A lottery is a game in which people pay to play for chances to win prizes. The prizes may be money or goods. Some lotteries award only a few prizes, while others award many. In a financial lottery, people buy tickets for a chance to receive a lump sum of money, or an annuity that pays out annual payments. In addition to financial lotteries, there are also lottery games for things like housing units or kindergarten placements.

Lotteries are generally considered a legitimate source of state revenue. Their supporters argue that they raise money for public services without requiring taxes. Consequently, they are less likely to be subject to legal challenges than other types of taxation. However, critics point out that lottery profits have been used for a variety of purposes that are unrelated to public service, and they are alleged to encourage addictive gambling behaviors.

In the United States, the lottery is a popular form of gambling, with millions of people playing each week. Many lottery winners spend their prize money on consumer goods, but some use it to finance businesses or other investments. The vast majority of lottery revenues come from ticket sales, with a small percentage going toward administration costs.

Lotteries typically begin to generate revenue quickly after they are introduced, but over time their growth slows and sometimes begins to decline. To maintain or increase their incomes, lotteries must constantly introduce new games and innovate their existing offerings. This has resulted in a proliferation of new formats, such as scratch-off tickets and keno.