THE EFFECTS OF LOTTO GAME CHANGES AND LARGE JACKPOTS ON INCOME ELASTICITIES AND SALES

Kathryn L. Combs and John A. Spry

Contemporary Economic Policy, 2019, vol. 37, issue 2, 261-273

Abstract: Using daily lottery data from Washington State by zip code from January 2011 through mid‐March 2016, we estimate that Powerball income elasticities range from −0.16 to 0.16 as the Powerball jackpot increases from its minimum to $1.5 billion, while Mega Millions income elasticities range from −0.08 to 0.03 as the Mega Millions jackpot increases from its minimum to $640 million. Controlling for jackpot size, each of three major game changes during this time period has a significant effect on own‐game and cross‐game sales. Despite these significant game changes, however, these lotto games are a highly regressive source of revenue for Washington State. (JEL H22, H71, L83)

Date: 2019
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