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Have Casinos Contributed to Rising Bankruptcy Rates?

Author

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  • Ernie Goss
  • Edward Morse
  • John Deskins

Abstract

This paper examines the relationship between casino gambling and bankruptcy rates in U.S. counties using a panel of U.S. county-level data from 1990 through 2005. We contribute to the literature in several ways, perhaps most notably by examining the possibility that the effect of a casino on bankruptcy may differ over the casino’s lifespan. Results confirm this possibility, indicating that the impact of casinos on bankruptcy follows a “U-shaped” curve over the life of the casino. More specifically, regression analysis indicates the existence of a casino in a county increases the bankruptcy rate by more than 9% in the first year of operation. The percentage of additional bankruptcies then decreases through the third year after the casino opens. Bankruptcy rates in casino counties then slightly fall below that of non-casino counties during the fourth through seventh years after opening, increasing once again in the eighth year and thereafter. This cycle corresponds closely to the 6 year statute of limitations period applicable to Chapter 7 bankruptcies. Copyright International Atlantic Economic Society 2009

Suggested Citation

  • Ernie Goss & Edward Morse & John Deskins, 2009. "Have Casinos Contributed to Rising Bankruptcy Rates?," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 15(4), pages 456-469, November.
    • Handle: RePEc:kap:iaecre:v:15:y:2009:i:4:p:456-469:10.1007/s11294-009-9234-7
    DOI: 10.1007/s11294-009-9234-7
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    References listed on IDEAS

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    1. John M. Barron & Michael E. Staten & Stephanie M. Wilshusen, 2002. "The Impact Of Casino Gambling On Personal Bankruptcy Filing Rates," Contemporary Economic Policy, Western Economic Association International, vol. 20(4), pages 440-455, October.
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    Cited by:

    1. Kent R. Grote & Victor A. Matheson, 2014. "The Impact of State Lotteries and Casinos on State Bankruptcy Filings," Growth and Change, Wiley Blackwell, vol. 45(1), pages 121-135, March.
    2. Paulette J. O’Gilvie, 2023. "The effects of casino proximity and time on poverty levels in New York City," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-9, December.
    3. Paulette J. O’Gilvie, 2022. "The impact of casino proximity on northeast urban communities: a literature review," Palgrave Communications, Palgrave Macmillan, vol. 9(1), pages 1-9, December.

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    More about this item

    Keywords

    Casinos; Bankruptcy; L6; K0;
    All these keywords.

    JEL classification:

    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • K0 - Law and Economics - - General

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