Lottery is a form of gambling in which a small amount of money is paid for the chance to win a large prize. The prize money may be cash, goods, services or other benefits. Lotteries are a form of legalized gambling, and most governments regulate them. The term is derived from the Dutch noun “lot”, which means fate, or a random process for allocating prizes.

The first recorded lottery to offer tickets for sale with prizes in the form of money was held in the Low Countries in the 15th century to raise funds for town fortifications and to help the poor. The word “lottery” is probably a calque of Middle French loterie, itself a calque on the Middle Dutch noun lot (“fate”).

In the United States, state-sponsored lotteries were introduced in the immediate post-World War II period. They were promoted as a way for states to expand social safety net programs without raising taxes. The idea was that people would be willing to spend a little bit of money on a chance at winning big, even though their chances of doing so were extremely low.

The winners of the lotteries are usually presented with a choice between receiving the prize money in one lump sum or in annual payments over several years. The choice to take the annuity payments instead of the lump sum is often made to reduce the total tax burden, since lotteries are taxable in most states.