The lottery is a form of gambling in which people pay money to win prizes by matching a set of numbers. It is a popular pastime in many countries and has been around for centuries. People used to use it as a means of divining fate and luck, but it became more common in modern times when states were looking for ways to raise revenue that would not anger voters about raising taxes or cutting services.

The early history of state-sponsored lotteries is quite similar: the government legislates a monopoly; establishes a public corporation to run the lottery (as opposed to licensing a private firm in return for a percentage of the profits); begins operations with a modest number of relatively simple games; and then, faced with steady pressure from politicians for additional revenues, progressively expands the lottery in size and complexity, particularly by adding new games. These innovations have proved remarkably successful at increasing the amount of money the lottery is able to generate.

In addition to creating a large and diversified pool of players, new games can also help to maintain a high level of player interest. The key to this is the leveraging of the expected value of winning. As the value of a winning ticket increases, so does its utility, and as a result, the likelihood of purchasing a ticket increases.

It is not surprising, then, that rich people buy a larger percentage of lottery tickets than poorer ones, even when the prize amounts are only in the tens of millions of dollars. The reason is that the wealthy spend a far smaller percentage of their incomes on tickets, so the ticket purchases have a much less dramatic impact on their financial bottom lines.