Richard Thalheimer

The demand for casino gaming

In this study an econometric model is developed to examine the determinants of the demand for casino gaming, specifically the demand for slot machine wagering at riverboats and racinos. In addition to examining the effects of traditional demand variables, the effect on wagering of variables such as location of a wagering facility and of government restrictions, is examined. A unique measure of accessibility of market area customers to a facility and to competing facilities was developed. The demand for wagering at a facility was found to increase as access by customers in its market area increases and to decrease as access by its customers to competing riverboats, racinos or Indian casinos increases. Government restrictions were found to have an adverse effect on wagering at a riverboat. On the other hand, wagering at a riverboat was found to increase when such restrictions were imposed on competing riverboats. The presence of total loss limits and restrictions on boarding times at a riverboat were found to have reduced wagering by 36% and 35%, respectively. With respect to traditional demand variables, slot machine wagering demand was found to be price elastic at the beginning of the sample period declining to slightly below unit elasticity by the end of the period. Table games offered at a gaming facility were found to be substitutes for slot machines. Demand was found to be negatively related to per capita income at lower income levels and positively related at higher income levels. The proportion of income wagered was found to be greater at upper and lower income levels relative to middle income levels. Demand was found to be positively related to days of operation and number of slot machines.

Price Expectations and Supply Response in the Thoroughbred Yearling Market

Limited information is available concerning price determination in the thoroughbred yearling market. A recursive model incorporating price expectations and biological constraints is used to estimate supply and demand functions for thoroughbred horses. Empirical results characterize a market with inelastic supply and elastic demand that converges to equilibrium under static conditions. Purses were identified as the most influential variable impacting price. Comparative statics illustrate the effectiveness of purses as a policy instrument for the thoroughbred industry. Federal tax policy also was found to have a significant impact on the decisions to breed or invest in thoroughbred yearlings.

Exotic betting opportunities, pricing policies and the demand for parimutuel horse race wagering

Parimutuel horse race wagering has been declining steadily for the past several decades. This has resulted in lower revenues to state governments, recetracks adn horseman. To retard or reverse this trend, attempts have been made to implement a number of pricing and marketing strategies. Among these has been the introduction of a variety of exotic wagering opportunities. Over the years the number and type of exotic wagers offered has been increased. Furthermore, the prices of both straight and exotic wagers have been increased and, in addition, the price of exotic wagers has generally been set at a higher rate than that for straight wagers. The paper examines the effectiveness of these policies.

Demand for parimutuel horse race wagering with special reference to telephone betting

Parimutuel horse race wagering (handle), measured in real terms, has been steadily declining for the past several decades. In an attempt to reverse this trend, a number of racetracks in the United States have instituted telephone betting systems which allow wagering from an ‘off-track’ location. The present study investigates the demand for parimutuel horse race wagering when a telephone betting system is implemented. Two demand equations are estimated for a racetrack, one for on-track (live race) handle and another for total (on-track plus telephone betting) handle. As expected, it is found that the telephone betting system has led to a decline in on-track wagering but surprisingly, it has also led to decline in total wagering, although not to the same extent as in on-track wagering. Thus, off-track wagering generated through the telephone betting system has not been sufficient to offset the loss in on-track handle. In addition to the effect of the telephone betting system, it is found that the takeout r...

Transportation costs and product demand: wagering on parimutuel horse racing

Parimutuel horse-race wagering is in many respects like any other economic good but it differs in one important way from a vast majority of them. Given the present market arrangement, this good cannot be transported to the consumer; instead the consumer must travel to the production site where the good is consumed as it is produced. Thus, transportation costs must play a crucial role in the demand decision for horse-race wagering. The consumers incur not only out-of-pocket expenses for travelling but also the cost of the time required to travel to and to consume the product. Moreover, consumers incur differential costs in obtaining the same product because of their locational differences. Wagering demands are theorized to be the consequence of the choice of utility maximizing consumers which incorporates this special characteristic of the product. Models for parimutuel horse-race wagering are then estimated both for thoroughbred and for harness horse racing in the state of New Jersey. It is found that both harness and thoroughbred horse-race wagering are sensitive to travelling costs and both can be increased by reducing the costs per visit to wagering sites. These costs can be lowered by reducing the travelling distance of the consumers to the wagering sites. This can be achieved by increasing the number of racing days or by simply reallocating a given number of racing days among different locations. It can also be achieved by increasing the number of wagering sites and locating them strategically. It is interesting to see that travelling distance declines non-linearly as the number of racing days and/or the number of sites is increased and the decline is insignificant as the number of racing days and/or the number of sites is increased beyond a saturation point. The unique construction of travelling costs allows investigation of wagering impacts of an introduction of a new wagering site or an elimination of an existing one.

Parimutuel wagering and video gaming: a racetrack portfolio.

