Lottery is a form of gambling in which numbers are drawn for a prize. People play lotteries to win cash prizes and other goods and services. Historically, governments used them to raise money for public projects. Some critics view them as a hidden tax that can take away from necessary spending on other services, and others argue that lotteries are a useful tool for raising revenue without increasing taxes.

The term lottery has also been applied to other activities involving chance, such as a contest of skill or intelligence. For example, the National Basketball Association holds a lottery to determine which team gets the first pick in the draft, and people use the term for other kinds of competitions involving chance, such as the NCAA men’s basketball tournament.

The word lottery derives from Middle Dutch loterie, which is believed to be a contraction of Latin loteria, a calque on Middle French loterie, the name of a town in Flanders that held a lottery in the 17th century. The oldest European state-sponsored lottery was the Staatsloterij, founded in 1726. It is now the world’s oldest running lottery. People purchase lottery tickets for the pleasure of winning a prize and to indulge in fantasies of becoming rich. Buying tickets is not rational under a decision model based on expected value maximization, but it may be explained by utility functions that are defined on things other than lottery outcomes. In addition, the lottery can be an addictive activity.