Resource title

Optimal taxation of gambling and lotto

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Resource description

Bets are analyzed using an intertemporal, state dependent expected utility model with non-linear probability weighting. Gamblers face a tradeoff between long-run expected utility from wealth and the short-run and fading emotional utility from gambling. Different wager tax bets, including lotto, are compared in various settings (fair bet versus monopoly). Reaction patterns are analyzed with respect to tax rates, the price of tickets, jackpots and the 'scale' of the gamble. It is shown that optimal tax rates are higher for larger lotto communities, jackpots induce overshooting 'bubbles' and taxes on lotto and fix-prize gambles are regressive. (author's abstract) ; Series: Working Papers Series "Growth and Employment in Europe: Sustainability and Competitiveness"

Resource author

Herbert Walther

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Resource publish date

Resource language

en

Resource content type

application/pdf

Resource resource URL

http://epub.wu.ac.at/1418/1/document.pdf

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Adapt according to the license agreement. Always reference the original source and author.