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Casino Revenue Sensitivity to Competing Casinos: A Spatial Analysis of Missouri

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  • Douglas M. Walker
  • Todd M. Nesbit

Abstract

Previous studies have examined the relationships among different gambling industries (e.g., casinos, lotteries, and racetracks), with mixed results. Yet, the literature lacks evidence on the extent to which casinos in a particular market compete with each other. No study considers the proximity of competing casinos in its empirical analysis. This analysis uses quarterly casino property-level revenue data from Missouri, 1997.1–2010.2, and a model with a distance-adjusted competition scalar to analyze how competing casinos affect the revenues of a particular casino. The results indicate that machine games, table games, and square footage all have a positive effect on own-casino revenues. Machine games and square footage have a negative impact on competing casinos; however, table games have a positive impact on competing casinos. These results are consistent with how the Missouri casino industry is developing, with more emphasis on machine games and less on table games. The results suggest that casinos are competitive in nature (i.e., are substitutes), as there is no evidence to suggest that there is any positive agglomeration effect from casinos being clustered. This analysis should be of interest to industry and policy makers, and provides a foundation for further research on the U.S. casino industry.

Suggested Citation

  • 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.
    • Handle: RePEc:bla:growch:v:45:y:2014:i:1:p:21-40
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    File URL: http://hdl.handle.net/10.1111/grow.12035
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    References listed on IDEAS

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    3. Karl Geisler & Mark Nichols, 2016. "Riverboat casino gambling impacts on employment and income in host and surrounding counties," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(1), pages 101-123, January.
    4. 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.
    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).
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    7. 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.

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