A competition based on chance in which numbered tickets are sold and prizes are given to the holders of numbers drawn at random. A lottery may also refer to a game where the participants pay for the privilege of competing in an event that relies solely on chance, such as a contest for subsidized housing units or kindergarten placements. The word is most often used to describe state-sponsored games, although the term also applies to similar events run by private companies, nonprofit organizations (such as churches and fraternal groups), and even families at dinner parties.

Most states rely on lotteries to raise funds for various public services and for other purposes, such as highway construction or building new prisons. In addition to running the actual drawing, a lottery may also offer prizes for a variety of activities or materials, such as sports team uniforms, cars, cruises, or home improvements. Many lottery programs partner with a variety of retail and service organizations to market their games, including gas stations, convenience stores, restaurants and bars, newsstands, and bowling alleys.

Despite the many benefits of state-sponsored lotteries, there are concerns about how much money is actually being won by people who purchase lottery tickets. According to a survey published by the National Gaming Impact Study Commission, most respondents believed that state lotteries paid out less than 25% of total sales as prizes. Additionally, a substantial number of participants reported that they had lost more than they won by playing the lottery.