Review of Industrial Organization
13: 713–726, 1998.
1998 Kluwer Academic Publishers. Printed in the Netherlands.
The Impact of Deregulation on Casino Win in
MARK W. NICHOLS
Department of Economics, University of Nevada, Reno, NV 89557, USA
Abstract. This paper examines the impact of deregulation on the demand for casino gaming in
Atlantic City. Speciﬁcally, the paper analyzes the impact of expanded operating hours and ﬂoor space
devoted to slot machines. Using monthly win data between June 1978 and July 1996, the analysis
reveals that expanded ﬂoor space had a signiﬁcant, positive impact on win, resulting in an average
monthly increase of over $2 million. This shows the importance of developing a regulatory structure
rigid enough to ensure the honesty and integrity of the gaming industry, but ﬂexible enough to allow
management to respond to changing market conditions.
Key words: Casino win (gross gaming revenue), Atlantic City, deregulation.
Casino regulation in Atlantic City has frequently been criticized for being excessive
and too intrusive into operational matters (see, e.g., Lowenhar et al. (1991) and
Satre (1981)). While few would argue that regulatory oversight is necessary to
keep out organized crime, maintain the integrity of casino operation, ensure proper
ﬁnancial reporting, and guarantee the legitimacy of the games, the regulation of
issues directly related to casino operations is more debatable. Many issues left to
management discretion in other jurisdictions, such as house rules and odds, are
explicitly regulated in Atlantic City. For example, New Jersey statutes state that
the Casino Control Commission shall be responsible for “deﬁning and limiting the
areas of operation, the rules of authorized games, odds, and devices permitted, and
the method of operation of such games and devices” and “prescribing for games
operations and procedures, forms and methods of management controls, including
employee and supervisory tables of organization and responsibility, and minimum
security standards,including security personnelstructure, alarmandother electrical
or visual security measures” (New Jersey Statutes, L. 1977, c. 110, s. 70 amended
L. 1995, c.18, s. 70). Has such regulatory oversight restricted management’s ability
to respond to changing market conditions, thereby retarding demand growth and
stiﬂing the industry’s revenue growth potential? The debate over this question came
I have beneﬁted from discussions with Bill Eadington, Kambiz Rafﬁee, Russell Sobel and sem-
inar participants at West Virginia University. Special thanks to Judy Cornelius and Jeffrey Lowenhar
for providing the data. All remaining errors are solely my responsibility.