Original Paper

Journal of Gambling Studies

, Volume 28, Issue 4, pp 703-717

Open Access This content is freely available online to anyone, anywhere at any time.

The Effect of Recessions on Gambling Expenditures

  • Csilla HorváthAffiliated withDepartment of Strategy and Marketing, Institute for Management Research, Radboud University Email author 
  • , Richard PaapAffiliated withEconometric Institute, Erasmus University Rotterdam

Abstract

This article examines the influence of the business cycle on expenditures of three major types of legalized gambling activities: Casino gambling, lottery, and pari-mutuel wagering. Empirical results are obtained using monthly aggregated US per capita consumption time series for the period 1959.01–2010.08. Among the three gambling activities only lottery consumption appears to be recession-proof. This series is characterized by a vast and solid growth that exceeds the growth in income and the growth in other gambling sectors. Casino gambling expenditures show a positive growth during expansions and no growth during recessions. Hence, the loss in income during recessions affects casino gambling. However, income shocks which are not directly related to the business cycle do not influence casino gambling expenditures. Pari-mutuel wagering displays an overall negative trend and its average growth rate is smaller than the growth in income, especially during recessions. The findings of this article provide important implications for the gambling industry and for local governments.

Keywords

Gambling Business cycle Time series analysis Cointegration