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Do gamblers invest in lottery stocks?

Author

Listed:
  • Kormanyos, Emily
  • Hanspal, Tobin
  • Hackethal, Andreas

Abstract

Previous studies document a relationship between gambling at the aggregate level and investments in securities with lottery-like features. We combine data on individual gambling consumption with portfolio holdings and trading records to examine whether gambling and trading act as substitutes or complements. We find that gamblers are more likely than average to hold lottery stocks, but less likely than active traders. Our results suggest that gambling behavior across domains is less relevant than other characteristics that predict investing in high-risk and high-skew securities, and gambling on and off the stock market act as substitutes to satisfy the same need, e.g., sensation seeking.

Suggested Citation

  • Kormanyos, Emily & Hanspal, Tobin & Hackethal, Andreas, 2023. "Do gamblers invest in lottery stocks?," SAFE Working Paper Series 373, Leibniz Institute for Financial Research SAFE, revised 2023.
    • Handle: RePEc:zbw:safewp:373
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    References listed on IDEAS

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    More about this item

    Keywords

    Gambling; Retail investors; Lottery stocks;
    All these keywords.

    JEL classification:

    • G50 - Financial Economics - - Household Finance - - - General
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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