Examining the spatial spillover of gambling regulation in the Czech Republic

ABSTRACT The responsibility of spatial regulation of gambling in the Czech Republic is placed on municipalities, the smallest self-governing units in the country. This creates a possibility that the effectiveness of regulation may be reduced by spatial spillover to the neighboring municipality. The aim of this paper is to evaluate to what extent the local reduction of gambling is effective in the overall reduction of gambling in the area under the conditions of fragmented regulation and mobility of gamblers. OLS regression was used to identify the spatial spillover effect. The decline in tax revenue on gambling machines in a district capital by one percentage point is associated with the rise of the same revenue in surrounding municipalities that are reachable in 10 min by 0.45 of a percentage point. Spatial spillover in more distant municipalities is close to zero. The results remain stable when control variables are employed. The results suggest that fragmented regulation is easy to overcome and better cooperation among municipalities or regulation on higher administrative level may be more effective.