dollar each and allow players to choose from small sets of numbers or to let machines do it for them. Drawings are usually held once or twice a week to determine the winners. Some states offer instant-ticket games that can be played for pocket change. These games usually feature a soft, latex coating that must be removed to reveal the play data on the ticket.

The idea of distributing property or goods by lottery goes back a long way. In the Old Testament, Moses was instructed to divide land among his people by lot (Numbers 26:55-56) and Roman emperors gave away property and slaves as part of Saturnalian feasts and entertainment. Benjamin Franklin and George Washington both organized lottery-type schemes to raise money for their revolutionary causes; rare tickets bearing Franklin’s signature are now collectors items.

State lottery profits are distributed to beneficiaries in a variety of ways, as shown in Table 7.2. Some states use the money to promote education; others, such as New York, give a portion of it to social welfare programs. The remaining funds are deposited in the state treasury, where they can be invested to generate more earnings for future lotteries.

Retailers who sell lottery tickets are compensated by the percentage of sales that they keep, usually a small percentage of total proceeds. Lottery retailers can also earn bonuses for increasing sales by a specified amount. Lottery retailers are able to purchase tickets in bulk and can choose from consignment billing or purchasing them on credit, which allows them to keep inventory on hand without having to pay for it upfront.

Lottery retailers include convenience stores, gas stations, supermarkets, restaurants and bars, service organizations such as fraternal groups, churches, bowling alleys, and newsstands. A few retailers are national chains. Most of these are privately owned, but some are franchises of state-owned lottery operations. In 2003, the National Association of Lottery Suppliers reported that about 186,000 retailers were selling lottery tickets in the United States.