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Gambling on Crypto Tokens?

Published online by Cambridge University Press:  03 February 2025

Sudheer Chava ,
Fred Hu  and
Nikhil Paradkar Open the ORCID record for Nikhil Paradkar [Opens in a new window]
Sudheer Chava
Affiliation:
Georgia Institute of Technology Scheller College of Business
Fred Hu
Affiliation:
Georgia Institute of Technology Scheller College of Business
Nikhil Paradkar*
Affiliation:
https://ror.org/00te3t702 University of Georgia Terry College of Business
*
nikhil.paradkar@uga.edu (corresponding author)
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Abstract

We proxy retail investor attention through Google Trends and find that fungible and non-fungible crypto tokens generate greater attention from high-gambling propensity regions. Crypto attention is higher during bubble-like episodes in the crypto market and for more lottery-like tokens. Moreover, retail crypto attention decreases after sports gambling is legalized. Higher token attention is associated with more contributors and higher fundraising. However, consumer credit default rates spike after periods of high crypto attention, but solely in the subprime segment. Overall, our findings suggest that gambling preferences strongly predict retail investor interest in the crypto market.

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Type
Research Article
Information
Journal of Financial and Quantitative Analysis , First View , pp. 1 - 28
Copyright
© The Author(s), 2025. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

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Footnotes

We thank Hendrik Bessembinder (the editor), Lin William Cong, Wendi Du, Glenn Harrison, John Kim, Alok Kumar, Jiasun Li, Yukun Liu, Igor Makarov, William Mann, Samuel Rosen (the referee), Zhen Shi (discussant), Sjoerd van Bekkum, Quentin Vandeweyer (discussant), Linghang Zeng, Peter Zimmerman, seminar participants at Oklahoma State University and the Georgia Institute of Technology, and conference participants at the 2022 CEAR/CenFIS Conference, the 2022 OCC FinTech Symposium, and the 2022 UWA Blockchain and Cryptocurrency Conference for helpful comments and suggestions. We thank Equifax for providing us with the data. The views expressed in the article are our own and do not represent the views of Equifax and other data providers.

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