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State Lottery Revenue: The Importance of Game Characteristics

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  • Thomas A. Garrett
  • Russell S. Sobel

Abstract

Previous studies have found that lottery ticket sales are influenced by certain socioeconomic characteristics of the population. The authors extend the state lottery literature by examining how lottery game characteristics, such as the overall expected value, the top prize, and the total number of combinations, influence ticket sales after controlling for socioeconomic variables. They perform an empirical analysis on a unique set of data that include information for 135 online lottery games in the United States. The results show that ticket sales are significantly influenced by the size of the top prize and the odds of winning it, but ticket sales are not significantly affected by the expected value of the lower prizes. The out-of-sample predictive power of the model is then tested using a real-world example of changes to the prize and odds structure of PowerBall.

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File URL: http://pfr.sagepub.com/content/32/3/313.abstract
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Bibliographic Info

Article provided by in its journal Public Finance Review.

Volume (Year): 32 (2004)
Issue (Month): 3 (May)
Pages: 313-330

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Handle: RePEc:sae:pubfin:v:32:y:2004:i:3:p:313-330

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  1. Marilyn Young & Michael Reksulak & William F. Shughart, 2001. "The Political Economy of the IRS," Economics and Politics, Wiley Blackwell, vol. 13(2), pages 201-220, 07.
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Cited by:
  1. Raviv, Yaron & Virag, Gabor, 2009. "Gambling by auctions," International Journal of Industrial Organization, Elsevier, vol. 27(3), pages 369-378, May.
  2. Kent Grote & Victor Matheson, 2011. "The Economics of Lotteries: An Annotated Bibliography," Working Papers 1110, College of the Holy Cross, Department of Economics.
  3. S. Capacci & E. Randon & A. E. Scorcu, 2014. "Luck vs Skill in Gambling over the Recession. Evidence from Italy," Working Papers wp918, Dipartimento Scienze Economiche, Universita' di Bologna.
  4. Victor Matheson & Kent Grote, 2009. "Spreading the Fortune: The Distribution of Lottery Prizes across Countries," Working Papers 0904, College of the Holy Cross, Department of Economics.
  5. Addison, Tony & Chowdhury, Abdur R., 2003. "A Global Lottery and a Global Premium Bond," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).

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