California Lottery Has Hurt Nevada Casinos, Study Says

A study by two economics professors at the University of Nevada-Reno says the California lottery has cut into Nevada’s casino business.

The report, released Monday, compares revenue trends in the gambling industry before and after the start of the lottery in the neighboring state. Professors Thomas Cargill and Kambiz Raffie said their study for the years 1986 through 1989 shows that gross gambling volume averaged 3.7% less each quarter once the lottery started.

Cargill and Raffie also said there were fewer visitors to Nevada. That meant reduced sales tax revenue, which were 4.5% lower than if the lottery had not been in effect.

The estimated loss in gaming gross revenue to casinos last year is $170 million. Nevada casinos reported their win at $4.5 billion for 1989, up 7% from the previous year. Gross revenue is computed before business expenses and taxes are deducted.

Cargill said Californians may not come to Nevada as often as in the past because they have gambling at home. In addition, he said Nevadans are also going over to California to buy lottery tickets.

The Nevada Gaming Control Board is conducting its own study of the impact on Nevada gambling of the lottery. Board economist Gary Horton said the lottery definitely “impacts” the casino industry. But he added that there were other factors.

“Many people who play the lottery do it at the 7-Eleven (stores), and they are not going to drive over the hill (to Reno) or travel to Las Vegas anyway,” he said. The study said what casino owners have known for some time. They have taken steps to increase advertising and are looking for other markets outside of California. The industry has also set up slot machine jackpots of more than $1 million to counter the lottery.