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The Effects Of Lotto Game Changes And Large Jackpots On Income Elasticities And Sales

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  • Kathryn L. Combs
  • John A. Spry

Abstract

Using daily lottery data from Washington State by zip code from January 2011 through mid‐March 2016, we estimate that Powerball income elasticities range from −0.16 to 0.16 as the Powerball jackpot increases from its minimum to $1.5 billion, while Mega Millions income elasticities range from −0.08 to 0.03 as the Mega Millions jackpot increases from its minimum to $640 million. Controlling for jackpot size, each of three major game changes during this time period has a significant effect on own‐game and cross‐game sales. Despite these significant game changes, however, these lotto games are a highly regressive source of revenue for Washington State. (JEL H22, H71, L83)

Suggested Citation

  • Kathryn L. Combs & John A. Spry, 2019. "The Effects Of Lotto Game Changes And Large Jackpots On Income Elasticities And Sales," Contemporary Economic Policy, Western Economic Association International, vol. 37(2), pages 261-273, April.
    • Handle: RePEc:bla:coecpo:v:37:y:2019:i:2:p:261-273
    DOI: 10.1111/coep.12393
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    References listed on IDEAS

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    Cited by:

    1. Forrest, David & Kainulainen, Tuomo & Saastamoinen, Jani & Suhonen, Niko, 2022. "Income elasticity of demand for horse wagering — Large-scale evidence from online betting accounts," Economics Letters, Elsevier, vol. 213(C).
    2. Alejandro Díaz & Levi Pérez, 2021. "Setting The Odds Of Winning The Jackpot: On The Economics Of (Re) Designing Lottery Games," Contemporary Economic Policy, Western Economic Association International, vol. 39(1), pages 168-177, January.
    3. Ege Can & Mark W. Nichols, 2022. "The Income Elasticity of Gross Sports Betting Revenues in Nevada: Short-Run and Long-Run Estimates," Journal of Sports Economics, , vol. 23(2), pages 175-199, February.
    4. Álvaro Muñiz & Levi Pérez, 2023. "The market for EuroMillions: jackpot sharing and implicit transfer of funds among countries," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(3), pages 817-833, October.

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    More about this item

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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