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Casino Revenue Sensitivity to Competing Casinos: A Spatial Analysis of Missouri

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  • Douglas M. Walker
  • Todd M. Nesbit

Abstract

Previous studies have examined the relationships among different gambling industries (e.g., casinos, lotteries, and racetracks), with mixed results. Yet, the literature lacks evidence on the extent to which casinos in a particular market compete with each other. No study considers the proximity of competing casinos in its empirical analysis. This analysis uses quarterly casino property-level revenue data from Missouri, 1997.1–2010.2, and a model with a distance-adjusted competition scalar to analyze how competing casinos affect the revenues of a particular casino. The results indicate that machine games, table games, and square footage all have a positive effect on own-casino revenues. Machine games and square footage have a negative impact on competing casinos; however, table games have a positive impact on competing casinos. These results are consistent with how the Missouri casino industry is developing, with more emphasis on machine games and less on table games. The results suggest that casinos are competitive in nature (i.e., are substitutes), as there is no evidence to suggest that there is any positive agglomeration effect from casinos being clustered. This analysis should be of interest to industry and policy makers, and provides a foundation for further research on the U.S. casino industry.

Suggested Citation

  • Douglas M. Walker & Todd M. Nesbit, 2014. "Casino Revenue Sensitivity to Competing Casinos: A Spatial Analysis of Missouri," Growth and Change, Wiley Blackwell, vol. 45(1), pages 21-40, March.
  • Handle: RePEc:bla:growch:v:45:y:2014:i:1:p:21-40
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    File URL: http://hdl.handle.net/10.1111/grow.12035
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    References listed on IDEAS

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    1. Douglas M. Walker & John D. Jackson, 2007. "Casinos and Economic Growth," American Journal of Economics and Sociology, Wiley Blackwell, vol. 66(3), pages 593-607, July.
    2. Donald S. Elliott & John C. Navin, 2002. "Has Riverboat Gambling Reduced State Lottery Revenue?," Public Finance Review, , vol. 30(3), pages 235-247, May.
    3. Daniel P. McMillen, 2010. "Issues In Spatial Data Analysis," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 119-141.
    4. Chad Cotti, 2008. "The Effect of Casinos on Local Labor Markets: A County Level Analysis," Journal of Gambling Business and Economics, University of Buckingham Press, vol. 2(2), pages 17-41, September.
    5. Ina Levitzky & Djeto Assane & William Robinson, 2000. "Determinants of gaming revenue: extent of changing attitudes in the gaming industry," Applied Economics Letters, Taylor & Francis Journals, vol. 7(3), pages 155-158.
    6. James LeSage & Matthew Dominguez, 2012. "The importance of modeling spatial spillovers in public choice analysis," Public Choice, Springer, vol. 150(3), pages 525-545, March.
    7. Richard Thalheimer & Mukhtar Ali, 2003. "The demand for casino gaming," Applied Economics, Taylor & Francis Journals, vol. 35(8), pages 907-918.
    8. Joshua C Hall & Robert Lawson & Chuck Skipton, 2011. "Estimating the size of the trade sector in the Economic Freedom of the World index," Economics Bulletin, AccessEcon, vol. 31(1), pages 466-472.
    9. Gary C. Anders & Donald Siegel & Munther Yacoub, 1998. "Does Indian Casino Gambling Reduce State Revenues? Evidence From Arizona," Contemporary Economic Policy, Western Economic Association International, vol. 16(3), pages 347-355, July.
    10. Martin Young & Francis Markham & Bruce Doran, 2012. "Too close to home? The relationships between residential distance to venue and gambling outcomes," International Gambling Studies, Taylor & Francis Journals, vol. 12(2), pages 257-273, February.
    11. Donald Siegel & Gary Anders, 2001. "The Impact of Indian Casinos on State Lotteries: A Case Study of Arizona," Public Finance Review, , vol. 29(2), pages 139-147, March.
    12. Douglas M. Walker & John D. Jackson, 2011. "The Effect Of Legalized Gambling On State Government Revenue," Contemporary Economic Policy, Western Economic Association International, vol. 29(1), pages 101-114, January.
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    14. Peter Calcagno & Douglas Walker & John Jackson, 2010. "Determinants of the probability and timing of commercial casino legalization in the United States," Public Choice, Springer, vol. 142(1), pages 69-90, January.
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    Cited by:

    1. María Teresa Álvarez-Martínez & Michael L. Lahr, 2016. "Gaming, States, and Tax Revenues—the Tortoise or the Hare: A CGE Comparative Assessment of Casino Resorts and Games-Only Casinos," Growth and Change, Wiley Blackwell, vol. 47(2), pages 236-258, June.
    2. Karl Geisler & Mark Nichols, 2016. "Riverboat casino gambling impacts on employment and income in host and surrounding counties," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(1), pages 101-123, January.
    3. Juin-Jen Chang & Ching-Chong Lai & Ping Wang, 2017. "A Tale of Two Cities: Cross-Border Casino Competition Between Detroit and Windsor," NBER Working Papers 23969, National Bureau of Economic Research, Inc.

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