The Determinants of Wagering Behavior

Abstract:     
The mutuel handle, or the total volume of wagering at a racetrack, has important implications for both racetrack and state revenues. This paper studies the factors that determine the dollar volume of wagering. One factor we study is of particular interest because it is both large and new to the literature: the sire stakes. The sire stakes is a major form of government subsidy. We conclude that this subsidy has little or no economic impact on the volume of wagers. Unless the state recovers nearly all of the subsidy in other ways, the sire stakes amounts to a direct transfer from taxpayers to the horse breeding industry. We also develop helpful information for managers and owners of racetracks.

Note: This is a description of the paper and not the actual abstract.

Keywords: Wagering, Sire Stakes, Racing, Mutuel Handle, Gambling, Subsidy

JEL Classification: G1, H2, H25, H71

Accepted Paper Series