The Importance of Self-Selection in Casino Cannibalization of State Lotteries

Jonathan Rork and Stephen Fink ()
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Stephen Fink: Vassar College

Economics Bulletin, 2003, vol. 8, issue 10, 1-8

Abstract: This note extends the work of Elliott and Navin (2002) on the substitutability of commercial casinos and state lotteries by controlling for a potential negative selection bias. We utilize a Heckman two-step selection correction in which our first stage probit involves whether or not a state has legalized commercial casinos. Results indicate that a $1 increase in state casino tax revenue will reduce net lottery proceeds by $0.56. This estimate is 33% smaller than what has been found in other studies, which is consistent with a negative selection bias.

JEL-codes: H7 (search for similar items in EconPapers)
Date: 2003-09-16
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Citations: View citations in EconPapers (9)

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