A lottery is a game in which people pay a small sum of money to have a chance to win a large prize, such as a cash prize or goods or services. The term comes from the Dutch word lot, derived from Middle French loterie and perhaps from Old English lotinge, meaning “action of drawing lots”. Most modern state-sponsored lotteries offer one grand prize along with a number of smaller prizes. Prize money is often the amount left over after expenses (including profits for the promoter) and taxes or other revenues have been deducted from the total pool of prizes.

The practice of making decisions and determining fates by casting lots has a long record in human history. But the lottery, where individuals pay to buy a ticket in the hope of winning a prize, is relatively new. Lotteries are promoted as a source of tax-free revenue, and states have been eager to adopt them because they are easy to organize and popular with the public.

But critics charge that lotteries are addictive forms of gambling, and the prizes on offer are unlikely to improve the standard of living for most people. In addition, they have been linked to increased health problems and mental distress. Nonetheless, the political and economic appeal of lotteries has been strong enough to make them a popular source of funding for many projects, from subsidized housing units to kindergarten placements. The lottery has also become an important part of the financial infrastructure of most modern economies, and many countries have adopted laws regulating its operation.