The . Econontics of Ganting Regulation

Atlantic City's saga, we are told, is of regulation that smothered the golden goose. Reports on Colorado say excessive taxation makes doing business impossible. While states regulate gaming for social reasons, these situations show the impact regulation can have on profitability. Nevada and the other casino states face a major challenge. Twenty years ago, Nevada was the only state with legal casinos. Having a geographic monopoly accelerated Nevada's growth. In the late 1970s, the monopoly eroded with the legalization of casino gaming in Atlantic City. The flood came when the United States Congress decided to legalize casino gaming in many states that have Native American tribal lands. Tribes in Minnesota, Connecticut, and Wisconsin opened full casinos on Indian reservations although non-Indians in the same states could not open casinos off the reservation. Congressional action caused many states to legalize gaming to realize revenues from the gaming activities of their citizens. Nine states now have legal non-Indian casinos. The prospect exists for a dozen other states legalizing casino gaming in the next few years. Both Indian and state-sanctioned casinos throughout the United States compete for the same consumer dollar. Unlike other industries in the United States that are highly regulated, gaming is either virtually unregulated, as are many Indian casinos, or regulated by the state government. The federal government has almost no involvement. Every state either has different rules or applies its rules differently. This article discusses how the differences in regulatory policy between states can affect the economics of a state's gaming industry. These differences can make one state's gaming industry more competitive than another. Seven major areas of casino regulation can have the greatest impact. These are: ( 1) cost of regulatory compliance, including fines and assessments; (2) regulatory price controls; (3) ease of entry; (4) taxation; (5) advertising; (6) credit policy; and (7) economic controls.