Financial Instruments with Sports Betting Components :Marketing Gimmick or A Domain for Behavioral Finance?

We examine a certain class of new financial instruments which are designed aslotteries on the outcome of prominent sports events like the Soccer World Cup 2006. We areable to explain why there might be a positive demand for such sports-related financialinstruments even if we take riskless lending/borrowing and the direct placement of bets asalternatives into account and stick to the assumption of homogeneous expectations. To do so,we need a combination of the cumulative prospect theory and the hedonic framing rule.