A Microeconometric Analysis of the Expenditure and the Frequency of Purchase of Football Pools Bets

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A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
Jaume Garcia Departament dEconomia i Empresa.
Universitat Pompeu Fabra Levi Pérez Departamento
de Economía. Universidad de Oviedo Plácido
Rodríguez Departamento de Economía. Universidad
de Oviedo
X Annual Conference Laboral.Paraninfo EU
Jovellanos Universidad de Oviedo 2008, May 9th
and 10th. Gijon. Spain
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Structure of the presentation

• 1. Introduction Goals, Backgrounds References

2. Football pools in Spain. La Quiniela
3. Data set and variables. The Euronet 2005
survey
4. Econometric model
5. Empirical findings
A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
3
Introduction Goals, Backgrounds and References
García and Roodriguez (2007) brought some
evidence at an aggregate level about the
determinants of the demand for football pools in
Spain.
.
THE DEMAND FOR FOOTBALL POOLS IN SPAIN THE ROLE
OF PRICE, PRIZES AND THE COMPOSITION OF THE
COUPON Garcia and Rodriguez (2007) In particular
the effect of the price of the coupon, the
structure of prizes and the composition of the
coupon are analyzed, finding that the face value
and the jackpot, but not the effective price,
have significant effects on sales and that the
non presence of First Divison teams in the coupon
reduces significantly the amount of sales.
A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
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Introduction Goals, Backgrounds and References
In a recent paper García, Pérez and Rodriguez
(2008) analyse the effect of having a
professional football team of the Spanish First
or Second Division in a certain province on the
amount of sales of football pools in that
province.
FOOTBALL POOLS SALES HOW IMPORTANT IS TO HAVE A
FOOTBALL CLUB IN THE TOP DIVISIONS? García, J.,
Pérez, L., and Rodríguez, P. (2008) Using a
panel data set at provincial level for the years
1985-2005, show that having a club in the top
divisions has a significant effect on sales of
football pools. This paper also provides evidence
showing football pools to be a normal good.
A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
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Introduction Goals, Backgrounds References
Given the characteristics and the frequency of
the data the previous papers used nothing is
known about the effect of socio-demographic
variables on the demand for football pools. In
this paper we use the SPANISH EURONET 2005 survey
which was commisioned by Loterías y Apuestas del
Estado (LAE), the Spanish lottery agency, in
order to
characterize the profile of those who buy
football pool bets (La Quiniela) and how often
they play.
Additionally, the survey contains information
about the monthly expenditure on La Quiniela.
A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
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Football pools in Spain. La Quiniela 1X2
La Quiniela is a pari-mutuel game where prizes
represent a share of sales revenue and players
have the possibility of choosing the final result
of each match among three alternatives home win
(1), draw (X) and away win (2).
Each coupon is composed of either 14 or 15
matches corresponding, in general, to Spanish
First and Second Division teams.
A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
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Football pools in Spain. La Quiniela 1X2
About the structure of Prizes

• To win the first prize, players have to correctly
  guess 14 results, with the exception of the
  period between the start of the 1988-89 season
  and the end of the 2002-03 season when 15 instead
  of 14 matches were included in the coupon (Pleno
  al 15). This extra match was introduced again in
  2005-06.
• Until the 1988-89 season, those correctly
  predicting 14, 13 and 12 results obtained prizes
  and when there were no winners of the first
  prize, those getting 11 right also won a prize.
• Since then, if there are no winners of the first
  prize, this money rolls over, and since the
  1991-92 season, those guessing 11 results have
  won a prize. Since the 2003-04 season players who
  get right 10 won a prize.

A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
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Football pools in Spain. La Quiniela 1X2
Football pools (La Quiniela) were introduce in
Spain in the 1946-47 season and it is managed by
a public institution Loterías y Apuestas del
Estado (LAE) which also manages most of the
lotteries in Spain.
For several years La Quiniela, together with the
Lotería Nacional and the ONCE Lottery (passive
games) were the only betting games available in
Spain
Ever, since 1985, La Quiniela has been competing
with another active lotto game, La Primitiva, and
all the new games launched by LAE with a similar
structure.
In 1970, the price of a bet was 0.03, whereas
since the 2003-04 season the price has been 0.50
A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
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Football pools in Spain. La Quiniela 1X2
Currently, football pools spending seems to
recover but it is now suffering the savage
competition of the on-line betting. But it is
another history.
A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
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Football pools in Spain. La Quiniela 1X2
The exceptional importance of the football pools
industry in Spain Economic and social benefits
In the beginning Spanish charity organizations
were the main institutions favoured by the funds
obtained through sport betting. Later, these
benefits were distributed to other institutions
1950s Sports organizations began to receive a
share of total revenue
1980s The claims of professional football
temas were considered.
Also, special events beneffited and sports
organizations beneffited from football pools
1982 Football World Cup
1992 Olympic Games (Barcelona)
A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
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Football pools in Spain. La Quiniela 1X2
2005 493.63 million
49.36 million
55 Prizes 10 - 15 12 - 14 24 -
13,12,11 09-10
10 LFP Spanish Professional Football League
12.42 Gov. Public Exchequer
10.60 LAE Administration and distribution
expenses
271.50 million
1 CSD National Council of Sports
54.2 million
10.98 CCAA Provincial Governments
61.31 million
4.94 million
52.32 million
A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
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Data set and variables
Spanish EuroNet Survey 2005
Sample size 1412
Variables on frequency and expenditure (dependent
variables)

