Abstract
This paper uses variation in Illinois casino taxes to estimate the elasticity of casino adjusted gross receipts (AGR) with respect to the marginal casino tax rate. Illinois’ shift to a graduated rate schedule initiated increases in the highest marginal tax rate on AGR from 20% to 70% with reversion to a 50% rate. We construct a state-level casino tax rate variable based on the effective marginal rates on AGR at individual casinos, imputing the tax on casino admissions as a proportion of adjusted gross receipts. We find that a 1% increase in this casino tax rate decreases AGR by 0.2%.