A lottery is a competition in which prizes are allocated by chance. It can include games where a person pays to enter and the prize allocation is entirely dependent on luck (such as a pure lotteries) and also competitions in which participants have to contribute something other than money, for example time or effort, to gain entry or win. Lotteries may be regulated to ensure fairness. In the USA, for example, state laws govern lottery sales and prizes. They also typically establish a lottery division to select and license retailers, train those retailers in the operation of lottery terminals, redeem winning tickets, distribute high-tier prizes, promote the lottery to prospective players and publicize its rules and procedures.

Financial lotteries are often run by governments to raise money for projects, such as roads or schools. Other types of lotteries, called charitable or social lotteries, allocate non-cash prizes based on random selection. These can include housing units, kindergarten placements or scholarships to university students. The latter are usually funded by government agencies.

The first recorded lotteries to offer tickets for sale with cash as a prize were held in the Low Countries in the 15th century. However, drawings for articles of unequal value were common at dinner parties before that time as an amusement. In colonial America, lotteries were used to raise money for town fortifications, colleges and public-works projects. Today, many state and local governments sponsor lotteries. Some offer a single winner a lump sum of money and others award annuity payments that are distributed at regular intervals until the total amount is paid out. Which choice is best depends on the individual’s financial goals and applicable tax rules.