EXAMINING THE IMPACT OF CASINOS ON ECONOMIC DEVELOPMENT: A SPATIAL ANALYSIS OF THE COUNTIES IN THE MID-ATLANTIC REGION

Abstract

Few have formally evaluated the economic impact of casinos, and yet most agree that it is crucial in estimating the net benefit to society.  A new casino investment should stimulate economic activity in the immediate region, but its operations could potentially reduce employment and incomes with in the industry. Grinols outlines the factors that could lead to positive or negative growth from the investment, but what is critical to the empirical validation of the investment is the definition of region.   Since data is geographically limited to political boundaries, it is necessary to employ a spatial methodology that captures the impact beyond the political boundary. The Spatial Durbin Model (SDM) is outline.  The SDM captures both the local impacts and spillovers in the region and it can also identify if the casino competes or complements within their sectors.   Income per capita and employment measurements for the county and the retail sector were examined. The evidence indicates that casinos raises per capita income in urban areas, but lowers per capita income in rural areas, while employment has significant gains in private employment, total employment, and retail employment.  The gains in both income and employment erode overtime.