The drawing of lots to decide rights and responsibilities has a long history (including several instances in the Bible) and has been employed by governments, private organizations, and individuals. Lotteries became widely used in colonial America to raise money for towns, wars, colleges, and public-works projects.
Once established, lottery revenues typically expand rapidly but eventually level off or even decline, resulting in the need to introduce new games in order to sustain growth and attract new players. This “boredom factor” has led to a proliferation of scratch-off tickets, video poker, and other nontraditional forms of gambling.
Lotteries are supported by a broad and diverse coalition of interests, including convenience store operators; lottery suppliers (who often make large contributions to state political campaigns); teachers (in states in which a portion of proceeds is earmarked for education); and state legislators (who quickly become accustomed to the extra revenue). A key element in winning and retaining public approval for lotteries is the extent to which the proceeds are seen as benefiting a particular public good such as education.
Lottery prizes are allocated by chance, and a significant proportion of people who wish to participate in the arrangement can do so without losing their own money. However, the chances of winning are low, and it is therefore unwise for a state to spend public funds on an activity that produces little utility for most participants. Moreover, it is important for lotteries to provide sufficient information about their operations and the prizes they offer to avoid misleading the public.