THE IMPACT OF CASINO GAMBLING ON PERSONAL BANKRUPTCY FILING RATES

John Barron (), Michael E. Staten and Stephanie Wilshusen

Contemporary Economic Policy, 2002, vol. 20, issue 4, 440-455

Abstract: Personal bankruptcies soared in the United States between 1994 and 1998. One activity that can precipitate personal financial crises and that has also experienced dramatic growth is commercial gambling, especially casino gambling. This article builds a simple model of bankruptcy choice and empirically tests the model using unique county‐level data on debt, income, household age, population density, and casino gambling as well as state measures of employment and marital stability, health insurance coverage, and garnishment restrictions. The authors find that the proximity of casino gambling appears to be associated with higher bankruptcy rates, but that the local impact is far more pronounced than the influence of casino gambling on the national filing rate. To quantify the magnitude of the impact, the analysis predicts over a 5% decline in 1998 filing rates for counties surrounding a casino, and a 1% decline in the nationwide filing rate if one were to eliminate casino gambling. Consequently, although casino gambling exerts important local effects, nationwide the incidence and growth of casino gambling does not explain much of the rise in bankruptcies during the past decade.

Date: 2002
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