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On the Design of Lottery Games

Author

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  • Roger Hartley
  • Gauthier Lanot

Abstract

We describe a model of participation in lottery games designed to address the optimisation of tax revenue in state-sponsored lotteries. The model treats participants dynamically and examines a long-run equilibrium. A novel high frequency approximation is used to turn the problem into a static, state-contingent deterministic programming problem. We demonstrate that the solution of this problem has qualitatively plausible properties and then calibrate the model against the United Kingdom National Lottery (UKNL). The results suggest that the current design of the UKNL may not be maximising tax revenue.

Suggested Citation

  • Roger Hartley & Gauthier Lanot, 1999. "On the Design of Lottery Games," Keele Department of Economics Discussion Papers (1995-2001) 99/05, Department of Economics, Keele University, revised Apr 2000.
    • Handle: RePEc:kee:keeldp:99/05
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    2. Hofer, Vera & Leitner, Johannes, 2011. "Should European gamblers play lotto in the USA?," European Journal of Operational Research, Elsevier, vol. 215(1), pages 181-187, November.
    3. Orrin David Gulley, 2018. "The optimal structure of lotto games," Economics and Business Letters, Oviedo University Press, vol. 7(4), pages 156-161.
    4. Alejandro Díaz & Levi Pérez, 2021. "Setting The Odds Of Winning The Jackpot: On The Economics Of (Re) Designing Lottery Games," Contemporary Economic Policy, Western Economic Association International, vol. 39(1), pages 168-177, January.
    5. Chen, Shu-Heng & Chie, Bin-Tzong, 2008. "Lottery markets design, micro-structure, and macro-behavior: An ACE approach," Journal of Economic Behavior & Organization, Elsevier, vol. 67(2), pages 463-480, August.
    6. Kent Grote & Victor Matheson, 2011. "The Economics of Lotteries: An Annotated Bibliography," Working Papers 1110, College of the Holy Cross, Department of Economics.

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