Gravity models and casino gaming: A review, critique, and modification

Abstract

Gravity models have been widely used in expanded gaming debates to persuade investors that proposed casinos will be financially successful and to persuade state and local government officials, as well as a skeptical public, of the economic and fiscal benefits of casino gaming. However, most people involved in the decision-making process understand very little about the internal mechanics of these models and how they generate financial forecasts, estimates of customer visits, and projections of new job creation. In fact, the gravity models used in market feasibility studies for the casino industry are proprietary models that remain closely guarded secrets of the industry and its consultants. The purpose of this article is to open the use of gravity models to critical scrutiny by reviewing their origins, development, and limitations. A second purpose is to illustrate our main thesis by analyzing gravity models deployed in the New England expanded gaming debates. The authors offer a proposed modification to the calculation of gravity factors to account for the growing importance of non- gaming amenities.