Eye in the Sky: A Cross-Cultural Analysis of the Gaming Markets of Las Vegas & Macau

Abstract

The two gaming capitals of the world – Las Vegas and Macau – have grown tremendously over the past few decades. Las Vegas’ revenues have more than doubled from 1992-2015, with growth persisting amid economic crisis, while Macau’s revenues have grown tenfold from 2002-2015. Because existing literature has not studied the behavior of the average gambler in each region with respect to changes in macroeconomic variables, I fill this void. I empirically prove that gambling is a luxury good, particularly in Macau, and that economic growth has a positive, causal relationship with gaming revenue per tourist. I also prove that economic growth promotes increased game play of each region’s traditionally preferred game(s). This finding contradicts the hypothesis that an increase in economic growth causes gamblers to gamble more for entertainment than for winning, which would prompt a shift in game play toward games that have a greater house advantage. In my cross-cultural analyses, I further demonstrate that changes to other variables, including interest rates and tourism numbers, have disparate associations with the gambling behavior in both venues.