IDEAS home Printed from https://ideas.repec.org/a/inm/ormksc/v41y2022i3p575-592.html
   My bibliography  Save this article

Social and Spatiotemporal Impacts of Casino Jackpot Events

Author

Listed:
  • Hee Mok Park

    (Department of Marketing, University of Manitoba, Winnipeg, Manitoba R3T 5V4, Canada)

  • Joseph Pancras

    (Department of Marketing, University of Connecticut, Storrs, Connecticut 06269)

Abstract

Jackpots are an important advertising and promotional tool in the casino gambling industry. In this paper, we use a unique data set to measure the impact of a slot machine jackpot event on subsequent gambling behavior. We use a difference in differences method to partition jackpot value into its impact on the post-jackpot behavior of three categories of players: (1) jackpot winners, (2) their peers or partners, and (3) bystanders who are in the proximity of the jackpot event. We find that jackpot events increase gambling expenditures (average slot machine bet amount) and frequency of plays by jackpot winners. The average impact on the jackpot winner is a $39 increase in bet amount per play and a 33% increase in the number of plays for the two-hour period after the jackpot event, whereas the impact on peers is a 21% increase in number of plays in the same period. For bystanders, effects are weaker and dissipate about an hour after the jackpot. Our study of jackpot return on investment shows that 49% of jackpots are profitable for the casino. Our study of the underlying mechanism of winners’ response favors the hot hand effect rather than the house money or gambler’s fallacy effects.

