This paper explores two theories explaining state lottery adoption—internal determinants models focusing on political economy characteristics like partisanship, policy capacity, and fiscal pressures, versus regional diffusion models suggesting innovation spreads via neighboring states. Using Mohr's theory of organizational innovation as a framework connecting both approaches, we develop a unified explanation that incorporates these factors.

We test this combined model through empirical analysis employing event history analysis—a pooled cross-sectional time series method—using data covering all U.S. states from 1964 to 2018 regarding lottery adoption over time.

The findings offer robust support for Mohr's perspective, demonstrating how both internal state conditions and peer influence significantly drive lottery innovation across the nation.

Event history analysis proves useful beyond its typical applications, capable of analyzing rare political events. This approach helps clarify policy diffusion mechanisms while highlighting the interplay between institutional attributes and regional trends.