Way up the cost: Will the increased price of National Lottery tickets affect sales?

The following blog is based on a short article that I wrote for Nottingham Trent University’s Expert Opinion column published earlier this year (January 29, 2013) and is a written version of many of the comments I made in national and local  BBC radio interviews yesterday.

This week Camelot Plc increased  the price of a Lotto ticket from £1 to £2 – but will this 100% price increase have any effect on whether people play the bi-weekly game? My own view is that although there may be a dip in overall sales when the price of the tickets first increases, over time, sales are likely to return to pre-price increase levels.

The price of buying a lottery ticket is just one of many inter-connected structural characteristics that help determine whether potential players will play the lottery. Other structural characteristics in gambling activities include the size of the jackpot, the number of smaller prizes, the probability of winning the jackpot and / or smaller prizes, the speed of the game, how quickly players receive their winnings, the ease of playing the game, whether the game is chance-based or requires some skill, the number of chances to gamble on a single event, etc.

The chance of winning the bi-weekly lottery is an incredible one in 14 million. But is playing Lotto a tribute to public innumeracy and totally irrational? Not necessarily. Lotto offers a low-cost chance of winning a very large life-changing amount of money. Many psychologists would argue that playing Lotto is entirely rational behaviour given the small cost involved. Basically, it’s a small cost for millions of people buying hope. More importantly, we know that most players don’t think about the actual probability of winning but concentrate on the amount that could be won (i.e., the jackpot size). Players may also rationalize that the cost of a ticket is still cheaper than buying a pint of lager in a pub or a coffee atStarbucks.

Jackpot size is one of the most important factors in whether people play the lotto. The fact that the ticket price is doubling doesn’t take away the fact that there will still be an enormous jackpot. Additionally, to soften the blow of the increased price, the amount that can be won for matching three numbers will increase from £10 to £25. This again is likely to help sales maintenance. And if people do feel that £2 is too much for a single ticket, there are plenty of other games in the national lottery portfolio to choose from.

Another factor that is important in lottery profitability for the operators is that we tend to overestimate positive outcomes and underestimate negative ones. If someone is told they have a one in 14 million chance of being killed that day they would hardly give it a second thought because the chances are tiny. Given the same probability of winning Lotto people suddenly become over-optimistic (“It could be you!”).

The media also plays a part. By providing widespread coverage for the few huge winners, it helps us forget the millions of people who lost! Finally, for regular players who choose the same numbers every week, they become ‘entrapped’ fearing that the one week they don’t play will be the week their numbers will come up. Players who have picked the same numbers for years are still likely to play despite the price increase for the same reason.

The bottom line is that Camelot will have done lots of market research to determine whether players will be prepared to pay more money to play Lotto. Major decisions about pricing are key to future success and increased profits. If people stop playing Lotto in their masses, a return to a lower price will be inevitable. However, my guess is that most current Lotto players will continue to play a game as the thought of winning millions of pounds outweighs the price increase.

Dr Mark Griffiths, Professor of Gambling Studies, International Gaming Research Unit, Nottingham Trent University, Nottingham, UK

Further reading

Arkes, H.R. & Blumer, C. (1985). The psychology of sunk cost.  Organizational Behavior and Human Decision Processes, 35, 124-140.

Griffiths, M.D. (1997). The National Lottery and instant scratchcards: A psychological perspective. The Psychologist: The Bulletin of the British Psychological Society, 10, 26-29.

Griffiths, M.D. (1997). Selling hope: The psychology of the National Lottery. Psychology Review, 4, 26-30..

Griffiths, M.D. (2008). Problem gambling and European lotteries. In M. Viren (Ed.), Gaming in New Market Environment. pp. 126-159. New York: Macmillan Palgrave.

Griffiths, M.D. (2010). The effect of winning large jackpots on human behaviour. Casino and Gaming International, 6(4), 77-80.

Griffiths, M.D. (2011). Gambling, luck and superstition: A brief psychological overview. Casino and Gaming International, 7(2), 75-80.

Griffiths, M.D. & Wood, R.T.A. (2001). The psychology of lottery gambling. International Gambling Studies, 1, 27-44.

Kahneman, D. & Tversky, A. (1973). Availability: A heuristic for judging frequency and probability. Cognitive Psychology, 5, 207-233.

Langer, E.J. (1975). The illusion of control. Journal of Personality and Social Psychology, 32, 311-328.

Langer, E.J. & Roth, J. (1975). The effect of sequence outcome in a chance task on the illusion of control. Journal of Personality and Social Psychology, 32, 951-955.

Tversky, A. & Kahneman, D. (1971). Belief in the law of small numbers. Psychological Bulletin, 76, 105-110.

Walker, M.B. (1992). The Psychology of Gambling. Pergamon, Oxford.

Wagenaar, W. (1988). Paradoxes of Gambling Behaviour. Erlbaum, London.

Wood, R.T.A. & Griffiths, M.D. (2004). Adolescent lottery and scratchcard players: Do their attitudes influence their gambling behaviour? Journal of Adolescence, 27, 467-475.

About drmarkgriffiths

Professor MARK GRIFFITHS, BSc, PhD, CPsychol, PGDipHE, FBPsS, FRSA, AcSS. Dr. Mark Griffiths is a Chartered Psychologist and Professor of Behavioural Addiction at the Nottingham Trent University, and Director of the International Gaming Research Unit. He is internationally known for his work into gambling and gaming addictions and has won many awards including the American 1994 John Rosecrance Research Prize for “outstanding scholarly contributions to the field of gambling research”, the 1998 European CELEJ Prize for best paper on gambling, the 2003 Canadian International Excellence Award for “outstanding contributions to the prevention of problem gambling and the practice of responsible gambling” and a North American 2006 Lifetime Achievement Award For Contributions To The Field Of Youth Gambling “in recognition of his dedication, leadership, and pioneering contributions to the field of youth gambling”. His most recent award is the 2013 Lifetime Research Award from the US National Council on Problem Gambling. He has published over 600 research papers, four books, over 130 book chapters, and over 1000 other articles. He has served on numerous national and international committees (e.g. BPS Council, BPS Social Psychology Section, Society for the Study of Gambling, Gamblers Anonymous General Services Board, National Council on Gambling etc.) and is a former National Chair of Gamcare. He also does a lot of freelance journalism and has appeared on over 2000 radio and television programmes since 1988. In 2004 he was awarded the Joseph Lister Prize for Social Sciences by the British Association for the Advancement of Science for being one of the UK’s “outstanding scientific communicators”. His awards also include the 2006 Excellence in the Teaching of Psychology Award by the British Psychological Society and the British Psychological Society Fellowship Award for “exceptional contributions to psychology”.

Posted on October 4, 2013, in Addiction, Advertising, Gambling, Gambling addiction, Lottery, Marketing, Online gambling, Popular Culture, Problem gamblng, Psychology and tagged , , , , , , , , , . Bookmark the permalink. Leave a comment.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: