Betting Longshots: 

The Effect of Increased Gambling Awareness and Accessibility on Retail Trading

Author(s): Spencer Wyld

Presentations: FMA 2024, SWFA 2024, University of Arkansas 2024

Abstract: This paper explores how retail trading is affected by the recent surge in gambling awareness and accessibility due to legal changes in sports betting and large structural changes in multi-state lotteries. We measure and compare the impact of skilled (sports betting) and non-skilled (lottery) gambling on retail traders’ preferences for stock characteristics. Our indicator variable for legalization is relative both to other non-gambling states but also the same state prior to legalization. Stocks headquartered in states which legalize sports betting see a reduction in retail trading. This reduction is larger for stocks with lottery-like characteristics. However, in aggregate, retail trading of lottery-like stocks increases as the fraction of US population allowed to bet on sports increases. For our non-skilled test using the jackpots of the multi-state lotteries, we do not see a significant relationship with lottery like qualities. These results show a difference in the impact of skilled and non-skilled gambling on retail traders.

Getting the Full Story?:

The Effects of the News Cycle on Trading Volume

Author(s): Spencer Wyld

Presentations: SWFA 2024, University of Arkansas 2024

Abstract: This paper explores how the reporting of news over time, the news cycle, affects intraday investor behavior. We measure news events as the time from the first major news agency (AP, Reuters, AFP) report relevant to a stock during the trading day till when news about that firm reaches its highest level of coverage during the remainder of the trading day.  We find that the impact of news is determined in its place within the news cycle with trading volume increasing before a story reaches peak coverage. We observe no major differences in directional responses by institutional and retail traders. Overall, we conclude that news matters, but more importantly news matters more when it is contextualized within its location in the news cycle. 

The Effects of News on Retail Investor Trading

Author(s): Matthew Crook, Andrew Lynch, Brian Walkup and Spencer Wyld

Presentations: SFA 2022, SWFA 2023, University of Arkansas 2022

Abstract: We explore the effect of media attention on investor decision making. Using TAQ data from January 2009 through December 2021, we examine the intraday impact of media attention on the trading of retail and institutional investors. We find retail traders less responsive to the existence of news than institutional investors, but more responsive to the number of covering news outlets. While institutional investors trade on news within the 10-minute period in which it is published, retail traders continue to trade as much as 30-minutes following its publication. Overall, we find retail traders more reactive to the attention given to firm news than its content.