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The demand for casino gaming

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  • Richard Thalheimer
  • Mukhtar Ali

Abstract

In this study an econometric model is developed to examine the determinants of the demand for casino gaming, specifically the demand for slot machine wagering at riverboats and racinos. In addition to examining the effects of traditional demand variables, the effect on wagering of variables such as location of a wagering facility and of government restrictions, is examined. A unique measure of accessibility of market area customers to a facility and to competing facilities was developed. The demand for wagering at a facility was found to increase as access by customers in its market area increases and to decrease as access by its customers to competing riverboats, racinos or Indian casinos increases. Government restrictions were found to have an adverse effect on wagering at a riverboat. On the other hand, wagering at a riverboat was found to increase when such restrictions were imposed on competing riverboats. The presence of total loss limits and restrictions on boarding times at a riverboat were found to have reduced wagering by 36% and 35%, respectively. With respect to traditional demand variables, slot machine wagering demand was found to be price elastic at the beginning of the sample period declining to slightly below unit elasticity by the end of the period. Table games offered at a gaming facility were found to be substitutes for slot machines. Demand was found to be negatively related to per capita income at lower income levels and positively related at higher income levels. The proportion of income wagered was found to be greater at upper and lower income levels relative to middle income levels. Demand was found to be positively related to days of operation and number of slot machines.

Suggested Citation

  • Richard Thalheimer & Mukhtar Ali, 2003. "The demand for casino gaming," Applied Economics, Taylor & Francis Journals, vol. 35(8), pages 907-918.
    • Handle: RePEc:taf:applec:v:35:y:2003:i:8:p:907-918
    DOI: 10.1080/0003684022000018259
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Gregory W. Goussak & Jon K. Webber, 2011. "Employee Perception Of Leadership Styles By Las Vegas Casino-Gaming Managers," International Journal of Management and Marketing Research, The Institute for Business and Finance Research, vol. 4(2), pages 85-98.
    3. Richard Thalheimer, 2008. "Government restrictions and the demand for casino and parimutuel wagering," Applied Economics, Taylor & Francis Journals, vol. 40(6), pages 773-791.
    4. Craig A. Depken & John M. Gandar, 2021. "Integrity Fees in Sports Betting Markets," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 47(1), pages 76-90, January.
    5. Chang, Juin-Jen & Fiedler, Ingo & Lai, Ching-Chong & Wang, Ping, 2021. "Cross-border casino competition, Externalities and Optimal Tax Policy: A Unified Theory with Quantitative Analysis," Regional Science and Urban Economics, Elsevier, vol. 88(C).
    6. 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.
    7. Hasret Benar & Glenn Jenkins, 2006. "Regulation And Taxation Of Casinos Under State-monopoly, Private Monopoly And Casino Association Regimes," Working Paper 1056, Economics Department, Queen's University.
    8. Richard Thalheimer & Mukhtar M. Ali, 2008. "The Demand For Casino Gaming With Special Reference To A Smoking Ban," Economic Inquiry, Western Economic Association International, vol. 46(2), pages 273-282, April.
    9. Monchuk, Daniel C., 2007. "People Rush in, Empty Their Pockets, and Scuttle Out: Economic Impacts of Gambling on the Waterways," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 37(3), pages 1-10.
    10. 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.
    11. Hasret Benar & Glenn Jenkins, 2008. "The economics of casino taxation," Applied Economics, Taylor & Francis Journals, vol. 40(1), pages 63-73.
    12. John C. Navin & Timothy S. Sullivan, 2007. "Do Riverboat Casinos Act as Competitors? A Look at the St. Louis Market," Economic Development Quarterly, , vol. 21(1), pages 49-59, February.
    13. 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.
    14. Douglas M. Walker, 2013. "Casinonomics," Management for Professionals, Springer, edition 127, number 978-1-4614-7123-3, December.
    15. Jim Landers, 2008. "What's the potential impact of casino tax increases on wagering handle: estimates of the price elasticity of demand for casino gaming," Economics Bulletin, AccessEcon, vol. 8(6), pages 1-15.
    16. repec:ebl:ecbull:v:8:y:2008:i:6:p:1-15 is not listed on IDEAS
    17. Richard Thalheimer & Mukhtar M. Ali, 2004. "The Relationship of Pari‐mutuel Wagering and Casino Gaming to Personal Bankruptcy," Contemporary Economic Policy, Western Economic Association International, vol. 22(3), pages 420-432, July.
    18. Richard Thalheimer, 2012. "The demand for slot machine and pari-mutuel horse race wagering at a racetrack-casino," Applied Economics, Taylor & Francis Journals, vol. 44(9), pages 1177-1191, March.

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