CORE Metadata, citation and similar papers at core.ac.uk Provided by University of Birmingham Research Archive, E-theses Repository UNDERSTANDING THE IMPACT OF GAMBLING WITH SPECIAL REFERENCE TO THAILAND by VISANU VONGSINSIRIKUL A thesis submitted to the University of Birmingham for the degree of DOCTOR OF PHILOSOPHY Department of Economics Birmingham Business School The University of Birmingham March 2010 University of Birmingham Research Archive e-theses repository This unpublished thesis/dissertation is copyright of the author and/or third parties. The intellectual property rights of the author or third parties in respect of this work are as defined by The Copyright Designs and Patents Act 1988 or as modified by any successor legislation. Any use made of information contained in this thesis/dissertation must be in accordance with that legislation and must be properly acknowledged. Further distribution or reproduction in any format is prohibited without the permission of the copyright holder. ABSTRACT This thesis mainly consists of three empirical chapters related to understanding the characteristics, economic impact and the demand for gambling in Thailand. Beginning with a review of the theoretical and empirical literature, this confirms that socio-economic and demographic data are important determinants of the level of gambling participation and gambling expenditure. A Logit model is then used to estimate the participation of gambling. The results suggest that the number games, such as the government lottery, the underground lottery, are popular among old gamblers whereas football betting is popular for adolescents. In the past, most casino customers were old gamblers, but at present the number of young gamblers who participate in casino has considerably increased. A Tobit model is employed to estimate the level of gambling frequency and gambling expenditure. The estimations reveal that there is a “supplementation effect” of casino on other gambling types and the effect also appears among the number games. The gambling expenditures on the number games are high in the group of gamblers who have undergraduate degree or lower while the expenditures on casino and football betting are high in the group of gamblers who have undergraduate degree. However, a higher education level leads to a lower level of gambling expenditures. The focus is then centred on the 2-3 digit lottery. The rational addiction model is tested for the case of the 2-3 digit lottery. In the addiction framework, the 2-3 digit lottery is found to be an addictive goods and the addiction is “myopic addiction”. This finding is confirmed by Instrumental Variable estimation. DEDICATION To my family ACKNOWLEDGEMENTS I would like to express my gratitude to all those who made it possible for me to complete this thesis. First and foremost thanks go to both of my supervisors, Dr. Siddhartha Bandyopadhyay and Mr. Nicholas Horsewood for opening another window towards Economics to me. Their in-depth insight, invaluable guidance and thoughtful encouragement at all stages of my work led me to complete this thesis. I am very thankful to the members of my thesis committee Professor Somnath Sen, Dr. Arijit Mukherjee, and Dr. Rudra Sensarma for their time in judging this thesis and also giving me the valuable suggestions and corrections to this work. I would also like to thank the Department of Economics at the University of Birmingham for giving me permission to commence this thesis. I would furthermore like to gratefully acknowledge Dhurakij Pundit University, Thailand, for granting me a scholarship. I am also grateful to Assoc. Prof. Dr. Varakorn Samakoses, Prof. Anek Laothamatas, Prof. Pasuk Phongpaijit, Assoc. Prof. Dr. Sungsidh Piriyarangsan, and Assoc. Prof. Dr. Nuannoi Treerat for their encouragement and support. I am also indebt to Miss Natanuj Vanichkul, Dr. Suparerk Pupongsak, Dr. Teerapan Suppa-aim, and Mrs Duangjan Vorakamin for their help. Many special thanks to Miss Supichayar nitadvorakul, Mr. Virot Ali, Miss Ariya Jittithavorn, and all of my friends in Thailand for their moral support. Finally, my deepest gratitude goes to my parents, Suvit and Vanida and my two lovely sisters, Missara and Tarika, for their inspiration and unconditional love throughout my life. TABLE OF CONTENTS Page Abstract Dedication Acknowledgements Table of Contents List of Tables List of Figures CHAPTER ONE: INTRODUCTION…………………………………………………...1-11 1.1 The motivation and importance of the study……...……………………………………….1 1.1.1 Economic and social impact…………………………………………………...……3 1.1.2 Political impact………………………..…………………………….....................…4 1.1.3 Supporting legalisation………………………….......