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Consumption benefits and gambling: Evidence from the NCAA basketball betting market

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  • Humphreys, Brad R.
  • Paul, Rodney J.
  • Weinbach, Andrew P.

Abstract

The utility of gambling model posits that consumption benefits lead rational agents to gamble when faced with negative expected financial returns. We analyze the determinants of bet volume and dollars bet on NCAA basketball games from three on-line sports books to test the predictions of this model. Betting action depends on television coverage, team quality, and the expected closeness of the contest. Our results support the notion that consumption benefits, not financial gain, motivate gambling. Preferences of bettors appear similar to those of sports fans, suggesting that models of gamblers as wealth-maximizing investors may not explain observed betting behavior.

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  • Humphreys, Brad R. & Paul, Rodney J. & Weinbach, Andrew P., 2013. "Consumption benefits and gambling: Evidence from the NCAA basketball betting market," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 376-386.
    • Handle: RePEc:eee:joepsy:v:39:y:2013:i:c:p:376-386
    DOI: 10.1016/j.joep.2013.05.010
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    Cited by:

    1. Mao, Luke Lunhua & Zhang, James J. & Connaughton, Daniel P., 2015. "Sports gambling as consumption: Evidence from demand for sports lottery," Sport Management Review, Elsevier, vol. 18(3), pages 436-447.
    2. Humphreys, Brad R. & Paul, Rodney J. & Weinbach, Andrew P., 2016. "Performance expectations and the tenure of head coaches: Evidence from NCAA football," Research in Economics, Elsevier, vol. 70(3), pages 482-492.
    3. Desiree A. Desierto & John V.C. Nye & Jema M. Pamintuan, 2011. "The Demand for Unfair Gambles : Why Illegal Lotteries Persist," UP School of Economics Discussion Papers 201103, University of the Philippines School of Economics.
    4. Brad R. Humphreys, 2017. "An Overview of Sports Betting Regulation in the United States," Working Papers 17-31, Department of Economics, West Virginia University.
    5. Luke Lunhua Mao & James J Zhang & Daniel P Connaughton, 2015. "Determinants of Demand for Sports Lottery: Insights from a Multilevel Model," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(8), pages 973-987, August.
    6. Arne Feddersen & Brad R. Humphreys & Brian P. Soebbing, 2020. "Casual bettors and sentiment bias in NBA and NFL betting," Applied Economics, Taylor & Francis Journals, vol. 52(53), pages 5797-5806, November.
    7. Agha, Nola & Tyler, B. David, 2017. "An investigation of highly identified fans who bet against their favorite teams," Sport Management Review, Elsevier, vol. 20(3), pages 296-308.
    8. Michels, Rouven & Ötting, Marius & Langrock, Roland, 2023. "Bettors’ reaction to match dynamics: Evidence from in-game betting," European Journal of Operational Research, Elsevier, vol. 310(3), pages 1118-1127.
    9. Krieger, Kevin & Fodor, Andy, 2013. "Price movements and the prevalence of informed traders: The case of line movement in college basketball," Journal of Economics and Business, Elsevier, vol. 68(C), pages 70-82.
    10. Christian Deutscher & Marius Ötting & Sandra Schneemann & Hendrik Scholten, 2019. "The Demand for English Premier League Soccer Betting," Journal of Sports Economics, , vol. 20(4), pages 556-579, May.
    11. Rodney Paul & Andrew Weinbach & Justin Mattingly, 2018. "Tests of Racial Discrimination in a Simple Financial Market: Managers in Major League Baseball," IJFS, MDPI, vol. 6(1), pages 1-10, March.
    12. Daniel C. Hickman, 2020. "Efficiency in the madness? examining the betting market for the ncaa men’s basketball tournament," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 44(3), pages 611-626, July.
    13. Rodney J. Paul & Andrew P. Weinbach, 2014. "Market Efficiency and Behavioral Biases in the WNBA Betting Market," IJFS, MDPI, vol. 2(2), pages 1-10, April.
    14. Victor Matheson, 2021. "An Overview of the Economics of Sports Gambling and an Introduction to the Symposium," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 47(1), pages 1-8, January.

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    More about this item

    Keywords

    Gambling; Sports betting; Bet volume; Dollars bet; Consumption value;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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