FISCAL PRESSURE, TAX COMPETITION, AND THE INTRODUCTION OF STATE LOTTERIES

This paper uses discrete-time hazard function estimation methods to ex amine the factors that affect the probability that a state will enact a lottery, where the probability is assumed to depend upon on economic , fiscal, demographic, and political factors. Of special interest is t he hypothesis that a state enacts a lottery in response to fiscal pres sures. The results suggest that fiscal stress played an important role in the early introduction of state lotteries, but this influence has declined in recent years. Rather, political considerations and at temp ts to mimic the behavior of neighboring states now seem the dominant f actors.