Lottery is a form of gambling in which players pay to enter a drawing for a prize, such as money or goods. State governments typically set up a monopoly, establish a state agency or public corporation to operate the lottery, and start with a small number of relatively simple games. They then expand the number of games and complexity based on demand, which is often generated by extensive advertising.

Lotteries are extremely popular in the United States. More than half of Americans play at least once a year, and this group is disproportionately lower-income, less educated, nonwhite, and male. In addition, lottery participation tends to decrease with formal education and increases with age. A number of factors drive this demographic trend, including a belief that playing the lottery is not risky and that it can be used to supplement other forms of income.

State governments have a strong incentive to promote the lottery and keep it in place, because the profits provide an additional source of “painless” tax revenue. This revenue is a welcome addition to state budgets when there is pressure for government spending cuts or increased taxes. Lottery revenues are also attractive to politicians because they do not require voter approval.

A major factor behind the lottery’s popularity is that its advertisements are designed to appeal to people’s irrational impulse to gamble. This is done by focusing on the size of the jackpot prizes, inflating the value of lottery winnings (prizes are paid out in equal annual installments over 20 years, and are therefore rapidly eroded by inflation), promoting “lucky numbers” and lucky stores, stressing the importance of purchasing tickets at certain times of day, etc.