Racino Gaming's Impact on Wages, Employment, Economic Diversity and Stability: Evidence from a Spatial Model of West Virginia

Racinos are mixed venue gaming and racing activities that have recently enjoyed considerable scrutiny among policy makers. This interest motivates this analysis of gambling. In this study I construct a regional model, employing fixed effects with time space recursive estimates of the presence of a racino on employment, wages, industrial composition and macroeconomic stability in each of West Virginia’s counties and bordering counties in adjacent states from 1978 through 2004. I found that the entrance of a racino (from an existing racing facility) results in a one time, non-transient increase in employment of as much as 1.18 percent which is accompanied by decrease in mean wages by as much as 2.9 percent. This suggests that new employees receive annual salaries of roughly $14,000 or half the existing annual wage. Additionally, while there is no impact on the industrial composition that meets minimum levels of statistical significance, the region which experiences a new racino activity sees a roughly 8/10’s of a percent increase in 3 year net changes to income – the regions are less stable. These findings suggest little in the way of activist efforts to attract or retain new racino firms.