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The Importance of Self-Selection in Casino Cannibalization of State Lotteries

Author

Listed:
  • Jonathan Rork

    () (Vassar College)

  • Stephen Fink

    () (Vassar College)

Abstract

This note extends the work of Elliott and Navin (2002) on the substitutability of commercial casinos and state lotteries by controlling for a potential negative selection bias. We utilize a Heckman two-step selection correction in which our first stage probit involves whether or not a state has legalized commercial casinos. Results indicate that a $1 increase in state casino tax revenue will reduce net lottery proceeds by $0.56. This estimate is 33% smaller than what has been found in other studies, which is consistent with a negative selection bias.

Suggested Citation

  • Jonathan Rork & Stephen Fink, 2003. "The Importance of Self-Selection in Casino Cannibalization of State Lotteries," Economics Bulletin, AccessEcon, vol. 8(10), pages 1-8.
  • Handle: RePEc:ebl:ecbull:eb-03h70001
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    References listed on IDEAS

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    1. Alm, James & McKee, Michael J. & Skidmore, Mark, 1993. "Fiscal Pressure, Tax Competition, and the Introduction of State Lotteries," National Tax Journal, National Tax Association;National Tax Journal, vol. 46(4), pages 463-476, December.
    2. Charles T. Clotfelter & Philip J. Cook, 1989. "Selling Hope: State Lotteries in America," NBER Books, National Bureau of Economic Research, Inc, number clot89-1, December.
    3. 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.
    4. Donald S. Elliott & John C. Navin, 2002. "Has Riverboat Gambling Reduced State Lottery Revenue?," Public Finance Review, , vol. 30(3), pages 235-247, May.
    5. Alm, James & McKee, Michael J. & Skidmore, Mark, 1993. "Fiscal Pressure, Tax Competition, and the Introduction of State Lotteries," National Tax Journal, National Tax Association, vol. 46(4), pages 463-76, December.
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    Citations

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    Cited by:

    1. Benar, Hasret & Jenkins, Glenn P., 2006. "Regulation and Taxation of Casinos under State-Monopoly, Private Monopoly and Casino Association Regimes," Queen's Economics Department Working Papers 273532, Queen's University - Department of Economics.
    2. Melissa S. Kearney, 2005. "The Economic Winners and Losers of Legalized Gambling," NBER Working Papers 11234, National Bureau of Economic Research, Inc.
    3. Benar, Hasret & Jenkins, Glenn P., 2006. "The Economics of Casino Taxation," Queen's Economics Department Working Papers 273533, Queen's University - Department of Economics.
    4. repec:bla:coecpo:v:35:y:2017:i:4:p:684-699 is not listed on IDEAS
    5. Benar, Hasret & Jenkins, Glenn, 2006. "Regulation and Taxation of Casinos under State-Monopoly, Private Monopoly and Casino Association Regimes," Queen's Economics Department Working Papers 273564, Queen's University - Department of Economics.
    6. Kent Grote & Victor Matheson, 2011. "The Economics of Lotteries: An Annotated Bibliography," Working Papers 1110, College of the Holy Cross, Department of Economics.

    More about this item

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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