Parimutuel wagering has been declining for several decades due, in part, to increased competition from state lotteries and casino gaming. In recent years, an attempt has been made to integrate video lottery terminal (VLT) gaming into a parimutuel racetracks product portfolio. Daily data are used to develop product demand equations for parimutuel horse-race wagering and video lottery gaming at a throughbred racetrack. It is found that introduction of VLTs into the product mix results in decreased parimutuel wagering and revenues. However, the additional revenue generated from the VLTs is found to more than offset the decline in parimutuel revenue and the increased expense associated with the VLTs, given that a sufficient number of terminals are made available. When revenue from the combined parimutuel and VLT gaming product increases, if the respective shares of the VLT revenue distributed to the racetrack, to the horsemen who race horses at the racetrack and to the government are the same as their distributive shares from parimutuel wagering, all will enjoy an increase in revenue. To the extent that the respective shares of these participants differ from their share of parimutuel wagering, all participants may or may not enjoy an increase in revenue, depending upon the magnitude of the revenue increase. An additional finding of importance is that patrons who attend and wager on horse racing also wager on the VLT games while patrons who attend for the VLT gaming are less likely to wager on horse racing.

On the use of grouping methods in the analysis of residential housing markets

Abstract In this article we employ four different statistical techniques (geographic, AID, cluster and discriminant analysis) to define homogeneous groupings of houses within an urban area. Analysis of a sample of data from Fayette Country, Kentucky indicates that each of these methods produces distinguishable homogeneous groupings of properties. Predictions of house values are compared using data from Lane County, Oregon, San Mateo County, California, and Fayette County. The major conclusions of the study are that there are no discernible differences among the four methods and that predictions made ignoring the grouping information are as accurate as those obtained by grouping.

Intertrack wagering and the demand for parimutuel horse racing

Abstract Wagering on parimutuel horse racing has been steadily declining for the past several decades. In an effort to retard or reverse this trend, a number of racetracks have attempted to expand their market by implementing an intrastate intertrack wagering (ITW) system. Intrastate ITW is the simultaneous satellite transmission of live racing from a host racetrack within a state to receiving racetrack facilities located in the same state. Patrons at the receiving ITW locations may place parimutuel wagers on the live race product at the host racetrack as it is being conducted. This paper examines the impacts of wagering on races conducted at six racetracks (four thoroughbred and two harness) in a state that has implemented an intrastate ITW system. It is found that intrastate ITW results in a significant increase in handle for these racetracks. The loss in thoroughbred handle due to competition from cross-breed (harness) ITW is minor, but the loss in harness handle from cross-breed (thoroughbred) ITW may be substantial.

Table games, slot machines and casino revenue

The main focus of this study is to assess the influence of table games on slot machine and total casino revenues. The subjects of the analysis are 24 rierboat casinos in the midwestern states of Illinois, Iowa and Missouri and three racinos in Iowa. A racino is a parimutuel racetrack which also offers slot machine gaming to its customers. Two econometric models were developed, one for slot machine revenue and one for total (slot machine plus table game) revenue at riverboats and racinos. Of particular interest is the effect on slot machine and total revenue of adding table games to the gaming operation. Slot machine revenue was found to increase with the number of slot machines and decrease with the number of table games. Slot machine revenue was estimated to decrease by 11.5% in the presence of 40 table games, the mean number of table games over the sample. Total win was found to increase with an increase in both slot machines and table games. The elasticity of total win with respect to the number of slot machines and table games was estimated to be 0.786 and 0.219, respectively. Total revenue was estimated to increase by 24.5% for an additional 40 table games. 1 This article was accepted for publication, subject to final edit, white Dr. Thalheimer was at the University of Louisville, Louisville, KY, USA. AS is customary, the authors assume full responsibility for the analysis and the remaining errors.

Government restrictions and the demand for casino and parimutuel wagering

Growth in casino wagering in the United States from the mid-1980s forward has been extraordinary. Over the same period, however, parimutuel wagering has declined. Concern for this decline has prompted a number of states to allow parimutuel racetracks to offer casino-type gaming devices at their facilities. Such operations are commonly referred to as ‘racinos’. If the gaming devices at a racino are under the auspices of a state lottery, they are referred to as video lottery terminals (VLTs). Separate parimutuel and VLT wagering demand models were estimated for a racino facility. A number of restrictions were imposed on the VLTs at the beginning of the study period including: number of VLTs, type of game and machine, maximum bet per play and VLT location. The effect of these restrictions on VLT and parimutuel handles was a major focus of this article. Also of importance was an examination of the relationship between the VLT and parimutuel products. Relaxation of government restrictions on the VLTs was found to have resulted in a large increase in VLT wagering. On the other hand, parimutuel wagering was found to decrease with the relaxation of restrictions on the VLTs. The presence and growth of the VLT product was found to decrease parimutuel handle. The presence and growth of the parimutuel product was found to increase VLT handle.