THE RELATIONSHIP BETWEEN BETTING AND LOTTERY PLAY

Authors

  • DAVID FORREST,

    1. Forrest: Professor, Centre for the Study of Gambling, University of Salford, Salford M5 4WT, UK. Phone 0044-161-295-3674, Fax 0044-161-295-2130, E-mail d.k.forrest@salford.ac.uk
    Search for more papers by this author
  • O. DAVID GULLEY,

    1. Gulley: Professor, Department of Economics, Bentley College, Waltham, MA 02452. Phone 781-891-2355; Fax 781-891-2896; E-mail dgulley@bentley.edu
    Search for more papers by this author
  • ROBERT SIMMONS

    1. Simmons: Senior Lecturer, Department of Economics, The Management School, Lancaster University, Lancaster LA1 4YX, UK. Phone 0044-1524-594234, Fax 0044-1524-594244, E-mail r.simmons@lancaster.ac.uk
    Search for more papers by this author
    • *

      We wish to thank participants at the 80th Western Economic Association Annual Conference, San Francisco, and two anonymous referees for constructive suggestions. We are grateful to the anonymous bookmaking company, which provided the bulk of the data for our analysis. D.F. acknowledges support from a Leverhulme Fellowship. O.D.G. was supported by the Gibbons Research Professorship.


Abstract

We apply a novel daily time series data set of daily turnover from one of Britain’s leading bookmakers to analyze potential substitution between lottery play and bookmaker betting. We find some evidence that bettors do substitute away from horse race, soccer and numbers betting when the effective price of lottery tickets is unusually low, that is, when there is a rollover or other special draw. This substitution has a highly specific pattern of timing that varies by sector. Our results further suggest that bettors rationally engage in forward-looking substitution within their betting portfolios. (JEL D12, L83)

Ancillary