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SETTING THE ODDS OF WINNING THE JACKPOT: ON THE ECONOMICS OF (RE) DESIGNING LOTTERY GAMES
Contemporary Economic Policy  (IF0.943),  Pub Date : 2020-03-26, DOI: 10.1111/coep.12475
Alejandro Díaz, Levi Pérez

In many jurisdictions, domestic lotto games have experienced a decline in sales revenue due to the introduction of new products and the absence of appealing jackpots. To reverse this trend, operators worldwide have conducted major reforms to the design of games. In this paper, we focus on Spain's largest domestic lottery game, which was redesigned in 2012 by significantly reduced the odds of winning the jackpot to produce more frequent and larger rollovers. Findings show overall negative results of such reform, as players seem to no longer react to large jackpots, and the declining trend in sales has even worsened. (JEL D12, H27, L83)