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Hitting the Jackpot or Hitting the Skids: Entertainment, Poverty, and the Demand for State Lotteries

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  • Garrick Blalock
  • David R. Just
  • Daniel H. Simon

Abstract

. State‐sponsored lotteries are a lucrative source of revenue. Despite their low payout rates, lotteries are extremely popular, particularly among low‐income citizens. State officials laud the benefits of lottery proceeds and promote the fun and excitement of participation. This entertainment value is one explanation for lottery demand by the poor: individuals with lower incomes substitute lottery play for other entertainment. Alternatively, low‐income consumers may view lotteries as a convenient and otherwise rare opportunity for radically improving their standard of living. Bad times may cause desperation, and the desperate may turn to lotteries in an effort to escape hardship. This study tests these competing explanations. We examine lottery sales data from 39 states over 10 years and find a strong and positive relationship between sales and poverty rates. In contrast, we find no relationship between movie ticket sales, another inexpensive form of entertainment, and poverty rates.

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  • Garrick Blalock & David R. Just & Daniel H. Simon, 2007. "Hitting the Jackpot or Hitting the Skids: Entertainment, Poverty, and the Demand for State Lotteries," American Journal of Economics and Sociology, Wiley Blackwell, vol. 66(3), pages 545-570, July.
    • Handle: RePEc:bla:ajecsc:v:66:y:2007:i:3:p:545-570
    DOI: 10.1111/j.1536-7150.2007.00526.x
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    Cited by:

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    5. Gabrielyan, Gnel & Just, David R., 2017. "Economic Factors Affecting Lottery Sales: An Examination of Maine State Lottery Sales," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258419, Agricultural and Applied Economics Association.
    6. Marc Wyszynski & Adele Diederich & Ilana Ritov, 2020. "Gamble for the needy! Does identifiability enhances donation?," PLOS ONE, Public Library of Science, vol. 15(6), pages 1-19, June.
    7. Kent R. Grote & Victor A. Matheson, 2017. "Should gambling markets be privatized? An examination of state lotteries in the United States," Chapters, in: Plácido Rodríguez & Brad R. Humphreys & Robert Simmons (ed.), The Economics of Sports Betting, chapter 2, pages 21-37, Edward Elgar Publishing.
    8. Mitton, Todd & Vorkink, Keith & Wright, Ian, 2018. "Neighborhood effects on speculative behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 151(C), pages 42-61.
    9. Kent Grote & Victor Matheson, 2011. "The Economics of Lotteries: A Survey of the Literature," Working Papers 1109, College of the Holy Cross, Department of Economics.
    10. Po-Chin Wu & Shiao-Yen Liu & Kou-Bau Wang, 2017. "Does Unemployment Matter for Lottery Sales and their Persistence? A New Estimation Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 130(2), pages 581-592, January.
    11. Horácio Faustino & Maria João Kaiseler & Rafael Marques, 2009. "Why Do People Buy Lottery Products?," Working Papers Department of Economics 2009/01, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    12. Ernst-Jan Bruijn & Gerrit Antonides, 2022. "Poverty and economic decision making: a review of scarcity theory," Theory and Decision, Springer, vol. 92(1), pages 5-37, February.
    13. Zeng Zhonglu & Zhang Dongmei, 2007. "A Profile of Lottery Players in Guangzhou, China," International Gambling Studies, Taylor & Francis Journals, vol. 7(3), pages 265-280, December.
    14. Millet, Kobe & Lamey, Lien & Van den Bergh, Bram, 2012. "Avoiding negative vs. achieving positive outcomes in hard and prosperous economic times," Organizational Behavior and Human Decision Processes, Elsevier, vol. 117(2), pages 275-284.
    15. Maria João Kaizeler & Horácio C. Faustino, 2008. "Demand for Lottery Products: A Cross-Country Analysis," Working Papers Department of Economics 2008/33, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    16. Zhiming Cheng & Russell Smyth & Gong Sun, 2013. "Participation and Expenditure of Rural-Urban Migrants in the Illegal Lottery in China," Monash Economics Working Papers 24-13, Monash University, Department of Economics.
    17. Ethan Grumstrup & Mark W. Nichols, 2021. "Is video gambling terminal placement and spending in Illinois correlated with neighborhood characteristics?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 67(2), pages 273-298, October.
    18. Kent R. Grote & Victor A. Matheson, 2014. "The Impact of State Lotteries and Casinos on State Bankruptcy Filings," Growth and Change, Wiley Blackwell, vol. 45(1), pages 121-135, March.
    19. Brochado, Ana & Santos, Maria & Oliveira, Fernando & Esperança, José, 2018. "Gambling behavior: Instant versus traditional lotteries," Journal of Business Research, Elsevier, vol. 88(C), pages 560-567.
    20. Adhikari, Binay Kumar & Agrawal, Anup, 2016. "Religion, gambling attitudes and corporate innovation," Journal of Corporate Finance, Elsevier, vol. 37(C), pages 229-248.
    21. Edmund R. Thompson & Gerard P. Prendergast & Gerard H. Dericks, 2021. "Personality, Luck Beliefs, and (Non-?) Problem Lottery Gambling," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 16(2), pages 703-722, April.
    22. Molly Ott & Barry Bozeman & Gabel Taggart, 2018. "Risks and Rewards of College Football: Who Would Accept a Scholarship Knowing the Chances of Physical Harm?," Social Science Quarterly, Southwestern Social Science Association, vol. 99(3), pages 915-932, September.
    23. Álvaro Muñiz & Levi Pérez, 2023. "The market for EuroMillions: jackpot sharing and implicit transfer of funds among countries," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(3), pages 817-833, October.
    24. Ferri, Giovanni & Lagravinese, Raffaele & Resce, Giuliano, 2024. "Inequality and Gambling," Economics & Statistics Discussion Papers esdp24095, University of Molise, Department of Economics.

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