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The Income Elasticity of Gross Casino Revenues: Short–Run and Long–Run Estimates

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  • Nichols, Mark W.
  • Tosun, Mehmet Serkan

Abstract

We examine how gross casino gambling revenues differ from other major tax bases in growth and variability. Long–run and short–run income elasticities are estimated using state–level gross casino revenue and state, regional and national income. We run separate time–series regressions for each of 11 states with significant commercial gambling. Gross casino revenue generally grows faster than taxable sales, but slower than taxable income. Gross casino revenue growth also slows as the industry matures. Short–run elasticity is, on average, lower than estimates for sales and income taxes, with an equal or more rapid adjustment to long–run equilibrium.

Suggested Citation

  • Nichols, Mark W. & Tosun, Mehmet Serkan, 2008. "The Income Elasticity of Gross Casino Revenues: Short–Run and Long–Run Estimates," National Tax Journal, National Tax Association;National Tax Journal, vol. 61(4), pages 635-652, December.
  • Handle: RePEc:ntj:journl:v:61:y:2008:i:4:p:635-52
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    Cited by:

    1. Fricke, Hans & Süssmuth, Bernd, 2014. "Growth and Volatility of Tax Revenues in Latin America," World Development, Elsevier, vol. 54(C), pages 114-138.
    2. Reed, W. Robert & Rogers, Cynthia L & Skidmore, Mark, 2011. "On Estimating Marginal Tax Rates for U.S. States," National Tax Journal, National Tax Association, vol. 64(1), pages 59-84, March.
    3. Kathryn L. Combs & Jaebeom Kim & Jim Landers & John A. Spry, 2016. "The Responsiveness of Casino Revenue to the Casino Tax Rate," Public Budgeting & Finance, Wiley Blackwell, vol. 36(3), pages 22-44, September.
    4. di Bella, Enrico & Gandullia, Luca & Leporatti, Lucia, 2014. "Short and long run income elasticity of gambling tax bases: evidence from Italy," MPRA Paper 73757, University Library of Munich, Germany.

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