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The demand for casino gaming

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  • Richard Thalheimer
  • Mukhtar Ali
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    Abstract

    In this study an econometric model is developed to examine the determinants of the demand for casino gaming, specifically the demand for slot machine wagering at riverboats and racinos. In addition to examining the effects of traditional demand variables, the effect on wagering of variables such as location of a wagering facility and of government restrictions, is examined. A unique measure of accessibility of market area customers to a facility and to competing facilities was developed. The demand for wagering at a facility was found to increase as access by customers in its market area increases and to decrease as access by its customers to competing riverboats, racinos or Indian casinos increases. Government restrictions were found to have an adverse effect on wagering at a riverboat. On the other hand, wagering at a riverboat was found to increase when such restrictions were imposed on competing riverboats. The presence of total loss limits and restrictions on boarding times at a riverboat were found to have reduced wagering by 36% and 35%, respectively. With respect to traditional demand variables, slot machine wagering demand was found to be price elastic at the beginning of the sample period declining to slightly below unit elasticity by the end of the period. Table games offered at a gaming facility were found to be substitutes for slot machines. Demand was found to be negatively related to per capita income at lower income levels and positively related at higher income levels. The proportion of income wagered was found to be greater at upper and lower income levels relative to middle income levels. Demand was found to be positively related to days of operation and number of slot machines.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Applied Economics.

    Volume (Year): 35 (2003)
    Issue (Month): 8 ()
    Pages: 907-918

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    Handle: RePEc:taf:applec:v:35:y:2003:i:8:p:907-918

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    References

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    1. Breusch, T S & Pagan, A R, 1980. "The Lagrange Multiplier Test and Its Applications to Model Specification in Econometrics," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 239-53, January.
    2. Thomas F. Cargill & William R. Eadington, 1978. "Nevada's Gaming Revenues: Time Characteristics and Forecasting," Management Science, INFORMS, vol. 24(12), pages 1221-1230, August.
    3. Mark W. Nichols, 1998. "The Impact of Deregulation on Casino Win in Atlantic City," Review of Industrial Organization, Springer, vol. 13(6), pages 713-726, December.
    4. William R. Eadington, 1999. "The Economics of Casino Gambling," Journal of Economic Perspectives, American Economic Association, vol. 13(3), pages 173-192, Summer.
    5. Suits, Daniel B, 1979. "The Elasticity of Demand for Gambling," The Quarterly Journal of Economics, MIT Press, vol. 93(1), pages 155-62, February.
    6. Mukhtar Ali & Richard Thalheimer, 1997. "Transportation costs and product demand: wagering on parimutuel horse racing," Applied Economics, Taylor & Francis Journals, vol. 29(4), pages 529-542.
    7. Richard Thalheimer & Mukhtar M. Ali, 1995. "The Demand for Parimutuel Horse Race Wagering and Attendance," Management Science, INFORMS, vol. 41(1), pages 129-143, January.
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    Cited by:
    1. Hasret Benar & Glenn Jenkins, 2008. "The economics of casino taxation," Applied Economics, Taylor & Francis Journals, vol. 40(1), pages 63-73.
    2. Jim Landers, 2008. "What's the potential impact of casino tax increases on wagering handle: estimates of the price elasticity of demand for casino gaming," Economics Bulletin, AccessEcon, vol. 8(6), pages 1-15.
    3. Hasret Benar & Glenn Jenkins, 2006. "Regulation and Taxation of Casinos under State-Monopoly, Private Monopoly and Casino Association Regimes," Working Papers 1088, Queen's University, Department of Economics.
    4. repec:ebl:ecbull:v:8:y:2008:i:6:p:1-15 is not listed on IDEAS

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