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Dueling Jackpots: Are Competing Lotto Games Complements or Substitutes?

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  • Kent Grote
  • Victor Matheson

Abstract

This paper considers the relationship that exists between two lottery products offered simultaneously in the same state, a smaller lottery game run by the individual state and a larger multi-state game run in coordination with other states. The primary issue is whether the two different products should be considered substitutes or complements for one another. The question is considered from two different perspectives that lead to a conclusion that while the two products do tend to be complements to one another, overall the individually run state lottery games experience a reduction in sales from the presence of the multi-state game. Copyright International Atlantic Economic Society 2006

Suggested Citation

  • Kent Grote & Victor Matheson, 2006. "Dueling Jackpots: Are Competing Lotto Games Complements or Substitutes?," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 34(1), pages 85-100, March.
  • Handle: RePEc:kap:atlecj:v:34:y:2006:i:1:p:85-100
    DOI: 10.1007/s11293-006-6130-x
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    References listed on IDEAS

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    1. Forrest, David & Gulley, O. David & Simmons, Robert, 2000. "Elasticity of Demand for UK National Lottery Tickets," National Tax Journal, National Tax Association;National Tax Journal, vol. 53(4), pages 853-864, December.
    2. Scoggins, John F., 1995. "The Lotto and Expected Net Revenue," National Tax Journal, National Tax Association;National Tax Journal, vol. 48(1), pages 61-70, March.
    3. Cook, Philip J & Clotfelter, Charles T, 1993. "The Peculiar Scale Economies of Lotto," American Economic Review, American Economic Association, vol. 83(3), pages 634-643, June.
    4. Mark Edward Stover, 1990. "Contiguous state lotteries: Substitutes or complements?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 9(4), pages 565-568.
    5. Victor Matheson, 2001. "When Are State Lotteries a Good Bet (Revisited)?," Eastern Economic Journal, Eastern Economic Association, vol. 27(1), pages 55-70, Winter.
    6. Gulley, O. David & Scott, Frank A. Jr., 1993. "The Demand for Wagering on State-Operated Lotto Games," National Tax Journal, National Tax Association, vol. 46(1), pages 13-22, March.
    7. Scoggins, John F., 1995. "The Lotto and Expected Net Revenue," National Tax Journal, National Tax Association, vol. 48(1), pages 61-70, March.
    8. Forrest, David & Gulley, O. David & Simmons, Robert, 2000. "Elasticity of Demand for UK National Lottery Tickets," National Tax Journal, National Tax Association, vol. 53(n. 4), pages 853-64, December.
    9. David Forrest & O. David Gulley & Robert Simmons, 2004. "Substitution between games in the UK national lottery," Applied Economics, Taylor & Francis Journals, vol. 36(7), pages 645-651.
    10. Matheson, Victor A. & Grote, Kent R., 2004. "Lotto fever: do lottery players act rationally around large jackpots?," Economics Letters, Elsevier, vol. 83(2), pages 233-237, May.
    11. Scott, Frank A, Jr & Gulley, O David, 1995. "Testing for Efficiency in Lotto Markets," Economic Inquiry, Western Economic Association International, vol. 33(2), pages 175-188, April.
    12. Gulley, O. David & Scott, Frank A. Jr., 1993. "The Demand for Wagering on State-Operated Lotto Games," National Tax Journal, National Tax Association;National Tax Journal, vol. 46(1), pages 13-22, March.
    13. Shapira, Zur & Venezia, Itzhak, 1992. "Size and frequency of prizes as determinants of the demand for lotteries," Organizational Behavior and Human Decision Processes, Elsevier, vol. 52(2), pages 307-318, July.
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    Cited by:

    1. Kent Grote & Victor Matheson, 2011. "The Economics of Lotteries: A Survey of the Literature," Working Papers 1109, College of the Holy Cross, Department of Economics.
    2. Kent R. Grote & Victor A. Matheson, 2006. "In Search of a Fair Bet in the Lottery," Eastern Economic Journal, Eastern Economic Association, vol. 32(4), pages 673-684, Fall.
    3. Humphreys, Brad & Perez, Levi, 2011. "Lottery Participants and Revenues: An International Survey of Economic Research on Lotteries," Working Papers 2011-17, University of Alberta, Department of Economics.
    4. Brad Humphreys & Levi Perez, 2012. "Network externalities in consumer spending on lottery games: evidence from Spain," Empirical Economics, Springer, vol. 42(3), pages 929-945, June.
    5. Michael Coon & Gwyneth Whieldon, 2016. "Elasticity of Demand and Optimal Prize Distribution for Instant Lottery Games," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 44(4), pages 457-469, December.

    More about this item

    Keywords

    D81; H71; L83;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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