The Impact of Indian Casinos on State Lotteries: A Case Study of Arizona

Abstract

Gambling is a rapidly growing industry with competing private, public, and Native American tribal interests. To examine the effects of this competition, the authors outline a simple econometric model for assessing substitution between lottery games and other forms of gambling. They estimate the model to examine whether an expansion in Indian casino gaming in Arizona is associated with a decline in lottery revenues. The findings imply that there is indeed a substitution effect.