In the United States, lotteries raise billions of dollars annually. They are an essential tool for raising money for state education, public works projects, and other government purposes. The word lottery comes from the Latin lotto, meaning “selection by lot,” or a process in which tokens are randomly selected from a group or pool of applicants or participants to determine winners and losers. In modern usage, the term has come to refer primarily to games of chance that award cash or other prizes. In some cases, people are awarded property or other items without paying for them, but such arrangements are usually deemed not to be true lotteries under the strict definition of the term.
The first European public lotteries to offer prize money arose in the Low Countries in the 15th century, with towns trying to raise funds for building defenses or aiding the poor. Lotteries came to England and America in the 17th century, when they were used largely to finance private enterprises (and, in the case of colonial America, for public purposes, including roads, libraries, churches, colleges, canals, bridges, and so forth).
Typically, governments create a lottery as a monopoly or quasi-monopoly, licensing a private firm for the promotion and operation of the lottery in return for a fixed percentage of ticket sales. Then they establish a set of rules governing the game, and begin operations with a modest number of relatively simple games. As revenues increase, the games offered expand in size and complexity. However, despite the constant introduction of new games, revenues eventually level off and sometimes even decline.