THE IMPACT OF CASINO GAMBLING ON PERSONAL BANKRUPTCY FILING RATES

Personal bankruptcies soared in the United States between 1994 and 1998. One activity that can precipitate personal financial crises and that has also experienced dramatic growth is commercial gambling, especially casino gambling. This article builds a simple model of bankruptcy choice and empirically tests the model using unique county-level data on debt, income, household age, population density, and casino gambling as well as state measures of employment and marital stability, health insurance coverage, and garnishment restrictions. The authors find that the proximity of casino gambling appears to be associated with higher bankruptcy rates, but that the local impact is far more pronounced than the influence of casino gambling on the national filing rate. To quantify the magnitude of the impact, the analysis predicts over a 5% decline in 1998 filing rates for counties surrounding a casino, and a 1% decline in the nationwide filing rate if one were to eliminate casino gambling. Consequently, although casino gambling exerts important local effects, nationwide the incidence and growth of casino gambling does not explain much of the rise in bankruptcies during the past decade.     

Have Casinos Contributed to Rising Bankruptcy Rates?

This paper examines the relationship between casino gambling and bankruptcy rates in U.S. counties using a panel of U.S. county-level data from 1990 through 2005. We contribute to the literature in several ways, perhaps most notably by examining the possibility that the effect of a casino on bankruptcy may differ over the casino’s lifespan. Results confirm this possibility, indicating that the impact of casinos on bankruptcy follows a “U-shaped” curve over the life of the casino. More specifically, regression analysis indicates the existence of a casino in a county increases the bankruptcy rate by more than 9% in the first year of operation. The percentage of additional bankruptcies then decreases through the third year after the casino opens. Bankruptcy rates in casino counties then slightly fall below that of non-casino counties during the fourth through seventh years after opening, increasing once again in the eighth year and thereafter. This cycle corresponds closely to the 6 year statute of limitations period applicable to Chapter 7 bankruptcies.     

THE BEHAVIOR OF CASINO GAMING REVENUE OVER THE BUSINESS CYCLE CONSIDERING ALTERNATIVE MEASURES OF “INCOME”

Reasons exist for believing that casino gaming revenue does not respond equally to all sources of income over the business cycle. We examine the growth and variability of casino revenue resulting from the growth and variability in different sources of income. We find that casino revenue behaves quite differently in response to short‐run and long‐run variation in each income source, thus revealing that the common use of personal income masks underlying drivers of each state's business cycle. Our results have implications for revenue forecasting models, research on the growth and variability of tax bases in general, and public policy. (JEL H72, H79, L83)     

Casinos and political corruption in the United States: a Granger causality analysis

The commercial casino industry experienced an unprecedented expansion in the United States during the 1990s. As the industry has grown, so has the anecdotal evidence that links the casino industry with political corruption. However, there have been no empirical analyses of the issue. We use state-level panel data from 1985–2000 to posit a Granger causality analysis of the relationship between corruption convictions of state public officials and the predicted adoptions of casinos at the state level. We find evidence that predicted casino adoptions Granger cause corruption convictions. This finding is suggestive of a scenario of regulatory capture and may help explain why state-level gaming regulatory agencies have a history of softening gaming regulations after the initial introduction of casinos. Our study provides the first empirical evidence linking casinos to political corruption.     

Market structure and casino taxation in tourist resorts

This article examines the association of tax effects with market structure for casino gaming. We show that if market structure is uncompetitive, much of casino taxation falls on tourists whose demand is inelastic relative to supply. The tax is likely to be efficient under strong external demand if imposed on oligopoly casinos with a monopoly location in a cross-border market. The likelihood of economically ‘good’ taxation is greater under oligopoly than under competition but lower than under monopoly. Casino taxes should be lowered in a more competitive market with weaker external demand. Our prediction is consistent with the evidence found from casino tourism development in Macao with ‘high’ gambling taxes.     

