Promotion of service industries by means of entry restriction: the case of operators in the slot machine industry

This article examines the effects of government policy on entry restriction for firms within a specific market of the Spanish gambling industry. Spain is an ideal economic region for studying this topic, as it allows for the analysis of quasi-identical populations exposed to different regulatory regimes. In Spain, gaming legislation is determined at the autonomous community level (state level), where differences across states within a single country are of particular interest. This paper analyses the performance of slot machine operators in three autonomous communities, each with different policies with regard to entry restriction. Fifty-eight firms were analysed using multiple regression, and we have concluded that, if prices are controlled, entry restriction may also have positive effects on its incumbents. The results are particularly interesting for countries or states within nations that are considering an increase or reduction in market regulation and who wish to predict the outcomes of these markets for operators.