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Publication Detail
UPSE DP 2011-03: The Demand for Unfair Gambles: Why Illegal Lotteries Persist

We show how cheating in illegal gambling can be sustained in equilibrium, even when gamblers are aware of it. Not only is cheating profiÂ…t-maximizing for operators, but it can also be utility-maximizing if it provides gamblers the opportunity to engage in other related activities that generate non-monetary rewards, such as practicing superstitions. This, in turn, suggests why legalizing gambling might not fully capture the gains from the illegal market - operators and gamblers both prefer cheating, but this would be harder to hide in a legalized environment. We illustrate the model, generate results, and verify them empirically, using the example of jueteng, an illegal numbers game in the Philippines.

UP-School of Economics
Authors Keywords
Simbolon, Indira; Brooks, Douglas H.; Chun, Natalie; Desierto,Desiree A.; Nye, John V.C.; Pamintuan, Jema M.; crime; millennium development goals (MDG); social protection; structural transformation; gambling; illegal gambling;
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Published in 2011 and available in the UPSE Library or Downloaded 430 times since November 25, 2011
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