The lottery is played by millions of Americans and contributes billions to the economy annually. Some people play for fun; others believe that winning the lottery is their ticket to a better life. The odds of winning, however, are very low. Because the lottery is a game of chance, its operation raises questions about 1) whether it promotes compulsive gambling; 2) whether its promotion leads to negative consequences for poor and other groups; and 3) whether government at any level should operate a business in which it profits.

In the United States state-run lotteries are very popular, with players spending over $113.3 billion in fiscal year 2023. The money from lotteries is used for a variety of purposes, and the distribution of proceeds varies by state. In most cases, unclaimed prizes reenter the prize pool to increase payouts on future games or are distributed to local charities.

Despite the popularity of the lottery, it is often misunderstood. Many critics claim that lottery advertising is deceptive, and that it presents misleading information about the chances of winning the jackpot; inflates the value of winnings (since the prize is usually paid in equal annual installments over several years, inflation and taxes dramatically erode the current value); and encourages counterfactual thoughts, which lead people to overestimate their chances of winning.

The success of the lottery has prompted governments to try new ways to generate revenue. For example, in the aftermath of World War II some states embraced the lottery as a way to raise funds for a broad range of social safety net uses without increasing tax rates. That arrangement proved to be ephemeral, as it became clear that the costs of running government continued to escalate.