Estimating the effect of racino restaurant sales on slot wagering volume

Abstract

Purpose
– The purpose of this paper is to estimate the effects of onsite restaurant business volume on slot machine gaming volume at a Midwestern racino property. The results provide management with critical estimates for use in determining the overall value of the restaurant space. Additionally, operators are able to examine whether it makes sense to operate restaurants at a loss, based on the notion that the dining outlets are contributing to gaming volumes.
Design/methodology/approach
– Time series multiple regression analysis is used to analyze daily performance data, providing an estimate of the change in the dollar amount of slot wagers resulting from a one‐unit increase in the dollar value of restaurant sales.
Findings
– The theoretical model advanced herein explained 81 percent of the variation in the aggregate, daily dollar value of slot wagers. A one‐dollar increase in the variable representing overall restaurant sales produced a $91 increase in slot wagers (or $7.44 in slot win).
Research limitations/implications
– Regression analysis does not prove cause and effect. The result was produced from a single data set. Operators are encouraged to examine their own data via the method and model advanced herein.
Practical implications
– The results provide management an opportunity to examine whether the slot win associated with the restaurant operations exceeds the operating losses incurred by the restaurants, and, if so, by how much.
Originality/value
– This is the first study to examine empirically the relationship between restaurant and gaming business volumes at a racino. Specifically, no published study includes statistically derived estimates of the impact of changes in on‐site restaurant volume on a racino's slot wagering volume.

Department

Hospitality Management

Publication Date

2012

Journal Title

International Journal of Contemporary Hospitality Management

Publisher

Emerald Publishing

Digital Object Identifier (DOI)

10.1108/09596111211258937

Document Type

Article

Link to Full Text

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