A game of chance in which players purchase numbered tickets and win prizes if their numbers are selected by lot. Often run by state or other government-sponsored organizations as a way to raise funds, lottery is a popular form of gambling that carries the risk that some individuals will become heavily indebted and may even lose their homes.

Historically, the term lottery has been applied to other activities involving chance selections as well; for example, sports team drafts and the allocation of scarce medical treatments are often called lotteries. Lotteries are also sometimes used as a means of allocating housing units in subsidized housing blocks or kindergarten placements in reputable public schools.

The modern lottery is usually played by purchasing tickets for a small sum of money. Participants then select groups of numbers or symbols that are randomly spit out by machines and, if their numbers match those of the winning ticket, they win prizes ranging from cash to goods and services. Although lottery games have many variants, all share a few common elements.

One of the most important is the drawing, a procedure for selecting winners that takes place after the sale of all tickets. The pool or collection of tickets must be thoroughly mixed by some mechanical means, such as shaking or tossing; this is a randomizing technique designed to ensure that the choice of winners is strictly dependent on chance. A variety of methods have been developed for the drawing, including the use of computers, but it is always a crucial part of the lottery operation.

The earliest recorded lotteries with tickets for sale and prizes in the form of money were held in Europe in the 15th century to raise funds for town fortifications and help the poor. The word is believed to come from the Middle Dutch llotte, which itself derives from Old English hlote, meaning “the action of drawing lots” (see lot).

People who participate in lotteries are generally aware that their chances of winning are slim, but this does not stop them from spending a large proportion of their incomes on tickets. Lotteries have been described as an addictive form of gambling, and there are many examples of people who have lost everything they had to win a big jackpot.

While it is hard to explain why some people choose to spend so much of their income on lottery tickets, economic theory suggests that the behavior can be explained by decision models based on expected value maximization or more general ones centered on utility functions defined on things other than the prize money. It is also possible that the excitement of playing the lottery gives some people a feeling of thrill and indulges their fantasies of becoming rich.