A lottery is a game of chance in which participants purchase numbered tickets or other symbols for a chance to win a prize, often large cash prizes. Some governments outlaw lotteries, while others endorse them and organize state or national lotteries. It is also possible to play private lotteries, where players place bets without the involvement of a state or other government agency.

The term lottery is probably derived from the Dutch noun lot, meaning fate or destiny (see fate). The earliest known lottery drawings were keno slips from the Han dynasty between 205 and 187 BC, which paid for construction projects such as roads and buildings. In colonial era America, lotteries were popular for financing public works such as paving streets, constructing wharves, and even building churches. George Washington sponsored a lottery to build a road across the Blue Ridge Mountains, but it was unsuccessful.

Lotteries are generally characterized by a number of common elements. First, they must have a system for collecting and pooling all money staked as chances to win a prize. This is typically done by a hierarchy of ticket sales agents who pass the money raised by each sale up to the lottery organization until it is “banked.” The second common element of lotteries is a procedure for selecting winners. This can take many forms, but all must involve some degree of random selection. Normally, the winning tickets are selected from a pool or collection of all the tickets and their counterfoils that have been purchased for the chance to win. These tickets must be thoroughly mixed by some mechanical means, such as shaking or tossing, before the winners are chosen. Often, computer programs are used to mix the tickets and then select them at random.

A third common element is a policy for allocating the prize funds. Normally, the largest percentage of the prize fund goes to advertising and promotional expenses, followed by a set amount of administrative costs, and then a small percentage for the prize money itself. In addition, a policy must be made concerning the balance between a few very large prizes and many smaller ones.

Finally, a successful lottery must have a stable base of regular players to ensure continued success. This is important, since it is not feasible to sustain a lottery solely on the basis of new, sporadic players. This is why many states promote “loyalty” prizes for repeat customers and offer discounts or other incentives for them to buy tickets.