The Revenue Performance of Casinos after a Smoking Ban: The Case of Illinois

Garrett, Thomas A.; Pakko, Michael R.

doi:10.2139/ssrn.1415034

The Revenue Performance of Casinos after a Smoking Ban: The Case of Illinois

44 Pages Posted: 5 Jun 2009 Last revised: 12 Mar 2010

See all articles by Thomas A. Garrett

Thomas A. Garrett

Federal Reserve Bank of St. Louis - Research Division

Michael R. Pakko

Arkansas Economic Development Institute

Date Written: March 9, 2010

Abstract

Recent state-wide smoking bans are likely the most significant regulations imposed on the casino gaming industry. We explore the effects that the Illinois state smoking ban has had on Illinois casino revenue and attendance as well as casino tax revenue. Our empirical methodology extends and enhances that of previous literature in that we observe a natural experiment in comparing the performance of Illinois casinos with out-of-state casinos (no smoking ban) that share a market with Illinois casinos. Estimates suggest that revenue and admissions at Illinois casinos declined by more than 20 percent ($400 million) and 12 percent, respectively. Calculations reveal that casino tax revenue to state and local governments declined by approximately $200 million.

Keywords: Gaming, Gambling, Smoking, Casinos

JEL Classification: I12, D78, H11

Suggested Citation: Suggested Citation

Garrett, Thomas A. and Pakko, Michael R., The Revenue Performance of Casinos after a Smoking Ban: The Case of Illinois (March 9, 2010). Available at SSRN: https://ssrn.com/abstract=1415034 or http://dx.doi.org/10.2139/ssrn.1415034