CIB Bailout and Gambling

On Monday, I provided the background and some opinion on the CIB shortfall where the taxpayers of Indiana (and, more acutely, the metropolitan Indianapolis area) will be on the hook for the operating shortfall at Lucas Oil Stadium. That article focused on the philosophical question of state investment in a sports stadium. In this article, I'll put that question aside and explore one proposed solution to the problem: a casino in downtown Indianapolis.

I'll cut straight to the chase in this debate. First off, my personal utopian position: if people want to gamble, it is their choice - it should not be illegal to gamble. This is simple and just. People who want to gamble are not deterred by laws. There is a whole lot that could be written on this line of thinking, but that's not what this particular article is all about. The issue is that gambling, generally, is not legal in Indiana.

Several years ago, Indiana granted gaming licenses to a handful of riverboat casinos. Gambling is legal in the United States, but each state is allowed to regulate as they desire. (Wow! A good example of federalism!) This site provides a summary of Indiana gambling laws. Since gambling is generally illegal in Indiana and only permissible with government-issued licences, the issue becomes highly-politicized.

One solution to the CIB budget shortfall is to introduce gambling in downtown Indianapolis at either Union Station or the former Market Square Arena. There are two constituencies who are opposed to such a solution: the conservatives who are fundamentally opposed to the expansion of gambling in the state and the special interests (and their representatives) who hold a government sponsored oligopoly today.

Gambling is profitable. It is even more profitable when a pseudo-monopoly is in place to diminish competition. Recently, the state allowed two horse tracks (who already were permitted to conduct parimutuel gambling) to offer more gaming (no table games). The existing gambling lobby representing the interests of riverboat casinos and the representatives of those districts were (generally) opposed to this measure. It has the potential to limit their profits by introducing more competition. The idea of authorizing gambling in downtown Indianapolis strikes fear in the hearts of the businessmen who bet on their government protected interest. Since it hurts the businessmen, the representatives don't like it either (think jobs and, if you are more cynical, campaign contributions).

I'll cut to the chase. Once government decides provides exemptions for illegal activity, you are going to have problems. Gambling is essentially illegal in Indiana. It is only legal if you receive a special permit to conduct the activity, and we're not talking about a driver's license. A situation has been created where staunch opponents of gambling are joining forces with the interests of the casino industry to block further expansion. Does this seem natural to anyone?!

My personal choice would be to legalize gambling, implement modest regulation, and allow competition to take hold. I think it would probably be better to not allow any gambling at all than to have the existing paradigm of government sponsored crime (not that it is really a crime). The conflicts of interest which are created under this model lead only to corruption.

For more on the option of gambling and other discussion on the CIB read here, here, here, and here.