An official lottery is a game of chance operated by a state government. It offers a cash prize for a ticket, typically sold for one dollar. Unlike most games of chance, which require no skill to play, a lottery requires some degree of knowledge or experience to be played properly. Lottery officials establish rules and regulations to guide players. These include the rules for selecting winners, determining how the prize money will be paid out, and other administrative matters. The rules of an official lottery must be approved by the state legislature.

In the heyday of state-run lotteries, supporters touted them as an easy revenue-raiser and a painless alternative to higher taxes. But while the game has proven to be a powerful instrument of government finance, it also has raised serious concerns.

The most obvious problem stems from the fact that lottery revenues are a form of indirect taxation. The state has to pay for the promotion and administration of the lottery, and it must also tack on a percentage for the prize fund and other expenses. Even so, the net income from a lottery is typically far less than the total amount of money that the state pays out in prizes.

The other major problem is that lottery revenues tend to be volatile, and the results of a single drawing can dramatically change the fortunes of a state. This has led to a number of budget crises in states that have run the game, as well as allegations that state officials are hyping jackpots for lottery advertising purposes.