Does what happen in Vegas stay in Vegas? Football gambling and stock market activity

Justin Cox (), Adam Schwartz () and Robert Ness ()
Additional contact information
Justin Cox: Appalachian State University
Adam Schwartz: Bucknell University
Robert Ness: University of Mississippi

Journal of Economics and Finance, 2020, vol. 44, issue 4, No 6, 724-748

Abstract: Abstract We examine whether lagged football betting payoffs result in changes in retail investing in lottery-like stocks. We show that lagged, low betting imbalances are associated with increases in retail stock participation, particularly for lottery-like stocks. This finding implies support for the “break-even” hypothesis that following negative sentiment and losses from football gambling, investors use lottery-like stocks to offset losses or break-even. This result holds for lottery-like stocks defined based on high idiosyncratic volatility and skewness as well as stocks that trade in over-the-counter (OTC) markets. Finally, we address whether the reverse relation exists, finding that only OTC market activity leads to increases in football betting activity but not football betting imbalances. Overall, our paper contributes to the literature investigating the relation between gambling sentiment and stock market activity.

Keywords: Gambling sentiment; Lottery-like stocks; Football (search for similar items in EconPapers)
JEL-codes: G10 G12 G14 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s12197-020-09513-9

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