The effect of local alcohol access on lottery purchases

Abstract

The relationship between gambling and drinking has attracted significant attention from researchers but has been primarily explored in the limited context of laboratory experiments and cross-sectional surveys. In this thesis, I exploit variation in county and city-level 'wet' laws in the state of Texas to estimate the causal effect of local alcohol access on gambling, using per-capita expenditures on two major lottery games, Powerball and Mega Millions, as a measure of gambling consumption. I find that the passage of a city or county-level wet law is associated with a large and significant increase in lottery consumption. While this increase in lottery purchases is observed following the legalization of any alcoholic beverages at the county level, at the city level the effect appears to be driven by laws legalizing the sale of beverages for on-premise consumption. While I cannot distinguish the mechanism by which alcohol availability may affect lottery sales, the implication of this finding is consistent with existing research which finds complementarity between alcohol and gambling.