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Substitution between games in the UK national lottery

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Abstract:

Virtually all lottery agencies offer a variety of games to suit the tastes of players in an attempt to maximize revenue to the government. Using the UK National Lottery, which offers a variety of on-line and scratchcard games, the extent to which there is substitution or complementarity between games is evaluated Employing weekly data from the three UKNL lottery games offered over the sample period, it is found that own-game characteristics have, by far, the largest influence on sales. Some evidence is found suggesting that the lotto and scratchcard games are partial substitutes for one another. Thunderball sales appear independent of the other two games. Some evidence is also found that the Wednesday and Saturday drawings of the lotto game are substitutes. The overall conclusion is that Camelot has successfully designed and marketed three games that each appeal to bettors in different ways. Thus, sales from one game do not seem to seriously cannibalize the sales of the other games, with the exceptions noted above. Further, the introduction of another, temporary game (Big Draw 2000) contributed to net sales. These results also suggest that the games do not appear to be complements to each other, indicating that the various arguments as to why the games may be so (transactions costs, brand awareness, and the portfolio effect) do not appear to be very strong.

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/0003684042000222034

Affiliations: 1: School of Accounting, Economics, and Management Science University of Salford Salford M5 4WT UK 2: Department of Economics Bentley College Waltham MA 02452 USA 3: Department of Economics The Management School Lancaster University Lancaster LA1 4YX UK

Publication date: April 1, 2004

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