Opinion: Non-Indian gaming doesn't operate in the free market

Last month, the New York State Legislature and Gov. Andrew M. Cuomo agreed on a deal to give the town a shot at one of the state’s four new proposed casinos. (A referendum is expected to be held in November.) As I was walking up Center Street, I couldn’t help wondering if this town had what it took to host a casino. Or if a casino could really persuade people to spend their money in Ellenville and turn around its moribund economy. But Michael Treanor, the current owner of the Nevele, who runs the company that is hoping to get the state’s gaming license, told me that that wasn’t the right way to look at it. “Our ability to do business is based upon a scarcity of casinos,” he told me. If the state allowed a dozen casinos to break ground, Ellenville would be toast. “We would never be able to build something luxurious enough to draw people,” he said. With only four casinos spread out over the entire state, though, whoever got a license could thrive.

Whatever you think of gambling, its regulations are mesmerizing. Gambling is outlawed in one way or another in all 50 states, but almost all — except Hawaii (surprisingly) and Utah (less so) — have exceptions. Most offer state-run lotteries. Thirty allow Indian casinos. Seventeen have full-scale non-Indian casinos (New York and Massachusetts are poised to join that group.) In each case, government officials limit the number of casinos and determine where they will be located.

Economically speaking, these anticasino regulations are the single greatest profit generator for casino operators. By limiting the number and location, and therefore artificially keeping the market underserved, governments essentially guarantee outsize profits for those in business.