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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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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Psychology.

Volume (Year): 39 (2013)
Issue (Month): C ()
Pages: 376-386

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Handle: RePEc:eee:joepsy:v:39:y:2013:i:c:p:376-386

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Web page: http://www.elsevier.com/locate/joep

Related research

Keywords: Gambling; Sports betting; Bet volume; Dollars bet; Consumption value;

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References

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  1. Rodney J. Paul & Andrew P. Weinbach, 2010. "The Determinants of Betting Volume for Sports in North America: Evidence of Sports Betting as Consumption in the NBA and NHL," International Journal of Sport Finance, Fitness Information Technology, vol. 5(2), pages 128-140, May.
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  8. Sauer, Raymond D, et al, 1988. "Hold Your Bets: Another Look at the Efficiency of the Gambling Market for National Football League Games: Comment," Journal of Political Economy, University of Chicago Press, vol. 96(1), pages 206-13, February.
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  12. Rodney J. Paul & Andrew P. Weinbach, 2009. "Sportsbook Behavior in the NCAA Football Betting Market: Tests of the Traditional and Levitt Models of Sportsbook Behavior," Journal of Prediction Markets, University of Buckingham Press, vol. 3(2), pages 21-37, August.
  13. Rodney J. Paul & Andrew P. Weinbach, 2008. "Price Setting in the NBA Gambling Market: Tests of the Levitt Model of Sportsbook Behavior," International Journal of Sport Finance, Fitness Information Technology, vol. 3(3), pages 137-145, August.
  14. Rodney Paul & Andrew Weinbach & J. Weinbach, 2003. "Fair bets and profitability in college football gambling," Journal of Economics and Finance, Springer, vol. 27(2), pages 236-242, June.
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  17. Paul, Rodney J. & Weinbach, Andrew P., 2007. "The uncertainty of outcome and scoring effects on Nielsen ratings for Monday Night Football," Journal of Economics and Business, Elsevier, vol. 59(3), pages 199-211.
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Cited by:
  1. 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.
  2. Rodney J. Paul & Andrew P. Weinbach, 2014. "Market Efficiency and Behavioral Biases in the WNBA Betting Market," International Journal of Financial Studies, MDPI, Open Access Journal, vol. 2(2), pages 193-202, April.

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