Upping the Ante for Lotto: a Strategy for Enhancing State Revenues

John F. Scoggins
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John F. Scoggins: University of Florida

Public Finance Review, 1994, vol. 22, issue 2, 258-264

Abstract: Many state lottery agencies operate a numbers game in which a grand prize accumulates (i.e. "rolls over") until at least one player wins it. This type of game is usually called a "lotto. " This article investigates the possibility of enhancing net revenues from a lotto by artificially increasing the expected grand prize amount with funds not generated by the game itself. Using data from the Florida Lotto, a time series regression for weekly ticket sales is estimated. Also introduced is a limited dependent variable model to estimate the probability that the grand prize will roll over as afunction of ticket sales. This model is based on a variation of the binomial distribution. The findings are that net revenues can be increased by artificially increasing the grand prize, but the timing of the increase has a large impact on the expected rate of return.

Date: 1994
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:22:y:1994:i:2:p:258-264

DOI: 10.1177/109114219402200206

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