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Do Gambling Firms Target Crime-Prone Areas?

34 Pages Posted: 30 Jun 2016 Last revised: 22 Jun 2017

Pradeep Kumar

University of Exeter Business School - Department of Economics

Hisayuki Yoshimoto

University of Glasgow - Adam Smith Business School

Date Written: June 20, 2017

Abstract

We investigate the causal effect of local crime on betting shop openings. Crime in an area can generate demand for gambling services as criminals and gamblers may share similar preferences: risk loving and instant gratification. To isolate the effect, we develop an empirical model to study the firm-side incentives driving the opening of betting shops. We estimate a panel model employing an instrumental variable approach using data from London boroughs for 2006 to 2015. The instrumental variable is built upon the differences in traveling patterns between gamblers and criminals. Our result shows that a 1% increase in the local crime rate causes a 0.3% to 1.3% increase in the number of betting shops per capita. This result is robust across a variety of econometric specifications.

Keywords: Entry, Gambling Industry, Betting Shops, Local Crime, Gambling Act, Causal Effect

JEL Classification: J1, L5, K0

Suggested Citation

Kumar, Pradeep and Yoshimoto, Hisayuki, Do Gambling Firms Target Crime-Prone Areas? (June 20, 2017). Available at SSRN: https://ssrn.com/abstract=2801017 or http://dx.doi.org/10.2139/ssrn.2801017

Pradeep Kumar

University of Exeter Business School - Department of Economics ( email )

Streatham Court
Exeter, EX4 4RJ
United Kingdom

Hisayuki Yoshimoto (Contact Author)

University of Glasgow - Adam Smith Business School ( email )

Glasgow
United Kingdom

HOME PAGE: http://hisayukiyoshimoto.org/

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