The Economics of Taxation in Casino Tourism with Cross‐border Market Power

This paper provides a theoretical proof that casino taxation may have great potential as a contributor to tourism efficiency under sufficient market power. We also examine empirical evidence for the economic efficiency of casino tourism in Macao even with a “high” tax owing to geographic market power. Both theory and evidence point to such power as a key factor that affects the ability of a tourism resort to pass along local taxes to gambling visitors. This ability makes all the difference between the good or bad effect of casino taxes on tourism development. The policy implication is that a gaming tax should be lowered to support casino businesses if it is inefficient, but can be raised to extract public revenues if it is efficient.     

CONSUMER BANKRUPTCY AND CHAPTER CHOICE: STATE PANEL EVIDENCE

Between 1985 and 1996, the number of personal bankruptcy cases filed annually in the United States rose from 341,000 to 1.1 million, and the rate of bankruptcies per 100,000 adults increased from 203 to 596. By state, bankruptcy rates vary from a low of 147 in Hawaii to a high of 956 in Tennessee. A controversial aspect of bankruptcy policy is the discharge of debts permitted under Chapter 7, in contrast to Chapter 13, where the debtor agrees to repay all or a portion of unsecured debt over a 3-5-year period. This paper examines empirically the determinants of the frequency with which individuals choose Chapter 13 relative to Chapter 7 (chapter choice). The panel data set is a cross section of states and the District of Columbia for the 8-year period from fiscal year 1989 to 1996. The empirical model and policy application focus on the importance of several laws for bankruptcy decisions, and legal variables are included for each state's Chapter 7 homestead exemption, personal property exemptions, and garnishment laws. This study shows that both homestead exemption laws and garnishment laws are statistically significant for bankruptcy choices. Although the marginal effect of the homestead exemption is small, there is a large range under current laws, suggesting that changes in this exemption are important for bankruptcy policy. ( JEL K1, K4, D2, D9)     

Searching for the favourite-longshot bias down under: an examination of the New Zealand pari-mutuel betting market

This paper tests for the presence of the favourite-longshot bias in a new setting. This bias #150 the tendency for bettors to underbet favourites and overbet longshots #150 has been found in most studies of pari-mutuel and bookmaking betting markets in the USA, the UK and Australia. However, there is growing evidence that in at least some pari-mutuel betting markets there is no favourite-longshot bias. This paper examines the previously unexplored New Zealand pari-mutuel betting market on horse races for evidence of this bias. Utilizing a large sample of recent New Zealand thoroughbred horse races, it is found that while early, off-track bettors price this bias into odds, late (on-and off-track) bettors eliminate much of the bias by the close of betting. That is, the results reinforce the view that not all pari-mutuel betting markets are characterized by a favourite-longshot bias at the close of betting. Evidence is also found that late bettors in this market are smart bettors.     

ALL IN: AN EMPIRICAL ANALYSIS OF LEGISLATIVE VOTING ON INTERNET GAMBLING RESTRICTIONS IN THE UNITED STATES

In 2006, the U.S. Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA) which prohibited financial institutions from processing transactions arising from online gaming activities, thereby severely hindering U.S. residents from participating in online casino games, primarily poker. Enactment of this legislation followed lobbying and political pressure from a variety of interest groups. By examining House roll call votes, we identify empirically the sources of political influence that resulted in passage of the internet gambling legislation. We find that party affiliation was of primary importance, with Republicans more likely to vote in favor of the bill. The percentage of constituents who are Evangelical Christians and also the number of gambling establishments in the district were positively associated with votes for the bill. However, contributions from the gaming industry decreased the probability a congressman would vote for the bill. (JEL D72, L83)     

