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Buying a Dream: Alternative Models of Demand for Lotto

David Forrest (), Robert Simmons () and Neil Chesters ()
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David Forrest: Centre for the Study of Gambling and Commercial Gaming, University of Salford, Salford, M5 4WT, UK.
Neil Chesters: Dresdner Kleinwort Wasserstein, Riverbank House, 2 Swan Lane, London EC4R 3UX, UK.

Economic Inquiry, 2002, vol. 40, issue 3, 485-496

Abstract: Existing lotto demand models utilize effective price, computed as the face value of a ticket minus the expected value of prize money per ticket, as their primary explanatory variable. By contrast, this article proposes a key role for consumption benefit or "fun" in the demand for gambling in general and lotto demand in particular. It develops an alternative model of lotto demand that focuses on the maximum possible prize. When this is tested against the traditional model using data from the U.K. National Lottery, we find that jackpot considerations exert an influence over and above that of variations in effective price. Copyright 2002, Oxford University Press.

Date: 2002
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