Consumer Behaviour in Lotto Markets: The Double Hurdle Approach and Zeros in Gambling Survey Data

Governments world-wide increasingly rely on gambling revenues, increasing the importance of understanding who gambles and why. Previous literature used Tobit and Heckman models to statistically analyze participation in gambling. These models make strong assumptions about the nature of gambling participation. We examine the double hurdle model as an alternative to other statistical approaches to modeling gambling participation and spending. Our results, based on data from a 2002 survey of gambling prevalence in Alberta, clearly prefer the double hurdle mode, which yields different results than the commonly used Tobit model.