DOES INDIAN CASINO GAMBLING REDUCE STATE REVENUES? EVIDENCE FROM ARIZONA

Authors

  • GARY C. ANDERS,

    1. Professor, Department of Economics, School of Management, Arizona State University West Phone 1-602-543-6214, Fax 1-602-543-6221 E-Mail garyanders@asu.edu.
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  • DONALD SIEGEL,

    1. Associate Professor, Department of Economics, School of Management, Arizona State University West Phone 1-602-543-6217, Fax 1-602-543-6221 E-Mail siegel@asuvm.inre.asu.edu.
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  • MUNTHER YACOUB

    1. Graduate Student, School of Management Arizona State University West.
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    • *This is a revised version of a paper presented at the Western Economic Association International 71st Annual Conference, San Francisco, Calif., July 1, 1996, in a session organized by Reza Rahgozar. The authors acknowledge the valuable comments and suggestions of Bill Eadington, John Navin, Farrokh Hormozi, Jonathan Silberman, Daniel Swaine, and the reviewers.


Abstract

Critics of Indian gaming contend that reservation casinos have a negative impact on state economies. This paper tests the hypothesis that the introduction of Indian casinos caused a structural change in the formation of Arizona state revenues. Data are from Maricopa County, the largest county in Arizona. Findings suggest that Indian casinos may divert funds from taxable to non-taxable sectors. The growth in tax revenue from non-gaming sectors of the economy has masked these displacement effects. However, given the trend toward increasing the proportion of state funds from sales taxes, a diminution in the rate of economic growth could have serious implications for future state budgets.

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