Pennsylvania Casinos’ Cannibalization of Regional Gambling Revenues

Gambling opportunities are expanding rapidly in the U.S. Mid-Atlantic area. Fifteen gambling venues have opened since 1996. The introduction of these venues has the potential to shift the balance of gambling activity away from New Jersey, which had enjoyed a monopoly position in the area for decades. Delaware and, more recently, Pennsylvania have entered the marketplace, raising the question of whether aggregate gambling activity has increased in the area, and whether all states have benefited. Contrary to previous research, a multivariate analysis reveals that aggregate gambling revenue among the three states has not increased with the introduction of Pennsylvania gambling venues. The research extends the literature by including Delaware in the analysis, which has drawn significant gamblers from Pennsylvania and the greater region, and by greatly expanding the data employed. In the Philadelphia-Northern Delaware-Atlantic City market (where the competition of gambling revenue is most intense), there is empirical evidence that the introduction of gambling in Pennsylvania has decreased the overall volume of gambling.