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Substitution between games in the UK national lottery

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  • David Forrest
  • O. David Gulley
  • Robert Simmons

Abstract

Virtually all lottery agencies offer a variety of games to suit the tastes of players in an attempt to maximize revenue to the government. Using the UK National Lottery, which offers a variety of on-line and scratchcard games, the extent to which there is substitution or complementarity between games is evaluated Employing weekly data from the three UKNL lottery games offered over the sample period, it is found that own-game characteristics have, by far, the largest influence on sales. Some evidence is found suggesting that the lotto and scratchcard games are partial substitutes for one another. Thunderball sales appear independent of the other two games. Some evidence is also found that the Wednesday and Saturday drawings of the lotto game are substitutes. The overall conclusion is that Camelot has successfully designed and marketed three games that each appeal to bettors in different ways. Thus, sales from one game do not seem to seriously cannibalize the sales of the other games, with the exceptions noted above. Further, the introduction of another, temporary game (Big Draw 2000) contributed to net sales. These results also suggest that the games do not appear to be complements to each other, indicating that the various arguments as to why the games may be so (transactions costs, brand awareness, and the portfolio effect) do not appear to be very strong.

Suggested Citation

  • 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.
    • Handle: RePEc:taf:applec:v:36:y:2004:i:7:p:645-651
    DOI: 10.1080/0003684042000222034
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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, vol. 53(n. 4), pages 853-64, December.
    2. Farrell, Lisa, et al, 2000. "The Demand for Lotto: The Role of Conscious Selection," Journal of Business & Economic Statistics, American Statistical Association, vol. 18(2), pages 228-241, April.
    3. 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.
    4. Charles T. Clotfelter & Philip J. Cook, 1989. "Selling Hope: State Lotteries in America," NBER Books, National Bureau of Economic Research, Inc, number clot89-1, July.
    5. 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.
    6. 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.
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    Citations

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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. 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.
    3. Jaume García & Plácido Rodríguez, 2007. "The Demand for Football Pools in Spain," Journal of Sports Economics, , vol. 8(4), pages 335-354, August.
    4. Jen-Hung Wang & Larry Tzeng & Junji Tien, 2006. "Willingness to pay and the demand for lotto," Applied Economics, Taylor & Francis Journals, vol. 38(10), pages 1207-1216.
    5. 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.
    6. Orrin David Gulley, 2018. "The optimal structure of lotto games," Economics and Business Letters, Oviedo University Press, vol. 7(4), pages 156-161.
    7. 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.
    8. Will E. Cummings & Douglas M. Walker & Chad D. Cotti, 2017. "The Effect Of Casino Proximity On Lottery Sales: Evidence From Maryland," Contemporary Economic Policy, Western Economic Association International, vol. 35(4), pages 684-699, October.
    9. Kathryn L. Combs & John A. Spry, 2012. "Who plays the numbers games in the middle of the day?," Applied Economics, Taylor & Francis Journals, vol. 44(7), pages 889-897, March.
    10. 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.
    11. 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.

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