The demand for casino gaming

Abstract

In this study an econometric model is developed to examine the determinants of the demand for casino gaming, specifically the demand for slot machine wagering at riverboats and racinos. In addition to examining the effects of traditional demand variables, the effect on wagering of variables such as location of a wagering facility and of government restrictions, is examined. A unique measure of accessibility of market area customers to a facility and to competing facilities was developed. The demand for wagering at a facility was found to increase as access by customers in its market area increases and to decrease as access by its customers to competing riverboats, racinos or Indian casinos increases. Government restrictions were found to have an adverse effect on wagering at a riverboat. On the other hand, wagering at a riverboat was found to increase when such restrictions were imposed on competing riverboats. The presence of total loss limits and restrictions on boarding times at a riverboat were found to have reduced wagering by 36% and 35%, respectively. With respect to traditional demand variables, slot machine wagering demand was found to be price elastic at the beginning of the sample period declining to slightly below unit elasticity by the end of the period. Table games offered at a gaming facility were found to be substitutes for slot machines. Demand was found to be negatively related to per capita income at lower income levels and positively related at higher income levels. The proportion of income wagered was found to be greater at upper and lower income levels relative to middle income levels. Demand was found to be positively related to days of operation and number of slot machines.

Institutions and Casinos on American Indian Reservations: An Empirical Analysis of the Location of Indian Casinos

“…The only lack of significance at the 5 percent level was for Statejur when only populations greater than 1,000 were used, but the estimated odds ratio was still 8.2. (4) I estimated the model with quadratic specifications for each of the income variables to be consistent with Thalheimer and Ali (2003). Doing so had a negligible effect on the coefficient estimates of Multstate and Statejur.…”

“…Income is an important determinant of casino demand (Thalheimer and Ali 2003 per capita income for Indian reservations, adjacent counties, the nearest metropolitan area of 1 million people, and the reservation's state; all income variables are measured in 1989 dollars. Despite the need to control for the effects of income, no prediction can be made regarding the direction of the income coefficients in the Casino regressions.…”

Market Cannibalization Within and Between Gambling Industries: A Systematic Review

“…Studies have been conclusive and evidence suggests that the presence of pari-mutuel racing, live or simulcast, increases EGM gambling (Thalheimer, 1998(Thalheimer, , 2008(Thalheimer, , 2012. One study (Thalheimer & Ali, 2003) found a negative impact on EGM revenue, but the relationship was statistically insignificant. We can therefore conclude that the impact of pari-mutuel or race betting on EGM gambling is complementary.…”

“…Seven of these 10 studies found that casinos substitute for other casinos, measured notably as decreases in gross gambling revenue (GGR), patronage, and admissions (Eadington, Wells, & Gossi, 2010;Gallagher, 2014;McGowan, 2009;Nichols, 1998;Shonkwiler, 1993;Thalheimer & Ali, 2003;Walker & Jackson, 2008;Walker & Nesbit, 2014). Three studies found either a complementary relationship or no impact (Geisler & Nichols, 2016;Hunsaker, 2001;Walker & Jackson, 2008).…”

“…The three remaining studies considered the impact of EGMs on table games at the same venue (Thalheimer, 2012;Thalheimer & Ali, 2003. These studies found substitution in EGM revenue and wagering of about 10% following the introduction of or in the presence of table games.…”