Several U.S. states have considered expanding gambling operations as a new source of revenue, especially since the past recession. Is this a good idea? Is it viable? Many have questioned this plan for various reasons, but this post specifically examines whether there is room for expansion in the gambling industry to shore up state budgets.
The graph above shows the share of gambling in total personal expenditures. While there has indeed been a rapid expansion of these expenditures up to the mid-1990s, the trend has flattened markedly since then. It even decreased during the past recession, showing that this industry is certainly not recession-proof. That may not bode well for states that have a balanced-budget mandate and need countercyclical sources of revenue: Gambling does not appear to be a source that states can depend on.
How this graph was created: Search for “gambling expenditures” and select the series shown above, which is nominal and has an annual frequency. Add it to the graph. Then use the “Add Data Series” option to add “personal consumption expenditures” to series 1 by selecting “Modify existing series.” (Be sure to choose the personal consumption series that is nominal and has an annual frequency.) Then select “Create your own data transformation” and add the formula a/b*100. The result is then expressed in percentages.
Suggested by Christian Zimmermann
View on FRED, series used in this post: