A lottery is a competition based on chance, in which numbered tickets are sold for a prize. The draw is held at random and winning numbers are chosen by a computer program. The prize is usually cash or goods, though some lotteries offer services such as medical treatment or housing.

Ticket sales provide a fast and effective way for governments to raise money. In the United States, state lotteries were introduced in the 1960s to provide a source of income for education and other programs without raising taxes. The first modern lottery was started in New Hampshire, followed by others throughout the Northeast and then the rest of the country. Today, all 50 states offer a lotto and the prizes range from small to huge. Typically, lottery proceeds are earmarked for specific purposes by the legislature, allowing it to reduce the appropriations it would otherwise have had to make from its general fund.

In addition to attracting attention and advertising revenues, lotteries are popular because they are fun. Although the chances of winning are slim, it is easy to get caught up in fantasies about what one might do with a big jackpot. Psychologists have found that people who play the lottery regularly diminish their losses by focusing on the times they won, and this can keep them coming back for more.

Lottery revenue tends to expand rapidly after a lottery is introduced, but then levels off and may even decline. Despite this, new games are continually introduced in an attempt to maintain or increase revenues. This is a classic example of public policy being made piecemeal and incrementally, with the overall direction of a state’s finances rarely being considered.