Determinants of Video Gaming Terminal Adoption and Revenue: Evidence from Illinois
*Names in bold indicate Presenter
Despite their expansion across the country, substantive analyses of VGTs at the municipal level have not been attempted in any of the seven states where non-casino devices are legal. Consequently, little is known about 1) the motivation behind VGT adoption and 2) the determinants of VGT revenue-generating capacity at the local level. This analysis seeks to fill this gap in the research and, in so doing, to inform the decisions of state and local policymakers who may be considering VGT legalization and adoption.
Towards that end, we construct a rich longitudinal dataset spanning four years using data from Illinois. As local governments are fully empowered to allow or prohibit VGTs in their jurisdictions, this setting provides substantial variation in both VGT adoption and local revenue across both jurisdictions and time. Using a two-part model and a rich set of controls, our identification strategy first identifies the predictors of VGT adoption among local jurisdictions and then, conditional on adoption, estimates the determinants of VGT revenues. To address possible sample selection bias and to check the robustness of our results, we alternatively consider Tobit and Heckman Selection models in our analysis. It is our hope that this study spurs more interest in this topic, for which there exists many avenues for further research.