Trading as Gambling During Covid-19 Lockdown

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.