What is a Lottery?


In a lottery, tokens are distributed or sold and the winning token or tokens are chosen by lot in a random drawing. The word lottery comes from the Dutch noun lot meaning fate, and the earliest known European lotteries began during the Roman Empire, where tickets were distributed as part of Saturnalian dinner parties to win prizes in the form of fancy items like dinnerware.

In the United States, most state governments run a lottery to raise money for a variety of public uses, such as education or road construction. The first official American lottery, the New Hampshire State Lottery, was established in 1964. Since then, lottery revenues have grown steadily. In 2021, Americans spent over $80 billion on lottery tickets.

Lottery winnings are typically paid in either a lump sum or an annuity payment. A lump sum grants you immediate cash, while an annuity spreads out payments over three decades and offers a tax advantage in some cases. Buying a lump sum can give you a larger payout, but it also sacrifices future guaranteed income. Many financial services firms and insurance companies will buy your long-term lottery payments, allowing you to choose the option that best fits your needs.

Americans tend to play the lottery in the same ways, with roughly one in eight people playing a lottery once a week or more (“frequent players”). The top 20 to 30 percent of lottery sales come from this group, which is disproportionately low-income and less educated. The rest of the lottery player base is more evenly distributed between those who play once a month or less (frequent players) and those who play only occasionally (occasional players).