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Casino Revenue Sensitivity to Competing Casinos: A Spatial Analysis of M issouri
Author(s) -
Walker Douglas M.,
Nesbit Todd M.
Publication year - 2014
Publication title -
growth and change
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.657
H-Index - 55
eISSN - 1468-2257
pISSN - 0017-4815
DOI - 10.1111/grow.12035
Subject(s) - revenue , competition (biology) , table (database) , advertising , business , total revenue , economics , marketing , microeconomics , computer science , ecology , data mining , biology , accounting
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 M issouri, 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 M issouri 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.