Abstract
Legalized gambling is a popular source of tax revenue in the United States. However, the ability to increase gambling tax revenue through higher tax rates is limited by the presence of nontaxable and cross-border substitutes. In July 2009, New Hampshire introduced a 10 percent tax on gambling winnings, substantially reducing the expected value of a gamble while leaving other aspects of gambling unaffected; the tax was repealed in May 2011. Using a novel data set and a difference-in-differences framework, I document significant reductions in New Hampshire lottery sales under the tax policy and estimate a price elasticity greater than −1. The response is consistent with informed choice by consumers, and larger changes in border areas provide suggestive evidence of cross-border shopping.
Get full access to this article
View all access options for this article.
References
Supplementary Material
Please find the following supplemental material available below.
For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.
For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.
