Trading as Gambling During Covid-19 Lockdown

30 Pages Posted: 1 May 2023

Date Written: April 1, 2023

Abstract

I investigate whether one of the reasons for a significant increase in retail trading during Covid-19 lockdown was the substitution of sports betting with stock trading. I find that the number of retail accounts holding stocks in companies based in states where online sports betting has launched prior to the pandemic during the period the covid-related break in major sporting events in the US has increased, relative to companies based in other states. This supports the substitution effect hypothesis. I also find that the traders have only substituted online sports betting, and not land-based sports betting, for stock trading. My results are driven primarily by the absence of the availability of sports betting, and not by lockdown-induced anxiety, boredom, or lack of alternative activity. The results are stronger for companies in more betting-intensive states, for lottery-like stocks and for companies with a stronger local investing bias.

Keywords: Stock market gambling, retail investors, gambling, sports betting, localized trading.

JEL Classification: G11, G41, G50

Suggested Citation

Orujov, Ayan, Trading as Gambling During Covid-19 Lockdown (April 1, 2023). Available at SSRN: https://ssrn.com/abstract=4423095 or http://dx.doi.org/10.2139/ssrn.4423095

Ayan Orujov (Contact Author)

Bangor Business School ( email )

Bangor Business School
College Road
Gwynedd LL57 2DG, Wales LL57 2DG
United Kingdom

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