Have Casinos Contributed to Rising Bankruptcy Rates?

International Advances in Economic Research, Vol. 15, p. 456, 2009

14 Pages Posted: 5 Feb 2010

See all articles by Ernest Goss

Ernest Goss

Creighton University - Department of Economics

Edward A. Morse

Creighton University - School of Law

John A. Deskins

Creighton University - Department of Economics

Date Written: August 12, 2009

Abstract

This article examines the relationship between casino gambling and bankruptcy rates in U.S. counties using a panel of UlS. county-level data from 1990-2005. 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 tha tthe 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 the 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 applicable to Chapter 7 bankruptcies during the years of this study.

Keywords: Casinos, Bankruptcy

JEL Classification: L6, K0

Suggested Citation

Goss, Ernest and Morse, Edward A. and Deskins, John, Have Casinos Contributed to Rising Bankruptcy Rates? (August 12, 2009). International Advances in Economic Research, Vol. 15, p. 456, 2009. Available at SSRN: https://ssrn.com/abstract=1534914

Ernest Goss

Creighton University - Department of Economics ( email )

College of Business Administration
2500 California Place
Omaha, NE 68178
United States

Edward A. Morse (Contact Author)

Creighton University - School of Law ( email )

2500 California Plaza
Omaha, NE 68178
United States

John Deskins

Creighton University - Department of Economics ( email )

College of Business Administration
2500 California Place
Omaha, NE 68178
United States

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