Lottery is a form of gambling in which tickets are drawn for a prize, typically money or goods. Modern lotteries are often referred to as games of chance, though there is a strict definition of gambling as an activity in which payment of something of value for a small probability of gaining something else of greater value. Modern lottery games, which are government-sponsored and commercially run, meet this definition. Lotteries are popular sources of revenue for state governments, which use the proceeds to fund public projects.

States are able to maintain the popularity of their lotteries by portraying them as beneficial to a specific public good, such as education. In addition, they can bolster their popularity by reducing the size and cost of prizes. As long as these trends continue, most state governments will find that they can sustain a lottery even in the face of fiscal crisis. Moreover, the results of various studies indicate that lottery revenues tend to rise and fall with the state economy.

Nevertheless, critics point to the fact that state lotteries are largely dependent on revenues from illegal gambling activities and characterized as a major regressive tax on low-income individuals. In addition, they are said to promote addictive gambling behavior and have other negative social impacts.

State lotteries are also criticized for not keeping their prizes relatively small and for being based on irrational and unsubstantiated assumptions. They are further criticized for being a form of gambling that is inherently unfair because winning the top prize requires an extremely large amount of money and, therefore, the chance of losing is very high.

In the past, lotteries were used for a variety of purposes, including financing private and public ventures. They were particularly important in colonial America, where they played a significant role in the establishment of the first English colonies and the construction of roads, bridges, and wharves. They also helped finance universities, such as Harvard and Yale, and churches.

Although the modern lottery is a government-sponsored and heavily promoted enterprise, its success relies on the support of a variety of other constituencies. These include convenience store owners (who serve as the primary vendors); suppliers of prizes (whose executives contribute heavily to state political campaigns); teachers, who are earmarked for lottery revenues; and state legislators, who become accustomed to the flow of new tax dollars and may resist efforts to curtail it.

The success of lottery marketing depends on the sensitivity of state officials to market pressures. In the end, it is state legislators who are responsible for defining and regulating the lottery industry, which is why they must be able to strike the right balance between increasing revenues and protecting the public welfare. As the example of Oregon illustrates, this can be a difficult task.