Table games,slot machines and casino revenue

The main focus of this study is to assess the influence of table games on slot machine and total casino revenues. The subjects of the analysis are 24 rierboat casinos in the midwestern states of Illinois, Iowa and Missouri and three racinos in Iowa. A racino is a parimutuel racetrack which also offers slot machine gaming to its customers. Two econometric models were developed, one for slot machine revenue and one for total (slot machine plus table game) revenue at riverboats and racinos. Of particular interest is the effect on slot machine and total revenue of adding table games to the gaming operation. Slot machine revenue was found to increase with the number of slot machines and decrease with the number of table games. Slot machine revenue was estimated to decrease by 11.5% in the presence of 40 table games, the mean number of table games over the sample. Total win was found to increase with an increase in both slot machines and table games. The elasticity of total win with respect to the number of slot machines and table games was estimated to be 0.786 and 0.219, respectively. Total revenue was estimated to increase by 24.5% for an additional 40 table games.     

The demand for casino gaming

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.     

Government restrictions and the demand for casino and parimutuel wagering

Growth in casino wagering in the United States from the mid-1980s forward has been extraordinary. Over the same period, however, parimutuel wagering has declined. Concern for this decline has prompted a number of states to allow parimutuel racetracks to offer casino-type gaming devices at their facilities. Such operations are commonly referred to as ‘racinos’. If the gaming devices at a racino are under the auspices of a state lottery, they are referred to as video lottery terminals (VLTs). Separate parimutuel and VLT wagering demand models were estimated for a racino facility. A number of restrictions were imposed on the VLT's at the beginning of the study period including: number of VLT's, type of game and machine, maximum bet per play and VLT location. The effect of these restrictions on VLT and parimutuel handles was a major focus of this article. Also of importance was an examination of the relationship between the VLT and parimutuel products. Relaxation of government restrictions on the VLT's was found to have resulted in a large increase in VLT wagering. On the other hand, parimutuel wagering was found to decrease with the relaxation of restrictions on the VLT's. The presence and growth of the VLT product was found to decrease parimutuel handle. The presence and growth of the parimutuel product was found to increase VLT handle.     

The myth of a booming town: a two-sector model of Macau economic growth

This paper builds a trade-based equilibrium, two-sector model to reveal the inefficiency of a foreign-dominated, gaming-biased, bubble growth in Macau. This fast GDP growth that has not led to much real development as measured by the effective GNP would likely have adverse impacts on the city's long-term prosperity. We employ the model to analyze why various gaming markets have adopted differing tax rates. This work provides a rigorous argument against the problematic attempts to push for low tax convergence in the Asian gaming market. To neutralize the damaging effects of foreign domination in the local economy, we offer several policy recommendations for reviving home businesses and enhancing domestic welfare in Macau. It is suggested that enforceable laws should be made to prevent the foreign firms with cross-market operations from stealing away Macau customers, that differential taxes on casino operators and income taxes on player winnings should be chosen to support Chinese-owned casinos and curb pathological gambling, and that a sovereign wealth fund should be established to stop too much of Chinese gaming money from being lost too fast and foster Macau's economic autonomy by reducing its overreliance on foreign concerns for output growth.     

The effect of the Affordable Care Act Medicaid expansion on consumer bankruptcies

Medical expenses have been associated with a large proportion of consumer bankruptcies in the United States. The objective of this study is to examine the relationship between the Medicaid expansion implemented in the context of the Affordable Care Act and consumer bankruptcy, overall and by chapter filing. We used a longitudinal study design with a study period of 2008–2017. We tested three approaches: difference-in-differences, fixed effect panel linear regression, and triple difference. We constructed a panel dataset from 2008 to 2017 with states’ data using data from various sources on insurance, bankruptcy filings, and characteristics that may affect bankruptcy, such as income and ethnicity. The outcomes were the annual rates of consumer bankruptcies overall and by chapter at the state level. Between 2008 and 2017, the overall unadjusted bankruptcy filing rate fell from 0.36% to 0.24%. We found that the expansion was associated with a decrease in overall consumer bankruptcy varying between 0.035 and 0.039 percentage points and that the intensity of the effect was modulated by the intensity of the treatment. Results were consistent across models and suggest that the Medicaid expansion had a significant negative effect on overall bankruptcy filings and specifically on Chapter 7 filings.     

