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An Examination of Cannibalization Effects within the Riverboat Gaming Industry: The Case of Illinois-Area Casinos

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  • Ryan M. Gallagher

Abstract

As states become increasingly reliant on taxable casino revenues to augment their budgets, questions concerning optimal casino location have entered into policy dialogues across the country. Notably, policy makers have become concerned with the presence and size of so-called “cannibalization effects” within the casino industry whereby casinos operating within overlapping markets capture one another's business. However, the size, significance, and underlying mechanics of these effects have received very little attention in the academic literature. Using a unique data panel for the Illinois region that spans over a decade, this paper develops a working framework for identifying the presence of intra-industry cannibalization effects for the riverboat gaming industry. Evidence suggests cannibalization effects do indeed exist and are largely a function of new casino development, not the expansion of pre-existing casinos. These effects also attenuate rather quickly with distance.

Suggested Citation

  • Ryan M. Gallagher, 2014. "An Examination of Cannibalization Effects within the Riverboat Gaming Industry: The Case of Illinois-Area Casinos," Growth and Change, Wiley Blackwell, vol. 45(1), pages 41-59, March.
    • Handle: RePEc:bla:growch:v:45:y:2014:i:1:p:41-59
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    References listed on IDEAS

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    Cited by:

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    3. Erin Hazel Phipps & Mark W. Nichols & Federico Guerrero, 2020. "The Impact of Video Gaming Terminals on Casinos and State and Local Tax Revenue," Public Finance Review, , vol. 48(5), pages 650-675, September.
    4. Siew Hoon Lim & Lei Zhang, 2017. "Does Casino Development Have a Positive Effect on Economic Growth?," Growth and Change, Wiley Blackwell, vol. 48(3), pages 409-434, September.
    5. Robert Baumann, 2025. "Has the rise of legal sports betting reduced lottery revenues? Evidence from New York," Economics Bulletin, AccessEcon, vol. 45(3), pages 1341-1353.

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