A contest, with a fixed prize, in which tickets bearing numbers are sold and the winning ones are drawn at random. The prize money may be cash or goods. Lotteries are commonly organized to raise money for public purposes and to promote recreational or sporting events. The word lottery is probably derived from the Dutch noun lot, which refers to an empty bag or box in which tokens are placed before a drawing. The casting of lots to decide matters has a long history, going back to the Old Testament. The first recorded public lotteries, selling tickets with prizes of cash or goods, were held in the Low Countries during the 15th century, for such things as town repairs and assisting the poor.

A lottery is usually run by a state agency, which sets the odds of winning, designs and markets games, sells tickets and collects payments. State agencies typically maintain a monopoly over the game, although private companies also run them under contract for a fee. The earliest modern lotteries began in New Hampshire in 1964, but since then many states have established them.

The most important issue facing state-sponsored lotteries is how to keep players coming back. The answer is to keep increasing the size of the jackpots, which attracts more people and generates more revenue. But this strategy is not without risks. In addition to increasing the chances of losing big, it can become addictive. As the author of a book on gambling addiction points out, a lot of lottery games are designed with the psychology of addiction in mind. The ads, the math, and the way the games are played are all meant to keep players hooked. In this sense, the lottery has much in common with other addictive forms of entertainment, like smoking and video games.

As a result, the growth of the lottery industry is threatening to outstrip its revenue sources, and states have begun to seek other ways to increase revenues. One common result is the introduction of other types of gaming, such as keno and video poker. Another is the use of credit card sales to boost lottery participation. This trend, which is reminiscent of the introduction of cigarette sales to teenagers in the United States, has raised concerns about gambling addiction.

While the popularity of the lottery is increasing, it is also becoming more expensive for states to operate. The reliance on super-sized jackpots, which require fewer tickets to be sold in order to reach an apparently newsworthy amount, can lead to unsustainable losses for state governments. These losses are particularly problematic in the current era, Cohen writes, because they coincide with a decline in the security of most working Americans’ financial lives. Incomes are stagnant, retirement plans have been eroded by rising health-care costs, and the national promise that hard work would enable children to live better than their parents has turned into a nightmare for many.

The question of whether to expand the lottery should be considered carefully by state officials, Cohen suggests. The state government must balance its need for tax revenue against the desire to make sure that the lottery is a popular and legitimate form of entertainment.