Lottery is a game of chance in which tickets are drawn for a prize. Some governments outlaw it, while others endorse it and regulate it. It can also refer to any event that is or appears to be determined by chance, such as life itself: ‘Life’s a lottery; you just never know when your lucky day is going to come.’
Lotteries have been around since ancient times, and the practice of determining property distribution by lot can be traced back to biblical texts (Numbers 26:55-55) and Roman emperors. They were common in Europe and the United States by the 1600s, when King James I approved the Virginia Company of London’s lottery to raise money for a settlement in America at Jamestown. Private lotteries were also popular in England, where they raised money for institutions such as Yale and Harvard.
In the American Revolution, the Continental Congress used a lottery to try to raise money for the Colonial Army. Although this failed, public lotteries became widely adopted in the United States. They were a major source of funds for many public projects, including the construction of Columbia, Harvard, Dartmouth, King’s College, Union, Brown, and William and Mary colleges. Public lotteries were considered to be “voluntary taxes” and helped give the colonies more financial autonomy than would have been possible with direct taxation.
Lottery purchases cannot be explained by decision models based on expected value maximization, as the ticket cost exceeds the expected gain. However, more general utility functions defined on things other than the lottery outcome can account for such behavior. For example, some people may purchase a lottery ticket to experience a thrill or indulge in a fantasy of wealth.