Lottery is a form of gambling in which people purchase chances to win a prize based on random chance. It has a long history, with records of the casting of lots for the determination of fates in ancient times and public lotteries in the Low Countries in the 15th century. Lotteries have been used to raise money for a variety of purposes, including municipal repairs and aiding the poor.

Lotteries have a number of peculiarities that make them interesting to study. For example, they tend to attract large numbers of participants and generate considerable profits. Yet, their prizes are typically only a small fraction of the overall pool of funds. Most of the remaining pool goes to commissions for retailers and overhead costs. In addition, most state governments earmark some of the revenues for gambling addiction initiatives and other state-level purposes.

As a result, lottery officials often find themselves in a situation in which they are dependent on revenues while retaining limited control over the way in which those revenues are collected and spent. This makes it difficult to develop a coherent lottery policy, which in turn undermines the effectiveness of the industry.

In addition, the evolution of a lottery system is often piecemeal and incremental, with little or no strategic oversight. As a consequence, the general welfare is only intermittently taken into account by those running the system. Moreover, lottery revenues are often directed to specific and extensive constituencies, such as convenience store operators (whose employees typically sell tickets); lotteries suppliers (heavy contributions to state political campaigns are commonplace); teachers in states in which lottery proceeds are earmarked for education; and even state legislators (who quickly grow accustomed to their new source of revenue). These special interests often shape the direction in which a lottery evolves over time.