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Journal Article

Institutions and Casinos on American Indian Reservations: An Empirical Analysis of the Location of Indian Casinos

J. Anthony Cookson
The Journal of Law & Economics
Vol. 53, No. 4 (November 2010), pp. 651-687
DOI: 10.1086/649030
Stable URL: http://www.jstor.org/stable/10.1086/649030
Page Count: 37
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Institutions and Casinos on American Indian Reservations: An Empirical Analysis of the Location of Indian Casinos
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Abstract

AbstractThis paper empirically investigates the institutional determinants of whether a tribal government invests in a casino. I find that the presence of Indian casinos is strongly related to plausibly exogenous variation in reservations’ legal and political institutions. Tribal governments that can negotiate gaming compacts with multiple state governments, because tribal lands span state borders, had more than twice the estimated probability (.77 versus .32) of operating an Indian casino in 1999. Tribal governments of reservations where contracts are adjudicated in state courts, rather than tribal courts, have more than twice the estimated probability (.76 versus .34) of investing in an Indian casino, ceteris paribus. These findings suggest that states’ political pressures and predictable judiciaries affect incentives to invest in casinos. This study contributes, more generally, to the empirical literature on the effects of institutions by providing new evidence that low-cost contracting is important for taking advantage of substantial investment opportunities.

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