What is the purpose of the lottery in the village? Why do people continue to participate?

Upon first glance, there doesn't seem to be much purpose for the lottery. The people in the story seem to remember there was once a reason for the lottery, but the system has been going on for so many years that nobody seems to remember the original purpose of the lottery.  

At one time, some people remembered, there had been a recital of some sort, performed by the official of the lottery, a perfunctory, tuneless chant that had been rattled off duly each year; some people believed that the official of the lottery used to stand just so when he said or sang it, others believed that he was supposed to walk among the people, but years and years ago this part of the ritual had been allowed to lapse.

The above text shows the people of the town are struggling to remember the procedures of the lottery. That seems to indicate that they also forgot the original reason for the lottery.  

Old Man Warner is the best source of information regarding the lottery's original purpose because he lived through many of them.  

"Seventy-seventh year I been in the lottery," Old Man Warner said as he went through the crowd. "Seventy-seventh time."

There is a brief moment when Old Man Warner hints at a likely reason for the original lottery.  

"Used to be a saying about 'Lottery in June, corn be heavy soon.' First thing you know, we'd all be eating stewed chickweed and acorns. There's always been a lottery," he added petulantly.

Those lines indicate the original purpose of the lottery was a ritualistic sacrifice in order to secure better crops. Stone a person to death, and the rains will come. The rains will provide a good crop season.  

The people continue to participate in the lottery because they always have. They are blindly following a tradition for the sake of following a tradition. Old Man Warner's quote, "There's always been a lottery," tells readers that he thinks the idea of giving it up is ridiculous. Other people disagree and mention that other towns have stopped the lottery, but, unfortunately for Tessie Hutchinson, the lottery tradition continues for at least this year.