IDEAS home Printed from https://ideas.repec.org/a/spr/series/v8y2017i2d10.1007_s13209-017-0156-y.html
   My bibliography  Save this article

On the effect of taxation in the online sports betting market

Author

Listed:
  • Juan Vidal-Puga

    () (Universidade de Vigo)

Abstract

Abstract We analyze the effect of taxation in the online sport betting market. A relevant characteristic of this market is its negligible marginal cost on bet volume. Taxation can be on gross profit (Gross Profit Tax) or on volume (General Betting Duty). We model the two most popular online sport betting bets: fixed-odds and spread, as compared with another traditional sport betting: parimutuel. We characterize the odds and the bookmaker’s payoff in (strong) subgame perfect equilibrium for each of the three types of bets under both taxation schemes. The results show that taxation on gross profit maximizes the utilitarian social welfare. Moreover, the three types of bets are equivalent when the market is symmetric.

Suggested Citation

  • Juan Vidal-Puga, 2017. "On the effect of taxation in the online sports betting market," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 8(2), pages 145-175, June.
  • Handle: RePEc:spr:series:v:8:y:2017:i:2:d:10.1007_s13209-017-0156-y
    DOI: 10.1007/s13209-017-0156-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s13209-017-0156-y
    File Function: Abstract
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Reinoud Joosten & Thomas Brenner & Ulrich Witt, 2003. "Games with frequency-dependent stage payoffs," International Journal of Game Theory, Springer;Game Theory Society, vol. 31(4), pages 609-620, September.
    2. David Paton & Donald S. Siegel & Leighton Vaughan Williams, 2001. "Gambling Taxation: A Comment," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 34(4), pages 437-440.
    3. Silvia Ferrari & Francisco Cribari-Neto, 2004. "Beta Regression for Modelling Rates and Proportions," Journal of Applied Statistics, Taylor & Francis Journals, vol. 31(7), pages 799-815.
    4. Marco Ottaviani & Peter Norman Sørensen, 2009. "Surprised by the Parimutuel Odds?," American Economic Review, American Economic Association, vol. 99(5), pages 2129-2134, December.
    5. David Paton & Donald S. Siegel & Leighton Vaughan Williams, 2002. "A Policy Response To The E--Commerce Revolution: The Case Of Betting Taxation In The UK," Economic Journal, Royal Economic Society, vol. 112(480), pages 296-314, June.
    6. Julie Smith, 2000. "Gambling Taxation: Public Equity in the Gambling Business," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 33(2), pages 120-144.
    7. Bag, Parimal Kanti & Saha, Bibhas, 2011. "Match-fixing under competitive odds," Games and Economic Behavior, Elsevier, vol. 73(2), pages 318-344.
    8. Steven D. Levitt, 2004. "Why are gambling markets organised so differently from financial markets?," Economic Journal, Royal Economic Society, vol. 114(495), pages 223-246, April.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Taxation; Online betting market; Sport betting; Bookmaker;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:series:v:8:y:2017:i:2:d:10.1007_s13209-017-0156-y. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.