Forecasting Key Strategic Variables in the Casino Tourism Industry

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Academy of Information and Management Sciences Journal


We examine the issues of forecasting industry gross revenue models in the casino gaming industries of Nevada, Mississippi and Atlantic City. Industry gross revenues are used as benchmarks for casino performance, a major source of state tax collection, an important part of a state's tourism industry and an important point of consideration for states contemplating legalizing gambling. Our model divides the time-series forecasts into two separate components, seasonality and trend. The results show all three states have distinctly different monthly seasonal patterns. Trend forecasting models and the presence of interventions such as September 11 are also shown to vary by region. In Mississippi, September 11 had an insignificant effect on casino gaming revenues. The effects of the September 11 intervention vary by region in Nevada. Six of the eight regions within Nevada do not conform to the overall Nevada state model. Aggregating time series data between states or within Nevada will lead to more complex, less accurate forecasts. The results indicate that in most cases aggregated or pooled time-series data should not be used in estimating models centered on forecasting revenues for casino and gaming establishments.

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