In the story "The Lottery" by Shirley Jackson, why does the village have the lottery?

We are not really told this.  However, I think the main reason is simply because the lottery is just a tradition.

No one really knows why it is held.  But when the people talk about places that have abolished the lottery, they think those places are dumb.  They don't have a reason -- it's just that this is what they're used to.  I think this is a major point Jackson is trying to make -- that people can get used to even horrible things and do them just because.

As for why it started in the first place, maybe it was once necessary to keep the population down to a manageable level.  Or it may once have been a sacrifice to bring good harvest "Lottery in June, corn be heavy soon."