Abstract
The commencement of casino gaming activities in Atlantic City, New Jersey, during 1978 marked the end of Nevada's virtual monopoly of casino-style gambling. This paper attempts to quantify the impact of Atlantic City casino gaming activity on Nevada gross taxable gaming revenues by using a dynamic unobserved components time series model. Such structural time series models have the ability to represent local linear (stochastic) trends, stochastic seasonality, and nonstationary time series. The stochastic trend model is augmented with exogenous variables to explicitly account for the effects of changing consumer incomes, Atlantic City play, and the California lottery. The empirical results show that by 1985 the impact of Atlantic City casinos reached an apparently stable level of reducing Nevada gaming revenues by about 10 to 12 percent.
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Research supported by the Nevada Agricultural Experiment Station. Without suggesting their complicity, T. F. Cargill, W. R. Eadington, and G. A. Horton have benefitted this study with their observations and comments.
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Shonkwiler, J.S. Assessing the impact of Atlantic City casinos on Nevada gaming revenues. Atlantic Economic Journal 21, 50–61 (1993). https://doi.org/10.1007/BF02302315
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DOI: https://doi.org/10.1007/BF02302315