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Do Riverboat Casinos Act as Competitors? A Look at the St. Louis Market

Author

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  • John C. Navin

    (Southern Illinois University Edwardsville)

  • Timothy S. Sullivan

    (Southern Illinois University Edwardsville)

Abstract

Using monthly data covering 1991 to 2003 for the five casinos located in the St. Louis, Missouri, metropolitan area, the authors examine how the return to gaming, as measured by the payout rate on electronic gaming devices, changes as new firms enter the market. The clear timing of the new entrants into the market and the availability of monthly data allow the authors to examine how competition has affected the payout rates. They find that new entrants into the market have clearly reduced the hold rate (increased the payout rate) on electronic gaming devices and increased the return to gamblers. Given that the tax revenue from riverboat gambling is based on adjusted gross revenue (total revenue less payout), the decrease in hold rates and, therefore, adjusted gross revenue has significant policy implications for local governments, the majority of which rely on a single casino for their local tax revenue.

Suggested Citation

  • 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.
    • Handle: RePEc:sae:ecdequ:v:21:y:2007:i:1:p:49-59
    DOI: 10.1177/0891242406296426
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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. Karl R. Geisler & Mark W. 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.
    3. Justus Haucap & Radivoje Nedic & Talha Şimşek, 2023. "Regulatory objectives vs fiscal interests: Are German casino locations motivated by beggar-thy-neighbor policy? An empirical analysis," European Journal of Law and Economics, Springer, vol. 55(2), pages 291-311, April.
    4. Lambert, Thomas, 2021. "US Gambling Stagnation: Will New Gambling Forms Make a Difference?," MPRA Paper 108549, University Library of Munich, Germany.
    5. Srinivasan, Arun & Lambert, Thomas, 2015. "The Impact of Stagnating Casino Revenues on State and Local Tax Receipts," MPRA Paper 69738, University Library of Munich, Germany.

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