In the U.S., most states offer some type of cash lottery like Mega Millions or Powerball. When you play, you purchase a ticket in hopes of winning a cash payout at random.
The prizes can vary from $1 to over $1 billion, depending on the type of lottery and the prize won. The odds of winning a cash lottery are very low, yet Americans still spend billions of dollars each year on tickets.
Despite the excitement lotteries bring, not everyone considers the financial implications. Imagining becoming a millionaire might be enticing, but even if you win a jackpot, it's important to carefully consider factors like taxes and how you would use the money if you won.
How the lottery system works
When you play lottery online, you'll typically spend a small sum of money to get the chance to win a large prize.
For many games, the longer a lottery goes without a winner, the more money accumulates in the pool. When someone wins, the lottery pool starts over again. The winners are selected at random.
Some lottery systems involve picking numbers that are then drawn by the lottery administrator
at specific times, such as twice per week in the evening. If you pick all the winning numbers, you'll win the jackpot, or share it with others who have all the correct numbers as well. Most lotteries also include smaller prizes for getting some combination of winning numbers, but not all of them.
Other lottery systems involve instant games, such as where you buy scratch-off tickets and reveal numbers or symbols that correspond with potential prizes.
Buying lottery tickets
Buying lottery tickets can vary based on location and the type of lottery game, but for many state lotteries, the most common way to purchase tickets is through retailers like gas stations, convenience stores, and supermarkets. Sometimes these locations have kiosks where you can purchase tickets. Also, some states have their own state-run lottery stores, and about half the states in the U.S. allow for some form of online lottery ticket purchases.
When buying lottery tickets for number-drawing games, players can either choose their numbers or get tickets with randomly assigned numbers. The cost is usually a few dollars per ticket, often around $2-$3, depending on the game. For instant-win games like scratch-offs, there is often a wider range of options, such as with ticket prices ranging from $1-$20. Usually, the higher the ticket cost, the higher the jackpot.
How the drawing process works
Lottery winners are chosen at random via a drawing. For instance, the Mega Millions drawings happen on Tuesdays and Fridays at 11 p.m. ET, and you can watch them on live TV.
During the live drawing, five white balls are selected at random, and the balls are numbered one through 70. Then one gold ball – the MegaBall — is chosen from a set of balls numbered one through 25. If the six numbers selected match your lottery ticket number, you're the big winner. There can also be smaller prizes for matching some of the numbers.
However, not all games are as dramatic as live drawings like Mega Millions. Some lottery games use computerized systems to randomly select winning numbers.
Random number generation and fairness
As mentioned, winning numbers are selected randomly, either through a physical system that spins out balls with numbers on them, or a computerized system that randomly selects the winning numbers. The randomness is meant to ensure fairness in lotteries. You might have your own "lucky numbers," but the probability of any number being selected is equal for each eligible number.
Types of lottery games
There are several different types of lottery games you can choose from, although the concept is typically the same — you spend a little bit of money to buy a ticket in the hopes that you'll win a much larger prize.
National lotteries
Some countries, like the U.K., have national lottery systems with a mix of numbers-based drawing games and instant-win games like scratch-offs. These are similar to state-run systems in the U.S., just on a national scale. However, different countries have different rules for lottery systems, such as how in the U.K., winnings from The National Lottery game are tax-free.
State and local lotteries
States — and occasionally local governments or regional authorities — also run lottery games. These can include traditional numbers-based lottery games with drawings, as well as ones like scratch-off tickets.
Instant win and scratch-off tickets
Instant win games can occur through both national and state/local lotteries, but it's worth noting that these games differ from some of the more prominent numbers-based drawings like Mega Millions. Instant wins, which include scratch-off tickets, tell you right away whether you won or lost, as opposed to having to wait for the numbers to be drawn. Some instant-win games are also held online, or you might participate in an informal instant-win lottery game, like a 50/50 raffle.
Usually, instant-win lottery games have smaller grand prizes than drawings, but it depends on the game and lottery system.