The lottery is a game of chance in which participants pay a small amount of money for the chance to win a large sum. People have been using lotteries to raise funds for centuries, with the casting of lots having a long record of use in determining fates (including some cases documented in the Bible).
The modern lottery began in New Hampshire in 1964 and now generates billions of dollars per year for states across the country. Despite the high odds of winning, the industry enjoys broad public support: In states with lotteries, 60% of adults report playing at least once a year.1
Lottery advertising campaigns expertly tap into a fear of missing out — FOMO — by showing stories of past winners enjoying their newly found wealth. As the jackpot grows, ticket sales increase, and you’re likely to see lottery advertisements on TV, in the news and online.
Lottery proceeds are used for a mix of purposes: A big chunk of the prize money gets paid out to winners, but state governments keep a slice for operating costs and other initiatives. Some of the proceeds are also used to pay commissions to retailers that sell tickets. When deciding how to spend your prize winnings, consider consulting a financial advisor who can help you determine the best strategy for investing your lump sum payout and maximizing its potential. You can also elect to receive your winnings in annuity payments, which can reduce your tax liability and allow you to invest over time.