Turns out cigarettes and gambling are complement goods: (here)
State video gambling tax receipts plummeted by nearly 18 percent in the last quarter of 2009, buffeted by the beginning of a statewide indoor smoking on bars and casinos and a recession that hit Montana hard.The gross video gambling-machine taxes will be about $12.5 million for the quarter that ran from October through December 2009, said Rick Ask, administrator of the Gambling Control Division in the state Justice Department. That’s about $2.7 million, or 17.8 percent, less than what the tax revenues were the previous three months, from July through September 2009.
The quarterly gambling-machine taxes are down by 16.8 percent, or $2.5 million, compared with the previous three-month period from September through December 2008, Ask said.
It certainly shows the unintended consequence of a policy that although is good at heart; can hurt the bank. So why would gambling and cigarettes be complements? Does nicotine help relieve the stress of losing money? Maybe smoking has a direct effect on one’s discount rate for gambling.