Internet Retailing and Pricing Decisions: An Examination in the Italian Gambling Market

The rapid growth of e-commerce over the last few years has sparked a stream of research that analyzed the impact of Internet retailing on market prices. It has been theorized that the low entry and transaction costs associated with electronic commerce should lead to a reduction in prices, especially for homogeneous products. Some scholars have verified, through empirical research, whether the prices of specific products and services sold through the electronic distribution channel are, as hypothesized, lower than those practiced in brick and mortar stores. The results of this research, even if they mostly confirm the greater price efficiency of e-commerce compared to the physical sales network, are however not univocal. This paper intends to offer an original contribution in this field of study, examining a particular industry that in recent years has been affected by an exponential increase in online sales, that of gambling. The aim of this work is to analyze whether in the Italian sports betting market, in line with theoretical hypotheses, online prices are lower than offline prices and whether the development of Internet sales has been accompanied by greater market efficiency and, therefore, a generalized reduction in prices. From a methodological point of view, the study was developed by collecting and processing the official market data of the regulated sports betting sector in Italy provided by the Agency of Customs and Monopoly, for the years ranging from 2011 to 2019, thus carrying out a longitudinal analysis on price levels and related changes over time. The results of the analysis have shown that in the period analyzed in the Italian regulated sports betting market the average prices paid for the betting products offered by the gambling websites remained lower, in a range going from 38 to 48 percent, as compared to those practiced by betting shops. It also emerged that there was a general reduction in the average price levels of betting products equal to almost 50 percent. These results have interesting managerial implications for gambling operators and provide some indications for state institutions that are responsible for gambling policy and legislative changes.