Lottery is a method of raising funds in which participants pay for a chance to win money or prizes. It can be used for a wide range of purposes, including paying taxes, funding public projects, or giving away goods or services. Common examples include a lottery for units in a subsidized housing block or kindergarten placements at a reputable public school. The money raised by lottery proceeds is commonly a combination of profits for the promoter, costs of promotion, and taxes or other revenues.

Historically, the argument for lotteries has focused on the notion that they provide “painless” revenue—that is, that voters willingly spend their money for the sake of public good without being coerced by the threat of higher taxes or budget cuts to public programs. This perception has helped to sustain state lotteries even in times of financial stress.

While this rationale may be persuasive, there are also reasons to believe that lotteries can have negative consequences. For example, promoting gambling increases the likelihood of people becoming compulsive gamblers and can create regressive impacts on lower-income groups. In addition, state lotteries are businesses that rely on a steady stream of new customers to maintain revenues and profit margins. As such, they are often at cross-purposes with larger public policy objectives, such as reducing poverty and the incidence of gambling addiction. This article examines these concerns and offers a set of recommendations for reforming lotteries.