Demand for Lottery Products in Massachusetts

Abstract

The characteristics of demand are examined for the state lottery in Massachusetts, which leads the nation in per capita sales. Cross‐sectional OLS regressions of sales per capita are calculated for 1983 and 1990 for each lottery product using explanatory variables representing education, income, race, ethnicity, and age. The results suggest that the lottery no longer exhibits the degree of tax progressivity it had in earlier years and is currently a regressive source of government revenue. While sales of all lottery products consistently decrease with increasing education levels, this inverse relationship has moderated over time. Ethnicity and race are also becoming less of a factor though race is perhaps still important for lottery products combining relatively small payoffs with a high probability of winning. From 1983 to 1990, the 65 and over age group became a significant factor in raising per capita sales of the Massachusetts lottery, thus raising issues of generational and distributional equity.

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