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Testing benford and universal laws on gambling and betting data in Romania

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Abstract

This study examines the integrity of financial statements within the Romanian gambling and betting industry, employing Benford's, Zipf’s and Universal Law and distribution distances tests. Data from the financial statements of active gambling and betting companies in 2013, classified under NACE code 9200, were analysed The primary focus was on the absolute values of declared gross profit or loss. Our analysis involved visual inspections, Chi-square tests, and the application of Zipf’s and Universal laws for distribution conformity. Results indicated that the empirical distributions of the first and second digits, as well as the combined first two digits of gross profit or loss, align with Benford's Law. Surprisingly, the distribution did not conform to the expected Zipf’s type but instead followed the specific pattern of the Universal law. Furthermore, while the Zipf’s model was not a fit, the Universal law effectively captured the distribution of the reported financial data, suggesting a power-law concentration of gross profit values in the industry.

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Acknowledgements

A preliminary version of the manuscript has been presented to DySES 2022 (Dynamics of Socio Economic Systems) to NEOMA Rouen (France), ICAS 2022 (The 16th International Conference on Applied Statistics) Predeal (Romania), Scientific Seminar MFB organized by the Faculty of Faculty of Finance and Banking, Bucharest University of Economic Studies (March 14th,2023) and Smart Diaspora 2023 Conference Timisoara (April 11th, 2023). We benefitted by comments and suggestions from the peers participating to above mentioned academic conferences/ seminars as well as from very constructive feedback provided by the two anonymous reviewers during peer review process. Our thanks to dr. Gurjeet Dhesi (Babes-Bolyai University of Cluj-Napoca & Bucharest University of Economic Studies) for improving the English level of a later version of the manuscript.

Funding

Claudiu Herteliu is partially supported by a grant of the Romanian National Authority for Scientific Research and Innovation, CNDS-UEFISCDI, project number PN-III-P4-ID-PCCF-2016-0084 and by a grant of the Romanian Ministry of Research Innovation and Digitalization, MCID, project number ID-585-CTR-42-PFE-2021. Ionel Jianu, Alexandru Isaic-Maniu and Claudiu Herteliu are partially supported by the project “Societal and Economic Resilience within multi-hazards environment in Romania” funded by European Union—NextgenerationEU and Romanian Government, under National Recovery and Resilience Plan for Romania, contract no.760050/ 23.05.2023, cod PNRR-C9-I8-CF 267/ 29.11.2022, through the Romanian Ministry of Research, Innovation and Digitalization, within Component 9, Investment I8. Ionel Jianu and Claudiu Herteliu are partially supported by the project “A better understanding of socio-economic systems using quantitative methods from Physics” funded by European Union—NextgenerationEU and Romanian Government, under National Recovery and Resilience Plan for Romania, contract no.760034/ 23.05.2023, cod PNRR-C9-I8-CF 255/29.11.2022, through the Romanian Ministry of Research, Innovation and Digitalization, within Component 9, Investment I8.

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Authors and Affiliations

  1. Bucharest University of Economic Studies, Bucharest, Romania

    Ionel Jianu & Claudiu Herteliu

  2. Centre for Industry and Services Economics, National Institute for Economic Research Costin C. Kiritescu, Romanian Academy, Bucharest, Romania

    Alexandru Isaic-Maniu

  3. West University of Timisoara, Timisoara, Romania

    Claudiu Brandas

  4. “Lucian Blaga” University Sibiu, Sibiu, Romania

    Marian Pompiliu Cristescu

  5. University of Oradea, Oradea, Romania

    Corneliu Bente

  6. Babes-Bolyai University of Cluj-Napoca, Cluj-Napoca, Romania

    Claudiu Herteliu

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  1. Ionel Jianu
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  2. Alexandru Isaic-Maniu
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  4. Marian Pompiliu Cristescu
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  5. Corneliu Bente
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  6. Claudiu Herteliu
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Correspondence to Claudiu Herteliu.

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Jianu, I., Isaic-Maniu, A., Brandas, C. et al. Testing benford and universal laws on gambling and betting data in Romania. Ann Oper Res (2023). https://doi.org/10.1007/s10479-023-05739-y

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