The Role of The US Government in Gambling Industry

The terrain also is becoming more complicated. As gambling has expanded, it has continued to evolve. Technology and competitive pressures have joined to produce new forms, with the onset of the Internet promising to redefine the entire industry.

The participants in the various debates are similarly varied. Even the designations “proponents” and “opponents” must be applied with care because opponents can include those opposed to all gambling, those content with the current extent of gambling but opposed to its expansion, those favoring one type of gambling but opposed to another, and those who simply want to keep gambling out of their particular community, the latter being less motivated by questions of probity than of zoning. Proponents can be similarly divided: Few people in the casino industry welcome the advent of gambling on the Internet, and the owners of racetracks are no friends of the state lotteries. Similarly, if polls are to be believed, a clear majority of Americans favor the continued legalization of gambling (in fact, in any given year a majority of Americans report having gambled; see Figure 1-2) but a clear majority also opposes unlimited gambling, preferring continued regulation. Drawing the line on gambling has proven difficult; and, in fact, most lines in this area become blurred when examined closely. But governments are in business to draw lines, and draw them they do.

The public has voted either by a statewide referendum and/or local option election for the establishment or continued operation of commercial casino gambling in 9 of 11 states where commercial casinos are permitted. Similarly, the public has approved state lotteries via the ballot box in 27 of 38 instances where lotteries have been enacted. Whatever the case, whether gambling is introduced by popular referendum or by the decision of elected officials, we must recognize the important role played by government in the industry’s growth and development. Government decisions have influenced the expansion of gambling in America, and influencing those decisions is the principal objective of most of the public debates on this issue.
Although some would argue that gambling is a business like any other and, consequently, should be treated as such, in fact it is almost universally regarded as something different, requiring special rules and treatment, and enhanced scrutiny by government and citizens alike. Even in the flagship state of Nevada, operation of a gambling enterprise is explicitly defined as a “privilege,” an activity quite apart from running a restaurant, manufacturing furniture, or raising cotton.
Unlike other businesses in which the market is the principal determinant, the shape and operation of legalized gambling has been largely a product of government decisions. This is most obvious in the state lotteries, where governments have not just sanctioned gambling but have become its enthusiastic purveyors, legislating themselves an envied monopoly; and in Native American tribal gambling, where tribal nations own, and their governments often operate, casinos and other gambling enterprises. But the role of government is hardly less pervasive in other forms of gambling: Governments determine which kinds of gambling will be permitted and which will not; the number, location, and size of establishments allowed; the conditions under which they operate; who may utilize them and under what conditions; who may work for them; even who may own them. All of this is in addition to the normal range of governmental activity in areas such as taxes, regulations, and so forth. And, because governments determine the level and type of competition to be permitted¾granting, amending, and revoking monopolies, and restricting or enhancing competition almost at will¾they also are a key determinant of the various industries’ potential profits and losses.

No Master Plan
To say that gambling has grown and taken shape in obeisance to government decisions does not imply that there was a well thought-out, overall