Social and Spatiotemporal Impacts of Casino Jackpot Events

This study empirically investigates the effect of casino jackpots on the subsequent betting behavior of jackpot winners, their peers, and bystanders playing in nearby slot machines. Jackpots are an important advertising and promotional tool in the casino gambling industry. In this paper, we use a unique data set to measure the impact of a slot machine jackpot event on subsequent gambling behavior. We use a difference in differences method to partition jackpot value into its impact on the post-jackpot behavior of three categories of players: (1) jackpot winners, (2) their peers or partners, and (3) bystanders who are in the proximity of the jackpot event. We find that jackpot events increase gambling expenditures (average slot machine bet amount) and frequency of plays by jackpot winners. The average impact on the jackpot winner is a $39 increase in bet amount per play and a 33% increase in the number of plays for the two-hour period after the jackpot event, whereas the impact on peers is a 21% increase in number of plays in the same period. For bystanders, effects are weaker and dissipate about an hour after the jackpot. Our study of jackpot return on investment shows that 49% of jackpots are profitable for the casino. Our study of the underlying mechanism of winners’ response favors the hot hand effect rather than the house money or gambler’s fallacy effects.