Monday, October 11, 2010: 5:00 PM
The casino industry has long been associated with corruption, yet no empirical analysis of such a relationship has been published. In this study we examine state-level corruption conviction data and casino revenue data from 1985 through 2005 to determine if there is a relationship between corruption convictions and casino activity. We employ a Granger causality model applied to panel data.
The findings of the model may be that (i) there is no relationship between casino revenues and political corruption; (ii) bi-directional causality; (iii) casino revenues “cause” political corruption; or (iv) political corruption “causes” casino revenues. The explanations for findings (iii) and (iv) would likely be explained as casino revenues represent political power on the part of the casino industry which is used to buy favors from politicians; and because corrupt politicians are attracted to the large potential revenues of the casino industry, and tend to be more likely to legalize casinos.
The findings of the model may be that (i) there is no relationship between casino revenues and political corruption; (ii) bi-directional causality; (iii) casino revenues “cause” political corruption; or (iv) political corruption “causes” casino revenues. The explanations for findings (iii) and (iv) would likely be explained as casino revenues represent political power on the part of the casino industry which is used to buy favors from politicians; and because corrupt politicians are attracted to the large potential revenues of the casino industry, and tend to be more likely to legalize casinos.
Any of the possible findings from this model provide an interesting result. The empirical findings are placed in the context of the current political controversies over casinos in a variety of states. The model has international applicability as well.