Business cycles, stock market wealth, and gambling at the racetracks

Cyrus A. Ramezani and James J. Ahern

Journal of Economic Studies, 2023, vol. 51, issue 2, 455-470

Abstract: Purpose - As digital technologies expand access to new forms of legalized gambling, including sports betting and online gaming, it is important to assess the impact of macroeconomic and equity market outcomes on fund flows into gambling. The authors’ findings will be of interest to policymakers and the gambling industry, as various forms of gambling, including day trading, gain broad public acceptance. Design/methodology/approach - The authors examine the impact of macroeconomic forces, business cycles, and financial market wealth on gambling. The authors propose a nonlinear model linking aggregate gambling expenditures to macroeconomic, stock market, and gambling industry variables. The authors estimate the proposed model using nonlinear estimation procedures. Findings - The authors find that price of wagering, incomes, and supply of gambling opportunities are the primary determinants of wagering demand. Aggregate wagering is negatively impacted by realized stock returns and market volatility, but rises during recessions. Originality/value - To the best of the authors’ knowledge, the questions posed and addressed in this manuscript have not been addressed in prior literature.

Keywords: Gambling demand; Business cycle; Realized risk premium; Market volatility; D12; G10; C13; L83 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jespps:jes-03-2023-0120

DOI: 10.1108/JES-03-2023-0120

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