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Urban Location and the Success of Casinos in Five States: A Data Envelopment Analysis Approach

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  • Lambert, Thomas
  • Srinivasan, Arun
  • Dufrene, Uric
  • Min, Hokey

Abstract

Coping with mounting budget shortfalls over the last three decades or so, many states in the US have legalized casino gambling/gaming in an effort to boost tax revenues. Four mid-western (Illinois, Indiana, Iowa, and Missouri) and two southern (Louisiana and Mississippi) states adopted legalized gaming in the form of riverboat casinos due to legal restrictions originally against land-based casinos. Following changes in state laws, land-based casinos and racinos (a combination of a casino and a race track) have since appeared in these states, although riverboat casinos still compose the majority of the establishments in most of these states. Although the scholarly literature is replete with articles on whether casinos make a difference in state tax revenues or cause an increase in crime, bankruptcies or other negative externalities, few if any have been written about the efficiency and effectiveness of casino operations and what external factors (location, size of market, etc.) are important to casino success. With so many states relying on casino revenues and others recently enacting or trying to permit casino gaming, it would be desirable to know those factors which influence casino success. This paper finds that urban location, urban size, income, and climate variables appear to influence casino efficiency and effectiveness. Tax dollars often hinge on the type of casino permitted and related location decisions. Hence, such decisions have public policy implications, and this article is perhaps the first to pinpoint factors that determine casino success.

Suggested Citation

  • Lambert, Thomas & Srinivasan, Arun & Dufrene, Uric & Min, Hokey, 2010. "Urban Location and the Success of Casinos in Five States: A Data Envelopment Analysis Approach," MPRA Paper 69740, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:69740
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    References listed on IDEAS

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    2. J. F. Nolan & P. C. Ritchie & J. R. Rowcroft, 2001. "Measuring efficiency in the public sector using nonparametric frontier estimators: a study of transit agencies in the USA," Applied Economics, Taylor & Francis Journals, vol. 33(7), pages 913-922.
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    6. Garrett, Thomas A. & Nichols, Mark W., 2008. "Do casinos export bankruptcy?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(4), pages 1481-1494, August.
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    10. Madhusudhan, Ranjana G., 1996. "Betting on Casino Revenues: Lessons From State Experiences," National Tax Journal, National Tax Association;National Tax Journal, vol. 49(3), pages 401-412, September.
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    Cited by:

    1. Arun K. Srinivasan & Thomas E. Lambert, 2017. "The Impact of Stagnating Casino Revenues on State and Local Governments Tax Receipts," Public Budgeting & Finance, Wiley Blackwell, vol. 37(1), pages 26-46, March.
    2. Justus Haucap & Radivoje Nedic & Talha Şimşek, 2023. "Regulatory objectives vs fiscal interests: Are German casino locations motivated by beggar-thy-neighbor policy? An empirical analysis," European Journal of Law and Economics, Springer, vol. 55(2), pages 291-311, April.

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    More about this item

    Keywords

    casinos; gaming; urban economics; public policy;
    All these keywords.

    JEL classification:

    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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