Lottery is a game of chance in which numbers are drawn at random to determine winners. Often associated with gambling, the lottery draws participants who invest a small sum for the chance to win a large prize. In addition to gambling, the lottery is also used as a decision-making tool for sports team drafts and for allocating limited medical treatments.

The odds of winning a lottery prize are low. Despite this, the lottery is an enormous business. It is estimated that Americans spend more than half a billion dollars on lottery tickets every week. For some, the lottery is a fun pastime, giving them a chance to fantasize about fortunes at the cost of a couple of bucks. But for others—and especially those with the least money to spare—lottery games can be a costly drain on their finances. Studies have found that people with lower incomes are disproportionately likely to play, and critics call the practice a disguised tax on the poor.

Where does all that ticket money go? It varies by state, but roughly 50%-60% of ticket sales go into the prize pot. The rest gets divvied up between various administrative and vendor costs, as well as toward whatever projects each state designates. In our $10 million example, federal taxes would take out about 24 percent of the winner’s winnings, leaving them with just under $5 million. But even this isn’t necessarily all that much: In many states, the winnings are used for other purposes, such as public education.