Lottery is a popular game in which numbers are drawn at random and a prize, often cash, is awarded to the winner. A number of different games can be played, and the prizes vary from state to state. In some cases, the prize money is used to fund public projects such as paving roads or constructing public buildings. In other states, the prize money is used to provide public services such as education or health care.

In the United States, state lotteries are regulated by laws passed by the legislature and administered by a lottery commission. The lottery commission oversees the selection and licensing of retailers, trains employees of those retail outlets to use lottery terminals and sell tickets, redeems winning tickets and assists the retailers in promoting the lottery. It also establishes rules governing the frequency, size and prizes of lottery games, pays high-tier winners, and ensures that retailers and players comply with lottery laws and regulations.

The first state to adopt a lottery in the modern era was New Hampshire in 1964, and other states quickly followed suit. State lotteries are widely accepted as a source of tax-free revenue, and they have broad popular support. In fact, in a recent poll, 60% of adults reported that they play the lottery at least once a year. Despite this support, the lottery is a source of controversy, and criticisms are often directed at its effect on compulsive gamblers or regressive impact on low-income groups.

Initially, state lotteries were little more than traditional raffles, with the public purchasing tickets for a drawing that would be held at some future date. But in the 1970s, innovations reshaped the industry. The introduction of instant-play games — usually in the form of scratch-off tickets — allowed people to win prizes immediately. These games also typically offered lower prize amounts, allowing for more frequent draws and higher odds of winning. This change in strategy boosted ticket sales, and the popularity of these games helped increase the overall revenues of the lottery.

Currently, the vast majority of lottery revenues go to prize pools, with the remainder divvied up between administrative costs and vendor fees, and toward whatever projects each state designates. Some of this money goes to public education, but most is earmarked for various other purposes. Because of this, state lotteries are not only subject to the usual criticisms of government spending, but they also face a unique problem: how to maintain their level of profitability in the face of rising operating expenses and sagging consumer demand for the product.