The Impact of Racino Legalization on Public Education Spending

This paper estimates the effect of racino legalization with earmarked revenues for K-12 education on school district finances. Using district-level data from 1999 to 2019 and a staggered difference-in-differences design, we find that legalization increases total per-pupil revenue by about 6.5%, driven by gains in state aid and local revenue, with no change in federal funding. Expenditure increases are concentrated in capital outlays, which rise nearly 19%, while current spending grows modestly. Event-study estimates show no pre-treatment trends and persistent post-treatment gains. The results are robust to alternative control groups, additional controls, and exclusion of large districts, suggesting that racino earmarks provide a sustained boost to district resources, particularly for long-term investments.