Evidence using Instrumental Variables and difference-in-differences shows that increased consumer spending on sports betting caused a significant decline in spending on video lottery terminals (VLTs) in casinos, both of which generate tax revenues. This paper exploits the legalization of sports betting and timing of sports book openings in West Virginia to analyze the impact of expanded sports betting on other casino gambling. The literature analyzing consumer substitution in gambling spending contains some evidence on the impact of expansions in many types of gambling, but no evidence on the impact of expanded sports betting. Most states already permit other forms of gambling and receive tax revenues from these sources.
A Supreme Court decision legalizing sports betting in the US led states to legalize sports betting in order to generate new tax revenues from wagering on sports events.
