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A lottery is a form of legalised government gambling that involves drawing lots for a prize. Lotteries are proscribed by some governments, while others endorse it to the point of organising a national or state lottery. It is common to find some degree of regulation of the lottery by governments; The most common regulation is the prohibition of selling to minors. Although lotteries were common in the United States and other countries during the nineteenth century, at the beginning of the twentieth century, most forms of gambling, including lotteries and sweepstakes, were illegal in the United States and most of Europe , As well as in many other countries. This remained so until well after World War II. In the 1960s casinos and lotteries began to reappear around the world as a means for governments to increase their incomes without raising taxes. For example, the prize may be a fixed amount of cash or property. In this format there is risk for the organiser if enough tickets are sold. More commonly, the prize fund will be a fixed percentage of revenue. A popular form of this is the "50-50" draw where the organisers promise that the prize will be 50% of the income. Many recent lotteries allow buyers to select numbers on the lottery ticket, resulting in the possibility of several winners.

The purchase of lottery tickets can not be accounted for by decision models based on the maximisation of expected value. The reason is that lottery tickets cost more than the expected profit, as demonstrated by lottery math, so someone who maximises expected value should not buy lottery tickets. However, lottery purchases can be explained by decision models based on the maximisation of expected utility, since the curvature of the utility function can be adjusted to capture risk-seeking behaviour. More general models based on utility functions defined in things other than lottery results may also explain the purchase of the lottery. In addition to lottery prizes, the ticket can allow some buyers to experience an excitement and enjoy a fantasy of getting rich. If the entertainment value (or other non-monetary value) obtained by playing is high enough for a given individual, then buying a lottery ticket could represent a profit in total profit. In such a case, the dis-utility of a monetary loss could be offset by the expected combined profit of monetary and non-monetary gain, thus making the purchase a rational decision for that person.