The lottery is a form of gambling that involves drawing numbers to win a prize. Historically, governments have sponsored lotteries to raise funds for public purposes. Typically, the government establishes a state-owned monopoly and then promotes the lottery to generate revenues. As a business, the lottery focuses on maximizing revenues by advertising and targeting specific groups of consumers. As a result, the promotion of this type of gambling often runs at cross-purposes with the larger public interest.

Traditionally, a lottery has been an effective way to finance public works projects, including paving streets, building wharves, and constructing bridges. It is also a popular way to fund school systems, libraries, and churches. During the American Revolution, Benjamin Franklin used a lottery to raise money for cannons to defend Philadelphia against British troops.

The earliest lottery records date to the Low Countries in the 15th century. Town records from Ghent, Utrecht, and Bruges refer to a lottery for raising funds to build town fortifications and to help the poor.

In general, lottery prizes are advertised as being annuity payments (which pay out periodically over a period of time) and one-time cash prizes (“cash or lump sum”). Winners who choose annuity payments may be subject to income taxes on the winnings. Regardless of the chosen payment option, a lump-sum prize is usually a smaller amount than an advertised annuity prize because of the time value of money.

Almost all states have lottery games, with the majority of players being adults. Those with the lowest incomes play the lottery at a disproportionately higher rate than other citizens, prompting critics to assert that the lottery is a disguised tax on the poor.