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Consumer spending in the gaming industry: evidence of complementary demand in casino and online venues

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  • Kahlil S. Philander
  • Brett L.L. Abarbanel
  • Toni Repetti

Abstract

Brick and mortar gambling stakeholders have scrutinized Internet gambling sites over concern that online operators may serve as substitutes for their products. In some cases, this has led to regulatory protection to prevent or restrict entry by online providers. However, many industry observers have remarked that the two gambling modalities may serve different consumers/consumer needs, or even serve as complementary goods. Policymakers, who look to gambling as an important source of tax revenue, must determine how expansion of Internet gambling will affect overall economic welfare. Using self-reported consumer gambling behaviour data from the United Kingdom, the net effect of Internet-based gambling activity on land-based demand is estimated in this study. A robust complementary (positive) relationship between online and offline gambling is found, using ordinary least squares, two-stage least squares, and two-part modeling techniques. These particular findings suggest that economic concerns around the cannibalization of traditional gambling industries should be reconsidered, and provide support for prior research showing that Internet based firms can be complementary to brick and mortar businesses.

Suggested Citation

  • Kahlil S. Philander & Brett L.L. Abarbanel & Toni Repetti, 2015. "Consumer spending in the gaming industry: evidence of complementary demand in casino and online venues," International Gambling Studies, Taylor & Francis Journals, vol. 15(2), pages 256-272, August.
    • Handle: RePEc:taf:intgms:v:15:y:2015:i:2:p:256-272
    DOI: 10.1080/14459795.2015.1042002
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    1. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, April.
    2. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    3. AfDB AfDB, . "Annual Report 2012," Annual Report, African Development Bank, number 461.
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    Cited by:

    1. Mikael Arvidsson & James Sjöstrand & Jesper Stage, 2017. "The economics of the Swedish online gambling market," Applied Economics Letters, Taylor & Francis Journals, vol. 24(16), pages 1135-1137, September.

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