Sports Betting’s Impact on Casino Gambling

Cannibalization or Expansion?

In 2018, the Supreme Court overturned The Professional and Amateur Sports Protection Act, enabling state governments to pass regulations to implement legal sports gambling. The recency of this ruling leaves the economic impact of sports gambling legalization unknown. This study uses Iowa—which added sports betting to casino offerings in August 2019—as a case study to explore potential national implications of sports gambling legalization.

The key dynamic that this study investigates is cannibalization: the possibility that introducing sports betting will cause revenues to be drawn from other forms of gambling, which could potentially result in decreased overall casino profits and decreased tax collections from casinos. Historically, the introduction of other forms of gambling—like a state lottery—has resulted in observable cannibalization within the larger gambling market,1 suggesting that the implementation of sports betting should result in some degree of cannibalization within the Iowa gambling market.

Estimates from regression results show that sports betting did not produce cannibalization of nonsports betting gambling revenue but instead increased nonsports casino gambling revenues. Additionally, this study finds that mobile sports betting did not alter the relationship between sports betting, and casino adjusted gross revenue (AGR).

a. Ph.D., MacAllister Chair, Creighton University.

b. B.A., Research Economist, Goss & Associates.
The authors wish to thank the Institute for Economic Inquiry at Creighton University for research sup-port essential for the completion of this study.

1. See Douglas M. Walker & John D. Jackson, Do U.S. Gambling Industries Cannibalize Each Other?, 36 Pub. Fin. Rev. 326–27 (2008).

The full text of this Symposium is available to download as a PDF.