Diffusion of an Economic Development Policy Innovation: Explaining the International Spread of Casino Gambling

Abstract

This study uses an event history analysis to examine the factors that lead to the adoption of casino gambling among 13 nations around the world. Specifically, measures of fiscal stress, economic development, tourism, religiosity, and income levels are tested for their relationship to national decisions to legalize casino gambling. This study found that economic development needs, as measured by general unemployment rates, were associated with the casino legalization decisions of national governments. Higher unemployment rates were more likely in the years that nations legalized casino gambling. Religiosity, measured by frequency of church attendance, was also found to be a significant barrier in legalization decisions. Measures of fiscal stress, tourism, and income levels were not found to have significant relationships with the legalization decisions. This is interesting because these factors are often cited in case studies, media reports, and the statements of politicians during legalization processes. This study points to the need for further research in several areas. Further exploration of potential explanatory variables and more appropriate measures of currently theorized factors is warranted. Another area for further research is the seeming contradictory findings of multiple statistical analyses and multiple anecdotal findings of the impacts of fiscal stress on the casino legalization decision.

The Effect of Recessions on Gambling Expenditures

“…When normal revenue growth softens during economic downturns, states often consider expanding their gambling operations for balancing their budgets (Dadayan and Ward 2009) by efforts to keep gambling revenues (and the concomitant gambling taxes) within the state, to reduce unemployment, and to attract tourism or “export taxes” (Calcagno et al 2010; Richard 2010). Richard (2010) conducts a study to find the factors behind the spread of casino gambling in 13 nations around the world. He finds that economic development needs, as measured by general unemployment rates, are associated with the casino legalization decisions by national governments.…”

Gambling participation and policies in Malaysia

“…These policies are partly responsible for the spread of casino gambling in some nations (Richard 2010). In the USA, Native American tribal councils have the right to set up and operate gambling establishments on their reservations, subject to the Indian Gaming Regulatory Act of 1988 (Cornell 2008).…”

“…An analysis of 13 countries (Richard 2010) with respect to legalization of casino gambling resulted in the suggestion that religiosity, as measured by frequency of church attendance, was a significant barrier to casino legalization. No additional casino has been allowed to open in Malaysia since the launching of the Casino de Genting in the early 1970s.…”

“…When governments remove legal restrictions and encourage the proliferation of certain forms of gambling such as lotteries and casino gambling it may result in rapid growth of these forms worldwide (Richard 2010). In Malaysia, the first and only legal casino, the Casino de Genting, was opened at Genting Highlands resort in the state of Pahang in the early 1970 s. In spite of its sizable non-Muslim population, no further casinos have been allowed by the authorities to be opened in Malaysia partly because of the influence of Islam and its increasing impact on public policy in this country.…”

“…Besides the utility and satisfaction gained by gambling product consumers without violating legal norms, there are allegedly economic benefits for the society at large. These include the creation of jobs through legalized gambling venues (Richard 2010), taxation revenues gained by the government (Shaffer and Korn 2002), and socioeconomic development of the community (Zheng and Hung 2012). For example, growth of remote cities such as Las Vegas in Nevada, USA and Macau, China (Dunstan 1997) whereby there are infrastructure improvements and constant influx of tourism revenues.…”