Abstract
This paper provides an empirical analysis of the relationships between three popular lottery games in the state of Texas: Lotto Texas, Texas Two Step, and the multi-state Mega Millions game. The analysis suggests complementarity between the Lotto Texas and Mega Millions; habitual players tend to play relatively safer games; the 2006 Lotto Texas rule change decreased revenue substantially; and that only at low effective ticket prices do players purchase more tickets for high stakes/low odds games. We simulate the effective prices at which two games would sell the same number of tickets in the state of Texas. The results suggest that Mega Millions and Lotto Texas are expected to sell more tickets than Texas Two Step, and that Lotto Texas is expected to sell more tickets than Mega Millions at all feasible price levels.
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