Lottery is a form of gambling in which numbered tickets are sold and prizes awarded if some or all the numbers match those randomly drawn. The drawing of lots to make decisions or determine fates has a long history (including several examples in the Bible), but the use of lotteries for material gain is more recent, with state-sponsored games beginning to be introduced around the mid-15th century. The modern lottery is usually a publicly run and operated game offering cash prizes, often with an overall prize pool far larger than any single winning ticket would have the potential to reach.
In many states, the emergence of lotteries was driven by the need to find a source of painless revenue, with voters eager for more state spending and politicians looking at this as a way to increase revenues without imposing additional taxes on the general public. Lotteries typically expand quickly upon initial introduction, but over time their growth tends to plateau or decline, requiring the addition of new games in order to maintain and grow revenues.
Some of the proceeds from a lottery are paid out as prizes, but a large percentage is used for operational costs such as commissions to retailers and salaries for lottery administrators. Winners can choose to receive their winnings as a lump sum or in annual installments, known as an annuity. Annuity payments allow winners to invest their winnings and take advantage of compound interest, but they can also be subject to income tax.