Lottery as Retail Product

In this study we examine whether the volume of lottery sales is positively related to the volume of other retail product sales. We find that retail sales are more significantly related to lottery sales than to any other macroeconomic variables. This result is consistent with the hypothesis that the lottery is similar to any other retail good. Among the retail products we include in our data, lottery sales are most correlated with the sales of food and beverage products. The results show that there is a unique aspect that distinguishes the lottery from other retail products. The most intriguing result is that lottery sales are inversely related to the level of income, meaning that people with lower income tend to participate in more lotteries, which can be interpreted as the lottery’s income supplementary function. We also find that lottery sales are mainly determined by the residents earning between $10,000 and $50,000 a year, implying that the lottery does not appeal equally to all income groups. Finally, lottery sales are negatively related to the number of African-American residents, positively related to the number of Hispanic residents, and negatively related to the number of White residents. These results suggest that the lottery appeals differently to people of different ethnicities.