How the Lottery Works


The casting of lots to decide property or other rights has a long record in human history, including several instances in the Bible. More recently, lotteries have played a major role in financing public and private ventures, such as roads, libraries, colleges, canals, bridges, hospitals, and wars. In colonial America, for example, many of the settlements and towns were financed by lotteries. In addition, lottery proceeds helped finance Princeton and Columbia Universities, the American Academy in London, and fortifications against the French in the Seven Years’ War.

The modern state lotteries have grown from a small number of traditional games to a large variety, each offering its own unique appeal to bettors. Generally speaking, though, all the games share certain characteristics. First, a prize pool must be established. A portion of this pool is normally used to pay costs of organizing and promoting the lottery, and another portion goes to profits and revenues for the state or sponsor. The remaining portion of the prize pool is then used to select winners.

Some states offer a wide range of prizes, from low-dollar cash to expensive vehicles and homes. Others have more specialized prizes such as kindergarten admissions at reputable schools or units in a subsidized housing block. There are even lotteries for sports tickets or vaccines for a rapidly moving virus.

In most cases, the prize money from a lottery is divided among several different winners. Depending on the type of game and the rules, this division may be based upon the total number of tickets sold, or on the relative prices paid for the tickets. In either case, the amount returned to winners tends to be between 40 and 60 percent of the total prize pool.

Traditionally, state lotteries have been relatively simple: People buy tickets for a drawing at some point in the future, typically weeks or months away. But innovations in the 1970s and 1980s brought about a change in the nature of state lotteries, with a shift toward instant games, such as scratch-off tickets, that allow players to win smaller prizes right away. These innovations also prompted the introduction of new games to try to maintain or increase revenues.

The popularity of state lotteries has increased dramatically in recent decades. In part, this reflects the general perception that a lottery is a form of painless revenue, one that allows states to expand their array of services without raising taxes on the middle class and working class. However, critics argue that the popularity of state lotteries is based on an incorrect interpretation of the lottery’s economic benefits.

Critics focus on the regressive nature of state lotteries, which tend to benefit middle- and upper-class voters more than lower-income citizens, and on other issues related to the design and operation of the lottery. But most state legislators and governors remain convinced that a lottery is a good thing for their states, especially in tough times.