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.

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.

RELATED TERMS
  1. Tontine

    A system for raising capital in which individuals pay into a ...
  2. Sin Tax

    A state-sponsored tax that is added to products or services that ...
  3. Gambling Income

    Any income that is the result of games of chance or wagers on ...
  4. Gambler's Fallacy

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

    The top prize in a game of chance. Jackpot prizes can be anything ...
  6. Gambling Loss

    A loss resulting from games of chance or wagers on events with ...
Related Articles
  1. Taxes

    Winning The Jackpot: Dream Or Financial Nightmare?

    Don't assume all prizes are free. Many come with enough costs to render them worthless.
  2. Entrepreneurship

    4 Fatal Financial Fantasies

    These dreams are likely to burst - and may blow away your financial future in the process.
  3. Investing Basics

    Sinful Investing: Is It For You?

    Sin stocks may seen outright undesirable to some, but these "naughty" industries bring stable returns - even in hard times.
  4. Mutual Funds & ETFs

    Socially (Ir)responsible Mutual Funds

    Not concerned about being an ethical investor? Maybe "sinful stocks" have a place in your portfolio.
  5. Fundamental Analysis

    Macau: Not Your Father's Gambling Destination

    Macau has given Las Vegas casinos a run for their money, but what's behind the scenes? Here's an overview of Macau's gambling industry.
  6. Chart Advisor

    Traders Are Looking To Bet On Casinos

    A breakout on the chart of BJK suggests now is the time to invest in the gaming industry. We'll take a look at several stocks that could be worth a closer look.
  7. Fundamental Analysis

    Explaining the Monte Carlo Simulation

    Monte Carlo simulation is an analysis done by running a number of different variables through a model in order to determine the different outcomes.
  8. Economics

    3 Main Reasons Las Vegas Sports Teams Keep Folding

    Learn why a unique labor force, competition for entertainment dollars and the stigma of gambling have kept professional sports out of Las Vegas.
  9. Investing

    How Millennials Will Impact The Casino Industry

    Hope for future prosperity in the gambling industry will mean catering to the preferences of a different set of consumers.
  10. Term

    Understand The Math Behind Betting Odds & Gambling

    A betting opportunity should be considered valuable if the probability assessed for an outcome is higher than the implied probability estimated by the bookmaker. Furthermore, the odds on display ...
RELATED FAQS
  1. What taxes will I pay if I win a lot of money while gambling in Las Vegas?

    Every year, thousands of people travel to gambling hot spots, such as the Nevada cities of Las Vegas and Reno, with the hope ... Read Full Answer >>
  2. What is the difference between a banker's acceptance and a post-dated check?

    Some common financial instruments that speculators use are stocks and financial derivatives. Speculation involves trading ... Read Full Answer >>
  3. What is the difference between speculation and gambling?

    Speculation and gambling are two different actions used to increase wealth. However, the two are very different in the world ... Read Full Answer >>
  4. Is there a difference between the special administrative regions of Hong Kong and ...

    Hong Kong and Macau are the two areas of China formally designated as Special Administrative Regions (SARs) of the People's ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Recession

    A significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, ...
  2. Bubble Theory

    A school of thought that believes that the prices of assets can temporarily rise far above their true values and that these ...
  3. Stock Market Crash

    A rapid and often unanticipated drop in stock prices. A stock market crash can be the result of major catastrophic events, ...
  4. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  5. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  6. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!