The effects of state lotteries on the pari-mutuel industry

The growth and success of state lotteries in the United States and Canada has been matched by a corresponding decline in pari-mutuel handle and attendance, especially in horse racing, causing speculation about the lotteries' presumed negative impact on that industry. This paper presents evidence showing that lotteries are not responsible for the financial problems of the pari-mutuel industry because many people buy lottery tickets exclusively. Further evidence indicates that the pari-mutuel industry would benefit from a decrease in governments' take-out rate and more vigorous marketing campaigns.