Government Monopolies Are Bad For Taxpayers, Open Up Casino Bids

When governments engage in monopolies taxpayers don’t get the best deal. One of Connecticut’s insightful columnists Chris Powell of the Journal Inquirer makes the case for an open, competitive process to maximize gaming revenues in the state, something that will be debated in the upcoming session of the General Assembly that starts next week with Bridgeport in play as the host community.

From Powell:

No government pursuing the public interest sells something without first putting it to bid. But for almost three decades Connecticut has given casino exclusivity to a couple of reconstituted Indian tribes out in the woods in the eastern part of the state and has never ascertained what anyone else might pay to operate a casino here.

The tribal casinos have been paying state government for this exclusivity–a quarter of their slot-machine revenue, which over the years has amounted to hundreds of millions of dollars. But these royalties have been declining steadily as casinos open in neighboring states.

Meanwhile MGM, having recently opened one of those casinos just over the Massachusetts line in Springfield, is arguing that Connecticut might do better by authorizing it to open a casino in Bridgeport. This would draw gamblers from heavily populated New York and Fairfield County, many of whom now journey to the tribal casinos two hours deeper into the countryside. These gamblers might be glad to lose their money closer to home.

Under federal law the two tribes have the right to run casinos on their reservations, and Connecticut can’t change that. But the tribes do not have the right to exclusivity in the casino business in the state. Nor is the 25-percent tribute from their slot-machine revenue fixed permanently; it could be renegotiated. So now that state government is permanently broke and unable to economize, it should ask whether the tribes might be induced to pay more for their casino exclusivity or whether a different entity operating another casino or two might pay more tribute than the tribes pay.

Full column here.

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