A lottery is an arrangement in which prizes are allocated by a process that relies entirely on chance. This includes the distribution of cash and goods, such as sports team drafts or kindergarten placements, and non-monetary prizes, such as units in a subsidized housing block or college tuition grants. A lottery may be organized by a state, local government, or private organization. Prizes can be anything from a cash prize to a new car, or even free tuition at a public university.
Some states have a single lottery operator; others operate a multi-state lottery or a series of regional lotteries that pool resources. In the United States, a lottery is regulated by federal and state laws. State governments often delegate to a lottery commission or board the responsibility for organizing and operating the state’s lottery. These entities usually have a staff of employees who select and train lottery retailers, distribute promotional materials, validate winning tickets, and monitor compliance with state laws and regulations.
In some cases, a lottery winner can become dangerously obsessed with his or her success. Whether because of the desire to control a large amount of money, the need to feel validated by a large sum of cash, or a combination of factors, there are a number of examples of people who have gone on a downward spiral after winning a lottery prize. Some of these stories have made headlines: Abraham Shakespeare, who won $31 million and was found in 2010 concealed under a concrete slab; Jeffrey Dampier, who was kidnapped and shot after winning $20 million; Urooj Khan, who dropped dead of poisoning after winning a comparatively tame $1 million.
The purchase of lottery tickets cannot be accounted for by decision models based on expected value maximization, because the ticket costs more than the expected gain. However, the purchase can be explained by models based on utility functions that include risk-seeking behavior. Lottery games have been around for centuries, and the word itself comes from the Dutch noun lot, meaning “fate.” In colonial America, Benjamin Franklin held a lottery to raise funds to purchase cannons; George Washington’s Mountain Road Lottery in 1769 raised money to fund the construction of roads, canals, bridges, and churches.
Today, 44 of the 50 states run lotteries. The six that don’t are Alabama, Alaska, Hawaii, Mississippi, Utah, and Nevada, which all ban gambling or don’t have the fiscal urgency of other states to adopt the lottery. In fact, Alabama and Utah’s absence from the lottery is largely driven by religious concerns; Mississippi and Nevada are motivated by greed (as well as their existing tax revenue streams); and Alaska has a budget surplus, which means there’s no incentive to introduce a gambling mechanism.