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Parimutuel wagering and video gaming: a racetrack portfolio

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  • Richard Thalheimer

Abstract

Parimutuel wagering has been declining for several decades due, in part, to increased competition from state lotteries and casino gaming. In recent years, an attempt has been made to integrate video lottery terminal (VLT) gaming into a parimutuel racetrack's product portfolio. Daily data are used to develop product demand equations for parimutuel horse-race wagering and video lottery gaming at a throughbred racetrack. It is found that introduction of VLTs into the product mix results in decreased parimutuel wagering and revenues. However, the additional revenue generated from the VLTs is found to more than offset the decline in parimutuel revenue and the increased expense associated with the VLTs, given that a sufficient number of terminals are made available. When revenue from the combined parimutuel and VLT gaming product increases, if the respective shares of the VLT revenue distributed to the racetrack, to the horsemen who race horses at the racetrack and to the government are the same as their distributive shares from parimutuel wagering, all will enjoy an increase in revenue. To the extent that the respective shares of these participants differ from their share of parimutuel wagering, all participants may or may not enjoy an increase in revenue, depending upon the magnitude of the revenue increase. An additional finding of importance is that patrons who attend and wager on horse racing also wager on the VLT games while patrons who attend for the VLT gaming are less likely to wager on horse racing.

Suggested Citation

  • Richard Thalheimer, 1998. "Parimutuel wagering and video gaming: a racetrack portfolio," Applied Economics, Taylor & Francis Journals, vol. 30(4), pages 531-544.
    • Handle: RePEc:taf:applec:v:30:y:1998:i:4:p:531-544
    DOI: 10.1080/000368498325796
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    1. Daniel B. Suits, 1979. "The Elasticity of Demand for Gambling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 93(1), pages 155-162.
    2. Mukhtar Ali & Richard Thalheimer, 1997. "Transportation costs and product demand: wagering on parimutuel horse racing," Applied Economics, Taylor & Francis Journals, vol. 29(4), pages 529-542.
    3. Gruen, Arthur, 1976. "An Inquiry into the Economics of Race-Track Gambling," Journal of Political Economy, University of Chicago Press, vol. 84(1), pages 169-177, February.
    4. Thalheimer, Richard & Ali, Mukhtar M., 1995. "Intertrack wagering and the demand for parimutuel horse racing," Journal of Economics and Business, Elsevier, vol. 47(4), pages 369-383, October.
    5. Richard Thalheimer & Mukhtar M. Ali, 1995. "The Demand for Parimutuel Horse Race Wagering and Attendance," Management Science, INFORMS, vol. 41(1), pages 129-143, January.
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    Cited by:

    1. Richard Thalheimer, 2008. "Government restrictions and the demand for casino and parimutuel wagering," Applied Economics, Taylor & Francis Journals, vol. 40(6), pages 773-791.
    2. 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.
    3. 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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