The practice of distributing goods and land by lot has a long history. It is recorded several times in the Bible and was used by Roman emperors to distribute slaves and property during Saturnalian feasts. But lottery use for public finance only began to grow in popularity after the 1500s and became widespread in Europe by the 1700s. The emergence of state-run lotteries was driven by the desire to raise funds for municipal improvements and by the belief that lotto revenues could offset taxes.

When governments establish a lottery, they typically legislate a monopoly for themselves; set up an agency or public corporation to run it (as opposed to licensing a private promoter); begin operations with a small number of relatively simple games; and then, based on pressure for additional revenue, progressively add new offerings, such as video poker, keno, and more sophisticated games. As a result, the lottery industry is constantly evolving and, because it is focused on increasing revenues, it frequently operates at cross-purposes with public policy.

When the jackpot is huge, it draws public attention and boosts sales. Moreover, the large jackpots earn lottery officials free publicity on newscasts and websites, which also enhances their image. But the enormous prize amounts are also a significant burden on those who win them, and many people find themselves in financial distress in the aftermath of a big win. For these reasons, a good rule of thumb is to limit lottery playing to what can be afforded in the context of a well-established emergency savings plan.