Lottery is a competition based on chance in which numbered tickets are sold and prizes are awarded to the holders of numbers drawn at random. Typically, the more tickets purchased, the higher the prize money. The term is also used to refer to state-sanctioned gambling games.

The first recorded lottery took place in the Low Countries in the 15th century, raising funds for town fortifications. In colonial America, public lotteries were common and helped finance roads, libraries, churches, colleges, canals, bridges, and other public projects, as well as private ventures. The foundation of Harvard, Dartmouth, Columbia, and other American universities was financed by lotteries. Lotteries were also used to raise money for the Continental Congress during the Revolutionary War.

Despite the fact that most people who play the lottery do not win, the phenomenon has a large and widespread appeal. It is easy to organize, inexpensive to advertise, and can produce high levels of revenue. It is also an effective tool for raising taxes, especially regressive ones, since it targets lower-income groups.

Despite the wide popularity of the lottery, there are concerns about its effect on society. One of the biggest is that it encourages gamblers to spend more than they can afford to lose. Another is that it skews the distribution of wealth by creating a class of winners whose incomes are disproportionately higher than that of the average citizen. To help address these issues, the AIR-Lotto research project is developing a new type of lottery that can be used to distribute resources such as housing units and kindergarten placements in a reputable public school district.