The Collaborative International Dictionary of English v.0.48:

Lottery \Lot"ter*y\, n.; pl. Lotteries. [Lot + -ery, as in
   brewery, bindery.]
   1. A scheme for the distribution of prizes by lot or chance;
      esp., a gaming scheme in which one or more tickets bearing
      particular numbers draw prizes, and the rest of the
      tickets are blanks. Fig.: An affair of chance.
      [1913 Webster]

   Note: The laws of the United States and of most of the States
         make private lotteries illegal, except in certain
         circumstances for charitable institutions; however,
         many of the states now conduct lotteries tehmselves as
         a revenue source.
         [1913 Webster +PJC]

   2. Allotment; thing allotted. [Obs.] --Shak.
      [1913 Webster]

WordNet (r) 3.0 (2006):

lottery
    n 1: something that is regarded as a chance event; "the election
         was just a lottery to them"
    2: players buy (or are given) chances and prizes are distributed
       by casting lots [syn: lottery, drawing]

Bouvier's Law Dictionary, Revised 6th Ed (1856):

LOTTERY. A scheme for the distribution of prizes by chance.
     2. In most, if not all of the United States, lotteries not specially
authorized by the legislatures of the respective states are prohibited, and
the persons concerned in establishing them are subjected to a heavy penalty.
This is the case in Alabama, Connecticut Delaware, Georgia, Kentucky,
Maryland, Massachusetts, Mississippi, New York, Ohio, Pennsylvania, Rhode
Island, Tennessee, Vermont and Virginia. In Louisiana, a license is granted
to sell tickets in a lottery not authorized by the legislature of that
state, on the payment of $5000, and the license extends only to one lottery.
In many of the states, the lotteries authorized by other states, are
absolutely prohibited Encycl. Amer. h.t.