Douglas M. Walker is a Professor of Economics in the Department of Economics & Finance, College of Charleston, 66 George Street, Charleston, SC 29424, USA. His e-mail address is: email@example.com. Todd M. Nesbit is a Senior Lecturer in the Department of Economics, The Ohio State University, 410 Arps Hall, 1945 N. High Street, Columbus, OH 43210, USA. His e-mail address is: firstname.lastname@example.org.
Casino Revenue Sensitivity to Competing Casinos: A Spatial Analysis of Missouri
Article first published online: 12 DEC 2013
© 2013 Wiley Periodicals, Inc
Growth and Change
Special Issue: Casinos, Gambling and Economic Development. Guest Editor: Michael Wenz
Volume 45, Issue 1, pages 21–40, March 2014
How to Cite
Walker, D. M. and Nesbit, T. M. (2014), Casino Revenue Sensitivity to Competing Casinos: A Spatial Analysis of Missouri. Growth and Change, 45: 21–40. doi: 10.1111/grow.12035
- Issue published online: 3 MAR 2014
- Article first published online: 12 DEC 2013
- Manuscript Accepted: MAR 2013
- Manuscript Revised: DEC 2012
- Manuscript Received: JUN 2012
Previous studies have examined the relationships among different gambling industries (e.g., casinos, lotteries, and racetracks), with mixed results. Yet, the literature lacks evidence on the extent to which casinos in a particular market compete with each other. No study considers the proximity of competing casinos in its empirical analysis. This analysis uses quarterly casino property-level revenue data from Missouri, 1997.1–2010.2, and a model with a distance-adjusted competition scalar to analyze how competing casinos affect the revenues of a particular casino. The results indicate that machine games, table games, and square footage all have a positive effect on own-casino revenues. Machine games and square footage have a negative impact on competing casinos; however, table games have a positive impact on competing casinos. These results are consistent with how the Missouri casino industry is developing, with more emphasis on machine games and less on table games. The results suggest that casinos are competitive in nature (i.e., are substitutes), as there is no evidence to suggest that there is any positive agglomeration effect from casinos being clustered. This analysis should be of interest to industry and policy makers, and provides a foundation for further research on the U.S. casino industry.