Games where players select a small group of numbers (usually 6) from a large set (usually 49) and are awarded prizes based on how many match the randomly drawn result. In a typical lotto game, a player might be asked to select six numbers from a set of 49. At a predetermined time, the lottery people randomly draw six numbers. The player wins a major prize if all six of their numbers match those chosen in the random drawing.

Lotteries come in many formats. The prize can be fixed cash or goods. In this format there is risk to the organizer if insufficient tickets are sold. The prize can be a fixed percentage of the receipts. A popular form of this is the "50-50" draw where the organizers promise that the prize will be 50% of the revenue. The prize may be guaranteed to be unique where each ticket sold has a unique number. Many recent lotteries allow purchasers to select the numbers on the lottery ticket resulting in the possibility of multiple winners.

Chances of winning a Lottery Games

The probability of winning a lottery jackpot are principally determined by several factors: the count of possible numbers, the count of winning numbers drawn, whether or not order is significant and whether drawn numbers are returned for the possibility of further drawing.

In a typical 6 from 49 lotto, 6 numbers are drawn from 49 and if the 6 numbers on a ticket match the numbers drawn, the ticket holder is a jackpot winner - this is true regardless of the order in which the numbers are drawn. The odds of being a jackpot winner are approximately 1 in 14 million (13,983,816 to be exact). The derivation of this result is a simple exercise in combinatory.

To put these odds in context, suppose one buys one lottery ticket per week. 13,983,816 weeks is roughly 269,000 years; in the quarter-million years of play, one would only expect to win the jackpot once.

Payment of prizes in Lottery Games

The payment of a lotto prizes is not always a lump sum amount. In countries like USA the winner gets to choose from either an annuity payment or a one-time payment. The one time payment is often about half of the advertised lotto jackpot, with much of the prize subject to a withholding tax. The annuity payment makes regular payments for periods from 10 to 40 years.

In some online lotto’s the yearly payments can be as low as $25,000 for 40 years with a balloon payment on the final year. In some countries lottery winnings are not subject to personal income tax, thus there are no tax consequences in terms of how the prize is paid out.

Scams and Frauds in Lottery Games

Lottery like any mechanism is susceptible to fraud despite the high degree to scrutiny offered by the organizers. One method involved is to tamper the machine used for the number selection. By rigging a machine it is theoretically easy to win a lottery. Some scams on the Internet too are based on lotteries. The modus operandi of this fraud is the trickster sends Spam to all email users in their database congratulating them on their recent lottery win. Then they proceed to announce that in order to release funds they must part with a certain amount (as tax/fees) as per the rules or risk forfeiture. The scammers also might use telephone or printed letters to approach victims to execute their plan more professionally.