A lottery is an arrangement in which prizes (usually money) are allocated by chance. Some of these arrangements involve a payment (such as a tax) to participate in the lottery; others do not. The word lottery is derived from the Greek noun lotos, meaning fate or destiny. Lotteries have long been popular, and they continue to attract widespread public approval. State governments have a strong incentive to establish and promote them because they can generate significant revenues without the need for a broad-based tax increase or cutbacks in other government services. These revenues are typically earmarked for education, but other governmental needs can also be served by the lottery.

People have a natural desire to dream big, and lotteries tap into this. Consequently, people have an intuitive sense for the odds of winning a lottery prize that is often quite different from reality. People tend to underestimate how rare it is to win the jackpot, and the odds of winning a jackpot can shift dramatically even over short periods of time.

Most state lotteries have a reputation for being unbiased and fair, but they have to deal with substantial and growing competition from commercial providers of lottery-related goods and services. They also have to deal with the fact that they are a form of gambling and must therefore be subject to scrutiny concerning problems such as compulsive gambling and regressive impacts on lower-income groups. Furthermore, the evolving nature of state lottery policy is such that it is often difficult for critics to articulate a clear critique.