What jackpot? The optimal lottery tax |
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Authors: | Michael Beenstock Ephraim Goldin Yoel Haitovsky |
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Institution: | a Department of Economics, The Hebrew University of Jerusalem, Mount Scopus, Jerusalem 91905, Israel;b GSTAT, Advanced Information Systems, 11 Hameasef St., Jerusalem 94386, Israel |
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Abstract: | The payout rate on lotto is normally fixed. We show that such a policy is generally suboptimal from the lotto authorities' point of view. The payout rate should be allowed to vary according to the number of rollovers that have occurred. To illustrate our argument, we simulate and optimize an econometric model of the lotto market in Israel. We also consider whether it is profitable to increase the frequency of lotto from once to twice a week. |
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Keywords: | Jackpot Lottery Tax |
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