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What's the potential impact of casino tax increases on wagering handle: estimates of the price elasticity of demand for casino gaming

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  • Jim Landers

    ()
    (Indiana Legislative Services Agency)

Abstract

This study estimates the price elasticity of demand for casino gaming. A demand model is estimated with data from a panel of 50 casinos operating in Illinois, Indiana, Iowa, and Missouri between 1991 and 2005. The model isolates the impact of changes in the casino win percentage or price on the wagering handle, controlling for the impact of other operating, economic, and regulatory determinants of the wagering handle. The model estimates suggest that the wagering handle in the short run is inelastic to price changes, and that in the long run the wagering handle is unit elastic if not somewhat inelastic.

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File URL: http://www.accessecon.com/pubs/EB/2008/Volume8/EB-08H00007A.pdf
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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 8 (2008)
Issue (Month): 6 ()
Pages: 1-15

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Handle: RePEc:ebl:ecbull:eb-08h00007

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Keywords: Casinos;

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  1. Richard Thalheimer & Mukhtar M. Ali, 1995. "The Demand for Parimutuel Horse Race Wagering and Attendance," Management Science, INFORMS, INFORMS, vol. 41(1), pages 129-143, January.
  2. Philip J. Cook & Charles T. Clotfelter, 1991. "The Peculiar Scale Economies of Lotto," NBER Working Papers 3766, National Bureau of Economic Research, Inc.
  3. Lany DeBoer, 1986. "Lottery taxes may be too high," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 5(3), pages 594-596.
  4. Richard Thalheimer & Mukhtar Ali, 2003. "The demand for casino gaming," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 35(8), pages 907-918.
  5. Suits, Daniel B, 1979. "The Elasticity of Demand for Gambling," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 93(1), pages 155-62, February.
  6. Gulley, O. David & Scott, Frank A. Jr., 1993. "The Demand for Wagering on State-Operated Lotto Games," National Tax Journal, National Tax Association, vol. 46(1), pages 13-22, March.
  7. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 185, Massachusetts Institute of Technology (MIT), Department of Economics.
  8. Mark W. Nichols, 1998. "The Impact of Deregulation on Casino Win in Atlantic City," Review of Industrial Organization, Springer, Springer, vol. 13(6), pages 713-726, December.
  9. Gruen, Arthur, 1976. "An Inquiry into the Economics of Race-Track Gambling," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 84(1), pages 169-77, February.
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