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Does what happen in Vegas stay in Vegas? Football gambling and stock market activity

Author

Listed:
  • Justin Cox

    (Appalachian State University)

  • Adam Schwartz

    (Bucknell University)

  • Robert Ness

    (University of Mississippi)

Abstract

We examine whether lagged football betting payoffs result in changes in retail investing in lottery-like stocks. We show that lagged, low betting imbalances are associated with increases in retail stock participation, particularly for lottery-like stocks. This finding implies support for the “break-even” hypothesis that following negative sentiment and losses from football gambling, investors use lottery-like stocks to offset losses or break-even. This result holds for lottery-like stocks defined based on high idiosyncratic volatility and skewness as well as stocks that trade in over-the-counter (OTC) markets. Finally, we address whether the reverse relation exists, finding that only OTC market activity leads to increases in football betting activity but not football betting imbalances. Overall, our paper contributes to the literature investigating the relation between gambling sentiment and stock market activity.

Suggested Citation

  • Justin Cox & Adam Schwartz & Robert Ness, 2020. "Does what happen in Vegas stay in Vegas? Football gambling and stock market activity," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 44(4), pages 724-748, October.
    • Handle: RePEc:spr:jecfin:v:44:y:2020:i:4:d:10.1007_s12197-020-09513-9
    DOI: 10.1007/s12197-020-09513-9
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    Cited by:

    1. Kormanyos, Emily & Hanspal, Tobin & Hackethal, Andreas, 2023. "Do gamblers invest in lottery stocks?," SAFE Working Paper Series 373, Leibniz Institute for Financial Research SAFE, revised 2023.

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    More about this item

    Keywords

    Gambling sentiment; Lottery-like stocks; Football;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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