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The Demand for Lottery Products and Their Distributional Consequences

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  • Ghent, Linda S.
  • Grant, Alan P.

Abstract

This study examines the distributional impact of three types of lottery games operated by the South Carolina Education Lottery (SCEL). We find significant sales variation by game type across both age and race. We also find each of the three types to be regressive, but with substantial differences in the degree of regressivity across games. By estimating the determinants of lottery sales using variables that capture the distribution of income rather than simply its level, our analysis provides a more complete description of the incidence of lottery sales. Our results suggest that lotteries may not be as regressive as suggested by the earlier literature.

Suggested Citation

  • Ghent, Linda S. & Grant, Alan P., 2010. "The Demand for Lottery Products and Their Distributional Consequences," National Tax Journal, National Tax Association;National Tax Journal, vol. 63(2), pages 253-268, June.
  • Handle: RePEc:ntj:journl:v:63:y:2010:i:2:p:253-68
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    References listed on IDEAS

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    1. David Giacopassi & Mark W. Nichols & B. Grant Stitt, 2006. "Voting for a Lottery," Public Finance Review, , vol. 34(1), pages 80-100, January.
    2. Borg, Mary O. & Mason, Paul M., 1988. "The Budgetary Incidence of a Lottery to Support Education," National Tax Journal, National Tax Association;National Tax Journal, vol. 41(1), pages 75-85, March.
    3. Donald I. Price & E. Shawn Novak, 2000. "The Income Redistribution Effects of Texas State Lottery Games," Public Finance Review, , vol. 28(1), pages 82-92, January.
    4. Rubenstein, Ross & Scafidi, Benjamin, 2002. "Who Pays and Who Benefits? Examining the Distributional Consequences of the Georgia Lottery for Education," National Tax Journal, National Tax Association, vol. 55(N. 2), pages 223-238, June.
    5. Thomas A. Garrett & Russell S. Sobel, 2004. "State Lottery Revenue: The Importance of Game Characteristics," Public Finance Review, , vol. 32(3), pages 313-330, May.
    6. Linda S. Ghent & Alan P. Grant, 2007. "Are Voting and Buying Behavior Consistent? Evidence from the South Carolina Education Lottery," Public Finance Review, , vol. 35(6), pages 669-688, November.
    7. Garrett, Thomas A. & Marsh, Thomas L., 2002. "The revenue impacts of cross-border lottery shopping in the presence of spatial autocorrelation," Regional Science and Urban Economics, Elsevier, vol. 32(4), pages 501-519, July.
    8. Oster, Emily, 2004. "Are All Lotteries Regressive? Evidence From the Powerball," National Tax Journal, National Tax Association;National Tax Journal, vol. 57(2), pages 179-187, June.
    9. Charles T. Clotfelter & Philip J. Cook, 1989. "Selling Hope: State Lotteries in America," NBER Books, National Bureau of Economic Research, Inc, number clot89-1, January.
    10. Kathryn Combs & Jaebeom Kim & John Spry, 2008. "The relative regressivity of seven lottery games," Applied Economics, Taylor & Francis Journals, vol. 40(1), pages 35-39.
    11. Tosun, Mehmet Serkan & Skidmore, Mark, 2004. "Interstate Competition and State Lottery Revenues," National Tax Journal, National Tax Association;National Tax Journal, vol. 57(2), pages 163-178, June.
    12. 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.
    13. Price, Donald I. & Novak, E. Shawn, 1999. "The Tax Incidence of Three Texas Lottery Games: Regressivity, Race, and Education," National Tax Journal, National Tax Association, vol. 52(n. 4), pages 741-52, December.
    14. Borg, Mary O. & Mason, Paul M., 1988. "The Budgetary Incidence of a Lottery to Support Education," National Tax Journal, National Tax Association, vol. 41(1), pages 75-85, March.
    15. Rubenstein, Ross & Scafidi, Benjamin, 2002. "Who Pays and Who Benefits? Examining the Distributional Consequences of the Georgia Lottery for Education," National Tax Journal, National Tax Association;National Tax Journal, vol. 55(2), pages 223-238, June.
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    Cited by:

    1. Rose Baker & David Forrest & Levi Perez, 2016. "Modelling regional lottery sales: Methodological issues and a case study from Spain," Papers in Regional Science, Wiley Blackwell, vol. 95, pages 127-142, March.

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