Lottery is a method of allocating property or other prizes among members of a class through a process that relies wholly on chance. It is often considered to be a form of gambling. The prize allocation can be for a fixed sum of money, goods or services. It can also be for the right to enter a competition or contest, such as an athletic event or musical performance. The term lottery may also refer to the prize distribution at a feast or other entertainment occasion, such as the Saturnalian games of ancient Rome.

In the United States, state-sponsored lotteries are legal and provide enormous profits for their promoters. However, the practice is prone to crookedness. The last US state lottery, the Louisiana Lottery, was killed after it developed a reputation for corruption and bribery.

In decision theory, lottery purchases cannot be accounted for by the mathematical models based on expected value maximization. However, people continue to buy tickets because they enjoy the entertainment value and fantasy of becoming wealthy. In addition, they believe that a lottery win will bring them happiness and pleasure, which is not quantified by economics but can be measured by other measures of well-being. When these non-monetary values are included in the expected utility function, a lottery purchase can be rational. In most countries, winners can choose whether to receive the prize in a lump-sum payment or in annual installments (annuity). The former option makes more sense from an investment perspective, but it can result in less overall financial wealth, since the proceeds are subject to income taxes.