A lottery is a game in which players select a group of numbers and are awarded prizes based on how many of their selections match those chosen in a random drawing. A player can win a large prize by matching all of the numbers in a predetermined number of draws, or a smaller prize for matching three, four, or five of the drawn numbers. The idea of lotteries is ancient, with early evidence of keno slips from the Chinese Han dynasty (205–187 BC) and American colonial-era public lotteries to raise money for town improvements, such as paving streets or building churches.

When states establish their lotteries, they generally do so with a view to maximizing the amount of money that goes to the winners. To do this, the pool of prizes must be large enough to attract sufficient ticket buyers to offset the cost of organizing and promoting the lottery, as well as the percentage that will go to the state or other sponsor in revenues and profits. A decision also must be made about how much of the remaining pool should be offered as small prizes that encourage additional play and, therefore, future jackpots.

But despite the apparent desirability of the lottery as a source of tax-free revenue, there are concerns that it promotes compulsive gambling and has regressive effects on lower-income groups. This is partly due to the fact that, since the lottery is a business and it must compete for the public’s attention and their money, advertising necessarily focuses on persuading consumers to spend more.