Why are the townspeople holding the lottery?
The town in this story continues to hold the lottery only because it is what they have always done. These are a people who are terribly beholden to tradition, and they do not like change -- even change that seems small. The wooden box used in the proceedings is in poor shape, and the man who runs the lottery has suggested that they make a new box, "but no one liked to upset even as much tradition as was represented by the black box." In other words, if the thought of exchanging the old box for a new one is too much of a break from tradition for the people, there's no possible way that they could ever consider changing the tradition of holding the lottery itself.
Of course, one might imagine, each year, that there is one new objector: whichever person is chosen in the lottery. Initially, Tessie Hutchinson has no problem with it and comes from her home as relatively cheerful as the rest (considering what they are about to do). However, once she realizes that she will be the one to die, her tune changes. "'It isn't fair, it isn't right,' Mrs. Hutchinson screamed [...]." We might imagine that this is part of the tradition too: it seems only natural that the person chosen to die would suddenly find this lottery not to their liking. Only the victim rises above complacency. The story, then, really functions as an indictment of outdated traditions that benefit no one as well as the people who continue to uphold those traditions without critically examining their value (or lack thereof).
The townspeople are holding the lottery in part out of tradition and in part, also, out of fear. The lottery has become so entrenched in society that it has become like a cultural cliche--it is done without thought or question. The connection with the corn and the harvest likens back to earlier civilizations (like the Mayans) who ritually sacrificed people in order to please the gods and to ensure the success of their crops. Readers would be expected to look upon these sacrifices as archaic and inhumane, as we would also be expected to look upon this lottery, and upon any inhumane practice that was performed more out of habit or ritual than thought or reason.
In the Shirley Jackson story "The Lottery," the townspeople conduct the lottery annually out of tradition. Apparently towns nearby conduct similar annual events without question to the ethics or morality. The turn at the end of the story shows the real purpose of the lottery is not for a prize or a reward before a violent stoning of the holder of the marked ticket.