Open Access Open Access  Restricted Access Subscription or Fee Access

EVALUATING THE EFFECTS OF GAME DESIGN ON LOTTO SALES: A CASE STUDY FROM SPAIN

David Forrest, Levi Perez, Rose Baker

Abstract


In February, 2005 the Spanish National Lottery Agency (LAE) made several modifications to the design of one of its lotto games. The entry fee was not changed but the familiar 6/49 format was replaced by 5/54 + 1/10. This considerably lengthened the odds against winning a share of the grand prize. However, extra lower tiers of prizes were added and a guaranteed jackpot of €5m introduced. The change in rules provides an unusual opportunity to study the effect on sales of features of lotto games other than entry fee and pay-back rate. The changes in design appear in this case to have allowed the operator to achieve higher and more stable sales. Reasons for this are explored through estimation of demand models. Results indicate that gains to the operator had been achieved by better satisfying players’ preference for skewness in the distribution of returns.


Keywords


lotto, game design, ticket sales, effective price, risk preferences

Full Text:

PDF

References


Baker, R.D. and I.G. McHale (2009), “Modelling the probability distribution of prize winnings in the UK National Lottery: consequences of conscious selection”, Journal of the Royal Statistical Society, Series A, on-line, DOI: 10.1111/j.1467-985X.2009.00599x

Cook, P. and C. Clotfelter (1993), “The peculiar scale economies of lotto”, American Economic Review 83, 634-643.

Farrell, L., E. Morgenroth, and I. Walker (1999), “A time series analysis of U.K. lottery sales: Long and short run price elasticities”, Oxford Bulletin of Economics and Statistics 61, 513-26.

Farrell, L. and I. Walker (1999), “The welfare effects of lotto: Evidence from the UK”, Journal of Public Economics 72, 99-120.

Forrest, D., O.D. Gulley and R. Simmons (2000), “Elasticity of demand for U.K. National Lottery tickets”, National Tax Journal 53, 853-63.

Forrest, D., R. Simmons and N. Chesters (2002), “Buying a dream: Alternative models of demand for lotto”, Economic Inquiry 40, 485-496

Golec, J. and M. Tamarkin (1998), “Bettors love skewness, not risk, at the horse track”, Journal of Political Economy, 106, 205-225.

Gulley, O. D. and F. Scott (1993), “The demand for wagering on state-operated lotto games”, National Tax Journal 46, 13-22.

Matheson, V. and K. Grote (2005), “Rationality and efficiency in lotto games” in Information Efficiency in Financial and Betting Markets (ed.) L. Vaughan-Williams, Cambridge University Press,Cambridge.

Phillips, J. (1987), The NAG Library: a beginner’s guide, Oxford University Press, New York.

Scott, F. and O. D. Gulley (1995), “Testing for efficiency in lotto markets”, Economic Inquiry 33, 175-188.

Walker, I. (1998), “The economic analysis of lotteries”, Economic Policy 13, 359-392.

Walker, I and J. Young (2001), “An economist’s guide to lottery design”, Economic Journal 111, F700-F722.

Wolfsen, S. and P. Briggs (2002), “Locked into gambling: anticipatory regret as a motivator for playing the National Lottery”, Journal of Gambling Studies 18, 1-17.




DOI: https://doi.org/10.5750/jgbe.v4i2.552

Refbacks

  • There are currently no refbacks.