……………………………....5 1.1.4 Opposing legalisation.................................................................................................5 1.2 Objectives of the study…………………………………………………………………….7 1.3 Scope of the study…………………………………………………………………………8 1.4 Outline of the study………………………………………………………………………..9 CHAPTER TWO: A BRIEF LITERATURE REVIEW OF THE THEORY OF DEMAND FOR GAMBLING……………………………………………………...12-44 2.1 Introduction………………………………………………………………………………12 2.2 Theoretical frameworks……………………………..……………………………………13 2.3 Conclusions........................................................................................................................40 Appendix 2A…………………………………………………………………………………43 CHAPTER THREE: THE GAMBLING INDUSTRY IN THAILAND…………..... 45-85 3.1 Introduction……………………………………………........……………………............45 3.2 Background of gambling industry in Thailand…………………………...........................46 3.2.1 The government lottery……………………………………………………………49 3.2.2 The underground lottery…………………………………………………………...50 3.2.2.1 Underground lottery betting network…………………………………….......50 3.2.2.2 The size of the underground lottery…………………………………….……53 3.2.2.3 The underground lottery and politics…………………………………….......54 3.2.3 The 2-3 digit lottery…………………………………………………………….....55 3.2.4 Football betting…………………………………………………………………....55 3.2.4.1 Market structure of football betting business…………………………….......56 3.2.4.2 The football betting network…………………………………………………64 3.2.4.3 Involved money in football betting business…………………………………64 3.2.4.4 Other aspects of football betting……………………………………………..65 3.2.5 Casino betting………………………………………………………………….......66 3.2.5.1 Earlier studies………………………………………………………………...66 3.2.5.1.1 Large organised casinos…………………………………………….....67 3.2.5.1.2 Neighbourhood gambling dens………………………………………..68 3.2.5.1.3 Flying casinos………………………………………………………….68 3.2.5.2 Later studies………………………………………………………………….69 3.2.5.2.1 Home/flying casinos ……………………………………………......71 3.2.5.2.2 Domestic permanent casino …………………………………………...73 3.2.5.2.3 Casinos in neighbouring countries…………………………………….74 3.2.5.2.4 Casinos in other countries……………………………………………..77 3.2.5.3 The economics of casinos…………………………………………………….78 3.3 Conclusions………………………………………………………....................................81 Appendix 3A…………………………………………………………………........................82 CHAPTER FOUR: ESTIMATING THE CHARACTERISTICS OF GAMBLERS……………………………………………………………………….86-170 4.1 Introduction…………………………………………………………………....................86 4.2 Literature review: Prevalence of gambling participation………………………..............87 4.3 The empirical works………………………………………………………………….......90 4.3.1 Methodology…………………………………………………………………........90 4.3.2 Model estimated…………………………………………………………………...92 4.3.3 Data…………………………………………………………………......................93 4.3.3.1 The first survey……………………………………………………………….93 4.3.3.2 The second survey……………………………………………………………98 4.3.3.3 The third survey……………………………………………………………..103 4.3.4 Empirical results………………………………………………………………….111 4.4 Discussion…………………………………………………………………....................155 4.5 Conclusions…………………………………………………………………..................161 Appendix 4A…………………………………………………………………......................164 CHAPTER FIVE: ESTIMATING THE EFFECTS OF SOCIO-ECONOMIC FACTORS ON GAMBLING EXPENDITURES…….171-231 5.1 Introduction…………………………………………………………………..................171 5.2 Literature review: Prevalence of gambling expenditure………………………………..172 5.2.1 Pent-up demand…………………………………………………………………..173 5.3 The empirical work…………………………………………………………………......176 5.3.1 Methodology…………………………………………………………………......176 5.3.2 Model estimated…………………………………………………………………....177 5.3.3 Data………………………………………………………………….....................178 5.3.3.1 The first survey……………………………………………………………...178 5.3.3.2 The second survey…………………………………………………………..183 5.3.3.3 The third survey……………………………………………………………..186 5.3.4 Empirical results………………………………………………………………….191 5.3.4.1 Income elasticity of demand………………………………………………...206 5.3.4.2 Pent-up demand estimates…………………………………………………..209 5.4Discussion…………………………………………………………………...................2010 5.5 Conclusions…………………………………………………………………..................220 Appendix 5A…………………………………………………………………......................223 Appendix 5B………………………………………………………………….......................229 CHAPTER SIX: GAMBLING DEMANDS ESTIMATING THE DEMAND OF 2-3 DIGIT LOTTERY………………………232-275 6.1 Introduction…………………………………………………………………..................232 6.2 Literature Review: Prevalence of the demand for the number game…………………...236 6.2.1 The expected price against the actual price………………………………………244 6.3 The Empirical Works and discussion…………………………………………………...247 6.3.1 The estimate of 2 digit 20 baht lottery…………………………………………...247 6.3.1.1 Methodology………………………………………………………………...247 6.3.1.2 Model estimated…………………………………………………………….248 6.3.1.3 Data………………………………………………………………….............249 6.3.1.4 Empirical