A lottery is a form of gambling in which numbers are drawn at random to determine winners. While lottery games are commonly associated with financial gain, there are also non-gambling lotteries, such as the selection of units in subsidized housing projects or kindergarten placements at public schools. While lottery games may be criticized as addictive forms of gambling, they are often used to fund good causes in the public sector.

A state government creates a lottery by legislating a monopoly for itself, creating an agency or public corporation to run the lottery, and then establishing a modest number of relatively simple games. Revenues typically expand dramatically for the first few years, then begin to decline; as revenues fall, lottery officials introduce new games in an attempt to keep player interest high. Lottery operators often develop extensive specific constituencies: convenience store owners, who sell tickets; retailers that promote the lottery; suppliers, who are frequently heavy contributors to state political campaigns; and teachers, in states where revenues are earmarked for education.

In addition, state-run lotteries tend to have substantial overhead costs, such as employee salaries, benefits, and administrative expenses. This can eat into profits, reducing the amount of money available to award prizes. A related problem is that lotteries can be abused by compulsive gamblers, who spend large amounts of their income on lottery tickets. Finally, some research suggests that players from low-income neighborhoods participate in the lottery at disproportionately lower levels than their percentage of the population.