Opinion: An example of why legalizing casinos hurts the 'free market'

The casinos bill was dealt a blow Thursday when a Senate committee hearing on it was cancelled, reportedly because it didn't have the votes to advance. Lest casino opponents break into a happy dance, know that bills have a penchant for rising from the dead under the Gold Dome. Remember how the MARTA bill was "dead" last year before coming back to life, albeit in a more limited fashion? (That one was also sponsored by Sen. Brandon Beach, and was revived under a compromise that came from the House. The House also has a casinos bill this year. Just sayin'.)

In any case, it's good practice when dealing with the Legislature not to consider any bill dead until a day or two after Sine Die -- long enough to go through the review the legislation passed in a flurry at the end to see what got tacked onto where in the process. Even then, bills aren't really dead; they're just in a coma until the next year's session.

It seems certain folks who view casinos as a threat are aware of that. Consider this email that was sent to patrons of the Fox Theatre this afternoon:

Before someone screams about the hypocrisy of a "free-market" guy like myself wanting to protect companies from competition, let's take a moment to review the most crucial part of Vella's message:

"Casinos use entertainment as a loss leader to lure ticket holders to the gaming floor. Casino venues, compared to traditional entertainment venues, have unlimited resources, hence they are known for being able to spend far above market rates to book top acts, making it nearly impossible for existing venues to compete. Casinos can demand exclusivity agreements in return for their big payouts, preventing acts from performing at competing venues sometimes up to 100 miles away and for as long as a year."

A "free-market" approach to this question has to acknowledge what is really going on. Casinos may not have "unlimited resources," but they do have a government-granted privilege -- and a monopoly privilege in a given geographic area, under the terms of Senate Bill 79 -- to earn gambling revenues. They use those revenues to offer below-market rates on items such as entertainment tickets, the better to attract more gamblers and produce more gambling revenues. And that dynamic has a real, negative effect on competitors that don't have that government-granted, monopoly privilege.

Rinse and repeat for hotel rooms, restaurants, spas, retailers -- and any other non-gambling good or service offered by the casino. What's more, SB 79 expressly requires them to offer such amenities so that they qualify as "destination resorts." (Which allows proponents to call SB 79 a "destination resorts" bill instead of a casinos bill.)

This isn't "free-market" competition. If it were, we'd be talking about allowing anyone to open up as many casinos as they want, without geographic restrictions. Yet, no one is proposing that -- because the proponents of this idea know that restricting their gambling competition is their only way to beat the competition on these other scores.

"The house always wins" isn't an adage from Adam Smith, F.A. Hayek or Milton Friedman. That's because it's the predictable result of a business that plays on an unlevel playing field against both its competitors and its customers. That's not the "free market," and it's not good or fair for other businesses in anything that approximates an actual free market.

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About the Author

Kyle Wingfield
Kyle Wingfield
Kyle Wingfield joined the AJC in 2009. He is a native of Dalton and a graduate of the University of Georgia.