EYE ON THE PIE Morton Marcus: Casino location none of state’s business

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Let’s see if I have this right. This is Indiana, a state dominated by conservative thought. Folks here support the free market, unimpeded competition, the roughand-tumble world of entrepreneurs doing their stuff guided by the benevolent invisible hand.

So, why don’t we live by our supposed principles? Case in point: gambling, specifically at French Lick, where the Donald has ducked out, thus reopening the bidding for the right to build a casino and hotel complex in Orange County.

Let’s review some familiar ground: First, is gambling a legal activity in Indiana? If so, how is it to be classified? It isn’t farming. It isn’t manufacturing. It seems to be akin to amusements and recreation. If so, how is it different from bowling in Auburn or skiing at Paoli Peaks?

If gambling is legal and similar to bowling or skiing, why is it regulated by the Indiana Gaming Commission? I know of no state commission that controls the number and location of bowling lanes or ski slopes.

Gambling is different because it involves more money than bowling or skiing. People like to gamble more than they like to bowl or ski. If a company or a group of companies can restrict competition by conniving with the state, profits can be increased. The state, the true “godfather” in this instance, sees that it gets its cut for protecting the gambling companies from competition.

The Gaming Commission might pretend that its chief function is to protect the consumer. That is an appropriate role for the state. Those who gamble should be assured that the games are honest, even if they do favor the house.

But why should the state decide where and how many gambling sites should be established? Except for making sure that bowling alleys conform with local zoning ordinances, no government controls the number of these revered institutions.

And thus we come to French Lick in Orange County. Why is the state involved in deciding who will build one or more casinos in Orange or any other county? “Well, it’s too big an investment for more than one,” you might say.

“Then,” I would respond, “only one would be built.”

“Well, you might have two or three being built and all would fail,” you counter.

“So what?” I respond. “That’s the free choice of the investors to accept such risks.”

Casinos are not necessary to the public welfare. Their investors need not be protected by the state. If they fail, so be it.

The only reason the state is involved in casinos is to get as much money out of them as possible. Indiana has no avowed interest in the efficient use of resources. For example, it does not regulate how many bookstores or coffee shops can be built, although they may drive others out of business. Over-building and the abandonment of commercial or residential structures has never been a concern of this state, nor does it trouble itself with wasteful land use and inefficient transportation.

All issues of morality, addiction and public safety can be addressed without the state’s deciding where and how many casinos are located in Indiana. We don’t want crooks running gambling, just as we don’t want them running laundries, movie theaters or churches. Gambling, if legal, should be regulated just like every other business in the state.

Gov. Mitch Daniels got rid of a few commissions. Here is another one he can dump, if he is willing to get the state out of the gambling business, end the special taxes on this form of recreation, and accept standard, conservative business philosophies. But then, even if Gov. Daniels were willing, he would have to convince the General Assembly, and that body is known to have no principles other than expediency.

Marcus taught economics for more than 30 years at Indiana University and is the former director of IU’s Business Research Center. His column appears weekly. To comment on this column, go to IBJ Forum at www.ibj.comor send e-mail to mmarcus@ibj.com.

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