This paper estimates the effect of racino legalization with earmarked revenues for K-12 education on school district finances. Using district-level data from 1999 to 2019 and a staggered difference-in-differences design, we find that legalization increases total per-pupil revenue by about 6.5%, driven by gains in state aid and local revenue, with no change in federal funding. Expenditure increases are concentrated in capital outlays, which rise nearly 19%, while current spending grows modestly. Event-study estimates show no pre-treatment trends and persistent post-treatment gains. The results are robust to alternative control groups, additional controls, and exclusion of large districts, suggesting that racino earmarks provide a sustained boost to district resources, particularly for long-term investments.
AlmJ.BuschmanR. D.SjoquistD. L. (2011). Rethinking local government reliance on the property tax. Regional Science and Urban Economics, 41(4), 320–331.
BiasiB.LafortuneJ.SchönholzerD. (2021). School capital expenditure rules and distribution. AEA Papers and Proceedings, 111, 450–454.
5.
BrunnerE. J.SonstelieJ. (2003). School finance reform and voluntary contributions. Journal of Public Economics, 87(9–10), 2157–2185.
6.
CallawayB.Sant’AnnaP. H. C. (2021). Difference-in-differences with multiple time periods. Journal of Econometrics, 225(2), 200–230.
7.
CampbellN. D. (2003). Do lottery funds increase educational expenditure? Evidence from Georgia’s lottery for education. Journal of Education Finance, 28(3), 383–401.
8.
CascioE. U.GordonN.ReberS. (2013). Local responses to federal grants: Evidence from the introduction of Title I in the South. American Economic Journal: Economic Policy, 5(3), 126–159.
9.
CelliniS. R.FerreiraF.RothsteinJ. (2010). The value of school facility investments: Evidence from a dynamic regression discontinuity design. Quarterly Journal of Economics, 125(1), 215–261.
10.
EvansW. N.ZhangP. (2007). The impact of earmarked lottery revenue on state educational expenditures. Education Finance and Policy, 2(1), 40–73.
11.
GarrettT. A. (2001). Earmarked lottery revenues for education: A new test of fungibility. Journal of Education Finance, 26(3), 219–238.
12.
Goodman-BaconA. (2021). Difference-in-differences with variation in treatment timing. Journal of Econometrics, 225 (2), 254–277.
13.
GordonN. (2004). Do federal grants boost school spending? Evidence from Title I. Journal of Public Economics, 88(9–10), 1771–1792.
14.
HanushekE. A. (2003). The failure of input-based schooling policies. The Economic Journal, 113(485), F64–F98.
15.
HicksM. J. (2009). The local economic impact of racetrack casinos: Evidence from West Virginia. Journal of Economic Insight, 35(2), 35–55.
16.
HongK.ZimmerR. (2016). Does investing in school capital infrastructure improve student achievement?Economics of Education Review, 53, 143–158.
17.
HymanJ. (2017). Does money matter in the long run? Effects of school spending on educational attainment. American Economic Journal: Economic Policy, 9(4), 256–280.
18.
JacksonC. K.JohnsonR. C.PersicoC. (2016). The effects of school spending on educational and economic outcomes: Evidence from school finance reforms. Quarterly Journal of Economics, 131(1), 157–218.
19.
LafortuneJ.RothsteinJ.SchanzenbachD. W. (2018). School finance reform and the distribution of student achievement. American Economic Journal: Applied Economics, 10(2), 1–26.
20.
LeuvenE.LindahlM.OosterbeekH.WebbinkD. (2007). The effect of extra funding for disadvantaged pupils on achievement. Review of Economics and Statistics, 89(4), 721–736.
21.
MartorellP.StangeK.McFarlinI.Jr. (2016). Investing in schools: Capital spending, facility conditions, and student achievement. Journal of Public Economics, 140, 13–29.
22.
MurrayS. E.EvansW. N.SchwabR. M. (1998). Education-finance reform and the distribution of education resources. American Economic Review, 88(4), 789–812.
23.
NovarroN. K. (2005). Earmarked lottery profits: a good bet for education finance?Journal of Education Finance, 31(2), 23–44.
24.
RobertsonW. H. P. (1964). The history of thoroughbred racing in America. Bonanza Books.
25.
SunL.AbrahamS. (2021). Estimating dynamic treatment effects in event studies with heterogeneous treatment effects. Journal of Econometrics, 225(2), 175–199.
