Lottery is the name given to a system for awarding prizes by chance. It is usually based on the sale of tickets to participants, who either choose their own numbers or use a “quick pick” option, in which case the computer selects numbers for them. Most large-scale lotteries offer one large prize, and often many smaller ones as well. Prize money is generated from ticket sales, and the larger the number of participants, the higher the prize pool. In addition to the ticket sales, other revenue sources can include advertising and taxes on the tickets.

In an anti-tax era, state governments have embraced the lottery as a relatively painless way of raising money. But it is important to remember that what states actually get from the lottery is less than a quarter of their total revenue. The rest comes from general tax revenues, which must be managed by political officials. And there is a risk that, as in Oregon, state leaders will become addicted to the lottery and seek to increase its size and complexity.

Lotteries are a popular form of gambling, but they can have a significant regressive impact on lower-income households. They also may lead to compulsive gambling habits and have been associated with serious declines in the quality of life for people who win the jackpots. In this article we look at the evidence on lottery effects and suggest some policies that might help limit their harmful impacts.