What is the Lottery?

The lottery is a competition based on chance in which numbered tickets are sold and prizes are given to those who have the winning numbers. It is also a method of raising money for public or private ventures. In colonial America, lotteries played a major role in the financing of roads, libraries, churches, colleges and canals. In 1748 Benjamin Franklin ran a lottery to finance the establishment of the city militia in Philadelphia. John Hancock and George Washington both ran lotteries to raise funds for military campaigns against the French.

In modern usage, the term is primarily used to describe a government-sponsored game in which people are given the opportunity to win cash or other valuable goods by picking the correct numbers from a fixed set of options. The majority of states in the United States conduct a state-sponsored lottery. Some states limit participation to residents of the state. Others sell tickets nationwide. Many lotteries are advertised on radio and television.

The purchase of lottery tickets cannot be accounted for by decision models based on expected value maximization. This is because the tickets cost more than they can be expected to yield in the form of wealth. However, people still buy them because they enjoy the entertainment and fantasy value of the game or because they have a strong desire to become wealthy. If these non-monetary values are factored into the utility function, it may be possible to rationally purchase lottery tickets.