What is the Lottery?

Lottery is a game of chance that uses the drawing of lots to decide on an outcome. Often, the prizes are money or goods. It is an activity that has been in use since ancient times. In fact, the Old Testament instructs Moses to divide land among Israel’s people by lot. During Roman Saturnalian feasts, hosts would distribute pieces of wood with symbols on them to their guests and then have a drawing at the end of the dinner for prizes that the guests could take home.

In the early modern era, states began to organize state-sponsored lotteries. The first public lotteries appear in the records of towns in the Low Countries around the 15th century, and were often used to raise funds for town fortifications or to help the poor. The lottery became a popular way to sell products and property, as well as a form of voluntary taxation. The Continental Congress established a lottery in 1776 to raise funds for the American Revolution, and private lotteries were common in England and America.

The purchase of a lottery ticket cannot be accounted for by decision models based on expected value maximization, as the tickets cost more than they promise to yield in return. However, many people buy lottery tickets anyway, because they enjoy the entertainment value and fantasy of becoming wealthy. If these non-monetary values are factored into their utility function, then a lottery ticket purchase may be rational according to expectational utility theory.