Can Demographic Variables Predict Lottery and Pari-mutuel Losses? An Empirical Investigation

Using data from the 2004 and 2005 Consumer Expenditure Surveys (CES) comprising of 15,000 respondents, this study examines two research questions. The first of these considers the demographic differences between households whose members lose money playing the lottery and/or engaging in pari-mutuel betting and those whose members do not lose money participating in such activities. The second assesses demographic differences among households whose members lose money playing the lottery and/or engaging in pari-mutuel betting. It was found that respondents living in money-losing households are slightly older, better off financially, more likely to be married or divorced, more likely to live in a state with at least one legal casino and more likely to live in the Northeast than respondents living in non-money-losing households. Among those living in money-losing households, the least wealthy and African American respondents are more likely to lose a higher proportion of their respective incomes purchasing lottery tickets and engaging in pari-mutuel betting than wealthier respondents and whites.