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Alistair Bruce of the University of Nottingham examines individual motivations for betting, synthesizing perspectives from economics, psychology, and sociology. His results have important implications for policy makers designing legal and regulatory regimes for betting as well as for those interested in treating the negative effects of “excessive” exposure to betting. The next chapter, by Les Coleman of the University of Melbourne, examines a variety of characteristics of betting markets. He focuses on comparing betting markets to financial markets and then assesses the motivations for gambling. In a similar vein David McDonald, Johnnie Johnson, and Ming-Chien Sung of the University of…

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Introduction While gambling is a common activity for humans, the demand for various types of games and related gaming services is not identical across different regions. Given the differences in social, political, and economic factors, such as culture, education, public administrative structure, regulatory system, income, and so on among different countries in the world, the organization and market performance of casino gaming and gambling in Asia are unique. For example, while the markets in America are largely 56 casinos dominated by gaming machines, it is well-known that Asia is a table-game market (see, e.g., Siu and Eadington 2009). In addition,…

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These markets are chiefly an Internet phenomenon, leveraging the ability of a large number of participants to quickly and cheaply place wagers on the outcome of upcoming elections. The first such market, the Iowa Political Stock Market, was founded in 1988 and involved a few hundred traders playing for modest stakes. More recent incarnations, most prominently Intrade and Betfair, have thousands of traders making millions of dollars in wagers. There is strong evidence that prices in these markets provide accurate forecasts of election outcomes. The prominence of Internet election markets often obscures the long history of such markets. While it…

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An important consideration is that the hot hand and gambler’s fallacies appear at first to be opposite effects. While bettors may believe that long runs in the results of players or teams will continue (the hot hand), they simultaneously believe that long runs should end (the gambler’s fallacy). This begs the question: how can these two apparently opposite effects be explained? One proposed explanation for both fallacies is the representativeness heuristic (Tversky and Kahneman 1971) in which decision-makers believe that sequences should be representative of the generating process. Decision-makers apply the “law of large numbers” too readily; that is, they…

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Charles Clotfelter and Philip Cook (1993) undertook one of the early studies using real betting data to investigate the gambler’s fallacy. The U.S. state of Maryland runs a “daily numbers” draw lottery where a three-digit number between 000 and 999 is picked at random and the bettor wins if he or she selects this number. Clotfelter and Cook found that betting volumes on a number decreased in the days after the number was drawn before returning to original levels after 84 days. It was postulated that bettors could be reducing their bets on numbers that had been drawn previously because…

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Casino gambling has grown substantially in recent years in many parts of the world. While an exhaustive review of the current state of global casino gaming and that growth 30 casinos is beyond the scope of this chapter, it is useful to highlight the forms of taxation used in selected major global casino markets. For a useful overview of casinos around the world, see Thompson 1998. The following section reviews casino taxation in the United States, Singapore, and Macau. United States In the United States casino gambling was first permitted legally in the State of Nevada in 1931 and in…

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Last but not least, another unique feature associated with the practice in Asian casino gaming markets is the relatively high proportion of table games to gaming machines. While the ratio of gaming tables to gaming machines in a typical North America casino is around 30, it is less than 10 in an Asian casino (see, e.g., Siu and Eadington 2009, 45). In one extreme case, for example, there were only 16 tables and no equipped gaming machines, as in the largest casino in Sri Lanka, the Ritz Club (International Land Casinos Directory—Sri Lanka). This unique composition of gaming devices is…

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Despite the conceptual robustness of the law of demand (Marshall [1890] 1997, ch. 3; Samuelson and Nordhaus 1995, 24), it is evident that this concept is not necessarily sufficient to reveal the quantity demanded nor applicable enough to directly uncover the demand behavior of casino gambling in practice (Siu 2007a and 2011). A major issue associated with economic studies is that the unit price paid by individual patrons to enjoy a casino game is unobservable. Indeed, once the odds of casino games are fixed, influences from a number of non-price factors (e.g., traits of a society in terms of its…

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Although the casino industry argues that it spurs local and regional economic growth by providing high-paying jobs and paying taxes and fees to local and state governments, there is little empirical research on the issue. Studies such as Arthur Andersen (1996), commissioned by the casino industry, are biased and amount to little more than static comparisons or listings of taxes paid and employees hired by the casino industry. The lack of empirical studies on the U.S. casino industry is not surprising given the relatively recent expansion of casinos. Even so, there have been few studies on the economic effects of…

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The operation of betting markets is straightforward, which helps in the analysis of decision-making behavior. Specifically, in a betting market individuals are able to place bets on a set of outcomes of a particular event. For instance, in the simplest of markets for betting on a horse race with n runners, n different bets are available, one for each horse to win the race. After the market has closed and the race has taken place, each bet pays a return, £ri, for each £1 staked if horse i wins the race but pays nothing 492 motivation, behavior, and decision-making in…

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