Contemporary Issues in Sports Economics

Contemporary Issues in Sports Economics

Participation and Professional Team Sports

New Horizons in the Economics of Sport series

Edited by Wladimir Andreff

The development of sports economics has exploded in recent years, and this well-researched and relevant book explores some of the most critical themes. Contemporary Issues in Sports Economics examines topics that have previously received little attention in the literature, such as the determinants and social impacts of sports participation including the link to crime levels. The distinguished authors also discuss some of the less investigated aspects of professional team sports, including: • sports betting, financing and governance; • the impact of low scoring matches on competitive balance and fan appeal in European football; and • the effect on player transfers of a luxury tax on club payrolls in Major League Baseball.

Chapter 7: Guessing Who Wins or Predicting the Exact Score: Does it Make Any Difference in Terms of the Demand for Football Pools?

Jaume García, Levi Pérez and Plácido Rodríguez

Subjects: economics and finance, sports


Jaume García, Levi Pérez and Plácido Rodríguez INTRODUCTION The Spanish State Lotteries and Gaming (Loterías y Apuestas del Estado – LAE), a government organisation reporting to the Ministry of Economy and Finance via the State Secretary for Finance and Budgets, controls most legal sports betting in Spain. Sport betting consists of pools and other competitions for forecasting the results of sports events. Despite Spain’s enthusiasm for football, legal sports betting in relation to football is largely limited to people gambling on the outcome of professional football matches through football pools.1 As in the case of lotteries, the introduction of football pools in the gambling market could be explained in terms of the desire of governments to identify a new source of revenue. Furthermore, the exceptional importance of this gambling industry in Spain lies in the scope of its economic and social benefits; generally speaking, the funds obtained have been used to further promote sporting activities. Thus the LAE seeks to maximise revenue for the state or its nominated organisations (such as those promoting sports or the professional football teams). As revenues are a fixed proportion of sales, football pools managers should be motivated to maximise sales. To see if revenue-maximising game designs have been chosen, we need to look at the determinants of participation, which include the price, the size of the prize pool and the difficulty of the game (that is, the probability of winning the top prize, known as a jackpot). 114 M2464 -...

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