Interstate Competition and State Lottery Revenues

In this article we use data on lottery sales for all 55 counties in West Virginia over the period 1987–2000 to examine in a dynamic framework the determinants of lottery revenues. While we examine more generally the determinants of lottery revenues, we focus on the effects of the introduction of new neighboring state lottery games on West Virginia lottery revenue generating capabilities. Our findings indicate that border state competition is an important determinant of lottery sales. The introduction of new competing games within West Virginia also has significant effects on sales of traditional lottery games.