A competition based on chance in which numbered tickets are sold and prizes (money, goods or services) are awarded to the holders of numbers drawn at random. State lotteries are generally run by a public corporation established for that purpose and financed by a dedicated tax, rather than being licensed to private companies to operate in exchange for a share of the profits. The word lottery derives from the Dutch noun lot, meaning fate or destiny, and it may have been borrowed via French, with the spelling Lottery first appearing in English in the 15th century.

The earliest records of lotteries offering tickets for a cash prize appear in town records from the Low Countries, including Ghent, Utrecht and Bruges. These lotteries raised money for towns’ fortifications and the poor.

In the 18th and 19th centuries, public lotteries became increasingly common in European nations, including the United States. The public embraced the idea of winning a large sum for a small investment, and many people began to consider it a legitimate alternative to saving or investing.

During the American Revolution, the colonists used lotteries to fund both private and public ventures. Benjamin Franklin sponsored a lottery to raise funds for cannons to defend Philadelphia against the British, and George Washington held a lottery to finance a road across the Blue Ridge Mountains. Lotteries were also used to finance roads, schools, churches, and canals in the colonies.

Modern-day state lotteries follow a similar pattern: the government establishes a monopoly, appoints a publicly owned entity to run it, and introduces a series of games with varying prizes and odds of winning. Revenues usually grow rapidly at the start, and after a period of stability they level off and even decline. In response, the lottery tries to maintain or increase its revenues by adding new games.

A logical way to think about the lottery is as an alternative to paying taxes, and indeed it has been promoted as such. In addition to the obvious economic benefits of replacing taxes with a voluntary payment, supporters of the lottery argue that it doesn’t distort spending because players choose to spend their own money—in contrast to the state imposing its will on citizens by force. But the reality is more complicated. A large number of studies have shown that those with the lowest incomes make up a disproportionate share of lottery players. It is also a fact that lottery playing can become an expensive habit, draining the budgets of those who have the least disposable income. In this sense, it’s no surprise that critics have accused the lottery of being a disguised form of taxation on those who can least afford it.