Lottery is a form of gambling in which numbers or symbols are drawn at random for a prize. Some governments outlaw it, while others endorse it and organize state-sponsored or national lotteries to raise funds for a variety of purposes. State-sponsored lotteries have become an important source of revenue for many states, but the large sums of money paid by players can also divert them from other financial goals such as saving for retirement or paying for college tuition.

The modern lottery, like all forms of gambling, is based on the idea that people will always gamble and that the government might as well benefit from it. This belief was fueled by the fact that many state governments were in dire need of money in the mid-20th century, when they first began to rely on lottery revenues for significant percentages of their total budgets.

Today, lottery play is widespread, with more than 50 percent of Americans buying tickets once a year. But there are significant differences in participation by income level, age and race/ethnicity, and among men and women. For example, lottery plays are disproportionately low-income; Hispanics and blacks play more than whites; and the young and the old do not participate as much as middle-age adults.

Moreover, lottery revenues typically spike after a new game is introduced but then begin to level off and even decline. The result is that a steady stream of innovations is necessary to maintain and increase sales, and many states now spend nearly as much on marketing as they do on prizes and administrative costs.