The Demand for Lottery Products

49 Pages Posted: 6 Jul 2004 Last revised: 13 Jul 2010

See all articles by Charles T. Clotfelter

Charles T. Clotfelter

Duke University - Sanford School of Public Policy; Duke University - Department of Economics; National Bureau of Economic Research (NBER)

Philip J. Cook

Duke University - Sanford School of Public Policy; Duke University, Dept. of Economics; National Bureau of Economic Research (NBER)

Date Written: April 1989

Abstract

Lotteries constitute one of the fastest-growing categories of consumer expenditure in the United States. Not only have an increasing number of states legalized state lotteries, but the per capita expenditures on lotteries in lottery states have increased at an annual rate of 13 percent after inflation between 1975 and 1988. This article examines the demand for lottery products. A majority of the adult public in lottery states play in any one year, but relatively few of these players account for most of the action". Socioeconomic patterns of play, measured from both sales data and household surveys, offer some surprises -- for example, that the Engle curve of lottery expenditures decline with income. There is some evidence that lottery sales increase with the payout rate, although it is not clear that it would be profitable for the states to increase payout rates. The addition of a new game, such as lotto, does not undercut sales of existing games, and the oft-heard claim that interest (and sales) will "inevitably" decline is contradicted by the data. The organizational form of the lottery is evolving in response to the quest for higher revenues: in particular, smaller states are forming multistate game. This article is a chapter from Selling Hope: State Lotteries in America, an NBER monograph to be published by Harvard University Press in November, 1989.

Suggested Citation

Clotfelter, Charles T. and Cook, Philip J., The Demand for Lottery Products (April 1989). NBER Working Paper No. w2928. Available at SSRN: https://ssrn.com/abstract=227215

Charles T. Clotfelter (Contact Author)

Duke University - Sanford School of Public Policy ( email )

Box 90245
Durham, NC 27708
United States
919-613-7361 (Phone)
919-681-8288 (Fax)

Duke University - Department of Economics

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States

National Bureau of Economic Research (NBER)

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Philip J. Cook

Duke University - Sanford School of Public Policy ( email )

201 Science Drive
Box 90312
Durham, NC 27708-0239
United States
919-613-7360 (Phone)
919-681-8288 (Fax)

Duke University, Dept. of Economics

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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