Lottery

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Tontine

    A system for raising capital in which individuals pay into a ...
  2. Lottery Bond

    1. A type of government bond issued in the United Kingdom by ...
  3. Time Value of Money - TVM

    The idea that money available at the present time is worth more ...
  4. Gambler's Fallacy

    When an individual erroneously believes that the onset of a certain ...
  5. Sin Tax

    A state-sponsored tax that is added to products or services that ...
  6. Jackpot

    The top prize in a game of chance. Jackpot prizes can be anything ...
Related Articles
  1. Winning The Jackpot: Dream Or Financial ...
    Taxes

    Winning The Jackpot: Dream Or Financial ...

  2. 4 Fatal Financial Fantasies
    Entrepreneurship

    4 Fatal Financial Fantasies

  3. Sinful Investing: Is It For You?
    Investing Basics

    Sinful Investing: Is It For You?

  4. Socially (Ir)responsible Mutual Funds
    Mutual Funds & ETFs

    Socially (Ir)responsible Mutual Funds

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center