DEFINITION of 'Lottery'
A game of chance, where winners are typically decided by a drawing. Lotteries can be used in decision-making situations, such as sports drafts and allocation of scarce medical treatment, but are most commonly used in the popular form of gambling, financial lotteries. The financial lottery is a game where players select a group of numbers and win prizes based on how they match the drawn results.
BREAKING DOWN 'Lottery'
The winner of a financial lottery will often have the choice of taking a lump-sum payment or annual installments. The lump-sum choice is attractive to most people, because of the time value of money; a dollar is worth more when it is received now than when it is received in the future. But it is also for this reason that you will receive a lower dollar amount than the sum of the future installments.
A prudent lottery winner would consult a financial professional before accepting an offer to liquidate their installment lottery winnings.