The drawing of lots to determine ownership or other rights has a long record in human history, including several cases in the Bible. State-sponsored lotteries have grown in popularity, and now more than 90% of adults live in states with an operating lottery. Most of these lotteries are operated by government, and profits are used solely for state purposes. In the United States, lotteries are monopoly enterprises, with no private competition.

Lottery supporters emphasize that the games are a painless source of revenue. In an anti-tax era, voters tend to favor any form of gambling that the state can profit from; and politicians look at lotteries as a way to raise funds without the stigma of raising taxes. Thus, lottery officials must constantly face the challenge of managing a gamble that is at cross-purposes with state policy goals.

One important challenge is to keep ticket sales healthy so that a respectable percentage of proceeds can be returned to the public as prize money. To do so, the odds of winning must be low enough to lure people in large numbers. Another challenge is to minimize the effect of big jackpots on overall ticket sales. The way to do this is to increase the number of smaller prizes, which may be achieved by increasing the size of the small prize or by making it harder to win the top prize.

Another challenge is to make the public aware that they are paying an implicit tax, but many states have difficulty in this area because of a lack of clear communication from the state about how lottery revenues are used. In addition, the overlapping jurisdictions of the legislature and executive branch often complicate decisionmaking, and a state’s lottery policy is rarely considered in the context of broader gambling policy.