Lottery is a type of gambling in which numbers are drawn in order to determine winners. In modern usage the term may also refer to a competition with a complex structure and several stages, but it is generally accepted that any arrangement in which entrants pay to enter and names are drawn is a lottery if it relies solely on chance (even if the odds of winning are much higher than those of hitting a lightning bolt or becoming a billionaire).
While there are many variations, all lotteries have certain elements in common. First, there is a pool or collection of tickets or counterfoils from which the winning numbers are selected; the tickets or counterfoils may be thoroughly mixed by mechanical means such as shaking or tossing or randomly generated using computers. Next, a percentage of the pool is deducted for costs and other expenses, including a profit for the state or other sponsor; and the remainder is awarded to the winners.
The popularity of lotteries has often been attributed to the fact that they can generate a large amount of money for public services without creating especially onerous taxes on low-income groups. This perception may explain why lotteries are so popular during periods of economic stress, when fears of tax increases or cuts in social safety net programs may have become more acute. But studies have shown that the objective fiscal circumstances of a state do not appear to have much influence on whether or when a lottery is adopted.