A lottery is a contest in which tokens are sold and the winner is selected by chance. The prizes can be anything from small items to large sums of money. Lotteries are typically regulated to ensure fairness and legality.
The word lottery is derived from the Old English hlot “thing that falls to someone by chance,” from Proto-Germanic *khlutam, which also gave rise to Old High German luz and Middle Dutch lut. The term was originally applied to any object used to determine the division of property, such as dice, straw, or pieces of wood marked with names. It is also used to mean a share or portion. The sense of a choice resulting from a random process was first recorded in 1630s (compare fate, God’s lot, and to cast one’s lot with another); the sense of an allotted parcel of land is attested from 1928.
To be a lottery, an event or game must provide entertainment value and other non-monetary benefits to participants, but must still require some investment for a participant to participate. The disutility of the monetary loss is usually outweighed by the combined expected utility of a monetary prize and other non-monetary benefits, so that purchasing tickets in a lottery is an economically rational decision.
Lottery games vary in format and prize structure, but most include a single large prize with many smaller prizes. The prize may be a fixed amount of cash or goods, or it may be a percentage of total receipts from ticket sales. If the prize is too large, it can depress ticket sales; if the prize is too low, there may not be enough incentive to buy tickets.