Policy Documents

Do Casinos Cause Economic Growth?

Douglas M. Walker and John D. Jackson –
July 1, 2007

Casino gambling is a popular form of entertainment and ispurported to have positive effects on host economies. The industrysurely affects local labor markets and tax revenues. However, there hasbeen little evidence on the effects of casino gambling on state economic growth. This paper examines that relationship using Grangercausality analysis modified for use with panel data. Our results indicatethat there is no Granger-causal relationship between real casinorevenues and real per capita income at the state level. The results arebased on annual data from 1991 to 2005. These findings contradict anearlier study that found that casino revenues Granger-cause economicgrowth, using quarterly data from 1991 to 1996. Possible explanationsfor the differences in short- and long-run effects are discussed.