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Casino revenue and the Illinois smoking ban

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  • Thomas A. Garrett
  • Michael R. Pakko

Abstract

Smoking was banned in all Illinois casinos in January 2008. We explore the effects that the smoking ban has had on Illinois casino revenue and attendance. Our empirical methodology extends and enhances that of previous literature in that we observe a natural experiment in comparing the performance of Illinois casinos with out-of-state casinos (no smoking ban) that share a market with Illinois casinos. Estimates suggest that revenue and admissions at Illinois casinos declined by more than 20 percent ($400 million) and 12 percent, respectively. Calculations reveal that casino tax revenue to state and local governments declined by approximately $200 million.

Suggested Citation

  • Thomas A. Garrett & Michael R. Pakko, 2009. "Casino revenue and the Illinois smoking ban," Working Papers 2009-027, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:2009-027
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    References listed on IDEAS

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    1. Dunham, John & Marlow, Michael L, 2000. "The Effects of Smoking Laws on Seating Allocations of Restaurants, Bars, and Taverns," Economic Inquiry, Western Economic Association International, vol. 38(1), pages 151-157, January.
    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. J. Dunham & ML. Marlow, 2000. "Smoking laws and their differential effects on restaurants, bars, and taverns," Contemporary Economic Policy, Western Economic Association International, vol. 18(3), pages 326-333, July.
    4. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-475, June.
    5. Mandel, Lev L MSc. & Alamar, Benjamin Ph.D. & Glantz, Stanton A. Ph.D., 2005. "Smoke-free law did not affect revenue from gaming in Delaware," University of California at San Francisco, Center for Tobacco Control Research and Education qt84p029jw, Center for Tobacco Control Research and Education, UC San Francisco.
    6. Michael R. Pakko, 2008. "The economic impact of a smoking ban in Columbia, Missouri: an analysis of sales tax data for the first year," Regional Economic Development, Federal Reserve Bank of St. Louis, issue Oct, pages 30-40.
    7. Michael Pakko, 2008. "No smoking at the slot machines: the effect of a smoke-free law on Delaware gaming revenues," Applied Economics, Taylor & Francis Journals, vol. 40(14), pages 1769-1774.
    8. Robert K. Fleck & F. Andrew Hanssen, 2008. "Why Understanding Smoking Bans Is Important For Estimating Their Effects: California’S Restaurant Smoking Bans And Restaurant Sales," Economic Inquiry, Western Economic Association International, vol. 46(1), pages 60-76, January.
    9. Adams Scott & Cotti Chad D., 2007. "The Effect of Smoking Bans on Bars and Restaurants: An Analysis of Changes in Employment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-34, February.
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    Cited by:

    1. Joe Hirschberg & Jenny Lye, 2010. "The Indirect Impacts of Smoking Bans in Gaming Venues," Department of Economics - Working Papers Series 1105, The University of Melbourne.

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    Keywords

    Gambling industry; Tobacco industry; Illinois;
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