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Working Paper
No smoking at the slot machines: the effect of a smoke-free law on Delaware gaming revenues
As communities around the nation consider laws restricting smoking in public places, a key political and economic issue that often arises is the effect that such laws have on the sales and profits of particular sectors. The gaming industry has been active in opposition to such ordinances, citing large prospective losses. This article analyzes the revenues of three gaming facilities in Delaware following the implementation of a smoke-free law in December 2002. Revenues are found to have declined significantly at each of the three facilities, with relative magnitudes of losses corresponding to ...
Working Paper
Inter-temporal differences in the income elasticity of demand for lottery tickets
We estimate annual income elasticities of demand for lottery tickets using roughly twenty years of county-level data for three states. We find that the income elasticity of demand (and thus the tax burden) for lottery tickets has changed over time. We argue that these changes are due to changes in a state's lottery game portfolio and the growth in consumer income. Trends in the income elasticity of demand for instant and online lottery games appear to be different. Our results question the long-term growth potential of lottery revenue and have policy implications for state governments and ...
Working Paper
Income and lottery sales: transfers trump income from work and wealth
Previous studies have examined the effect of income on lottery ticket expenditures using an aggregate measure of income, usually personal income. Reasons exist, however, for believing that lottery expenditures do not respond equally to all sources of income. This paper examines the propensity to purchase lottery tickets from separate types of income, namely income from earnings, transfer payments, and wealth. Using county-level data for five states, we find evidence that lottery expenditures respond differently to changes in each income type, and that ticket purchases are most strongly ...
Working Paper
Do casinos export bankruptcy?
This paper measures the extent to which destination resort casinos export bankruptcy back to visitors' home states. Previous literature has alluded to this possibility, but to date studies have only examined the influence of local casinos on local bankruptcy. Using various survey data, we calculate the number of visits from each state to casino resort destinations in Nevada, New Jersey, and Mississippi. We find strong evidence that states having more residents who visit out-of-state casino resorts have higher bankruptcy filings. This effect is dominant in the south, suggesting that casinos ...
Working Paper
A closer look at the tax incidence of instant lottery games: an analysis by price point
The tax incidence of different price-point instant lottery games is examined. Theoretical reasons exist for expecting higher-priced instant lottery games to be less regressive than lower-priced instant games. Using game-level data from a sample of states, the empirical results show that higher-priced instant games are significantly less regressive than lower-priced games. For some games, regressivity is rejected in favor of proportionality. In addition, the tax incidence of individual instant games is quite different than that for all instant games combined. This suggests that large ...
Working Paper
State lottery revenue: the importance of game characteristics
Previous studies find state lottery sales are significantly influenced by socioeconomic characteristics of the population. We extend this literature by examining how the overall expected value, the top prize, and the total combinations influence sales after controlling for these other socioeconomic factors. We perform our empirical analysis on an unparalleled set of data that includes information for 135 on-line lottery games in the United States. Our results show that sales are significantly influenced the top prize amount and odds of winning it, but that sales are not significantly affected ...
Journal Article
They're off
Off-track betting and remote TV feeds combine to make horse racing in Virginia look economically viable despite a gloomy national outlook for the business.
Working Paper
Spatial competition and cross-border shopping
This paper investigates competition between jurisdictions in the context of cross-border shopping for state lottery tickets. We first develop a simple theoretical model in which consumers choose between state lotteries and face a trade-off between travel costs and the price of a fair gamble, which is declining in the size of the jackpot and the odds of winning. Given this trade-off, the model predicts that per-resident sales should be more responsive to prices in small states with densely populated borders, relative to large states with sparsely populated borders. Our empirical analysis ...
Working Paper
Risk taking and the quality of informal insurance: gambling and remittances in Thailand
More than 35% of Thai households either give or receive remittances, and remittances account for about one-third of the income of the receiving households. Remittance relationships may be an important source of protection against adverse events for the individuals involved. This paper provides evidence that remittances behave in a way that is consistent with insurance: they are sensitive to shocks to regional rainfall and they respond to household level events. The paper goes on to consider how the quality of insurance that is offered through remittances affects household risk taking ...
