Have Casinos Contributed to Rising Bankruptcy Rates?
- 113 Downloads
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.
- American Gaming Association. (2004). State of the States: The AGA Survey of Casino Entertainment.Google Scholar
- Morse, E. M., & Goss, E. P. (2007). Governing fortune: Casinos in America. Ann Arbor: University of Michigan Press.Google Scholar
- National Opinion Research Center. (1999). “Overview of national survey and community data base research on gambling behavior,” University of Chicago. National Gambling Impact Study Commission.Google Scholar
- Rivlin, G. (2004). The tug of the newfangled slot machines. New York Times Magazine. May 9.Google Scholar
- SMR Research. (2001). The new bankruptcy epidemic: Forecasts, causes, and risk control. June.Google Scholar
- Sullivan, T. A., Warren, E., & Westbrook, J. L. (2000). The fragile middle class. Yale University Press.Google Scholar
- Zywicki, T. A. (2005). Institutions, incentives, and consumer bankruptcy reform. George Mason University School of Law Working Paper Series, No. 21.Google Scholar