New York voters this week approved a proposition that will allow four casinos to open in upstate New York, and three more to open in or around New York City after seven years have passed. The potential issue for Wall Street is that according to recent scientific research, the mere presence of nearby casinos encourages investors to take riskier investment positions.
A recent scientific study by Chi Liao, a Ph.D. student at the University of Toronto's Rotman School of Management, found that when a new casino opens, nearby investors who are likely to frequent the casino start to take on riskier position in stocks.
So when casinos eventually open a subway ride away from Wall Street, will we see investment professionals start to take on more risk en masse?
"Once a casino opens nearby, those people who are likely to be gamblers—basically, higher-income, older males—subsequently take on more risk in their own portfolios," Liao told CNBC.com. "Investment professional do do this for a living, so they might be less prone to being affected," but "we'll have to see what the data says."
To perform her research, Liao took a set of data showing household portfolio positions and trades from 1991 to 1996. She then used demographic information to model how likely investors are to gamble. (Unsurprisingly, she found that older, higher-income married males are more likely to be gamblers.) The next step was to find cases in which a casino opened within 50 miles of the investors who were likely to gamble. Once she narrowed these people down, she was able to conclude that these investors took on more risk in stocks once a casino opened near them, relative to those who were unlikely to gamble at a casino.
(Read more: This is why Atlantic City won't catch Las Vegas)