A lottery is a gambling game in which numbers are drawn for a prize. State governments sponsor lotteries, offering a variety of games to the public. Historically, people have been willing to hazard small sums of money for the chance of considerable gain—an example of what economists call “heteroeconomic utility.”

States use lotteries to raise funds for a wide range of projects and activities, from roads and bridges to schools and police forces. Lottery proceeds have also been used to pay off debts and finance military operations. Some states have even used lotteries to raise the taxes they charge on tobacco and liquor. The term lottery derives from the act of casting lots, an ancient practice with a long record in human history, including several instances recorded in the Bible.

When states adopt lotteries, debate often centers on whether they are appropriate and how much money they raise. Critics of lotteries cite problems with compulsive gamblers and alleged regressive effects on low-income groups. But these criticisms are often misguided and miss the point of how lotteries operate.

Lotteries are business enterprises with a clear focus on maximizing revenue. To do so, they advertise and market themselves heavily. Moreover, the vast majority of lottery revenues come from middle-income neighborhoods. While the poor do play, they do so at a proportionally lower rate than those in other socioeconomic groups. As such, promoting the lottery seems to run at cross-purposes with the state’s policy goal of expanding opportunities for the poor.