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Casinos and political corruption in the United States: a Granger causality analysis

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The commercial casino industry experienced an unprecedented expansion in the United States during the 1990s. As the industry has grown, so has the anecdotal evidence that links the casino industry with political corruption. However, there have been no empirical analyses of the issue. We use state-level panel data from 1985–2000 to posit a Granger causality analysis of the relationship between corruption convictions of state public officials and the predicted adoptions of casinos at the state level. We find evidence that predicted casino adoptions Granger cause corruption convictions. This finding is suggestive of a scenario of regulatory capture and may help explain why state-level gaming regulatory agencies have a history of softening gaming regulations after the initial introduction of casinos. Our study provides the first empirical evidence linking casinos to political corruption.

Keywords: D73; Granger causality; L83; casinos; corruption; regulatory capture

Document Type: Research Article

Affiliations: College of Charleston, Economics and Finance, 66 George Street, Charleston, SC 29424, USA

Publication date: December 1, 2013

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