Factors influencing the adoption of state lotteries

Abstract

This paper explores the factors influencing the adoption of state lotteries in the United States. The conceptual framework utilizes a common utility framework in which a representative legislator maximizes utility derived from the current and expected fiscal position of a state, subject to a political constraint. The empirical results support the theoretical hypotheses, including the finding that changes in the fiscal health of the state, the predicted profit potential of a lottery, and the political climate of the state all affect the likelihood that a lottery is adopted. By introducing a sound conceptual framework, using better data than used in previous studies, utilizing an appropriate estimation technique, and obtaining strong results, this study advances our knowledge of why states adopt lotteries.

Substitute effects between Lotto and Big Lotto in Taiwan

“…In the demand equation TREND is expected to reflect the tendency of lottery games. Caudill et al (1995) and Erekson et al (1999) find an increasing trend of lottery adoption, while TREND 2 is included to permit possible non-linearity. According to the experiences of the US state and the UK lotteries, in which sales increase with lottery age at a certain point the lottery matures and sales begin to decline (Mikesell and Zorn, 1987;Gulley and Scott, 1993;Forrest et al, 2000a).…”

Determinants of the probability and timing of commercial casino legalization in the United States

“…Studies of lottery adoption includeFiler et al (1988),Berry and Berry (1990),Caudill et al (1995),Mixon et al (1997),Erekson et al (1999),Glickman and Painter (2004), andGiacopassi et al (2006). Many of these studies are compared in the review byCoughlin et al (2006).…”

The Economics Of Lotteries: A Survey Of The Literature

“…In order to encourage consumers to play (Landry and Price, 2007) and to overcome opposition to state sponsored gambling (Erekson, Platt, Whistler and Ziegert, 1999;Pierce and Miller, 1999;and Ghent and Grant, 2007), governments frequently designate profits from lotteries towards specific agencies. Well over half of state lotteries in the U.S. and some foreign lotteries, including the U.K. Lottery, earmark all or part of the revenues generated for specific government programs, with education being the primary beneficiary (Matheson and Grote, 2008).…”

“…Filer, Moak and Uze (1988) argue that concern for the regressivity of lotteries will limit their implementation in poor jurisdictions while Martin and Yandle (1990) suggest that the relative political power of the wealthy in rich areas will induce the adoption of lotteries as a means to transfer income from the poor to the wealthy. Erekson, Platt, Whistler and Ziegert (1999) argue that rich states will adopt lotteries simply due to the higher potential for lottery revenues.…”