The word Lottery is derived from Middle Dutch loterie “action of drawing lots” and Old English lot “fate”. Lotteries are games of chance that award prizes to players who match combinations of numbers on a game board or other device. State governments sponsor lotteries to raise money for public services. A common argument in favor of the lottery is that it is a source of “painless” revenue: Lottery proceeds allow state government to expand programs without imposing particularly onerous taxes on the middle and working classes. This dynamic is especially salient in an anti-tax era, and it has made many states dependent on lotteries as sources of income.

In most states, a significant percentage of Lottery revenue is used for education, and the remainder gets divvied up among administrative costs, vendor fees, and other projects designated by individual state legislatures. The result is that Lottery revenues have been able to win broad public approval, regardless of the actual fiscal condition of the state. Clotfelter and Cook report that the popularity of lotteries appears to be rooted in a deep sense of social obligation: People feel they are doing their civic duty when they buy tickets.

In the early years of the lottery, many state games were little more than traditional raffles, with participants purchasing tickets to be eligible for a future drawing. Revenues typically exploded after such games were introduced, but they eventually leveled off or even began to decline. This created a pressure to continually introduce new games to maintain or increase revenues, which was achieved through a combination of innovations in prize levels and the use of aggressive advertising.