Regulation and Taxation of Casinos under State-Monopoly, Private Monopoly and Casino Association Regimes
AbstractThis paper considers alternative forms of regulation and taxation of the casino sector. The model considers the situation of a typical tourist destination country that is using casinos to attract and entertain foreign tourists. The objective is to invest in the sector efficiently while maximizing the amount of government revenue or profits accruing to the country. The regulator must determine how the price of gambling will be set, how many casinos will be allowed to enter the industry and the form and rates of taxation. Four alternative forms of regulation are considered: price regulation, state-owned monopoly, private monopoly and casino association regulation. Turnover taxes on the amount of funds gambled and also annual taxation of the fixed costs of the casinos are evaluated. Applications of the models are carried out for North Cyprus. The conclusion is that the economic efficiency costs and the revenue losses from the absence of effective regulation in these tourist destinations can be very substantial with welfare costs equal to the approximately 75 percent of the tax revenue generated by this sector. Furthermore it shows that while a tax on turnover can be efficient in the case of a competitive industry or a cartel association form of regulation, it will be distortionary if a multi-plant private monopoly is controlling the sector. In contrast a tax on fixed costs will lead to an efficient result in the case of a competitive industry, but it will lead to economic inefficiencies if the sector is regulated by a casino association that controls the number of casino entering the sector.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Queen's University, Department of Economics in its series Working Papers with number 1088.
Length: 32 pages
Date of creation: Jul 2006
Date of revision:
Casino regulation; taxation; state-monopoly; welfare cost;
Other versions of this item:
- Hasret Benar & Glenn P. Jenkins, 2006. "Regulation and Taxation of Casinos under State-Monopoly, Private Monopoly and Casino Association Regimes," Working Papers 1056, Queen's University, Department of Economics.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-08-12 (All new papers)
- NEP-COM-2006-08-12 (Industrial Competition)
- NEP-PBE-2006-08-12 (Public Economics)
- NEP-PUB-2006-08-12 (Public Finance)
- NEP-REG-2006-08-12 (Regulation)
- NEP-TUR-2006-08-12 (Tourism Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Anderson, John E., 2005. "Casino Taxation in the United States," National Tax Journal, National Tax Association, vol. 58(2), pages 303-24, June.
- Paton, David & Siegel, Donald S. & Williams, Leighton Vaughan, 2004.
"Taxation and the Demand for Gambling: New Evidence from the United Kingdom,"
National Tax Journal,
National Tax Association, vol. 57(4), pages 847-61, December.
- David Paton & Donald S. Siegel & Leighton Vaughan Williams, 2003. "Taxation and the Demand for Gambling: New Evidence from the United Kingdom," Rensselaer Working Papers in Economics 0306, Rensselaer Polytechnic Institute, Department of Economics.
- N. Gregory Mankiw & Michael D. Whinston, 1986. "Free Entry and Social Inefficiency," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 48-58, Spring.
- Richard Thalheimer & Mukhtar Ali, 2003. "The demand for casino gaming," Applied Economics, Taylor & Francis Journals, vol. 35(8), pages 907-918.
- repec:ebl:ecbull:v:8:y:2003:i:10:p:1-8 is not listed on IDEAS
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Babcock).
If references are entirely missing, you can add them using this form.