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.


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.

  1. Tontine

    A system for raising capital in which individuals pay into a ...
  2. Gambling Income

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

    When an individual erroneously believes that the onset of a certain ...
  4. Lottery Bond

    1. A type of government bond issued in the United Kingdom by ...
  5. Gambling Loss

    A loss resulting from games of chance or wagers on events with ...
  6. Time Value of Money - TVM

    The idea that money available at the present time is worth more ...
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. Investing

    4 Gambling Stocks that Outperformed Since 2010

    A look at four stocks in the casino and gambling industry that outperformed the market for the last five years.
  6. Investing News

    Defensive Investing: Learn from a Hedge Fund Pro

    Looking for ideas on companies, sectors or investments to short? Consider the opinion of this hedge fund luminary.
  7. Investing

    How to Play the Gaming and Gambling Sectors

    An upturn in macro revenue numbers should signal a significant trading and investment opportunity in the gaming and gambling sectors.
  8. Stock Analysis

    5 Risky Stocks to Own Right Now

    These five well-known stocks are risky propositions. Here's why.
  9. Entrepreneurship

    Behind the Hair: How To Build an Empire, Trump-Style

    Who is the man behind the hair? The crucial steps that Donald J. Trump took to build his real estate and celebrity empire.
  10. Personal Finance

    Why Does the House Always Win? A Look at Casino Profitability

    Understand how a casino has a number of built-in advantages that insure it, and not the casino players overall, will always come out a winner in the end.
  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. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  2. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  3. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  4. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  5. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  6. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
Trading Center