, , , , , ,

 'I bet you £10 there's a gambling advert on next.'

I generally don’t gamble, but I believe that gambling should be legal, and not just at casinos on rivers and lagoons. Those high-profile casino developments involve a lot of concentrated economic and political power in the service of providing a willing counter-party for bettors, always at odds that garner a tidy profit for the casino. That power is associated with some dark realities, as local governments stumble over each other to provide incentives (ahem!!) for these developments. Unfortunately, other than a limited number of jobs for locals and the ephemeral thrills derived by bettors, the ongoing operations of casinos do not provide much benefit to their local economies, and are very likely a drag on local growth. This is the subject of “A Good Way To Wreck a Local Economy: Build Casinos,” by David Frum in The Atlantic. Here is one of Frum’s nuggets:

“The impact of casinos on neighboring property values is “unambiguously negative,” according to the economists at the National Association of Realtors. Casinos don’t encourage non-gaming businesses to open nearby, because the people who most often visit casinos do not wander out to visit other shops and businesses. A casino is not like a movie theater or a sports stadium, offering a time-limited amusement. It is designed to be an all-absorbing environment that does not release its customers until they have exhausted their money.”

Glenn Reynolds, on his Instapundit blog, says:

“A casino is basically a sign that the local political class has wrecked things already enough that they need a new approach to squeeze sufficient graft out of the wreckage. That’s especially true now that casinos are common enough that they mostly draw from the (already economically suffering) local region.” 

I think Reynolds’ is referring to casinos that are subsidized by local governments with some degree of protection from local competition (which is afforded to some extent by laws that require casinos to “float”).

Frum makes much of the negative personal and social consequences of problem gambling. In light of his assertions, how could I support more general legalization? First, an end to subsidies for big casino developments would be an important step. Second, legal betting would expand personal liberty, which should be a sufficient justification. Legal or not, there will always be problem gamblers, but that’s not a good reason to curtail the rights of those capable of restraint. In addition, more general legalization would help keep local gambling dollars circulating locally, rather than sucked out of the local economy via casino profits or internet gambling. Another answer lies in what I suspect would be a less elastic supply of willing counterparty dollars, in a competitive environment (assuming an absence of subsidies to large gaming providers), to satisfy the presumed expansion of betting demand.