Casinos and Government Non-Competitiveness

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As more casinos open their doors in Massachusetts, Rhode Islanders are at least presented with an important lesson in government.

Insider Senator Frank Ciccone (D, North Providence, Providence) has demanded to know “How can we compete?”  The answer, in short, is to stop requiring an act of the General Assembly for Twin River to do so.

Rhode Island takes a high percentage of gambling revenue, reducing the incentive for private investors to be involved.  The state dictates details about how many of what games from what company should be on the premises, and the governor is even now seeking to lock in a restrictive contract with IGT for 20 whole years.  Read through the state’s laws pertaining the the casinos, and it is clear that Twin River is little more than a management company for a state-run casino.

How can we compete?  Change that around.

Steve Frias notes that Rhode Island has already been down this path with horse racing, writing that it declined and disappeared for three reason:

First, competition from horse race tracks located in other New England states caused Rhode Island horse race tracks to lose customers. …

Second, the number of horse racing gamblers shrank as the sport failed to attract younger fans. …

Third, the quality of Rhode Island horse racing became poor due in part to a high tax burden. Rhode Island politicians steadily increased the state’s share of horse racing revenues from 3.5 percent in 1934 to 9 percent by 1971. This caused race track owners to invest less money into their facilities and it reduced the quality of the horses they could attract for races since the prize money was smaller. By 1976, Rhode Island race tracks were being called “the most miserable race tracks in America” with “the most miserable horses in America.” In 1978, horse racing in Rhode Island came to an end.

This is a microcosm of the way Rhode Island operates.  Simply put, you can’t compete when you have to cut a state’s worth of insiders in on the deal.  As life becomes less and less dependent on where you live, the captive audience will shrink, and business (any kind of business) will shift to the best competitor.

Thus, mobile sports betting (or wind turbine production or whatever) is no answer for the long term.  Even if Rhode Island is first to market, we’ll never be able to compete until we change the way the state runs.