Saturday, 19 October 2019: 9:00 AM
This paper is an examination of casino location effectiveness. In particular, we examine whether casino clusters are more effective at generating revenues compared to more isolated casinos. The "effectiveness" will be measured controlling for the local population and demographics, as well as a measure of tourism/visitors, if available. Objectives: Analyze "clustered" and "isolated" casinos to determine which location model is more effective, in terms of revenue and tax revenue maximization. Data/Methods: We use data from the casino markets in Missouri to analyze the revenue per resident near each casino, as well as travel time between casinos, first in a anecdotal analysis of the performance of casinos in each location model. Next, given suitable data, we perform an econometric model of casino revenues to determine whether close proximity of other casinos has a positive or negative effect on a particular casino's performance. Expected results: It is not obvious, apriori, whether a clustered casino model will perform better than isolated casinos. This is because isolated casinos may attract customers from a longer range, yet, clustered casinos may simply attract more customers because they will offer more variety and amenities.
This issue is interesting because (1) it has never been analyzed in the economic literature, and (2) state government recently have seemed to favor the "isolated" model. For example, in Kansas, Ohio, and Massachusetts, state law regulates casino location and limits competition, so that there is only one casino in each "zone." This study should provide evidence on whether this is an effective strategy, using the casino market in Missouri, which has several casino clusters and several isolated casinos.