Lottery is a competition based on chance, in which numbered tickets are sold and prizes are given to the holders of numbers drawn at random. The prize money can be cash, goods or services. Often state governments organize and run lotteries to raise funds for government purposes. Although the lottery is a form of gambling, supporters argue that it is an effective and efficient source of public revenue, especially in times of economic stress, when tax increases or cuts in government spending might be politically difficult.

The earliest known lottery games were held during the Roman Empire, when guests at dinner parties would be given tickets to receive articles of unequal value. Later, Europeans began to use public lotteries as a means of raising money for local government projects such as building walls and town fortifications. The name “lottery” is believed to be derived from the Dutch word lot, meaning “fate,” though the precise origin of the concept remains obscure.

Most lottery funds are used for a combination of prizes and administrative expenses. A substantial share is paid out in the form of prize winnings, while administrators keep some for operational costs and other initiatives such as funding gambling addiction programs. In addition, a small amount is paid to retailers who sell the tickets and for the cost of advertising.

The lottery is a popular source of entertainment for many people, and some play regularly to improve their chances of winning. However, it is also a form of gambling that is highly addictive, and many players end up worse off than before they started playing. The improbability of winning can lead to compulsive gambling and even severe financial ruin.