How the Lottery Works


The lottery is a popular form of gambling, and state governments promote it as a way to raise revenue for education, road repairs, and other services. But it’s important to understand how lottery money really works—and what the real costs are for the people who play it. Americans spend more than $80 billion a year on lotteries, and many winners end up bankrupt in just a couple years. The money they spend on tickets could be better spent building emergency savings or paying off credit card debt.

A lotteries are games of chance that distribute prizes based on the drawing of numbers. They can be a public or private enterprise. A public lottery is run by a government, and private lotteries are run by businesses that are licensed to do so. A prize may be cash or goods. The first recorded lotteries were in the Low Countries, where towns held them to raise money for town fortifications and to help poor citizens. The Continental Congress established a lottery in 1776 to raise money for the Revolution, but it failed to generate enough funds and was ultimately abandoned. Private lotteries became common in the United States in the mid- to late-1700s, with some of them raising millions of dollars for public uses.

Most states enact laws regulating lotteries and delegate responsibility for administering them to a special lottery board or commission. These commissions select and license retailers, train employees of retailers to use lottery terminals and sell and redeem tickets, pay high-tier prizes, and monitor retail and player compliance with lottery law and rules. Generally, winning numbers are selected using a machine that mixes and selects random combinations of numbered tickets. The mixing and selection process are usually visible to viewers, allowing them to verify that the lottery is unbiased and not being tampered with.