Faculty of Business Administration
Decision Sciences

What Drives Lottery Demand? Evidence from China Lottery Practice

Prof. Zhicheng Gao
Full Professor
Carleton University’s School of Mathematics and Statistics
Ottawa, Canada


As governments draw increasing revenues from the lottery industry, it has become academically important, as well as for policy purposes, to better understand the factors that can explain lottery purchase decisions. The traditional literature uses either the expected return of each lottery ticket (effective price approach) or the jackpot size (jackpot approach) to explain the variation of lottery demand. In this talk, we examine these two factors by exploiting a unique lottery game setup in the lottery practice in China. This lottery game is similar to the lotteries in other countries except that there is a cap policy on the grand prize, which limits the reward of each jackpot winner. We prove that this complex cap-policy actually causes both the lottery effective price and the jackpot size to remain almost fixed for the majority of the time while the lottery demand significantly fluctuates. The lack of variation suggests that in China’s practice, neither the effective price nor the jackpot size can explain for the observed variation in lottery sales. Instead, we find that the size of the lottery rollover fits well in explaining for the variation in the lottery demand.

Date: December 15, 2014 (Monday)

Time: 15:00~16:30

Venue: Faculty of Business Administration, E22-2011

A Short Biography of Prof. Gao
Prof. Gao is a Full Professor at Carleton University’s School of Mathematics and Statistics in Ottawa, Canada. He was a visiting professor and Director of the Institute for the Study of Commercial Gaming at University of Macao during the period 2003-2005, and an S.S. Chern Visiting Professor at Nankai University during the period 2005-2008. His research interests are in discrete mathematics, mathematics of gambling, and game theory. He has published over 50 research papers in international journals, such as Journal of Combinatorial Theory, Journal of Graph Theory, Random Structure and Algorithms, SIAM Journal on Computing, and International Gambling Studies. He has given invited talks at numerous international conferences and serves on the editorial boards of International Gambling Studies and Annals of Combinatorics. He has also done consulting works for governments, casino industry, and telecom industry.

Prof. Gao is a graduate from Nanjing University and he obtained his Ph.D. from University of California at San Diego.