Suggested Citation

  • Hee Mok Park & Joseph Pancras, 2022. "Social and Spatiotemporal Impacts of Casino Jackpot Events," Marketing Science, INFORMS, vol. 41(3), pages 575-592, May.
    • Handle: RePEc:inm:ormksc:v:41:y:2022:i:3:p:575-592
    DOI: 10.1287/mksc.2021.1342
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mksc.2021.1342
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mksc.2021.1342?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Mitton, Todd & Vorkink, Keith & Wright, Ian, 2018. "Neighborhood effects on speculative behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 151(C), pages 42-61.
    2. Cooper, David J. & Rege, Mari, 2011. "Misery loves company: Social regret and social interaction effects in choices under risk and uncertainty," Games and Economic Behavior, Elsevier, vol. 73(1), pages 91-110, September.
    3. Peter J. Kuhn & Peter Kooreman & Adriaan R. Soetevent & Arie Kapteyn, 2008. "The Own and Social Effects of an Unexpected Income Shock: Evidence from the Dutch Postcode Lottery," NBER Working Papers 14035, National Bureau of Economic Research, Inc.
    4. Hee Mok Park & Puneet Manchanda, 2015. "When Harry Bet with Sally: An Empirical Analysis of Multiple Peer Effects in Casino Gambling Behavior," Marketing Science, INFORMS, vol. 34(2), pages 179-194, March.
    5. Harikesh S. Nair & Sanjog Misra & William J. Hornbuckle IV & Ranjan Mishra & Anand Acharya, 2017. "Big Data and Marketing Analytics in Gaming: Combining Empirical Models and Field Experimentation," Marketing Science, INFORMS, vol. 36(5), pages 699-725, September.
    6. Amrei Lahno & Marta Serra-Garcia, 2015. "Peer effects in risk taking: Envy or conformity?," Journal of Risk and Uncertainty, Springer, vol. 50(1), pages 73-95, February.
    7. Rachel Croson & James Sundali, 2005. "The Gambler’s Fallacy and the Hot Hand: Empirical Data from Casinos," Journal of Risk and Uncertainty, Springer, vol. 30(3), pages 195-209, May.
    8. Peter Kuhn & Peter Kooreman & Adriaan Soetevent & Arie Kapteyn, 2011. "The Effects of Lottery Prizes on Winners and Their Neighbors: Evidence from the Dutch Postcode Lottery," American Economic Review, American Economic Association, vol. 101(5), pages 2226-2247, August.
    9. Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
    10. Gerard J. Tellis & Philip Hans Franses, 2006. "Optimal Data Interval for Estimating Advertising Response," Marketing Science, INFORMS, vol. 25(3), pages 217-229, 05-06.
    11. Terrell, Dek, 1994. "A Test of the Gambler's Fallacy: Evidence from Pari-mutuel Games," Journal of Risk and Uncertainty, Springer, vol. 8(3), pages 309-317, May.
    12. Nicholas Barberis, 2012. "A Model of Casino Gambling," Management Science, INFORMS, vol. 58(1), pages 35-51, January.
    13. Richard H. Thaler & Eric J. Johnson, 1990. "Gambling with the House Money and Trying to Break Even: The Effects of Prior Outcomes on Risky Choice," Management Science, INFORMS, vol. 36(6), pages 643-660, June.
    14. Flepp, Raphael & Rüdisser, Maximilian, 2019. "Revisiting the house money effect in the field: Evidence from casino jackpots," Economics Letters, Elsevier, vol. 181(C), pages 146-148.
    15. Sridhar Narayanan & Puneet Manchanda, 2012. "An empirical analysis of individual level casino gambling behavior," Quantitative Marketing and Economics (QME), Springer, vol. 10(1), pages 27-62, March.
    16. Fafchamps, Marcel & Kebede, Bereket & Zizzo, Daniel John, 2015. "Keep up with the winners: Experimental evidence on risk taking, asset integration, and peer effects," European Economic Review, Elsevier, vol. 79(C), pages 59-79.
    17. Jonathan Guryan & Melissa S. Kearney, 2008. "Gambling at Lucky Stores: Empirical Evidence from State Lottery Sales," American Economic Review, American Economic Association, vol. 98(1), pages 458-473, March.
    18. Kimberly Moreno & Thomas Kida & James F. Smith, 2002. "The Impact of Affective Reactions on Risky Decision Making in Accounting Contexts," Journal of Accounting Research, Wiley Blackwell, vol. 40(5), pages 1331-1349, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Joshua B. Miller & Adam Sanjurjo, 2014. "A Cold Shower for the Hot Hand Fallacy," Working Papers 518, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    2. Maximilian Rüdisser & Raphael Flepp & Egon Franck, 2017. "Do casinos pay their customers to become risk-averse? Revising the house money effect in a field experiment," Experimental Economics, Springer;Economic Science Association, vol. 20(3), pages 736-754, September.
    3. Stefan Grimm & Martin G. Kocher & Michal Krawczyk & Fabrice Lec, 2021. "Sharing or gambling? On risk attitudes in social contexts," Experimental Economics, Springer;Economic Science Association, vol. 24(4), pages 1075-1104, December.
    4. Alexandros Karakostas & Giles Morgan & Daniel John Zizzo, 2023. "Socially interdependent risk taking," Theory and Decision, Springer, vol. 95(3), pages 365-378, October.
    5. Salaghe, Florina & Sundali, James & Nichols, Mark W. & Guerrero, Federico, 2020. "An empirical investigation of wagering behavior in a large sample of slot machine gamblers," Journal of Economic Behavior & Organization, Elsevier, vol. 169(C), pages 369-388.
    6. Xiao Ma & Seung Hyun Kim & Sung S. Kim, 2014. "Online Gambling Behavior: The Impacts of Cumulative Outcomes, Recent Outcomes, and Prior Use," Information Systems Research, INFORMS, vol. 25(3), pages 511-527, September.
    7. Xue Dong He & Sang Hu & Jan Obłój & Xun Yu Zhou, 2017. "Technical Note—Path-Dependent and Randomized Strategies in Barberis’ Casino Gambling Model," Operations Research, INFORMS, vol. 65(1), pages 97-103, February.
    8. Joshua B. Miller & Adam Sanjurjo, 2015. "Is it a Fallacy to Believe in the Hot Hand in the NBA Three-Point Contest?," Working Papers 548, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    9. Lucks, Konstantin E. & Lührmann, Melanie & Winter, Joachim, 2020. "Assortative matching and social interaction: A field experiment on adolescents’ risky choices," Journal of Economic Behavior & Organization, Elsevier, vol. 170(C), pages 313-340.
    10. M. Pelé & M. Broihanne & B. Thierry & J. Call & V. Dufour, 2014. "To bet or not to bet? Decision-making under risk in non-human primates," Journal of Risk and Uncertainty, Springer, vol. 49(2), pages 141-166, October.
    11. Kim Kaivanto & Eike Kroll, 2014. "Alternation bias and reduction in St. Petersburg gambles," Working Papers 65600286, Lancaster University Management School, Economics Department.
    12. Schmidt, Ulrich & Neyse, Levent & Aleknonyte, Milda, 2019. "Income inequality and risk taking: the impact of social comparison information," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 87(3), pages 283-297.
    13. Martin Adam & Konstantin Roethke & Alexander Benlian, 2022. "Gamblified digital product offerings: an experimental study of loot box menu designs," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(2), pages 971-986, June.
    14. Rau, Holger & Müller, Stephan, 2017. "Decisions under Uncertainty in Social Contexts," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168228, Verein für Socialpolitik / German Economic Association.
    15. Hee Mok Park & Puneet Manchanda, 2015. "When Harry Bet with Sally: An Empirical Analysis of Multiple Peer Effects in Casino Gambling Behavior," Marketing Science, INFORMS, vol. 34(2), pages 179-194, March.
    16. Matteo Benuzzi & Matteo Ploner, 2024. "Skewness-seeking behavior and financial investments," Annals of Finance, Springer, vol. 20(1), pages 129-165, March.
    17. Xue Dong He & Sang Hu & Jan Obłój & Xun Yu Zhou, 2017. "Technical Note—Path-Dependent and Randomized Strategies in Barberis’ Casino Gambling Model," Operations Research, INFORMS, vol. 65(1), pages 97-103, February.
    18. Sang Hu & Jan Obłój & Xun Yu Zhou, 2023. "A Casino Gambling Model Under Cumulative Prospect Theory: Analysis and Algorithm," Management Science, INFORMS, vol. 69(4), pages 2474-2496, April.
    19. He, Kevin, 2022. "Mislearning from censored data: The gambler's fallacy and other correlational mistakes in optimal-stopping problems," Theoretical Economics, Econometric Society, vol. 17(3), July.
    20. Doidge, Mary & Feng, Hongli & Hennessy, David A., 2017. "A test of the gambler’s and hot hand fallacies in farmers’ weather and market predictions," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258457, Agricultural and Applied Economics Association.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormksc:v:41:y:2022:i:3:p:575-592. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.