“WHY NOT GIVE SLOTS TO EVERY FAILING BUSINESS?”

The following excerpt is from an online column, titled “Governor Rode a Dead Horse” and published on June 26, 2009, by Jim Waters of the Bluegrass Institute in Frankfort, Kentucky.   Mr. Waters is the Institute’s Director of Policy and Communications.   [click here to read the column in its entirety]

“Businessman Ron Geary [owner of Ellis Park racetrack in Henderson, Kentucky] who’s already reduced the number of racing days during this year’s live meet by more than half, says Ellis Park will close after Labor Day.   Yet Geary knew when he bought the track that it was already losing money.

Geary wanted a bailout from Frankfort during the recent special session, claiming he didn’t grasp how competitive the industry was when [he] took over Ellis Park.  

But should we usher in what Rev. Bob Russell, former pastor of Louisville’s Southeast Christian Church – one of the nation’s largest congregations – called ‘the crack cocaine of gambling’ just because Geary is afraid his risk might not pay off?   Why not give slots to every failing business?”

Here is a four-point answer to Mr. Water’s rhetorical strawman, “Why not give slots to every failing business?”

Point 1:   In the first place, Mr. Water’s question is flawed because it is crafted around a false premise.   No one is proposing to “give slots” to anyone.   Should slots be legalized in Kentucky, the licensees would be required to pay millions of dollars in upfront fees, plus the Commonwealth of Kentucky would extract ongoing operating royalties that would be considered confiscatory in any other type of business.   These fees and royalties would, in turn, be put to use in educational and social services for the Kentucky citizenry, including the treatment of compulsive gamblers.

Point 2:   Companies organize around product lines.   For example, Procter & Gamble’s product lines are separated into personal and beauty, pet nutrition and care, health and wellness, and so forth.   A company’s product lines are put together with consistency and marketing logic.   For the same reason that Procter & Gamble would not mix and match its various product lines, the addition of video lottery terminals, or slots, only makes business sense for certain types of enterprises.   While slots are a natural product-line extension for racetracks, which already offer gambling, they are manifestly not a fit for the vast majority of other businesses.

Point 3:   Mr. Geary’s Ellis Park is failing largely because of government fiat.   The word fiat means a “decree,” or “an authoritative or arbitrary order.”   For instance, the U. S. dollar has value, not because it is backed by gold, but rather, because the U. S. government declares it has value.   Ellis Park is precluded from expanding its natural product line by a Kentucky government fiat that proclaims slots to be illegal within the Commonwealth’s boundaries.   Change the “arbitrary” decree and Ellis Park has the chance to become profitable and save the jobs of numerous working people.

Point 4:   Confining slots to racetracks (as opposed to giving them to every failing business) is a reasonable and livable compromise between libertarians on the one side of the expanded gambling issue and advocates of government restrictions on unfettered personal behavior on the other side.

Opponents of slots at racetracks typically rely on often-effective emotional arguments (e.g., slots are “the crack cocaine of gambling”) and ad hominem assertions (e.g., “expanded gambling will attract mobsters”).   Thus don’t look for facts and logic to persuade them, even the undeniable fact that prohibition has a history of failure in the United States.   If people want to engage in an activity, they usually find a means to do so.  It is just a short drive from Kentucky across the Ohio River to play the slots in Indiana.

Copyright © 2009 Horse Racing Business