• Do you know the football pools? YES (93.9)
  NO (06.1)
• Have you ever played to football pools? YES
  (53.62) NO (46.38)

Frequency Every week (03.8) At least
once a month (23.49) Less frequently
(72.71)

• Do you play alone or syndicate?
• Alone (52.03) Syndicated (45.64)
  Both (02.33)

A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
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Data set and variables
Spanish EuroNet Survey 2005
Sample size 1412
Variables on frequency and expenditure (dependent
variables)

• How many euros do you expend monthly?

Variable Obs Mean Std.
Dev. Min Max -------------
--------------------------------------------------
-------------- p6f_5 497
5.61992 11.53042 0 126
A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
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Data set and variables
Spanish EuroNet Survey 2005
Sample size 1412
About players preferences

• Which type of game do you prefer?
• Games more difficult to succeed but with higher
  prizes (51.29)
• Easy games though the amount of the top prize
  could be smaller (36.41)
• Both games (12.3)

• The most important game feature is
• Funny (29.98)
• Top prize (58.04)
• Both features (11.98)

A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
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Data set and variables
Spanish EuroNet Survey 2005
Sample size 1412
Football pools features

• Funny (37.42)
• Easy to play (13.54)
• Exceptional top prize (04.56)
• Frequent small prizes (05.91)
• Know many people who plays (17.03)
• Prizes help to cover some needs (10.76)
• Good ratio price of the bet / top prize (11.26)
• Easy to win some prize (18.53)

A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
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Data set and variables
Spanish EuroNet Survey 2005
Sample size 1412
Socio-demographic variables (independent
variables)

• Gender Male (46.74) Female (53.26)
• Age Variable Obs Mean
  Std. Dev. Min Max
• ------------- ----------------------
  -------------------------------------------
• p0_2 1412 46.18484
  17.52958 18 93

• Being the head of the household Yes
  (49.64) No (50.36)

• Childrens lt 18 years old Yes (27.19) No
  (72.81)

A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
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Data set and variables
Spanish EuroNet Survey 2005
Sample size 1412
Socio-demographic variables (independent
variables)

• Employment status
• Employee (49.37)
• Unemployed (07.22)
• Retired (17.78)
• Student (07.5)
• Homemaker (18.13)

Occupation? 24 different occupations!!!

• Education

• People at home

Variable Obs Mean Std. Dev.
Min Max ------------
--------------------------------------------------
---------------- pc9 1379
3.011603 1.296925 1 11
A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
18
Data set and variables
Spanish EuroNet Survey 2005
Sample size 1412
Socio-demographic variables (independent
variables)

• After tax household monthly income

A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
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Econometric models
The empirical aim is to study the socioeconomic
features of the individuals who affect the
frequency of purchase of football pools bets. The
models of discreet choice (election) are a good
tool to catch the way in which certain attributes
affect the frequency of purchase.
The econometric models we use take into account
the particular features of the dependent variables
Specifically, because the categories of the
frequency of purchase are in order, the ordered
logit model seems to be the appropiated model to
carry out this analysis.
Nevertheless, the inflexibility that imposes the
ordered specification makes necessary the use of
more flexible models, as the multinomial logit
model.
A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
20
Econometric models
LOGIT MODEL In particular, we use both Logit
models (ordered and multinomial) to analyze how
frequently an individual buys football pools
bets, given that we have a quantitative measure
of this frequency (every week, at least once a
month, less frequently or never).
DOUBLE HURDLE MODEL On the other hand for the
expenditure equations we will allow for different
speccifications for explaining whether you
purchase or not coupons and the amount of money
you spend, i.e., we will use a double hurdle
model. NOTE Nevertheless, in this first stage
of the investigation(research) we choose to
estimate a tobit model
A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
21
Empirical findings
A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
22
Empirical findings
A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
23
Empirical findings
A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
24
Empirical findings
A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain
25
A Microeconometric Analysis of the Expenditure
and the Frequency of Purchase of Football Pools
Bets in Spain