Previous studies document a relationship between gambling activity at the aggregate
level and investments in securities with lottery-like features. We combine data on
individual gambling consumption with portfolio holdings and trading records to
examine whether gambling and trading act as substitutes or complements. We find
that gamblers are more likely than the average investor to hold lottery stocks, but
significantly less likely than active traders who do not gamble. Our results suggest
that gambling behavior across domains is less relevant compared to other portfolio
characteristics that predict investing in high-risk and high-skew securities, and that
gambling on and off the stock market act as substitutes to satisfy the same need,
e.g., sensation seeking.
