If we look at this story carefully, we can see the human sacrifice that is so chillingly presents to us is based on the belief that a blood sacrifice is necessary to appease the various gods so that they forget the sins of the community and grant the village a good and bountiful sacrifice. Note what Old Man Warner says as he comments upon the proceedings as each family head takes a bit of paper from the ballot box:
Used to be a saying about "Lottery in June, corn be heavy soon."
The saying that Old Man Warner remembers clearly relates the lottery and the act of communal killing to a successful harvest. In this story then, one member of the community is selected as being the scapegoat for the rest, the metaphorical person on whom is placed the sins of the community. This person is punished accordingly with being killed by that community so that the blood sacrifice can have its potent effect and bring the village its rich harvest.