Gambling on Lotto Numbers: Testing for Substitutability or Complementarity
using Semi-weekly Turnover Data
JEL Classification L83, D12, D81
Catriona Purfield and Patrick Waldron
Department of Economics, Trinity College, Dublin 2, Ireland.
AbstractThe impact on demand for a gambling product of the introduction
of a competing product is a topical issue in Britain, Ireland and elsewhere. We
consider empirically the demand for Lotto itself and for fixed-odds betting on
Lotto draw. The evidence suggests that these products are complements. Problems
are posed by the need to rely on turnover data instead of price and quantity
data in testing for substitutability or complementarity and by the semi-weekly
nature of Lotto draws, which prompts the use of a new test for the possible
presence of a negative unit root in turnover series.
AcknowledgementsWe are extremely grateful to the Allied Betting Shops
Association and its member firms and to An Post National Lottery Company,
Ireland for giving us access to their turnover data. We would also like to thank
our colleagues John Fingleton, Michael Harrison, Antoin Murphy and John O'Hagan
and seminar participants at Trinity College and at the Irish Economics
Association Annual Congress held at Dromoland Castle in April 1996 for their
advice and comments. Catriona Purfield would like to thank the Royal Irish
Academy which awarded a postgraduate essay prize to the preliminary research.