Racino Gaming’s Impact on Wages, Employment, Economic Diversity and Stability: Evidence from a Spatial Model of West Virginia

Abstract

Racinos are mixed venue gaming and racing activities that have recentlyenjoyed considerable scrutiny among policy makers. This interest motivates this analysisof gambling. In this study I construct a regional model, employing fixed effects with timespace recursive estimates of the presence of a racino on employment, wages, industrialcomposition and macroeconomic stability in each of West Virginia’s counties andbordering counties in adjacent states from 1978 through 2004. I found that the entranceof a racino (from an existing racing facility) results in a one time, non-transient increasein employment of as much as 1.18 percent which is accompanied by decrease in meanwages by as much as 2.9 percent. This suggests that new employees receive annualsalaries of roughly $14,000 or half the existing annual wage. Additionally, while thereis no impact on the industrial composition that meets minimum levels of statisticalsignificance, the region which experiences a new racino activity sees a roughly 8/10’s ofa percent increase in 3 year net changes to income – the regions are less stable. Thesefindings suggest little in the way of activist efforts to attract or retain new racino firms.(R1, C1, O2)