ABSTRACT
This chapter offers a critical review of attempts by British (and American) economists to model the demand for lottery products, in particular the on-line numbers game known as Lotto. Economists’ focus has been to attempt to illuminate the issue of whether or not take-out rates and prize structures have been selected appropriately for the goal of maximizing tax revenue. It will be argued that, notwithstanding the ingenuity shown in modelling exercises, data limitations imply that one must remain fairly agnostic about whether or not variations in takeout or prize structure would, in fact, be capable of further raising the tax-take. However, it will be suggested that an injection of competition into the supply of lottery services could have the potential to reveal more about the nature of demand and to lead to greater expenditure on lottery tickets and consequent increases in tax revenue.
