A lottery is a form of gambling in which participants pay a small sum for the chance to win a larger sum. In the United States, state governments operate lotteries and regulate them. The money raised by the games is often used to support public services. Some states also offer national lotteries. In addition to state-operated lotteries, privately operated games are available.

Historically, lotteries were little more than traditional raffles: people bought tickets for the opportunity to win a prize, typically cash or goods. But innovation in the 1970s dramatically changed the industry, introducing instant games with smaller prizes and higher odds of winning. In modern times, the popularity of lotteries has risen and fallen depending on the state’s fiscal situation, but the overall effect appears to be that they generate substantial revenue.

In the early 1990s, Maryland’s booming lottery sales caused a budget crisis, as state officials spent too much on marketing and promotions. Other states have learned such lessons the hard way, as California did in 1991-92, when drooping sales led to a 16 percent limit on administrative expenses specified by law.

In order to boost sales, many states have increased jackpot amounts or introduced new games. But these strategies may have unintended consequences, researchers say. For instance, large jackpots draw publicity and attention but they do not necessarily stimulate ticket purchases. Studies show that lower-income Americans spend far more on instant scratch-off games than on the big jackpots. The result, critics argue, is that the games have a regressive effect, transferring wealth from poor communities to rich ones.