A lottery is a process of allocating goods, services, or opportunities that relies on chance. It may be used to distribute anything from units in a subsidized housing block to kindergarten placements at a particular public school. In modern times it is most commonly associated with cash prizes which are awarded by a random drawing of tickets purchased by paying participants.

The origins of the word Lottery are unclear, but it is thought to be a calque on Middle Dutch loterie or Late Dutch lotinge, referring to “the action of drawing lots”. The earliest state-sponsored lotteries were recorded in the Low Countries during the first half of the 15th century to raise funds for town fortifications and poor relief. Benjamin Franklin organized a lottery to buy cannons for Philadelphia in 1769, and George Washington advertised land and slaves as prizes in the Virginia Gazette in 1769.

In some states, a portion of ticket sales is reserved for the operating costs of the lottery. Other proceeds go to prize winners and a small percentage is returned to retailers as commissions and sales incentives. The remaining amount goes to a state’s general fund or to a state-designated charitable purpose, such as education or infrastructure.

Some critics see lottery games as a form of gambling, with the odds of winning being long and costs potentially high. This type of criticism can obscure a key point: Lottery revenues come from people who choose to play, so the choice to gamble is not made in a vacuum. In fact, the choice to buy a ticket can be explained by decision models based on expected value maximization, but more general models based on utility functions defined on things other than lottery outcomes can also account for the purchase of tickets.