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Upping the Ante for Lotto: a Strategy for Enhancing State Revenues

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  • John F. Scoggins

    (University of Florida)

Abstract

Many state lottery agencies operate a numbers game in which a grand prize accumulates (i.e. "rolls over") until at least one player wins it. This type of game is usually called a "lotto. " This article investigates the possibility of enhancing net revenues from a lotto by artificially increasing the expected grand prize amount with funds not generated by the game itself. Using data from the Florida Lotto, a time series regression for weekly ticket sales is estimated. Also introduced is a limited dependent variable model to estimate the probability that the grand prize will roll over as afunction of ticket sales. This model is based on a variation of the binomial distribution. The findings are that net revenues can be increased by artificially increasing the grand prize, but the timing of the increase has a large impact on the expected rate of return.

Suggested Citation

  • John F. Scoggins, 1994. "Upping the Ante for Lotto: a Strategy for Enhancing State Revenues," Public Finance Review, , vol. 22(2), pages 258-264, April.
    • Handle: RePEc:sae:pubfin:v:22:y:1994:i:2:p:258-264
    DOI: 10.1177/109114219402200206
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    References listed on IDEAS

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    1. Gulley, O. David & Scott, Frank A. Jr., 1989. "Lottery Effects on Pari-Mutuel Tax Revenues," National Tax Journal, National Tax Association, vol. 42(1), pages 89-93, March.
    2. Borg, Mary O. & Mason, Paul M., 1988. "The Budgetary Incidence of a Lottery to Support Education," National Tax Journal, National Tax Association, vol. 41(1), pages 75-85, March.
    3. Thaler, Richard H & Ziemba, William T, 1988. "Parimutuel Betting Markets: Racetracks and Lotteries," Journal of Economic Perspectives, American Economic Association, vol. 2(2), pages 161-174, Spring.
    4. Thiel, Stuart E., 1991. "Policy, Participation and Revenue in Washington State Lotto," National Tax Journal, National Tax Association;National Tax Journal, vol. 44(2), pages 225-235, June.
    5. Borg, Mary O. & Mason, Paul M., 1988. "The Budgetary Incidence of a Lottery to Support Education," National Tax Journal, National Tax Association;National Tax Journal, vol. 41(1), pages 75-85, March.
    6. Thiel, Stuart E., 1991. "Policy, Participation and Revenue in Washington State Lotto," National Tax Journal, National Tax Association, vol. 44(2), pages 225-35, June.
    7. John E. Filer & Donald L. Moak & Barry Uze, 1988. "Why Some States Adopt Lotteries and others Don'T," Public Finance Review, , vol. 16(3), pages 259-283, July.
    8. Gulley, O. David & Scott, Frank A. Jr., 1989. "Lottery Effects on Pari-Mutuel Tax Revenues," National Tax Journal, National Tax Association;National Tax Journal, vol. 42(1), pages 89-93, March.
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    Cited by:

    1. Terry Ashley & Yi Liu & Semoon Chang, 1999. "Estimating net lottery revenues for states," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 27(2), pages 170-178, June.
    2. Scoggins, John F., 1995. "The Lotto and Expected Net Revenue," National Tax Journal, National Tax Association;National Tax Journal, vol. 48(1), pages 61-70, March.
    3. Scoggins, John F., 1995. "The Lotto and Expected Net Revenue," National Tax Journal, National Tax Association, vol. 48(1), pages 61-70, March.

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