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Do smoking bans always hurt the gaming industry? Differentiated impacts on the market value of casino firms in Macao


  • Zhang, Jing Hua
  • Tam, Kwo Ping
  • Zhou, Nan


The gaming economy has expanded rapidly in East Asia over the past decade. Despite the known public health hazards of secondhand smoking, smoking bans in casinos remain controversial due to concerns over the potential economic harm to casino firms. Applying an event study, the authors examine the abnormal returns of casino stocks in response to three unexpected smoking ban announcements from 2011 to 2015 in Macao. Their analysis reveals that these announcements were associated with differentiated abnormal returns of casino stocks. Stocks of traditional casinos suffered abnormal losses of 0.58-3%, while the Las Vegas themed casinos enjoyed positive abnormal returns of up to 3%. Furthermore, the authors find that low air quality in gaming venues and high dependence on gaming revenues are associated with abnormal losses, while positive management initiatives are significantly correlated with positive abnormal returns. The findings of this study provide a full picture of the impacts of smoking bans on casinos and thus will be a useful policy references for the Macao government, as well as for the rapidly growing gaming industry in Asia and developing economies elsewhere.

Suggested Citation

  • Zhang, Jing Hua & Tam, Kwo Ping & Zhou, Nan, 2016. "Do smoking bans always hurt the gaming industry? Differentiated impacts on the market value of casino firms in Macao," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 10, pages 1-32.
  • Handle: RePEc:zbw:ifweej:201628

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    References listed on IDEAS

    1. Chan, Kam C & Gup, Benton E & Pan, Ming-Shiun, 1992. "An Empirical Analysis of Stock Prices in Major Asian Markets and the United States," The Financial Review, Eastern Finance Association, vol. 27(2), pages 289-307, May.
    2. Husain, Muhammad Jami, 2010. "Contribution of health to economic development: A survey and overview," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 4, pages 1-52.
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    5. Michael Pakko, 2008. "No smoking at the slot machines: the effect of a smoke-free law on Delaware gaming revenues," Applied Economics, Taylor & Francis Journals, vol. 40(14), pages 1769-1774.
    6. Scott E. Hein, 2004. "Improving Tests of Abnormal Returns by Bootstrapping the Multivariate Regression Model with Event Parameters," Journal of Financial Econometrics, Society for Financial Econometrics, vol. 2(3), pages 451-471.
    7. A. Craig MacKinlay, 1997. "Event Studies in Economics and Finance," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 13-39, March.
    8. Karafiath, Imre, 1988. "Using Dummy Variables in the Event Methodology," The Financial Review, Eastern Finance Association, vol. 23(3), pages 351-357, August.
    9. Raymond Deneckere & Carl Davidson, 1985. "Incentives to Form Coalitions with Bertrand Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 473-486, Winter.
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    More about this item


    smoking bans; economic impacts; casinos; abnormal returns; Macao;

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Z33 - Other Special Topics - - Tourism Economics - - - Marketing and Finance


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