Study Examines Impact of Casinos on Bankruptcy Rates

Newswise — A study by two Creighton University professors examines the impact of casino gambling on bankruptcy rates. The study by Economics Professor Ernie Goss and Law Professor Edward Morse is the first to show varying bankruptcy effects over the lifecycle of the casino.

This study, entitled "The Impact of Casino Gambling On Individual Bankruptcy Rates from 1990 to 2002" , evaluates personal bankruptcy data on a county-level basis over the period from 1990-2002 for both casino and non-casino counties. Adjustments for factors such as population, employment, per capital income, and race are designed to isolate the impact of adding a casino on the personal bankruptcy characteristics of the county population.

After an initial increase in personal bankruptcy rates, rates decline and level out for an additional two or three years, followed by progressively increasing rates. Compared with a non-casino county, the casino county is expected to have higher overall bankruptcy filings than the non-casino county after the ninth year of operations, with progressively increasing rates thereafter. The study also raises possible explanations for these lifecycle effects. Casinos may have positive economic effects manifested in initial years, which dampen the effects from problem gambling behavior. However, these effects may moderate as casino markets mature. The combination of the manifestation of problem gambling behavior, coupled with declining inflows from nonresidents as casino markets become more densely occupied, has the potential to increase total bankruptcy experiences some years after the casino has opened. This suggests that bankruptcy effects from many of the casinos opened in recent years are yet to be experienced in local communities.

Professor Goss presented the findings at the Southern Regional Science Meetings in Washington, D.C. April 9, 2005. A copy of the study is available in PDF format at the following website: http://www.outlook-economic.com/ . Additional commentary and feedback is available at their blog, http://www.economictrends.com.