Carl Person, candidate for the Libertarian Party’s Presidential Nomination, called today for the legalization of all gambling to bolster the economy and to create new jobs.
His full comments on the issue were as follows:
Legalization of gambling should be a major issue for Libertarians. The gambling industry takes in about $80 billion each year in net gambling revenues (i.e., the total amount bet minus winnings paid to gamblers). [ http://www.hoovers.com/industry/gambling/1431-1.html ] These winnings by the gambling industry would not exist in a deregulated market and amount to taxes imposed on individual gamblers residing in the U.S. This annual fleecing of $80 billion from the American public substantially reduces the effectiveness of the U.S. economy, by being handed over by our elected politicians to the favored few. In October 2011, one gaming organization was granted a license to operate the only casino in NYC, worth an estimated $20 billion or more, for an up front licensing fee of only $380 million. The casino is expected to throw off $3 million in profits per day [http://www.nytimes.com/2011/10/28/nyregion/new-yorks-first-casino-at-aqueduct-racetrack-is-set-to-open.html?pagewanted=all ]
These $80 billion in gaming industry profits are almost equal to twice the $44 billion in net profits in 2010 of the U.S. pharmaceutical industry. [http://www.ahipcoverage.com/2011/03/03/putting-health-plans-profits-in-perspective/ ]
Government-licensed gambling establishments are profitable because of the monopoly position enjoyed by most of them, through the protected location of individual establishments, through a cluster of casinos in Atlantic City, New Jersey, or through various casino clusters in Nevada. Unless licensed by a state, it is illegal to own or operate a casino, so that the operating casinos have little pressure on them to compete in price, especially when the licensing state takes a percentage of the winnings (generally 50%). The result is a tax on the gambling public, with the gambling profits being divided between the licensing government and the licensed gambling establishment.
Originally gambling was prohibited by law based on principles of religion and/or morality, but during the past 50 years the basis for prohibition has changed. Today, it is to prevent competition with the favored few who own and operate the licensed gambling establishments, to increase their profitability to casino and government through the prohibition of competition.
The sad thing about this resulting regulation of gambling is the loss each year of $80 billion in capital to create new businesses and needed jobs in the country. If this $80 billion per year is not taken from gamblers, there would be 400,000 new jobs created each year (assuming one job is created with $200,000 in non-gambling expenditures by middle-class and poor individuals).
Here are several ways in which fully legalized gambling would create businesses and jobs:
1. 300,000,000 individuals would be free to purchase and operate video games, slot machines, roulette or blackjack machines in their homes or offices, with a potential market (I estimate) of 10,000,000 slot machines per year or $10 billion in sales and another $10 billion per year to service the 10,000,000 machines
2. Restaurants would install 10-20 slot machines, set them for a payback of 101% to 105%, which would cause many customers to patronize the restaurant just to wait in line (30-60 minutes hopefully before being seated) to play the slot machines set for them to win. The price of the meal would of course reflect this high-payback slot machine setting.
3. Local clubs would be formed and install slot machines to become an attractive meeting place for older residents (with money to invest) to meet with younger residents looking for an opportunity. This type of eco-socialization in distant casinos doesn’t work because meetings are short-lived and not repeated, with no follow up generally.
By legalization of gambling, the gambling public would save 400 million days of travel and travel expense each year, with a combined value of about $20 billion (estimated at 20% of $80 billion in winnings).
By legalization of gambling we would be deregulating a significant part of the nation’s economy, and enable gambling to be a competitive tool in developing and promoting businesses and creating jobs, and deprive government and monopolists of $80 billion/year in tax revenues taken mainly from the poor and elderly.
Also, by legalizing gambling we would be eliminating the political corruption always present when an elected official or body has an opportunity to give a multi-billion dollar license to a single person or company. Gambling is clearly an activity which should not be regulated by government.
In summary, by legalization of all gambling in the U.S., there would be the effect of an $80 billion stimulus being paid to middle-class and poor individuals, instead of to banks, to result in the creation of 400,000 new jobs per year.
Note: I filed a lawsuit in 2005 to legalize all gambling in NYS. Links to a copy of my complaint and my 19-page analysis of gambling in NYS are available in my website for legalization of gambling in NYS. [http://www.lawmall.com/legalizeNYgambling/ ]