An econometric study of the effect regulatory systems have on state gaming tax revenue

During the late 1990's, most state legislatures were forced to confront growing state budgetary deficits. These jurisdictions were forced to raise taxes or cut state spending. In an effort to increase the total tax base and raise total state revenue, many jurisdictions adopted some form of casino gaming. Each jurisdiction, faced with a unique set of internal and external pressures, introduced different forms of casino gaming. Mississippi introduced Nevada and New Jersey style casinos; Delaware introduced “racino” casinos that allowed racetrack owners to install slot machines while Iowa, Illinois and Missouri chose to introduce riverboat casinos. Each jurisdiction adopted different gaming regulatory controls that created different levels of total gaming tax revenue for each jurisdiction depending on the level of “conservative” or “liberal” regulatory control found in each jurisdiction. This study indicates that as a jurisdiction liberalizes its own gaming regulatory system, gaming tax revenue began to increase at an increasing rate.