A lottery is a process by which participants choose numbers to win prizes. There are many different types of lotteries, including ones that dish out cash prizes to paying participants and those that give access to limited resources such as kindergarten admission at a prestigious school or the right to occupy units in a subsidized housing block. Most lotteries have rules that try to ensure the fairness of the selection process, which may include randomization and a distribution of tickets and stakes among participants (e.g., each participant receives a certain number of tickets).
In addition to the randomization and distribution of tickets and stakes, a successful lottery requires a way of recording the identity of each bettor and the amount of money staked by each. Some lotteries use a computer system to record the purchases and stakes of all participating players, while others require that each player write his or her name and a number on a ticket that is then deposited for shuffling and possible selection in a drawing.
Once a state adopts a lottery, it must determine the frequency and size of the prizes. The costs of organizing and promoting the lottery must be deducted, and the remaining pool of prize money must balance the desire for few large prizes with a need to maintain high sales.
Lotteries are a classic example of how public policy is made piecemeal and incrementally, with little or no general overview. Consequently, few, if any, state officials have a coherent “lottery policy.” Instead, they inherit a policy that has evolved on its own and must continually introduce new games to maintain and even increase revenues.