Gambling on Lotto Numbers: Testing for Substitutability or Complementarity using Semi-weekly Turnover Data

The impact on demand for a gambling product of the introduction of a competing product is a topical issue in Britain, Ireland and elsewhere. We consider empirically the demand for Lotto itself and for fixed-odds betting on Lotto draw. The evidence suggests that these products are complements. Problems are posed by the need to rely on turnover data instead of price and quantity data in testing for substitutability or complementarity and by the semi-weekly nature of Lotto draws, which prompts the use of a new test for the possible presence of a negative unit root in turnover series.