Trading as Gambling

36 Pages Posted: 12 Oct 2012  

Anne Jones Dorn


Daniel Dorn

Drexel University - Department of Finance

Paul Sengmueller

Tilburg University

Date Written: October 12, 2012


This paper offers evidence from two very different settings consistent with individual investors substituting between playing the lottery and playing the stock market. In the U.S., increases in the multi-state lottery jackpots Powerball and Mega-Millions are associated with significant reductions in small trade participation in the stock market, other things equal. In Germany, individual-level transaction records from a discount broker show that retail investors are significantly less likely to trade in the stock market during weeks with larger prizes in the German national lottery. The negative relation between trading activity and jackpots is stronger for trading in more lottery-like securities such as options, and also for individuals who are more likely to be influenced by jackpots as judged by their location, gender, and education.

Keywords: Trading volume, individual investors, gambling

JEL Classification: G11, G12

Suggested Citation

Jones Dorn, Anne and Dorn, Daniel and Sengmueller, Paul, Trading as Gambling (October 12, 2012). Available at SSRN: or

Anne Jones Dorn (Contact Author)

Independent ( email )

No Address Available

Daniel Dorn

Drexel University - Department of Finance ( email )

LeBow College of Business
Philadelphia, PA 19104
United States

Paul F. Sengmueller

Tilburg University ( email )

Department of Finance
Warandelaan 2
Tilburg, 5037 AB
+31 13 466 2318 (Phone)

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