A gambling game or method of raising money, as for some public charitable purpose, in which a large number of tickets are sold and a drawing is held for certain prizes. Alternatively, the term may be used to refer to any process or activity whose result depends on chance: for example, a lottery for units in a subsidized housing block or kindergarten placements at a public school.
Lotteries are run by state or local government agencies whose responsibilities include purchasing lottery terminals and software, training employees of retailers on the use of these machines, promoting the sale of lottery tickets, paying high-tier prize winners, ensuring compliance with legal requirements for conducting lotteries, and regulating lotteries. In some cases, a private corporation manages a state-approved lottery.
People buy lottery tickets for a variety of reasons. Many believe they will improve their chances of winning a prize, such as a big jackpot, by playing often. But the odds of winning are very low and most players are better off saving their money or spending it on something else instead.
The purchase of lottery tickets cannot be explained by decision models based on expected value maximization because the tickets are expensive and there is no guarantee that they will yield a large reward. However, more general models based on utility functions defined on things other than the probability of winning can account for this behavior. For example, a woman who spends thousands of dollars each year on lottery tickets might be able to justify her habit by calculating the entertainment value she gets out of it.
