The Income Elasticity of Gross Casino Revenues: Short–Run and Long–Run Estimates

We examine how gross casino gambling revenues differ from other major tax bases in growth and variability. Long–run and short–run income elasticities are estimated using state–level gross casino revenue and state, regional and national income. We run separate time–series regressions for each of 11 states with significant commercial gambling. Gross casino revenue generally grows faster than taxable sales, but slower than taxable income. Gross casino revenue growth also slows as the industry matures. Short–run elasticity is, on average, lower than estimates for sales and income taxes, with an equal or more rapid adjustment to long–run equilibrium.