Have Casinos Contributed to Rising Bankruptcy Rates?

Article

Abstract

This paper examines the relationship between casino gambling and bankruptcy rates in U.S. counties using a panel of U.S. county-level data from 1990 through 2005. We contribute to the literature in several ways, perhaps most notably by examining the possibility that the effect of a casino on bankruptcy may differ over the casino’s lifespan. Results confirm this possibility, indicating that the impact of casinos on bankruptcy follows a “U-shaped” curve over the life of the casino. More specifically, regression analysis indicates the existence of a casino in a county increases the bankruptcy rate by more than 9% in the first year of operation. The percentage of additional bankruptcies then decreases through the third year after the casino opens. Bankruptcy rates in casino counties then slightly fall below that of non-casino counties during the fourth through seventh years after opening, increasing once again in the eighth year and thereafter. This cycle corresponds closely to the 6 year statute of limitations period applicable to Chapter 7 bankruptcies.

Keywords

Casinos Bankruptcy 

JEL

L6 K0 

References

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Copyright information

© International Atlantic Economic Society 2009

Authors and Affiliations

  1. 1.Department of Economics & FinanceCreighton UniversityOmahaUSA
  2. 2.School of LawCreighton UniversityOmahaUSA

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