Lottery is a process of allocating prizes to people by chance. It is most often used for distributing money or goods, such as units in a subsidized housing complex, placements in a sports team among equally competing players, or public school enrollment. Lottery can also be used to select participants for a variety of other situations, such as filling a vacancy in a political office or for a job, or for determining eligibility for government benefits.

State lottery games first became popular in the 1960s, beginning with New Hampshire. They were marketed to voters as easy fundraising tools that could funnel millions into public schools and other social programs. But critics argue that states have become too dependent on lottery revenues, which are often derived from addictive gambling activities, and that they run lottery operations at cross-purposes with their public responsibilities to promote the general welfare.

The most obvious function of a lottery is the awarding of prizes to people by chance. The earliest known examples of lotteries are keno slips from the Chinese Han dynasty (205–187 BC), and the drawing of lots at Saturnalian banquets during the Roman Empire (212–70 AD). When financial lotteries were introduced in colonial America, they played an important role in financing many public projects, including roads, canals, and churches. Today, the lottery industry is booming and has expanded to almost all states. Many states offer both a lump sum and an annuity payment option for winnings. Both have advantages and disadvantages for winners. A lump sum can allow the winner to invest and diversify, while an annuity provides a steady stream of income that might help them avoid long-term tax consequences.