A lottery is a form of gambling in which numbers are drawn at random to determine a prize. Some governments outlaw the practice, while others endorse it to a limited extent and organize state or national lotteries. It is also common to find private lotteries that sell tickets for large prizes.

Prizes are normally distributed to winners in the form of a lump sum or in installments over time. Depending on the type of lottery, cost of prize administration and profit to the sponsor may be deducted from the total pool of money available for prize awards. A large portion of the pool is often used for advertising, merchandising, and retailer commissions.

In some countries, participants must pay a small fee to play. Some people play the lottery for recreational purposes, while others do so to try to improve their financial standing. Those with low incomes appear to make up a disproportionate share of lottery players, and critics argue that these games are a disguised tax on those who can least afford them.

Lottery games have a long history, with the first recorded instances dating back to keno slips found in China during the Han dynasty between 205 and 187 BC. Modern lotteries usually use a computer system to record and print ticket purchases. Retailers are trained to use lottery terminals, and they receive a percentage of each sale as their compensation. Lottery divisions also work with retailers to help them promote games, pay top-tier prizes, and ensure that they comply with lottery rules and laws.