Examining the spatial spillover of gambling regulation in the Czech Republic.
Abstact: Background and aims: The responsibility of spatial regulation of gambling in the Czech Republic is placed on municipalities, the smallest self-governing units in the country. The Czech Republic has one of the smallest average size of municipality in the EU. This creates a possibility that the effectiveness of regulation of gambling may be reduced by spatial spillover to the neighbouring municipality. Thus, the aim of the paper is to evaluate the effectiveness of gambling regulation in the Czech Republic under the conditions of fragmented regulation and mobility of gamblers. Design: Tax revenues on technical games of all municipalities in the Czech Republic. Measurements: Pooled OLS regression was used to identify the spatial spillover effect, and, more specifically, to answer the question of whether the proliferation of technical games in populated areas affects the proliferation in surrounding municipalities. Findings: The decline of tax revenue on technical games (that is directly connected with gambling activity) in a district capital by one percentage point is associated with the rise of the same revenue in surrounding municipalities that are reachable by car in 10 minutes 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. Conclusions: Local restrictions in district capitals shift the problem to the surrounding municipalities. The regulation in very small regulatory units produces considerable spatial spillover.