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The Impact of State Lotteries and Casinos on State Bankruptcy Filings

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  • Kent R. Grote
  • Victor A. Matheson

Abstract

Over the past half century, there has been an increasing prevalence of legalized gambling in the U.S. At the same time, there is a general recognition, empirically supported in the economics literature, that spending on lottery and gaming products tends to be regressive in nature. In addition, gambling addiction is a widely acknowledged social problem. This raises the question of whether the increased presence of casinos and state lotteries results in relatively more bankruptcy filings in the states that offer them. This paper adds to the existing literature by comparing the relative impact of the presence of lotteries to that of casinos on both personal and business bankruptcies. States that adopted lotteries and casinos prior to 1995 experienced significantly higher personal bankruptcy rates while the effect of lottery and casino adoption on personal bankruptcies has disappeared since that time.

Suggested Citation

  • Kent R. Grote & Victor A. Matheson, 2014. "The Impact of State Lotteries and Casinos on State Bankruptcy Filings," Growth and Change, Wiley Blackwell, vol. 45(1), pages 121-135, March.
    • Handle: RePEc:bla:growch:v:45:y:2014:i:1:p:121-135
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    File URL: http://hdl.handle.net/10.1111/grow.12030
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    Cited by:

    1. Barry Scholnick & Hyungsuk Byun, 2016. "Do Slot Machines Cause Bankruptcy? A Regulatory Natural Experiment with Exogenous Changes to Slot Locations," ERSA conference papers ersa16p607, European Regional Science Association.
    2. Amir Borges Ferreira Neto & Collin D. Hodges & Hyunwoong Pyun, 2016. "Voting Dynamics and the Birth of State-owned Casinos in Kansas," Economics Bulletin, AccessEcon, vol. 36(1), pages 329-336.
    3. Hyungsuk Byun & Barry Scholnick, 2017. "Spatial Commitment Devices and Addictive Goods: Evidence from the Removal of Slot Machines from Bars," Working Papers 17-34, Federal Reserve Bank of Philadelphia.

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    More about this item

    JEL classification:

    • K35 - Law and Economics - - Other Substantive Areas of Law - - - Personal Bankruptcy Law
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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