Plant-level employment development before collective displacements: comparing mass layoffs,plant closures and bankruptcies

This article analyzes the development of employment levels and worker flows before bankruptcies, plant closure without bankruptcies and mass layoffs. Utilizing administrative plant-level data for Germany, we find no systematic employment reductions prior to mass layoffs, a strong and long-lasting reduction prior to closures, and a much shorter shadow of death preceding bankruptcies. Employment reductions in closing plants, in contrast to bankruptcies and mass layoffs, do not come along with increased worker flows. These patterns point to an intended and controlled shrinking strategy for closures without bankruptcy and to an unintended collapse for bankruptcies and mass layoffs.     

CASINOS,HOTELS, AND CRIME

This paper examines the links among casinos, hotels, and crime using Indiana's counties for 1994‐2004. In estimating casinos' impacts, I introduce a measure of casino activity in addition to variables related to the timing of casino opening. I test whether or not the number of hotel rooms affects crime rates. Increased casino activity reduces crime rates except for burglary, where crime rates rise after a lag. Leaving out a measure of casino activity appears to create a serious specification error. Finally, including problem crime data plagued by incomplete reporting affects the estimated impact of casinos on crime. (JEL R11, L83)     

THE EFFECT OF CASINO PROXIMITY ON LOTTERY SALES: EVIDENCE FROM MARYLAND

The continued expansion of the casino industry has caused increasing concern regarding the cannibalization of other industries, and in particular, state lotteries. For example, Maryland Lottery sales flattened shortly after casinos began opening in the state. Although previous papers have found that casinos and lotteries have a negative relationship with each other, no previous research has analyzed the impact of casino proximity on lottery sales or has examined the relationship between casinos and different types of lottery games. In this paper, we examine ZIP code‐level monthly lottery sales data from Maryland between July 2009 and February 2014, in order to test the impact of casino proximity on lottery sales, by type of game. Our findings indicate that aggregate lottery sales decline more in closer proximity to casinos, but that casinos affect different lottery products differently. We discuss the consumer behavior and public finance implications of the findings. (JEL H27, H4, L83)     

Recreational versus professional bettors: Performance differences and efficiency implications

Using a novel dataset, which allows comparisons across heterogeneous sub-groups of pari-mutuel bettors, we demonstrate significant behaviour and performance distinctions between recreational and professional investors. Professionals’ ability to earn abnormal returns on short odds horses in high volume markets challenges the existing empirical consensus, which offers very limited evidence of betting market inefficiency. The results offer important lessons for betting operators and regulators and highlight the potential for similar avenues of investigation in other speculative markets.     

AN ANATOMY OF U.S. PERSONAL BANKRUPTCY UNDER CHAPTER 13

We build a structural model that captures salient features of personal bankruptcy under Chapter 13. We estimate our model using a novel data set that we construct from bankruptcies filed in Delaware between 2001 and 2002. Our estimation results highlight the importance of a debtor's choice of repayment plan length on other Chapter 13 outcomes. We use the estimated model to conduct policy experiments to evaluate the impact of more stringent laws that impose restrictions on the length of repayment plans. We find that these provisions would not materially affect creditor recovery rates and would not necessarily make discharge more likely.     

新制度经济学的新发展:历史比较制度分析

新制度经济学在完全理性与有限理性之间左右摇摆,限制了制度理论的发展。以格雷夫为代表的历史比较制度分析,在有限理性前提下,通过大量案例研究,提出了自己关于制度及其变迁的真知灼见:(1)克服两个“两分法”,发展了统一的制度概念;(2)将制度理解为博弈均衡,重点解释古典博弈论成为制度分析有用工具的条件;(2)研究制度在变化的环境中如何存续、内生的制度变迁以及过去制度影响后续制度的原因和作用机制;(3)提出了独具特色的互动的特定历史情景分析,将重复博弈理论与特定历史情景结合起来去识别制度,解释其出现、存续和变迁。