Rigging the Odds
Early this week, the Missouri Gaming Commission mandated a restriction on the number of casinos allowable in the state. The move was justified as a prohibition on any sudden actions by would-be casino owners in anticipation of a possible referendum that might permanently prohibit entrants to the gaming business.
The Jefferson City News Tribune correctly discredited the moratorium as naked protectionism of the industry supposedly being regulated. Faced with the prospects of increased competition and a larger tax base, consumers and policymakers alike would benefit from the lack of restrictive policies like this. The only parties that benefit financially from the moratorium (or the referendum it’s behaving like) are the currently established casinos, which are now partially exempt from the required efficiencies of market competition.
Arguments in favor of the moratorium are founded on strange conceptions of the state’s relationship with the market. Speculation that the gambling industry needs special treatment because its revenues are highly taxed is ludicrous. For the most part, artificial barriers to entry will only consolidate gambling revenues to fewer casinos while limiting potential long-run growth. Any decrease in revenue that might result from free competition would probably come from a reduction of monopolistic pricing. Although proponents of the moratorium might possibly defend such monopolistic power because of its implications for state income, I hold that any such intervention is extremely inappropriate. Why would the government be permitted to promote monopolies for one industry while breaking them up for the majority of others?
The suggestion that new casino projects shouldn’t currently be allowed because of a potential referendum also rejects market mechanisms. If developers are bold enough to begin a project in the face of possibly imminent legal prohibition, why should the state stop them? To my knowledge, no other industry is so simplistically regulated against basic market risk.
The current moratorium and the potential ballot issue provide nothing but damaging regulation that arbitrarily selects winners and losers. Regardless of their personal opinions about casinos, Missourians should identify poor policies and consider their universally negative consequences.