In case I get accused of libertarianism (again!), since I am writing criticisms of gambling prohibition, let me just say that I am not one. I am a Christian who thinks the Bible is the authoritative word of God that contains wisdom for all people in all places. And in the Bible, I see that a great deal of behavior can bring about bad consequences. But I don’t see all that behavior being illegal. I do see many examples of laws and government prohibitions on sex outside of marriage (thus, I can’t agree with libertarians). But I don’t see any examples of controlled-substance laws or prohibitions on games of chance. So whether you agree with me or not, that is where I’m coming from. In this post, I’m not arguing for any of that. I just want to point out some economic consequences that conservatives need to deal with whether they agree with me or not.
The economic consequences are reported by Reuters.
Trump Entertainment Resorts Inc (TRMY.PK), which runs two casinos in Atlantic City, filed for bankruptcy protection for a third time, in another blow to the city’s crumbling casino industry.
Debt is a killer isn’t it? I should point out that Donald Trump sold these properties a long time ago, so this doesn’t necessarily reflect on his management (I don’t think much of Trump but I don’t want anyone to come away from this post believing a falsehood about him). Back when he sold the properties his name was part of what gave the properties their value. Naturally, the new owners kept it.
But this is a story that is much broader than one company filing for bankruptcy. It is about the decline of Atlantic City gambling in general.
Atlantic City’s casinos have been losing their glitz and gambling dollars to the more than 40 new rivals that have opened in neighboring states, with gaming revenue nearly halving from its 2006 peak of $5.2 billion.
People commonly say that money is made through legalized gambling. True but not completely true. Real money is made when gambling is legal in one place while being mostly illegal everywhere else. This gives the legal casino center a virtual cartel.
And who enforces that cartel? Conservatives who want gambling to remain criminalized. Now that gambling has been decriminalized in more places, suddenly the huge profits have dried up.
Las Vegas became the virtual political center of the United States on the same basis. It too is facing competition from new rivals.
But of course, it is quite likely that all these new rivals are also not making the profits they had projected. In many cases they probably hadn’t considered all the new competition that would be available.
Now maybe the spread of the availability of gambling is worse for society. But maybe more widespread gambling will actually take away some of the attraction. The reason Atlantic City could afford to advertise and build up huge glitzy buildings to attract people was because of their massive profit margins. As those profit margins shrink, the recruitment efforts of these more numerous casinos will also probably shrink.
Again, if you think gambling should be illegal, I haven’t disproven your position. I’m just pointing out that there are some consequences that you need to take into account.