Tuesday, October 11, 2016

Casinos: The Slow-Drip Death of Atlantic City.

There is no place, in either America or the world, like Las Vegas. There can't be. Las Vegas is an unique confluence of law and escapism that allows people the chance to get-away from their work-a-day lives and indulge for a bit in the fantastical. In short: Las Vegas is a mirage, a myth. It's a city where almost nothing (except incredible poverty and broken families) is real.

High-rollers in Las Vegas have easy access to drugs, women (or men), high-end booze and just about anything that people think they need in order to have a good time. Low-rollers have access to high-end amenities, for a price of course, and negative expectation games designed to take their money from them in an increasingly efficient manner.

You don't go to Las Vegas to win money, you go there to spend money. If you think of it any other way you're doing it wrong.

Atlantic City thought that it could be an East Coast Vegas. Build some casinos, add some strip clubs and all would be well.  We're seeing now just how flawed of an idea that was.

With the news of the closing of the Trump Taj Majal earlier this week the casino count in Atlantic City is down to seven. The Taj is the fifth casino to shutter and results in another 3,000 jobs lost. Ironically, the union that refused to renegotiate with the casino terms the closure a "win".

For Atlantic City however, it might be a long-term win in and of itself.

Kevin D. Williamson, writing for the National Review, took a look at gambling and it's impacts on economies in a recent piece and found the gambling economic model lacking. In short, gambling is a racket controlled by unions and Democratic Political Machines that suck resources from the municipalities in which they operate and provide little back in return.  Casino magnates like Sheldon Adelson and Steve Wynn may be Republicans in name and donation habits, but locally they thrive off of their support of the Democratic political machine.

None of this is an argument that gambling should be illegal. And while I'm in agreement with the argument that casino gambling won't work, except in limited instances, outside of Las Vegas that doesn't mean that outright bans are the way to go.

Because in today's, modern, society you don't need to authorize kick-backs and corporate welfare to build overly expensive pleasure palaces, you can have gambling online. The Internet gambling market is somewhere in the Billions neighborhood in terms of revenue. This despite being illegal in all but three states (Nevada, Delaware and New Jersey). Online sports betting and poker continue to grow, and where people cannot do it for free they are increasingly reaching out to illegal, off-shore, betting sites with internet addresses that end in .lv (Latvia, NOT Las Vegas) and .ag (Antigua and Barbuda).

Sheldon Adelson wants to stop this, which is why he's donating so heavily to Republican causes. His "Restoration of America's Wire Act" bill seeks to overturn existing state laws and make all forms of online gambling illegal. It should be noted that his Sands casino group trails the pack in terms of online gaming revenue. In short, Mr. Adelson is trying to eliminate a segment of the market in which he is not competitive.

What Mr. Adelson doesn't get, either due to ignorance or intentionally, is that online gambling won't hurt Las Vegas all that much. People will always want the escapism that the resort town offers. Where the legalization of online gambling will have an impact is in the casino trade for Louisiana, Oklahoma, Connecticut, Pennsylvania etc.

When people from Houston head to Lake Charles for a weekend at the casinos they go there, primarily, to gamble. Yes, there are restaurants and night-clubs on offer there but nothing to the level of Las Vegas. There are no Cirque du Solei shows in Lake Charles.

There's no Fendi or Prada store fronts either. There are a few restaurants and some bars but nothing to the level of Whiskey Down in the MGM grand or Gordon Ramsey Steak in Paris. There are no shopping malls with skies painted with clouds that change color to simulate morning, noon and evening, there are no animatronic statues, no Cleopatra's barge, no method actors walking around in period costume.

In Lake Charles, there's gambling, and some places to eat. Gambling that, to be honest, has fairly terrible odds when you compare it to the rates at other casinos.  But people go, because that's all they have to go to.  You allow people to play online and many of them stay home and do so. Whether or not this is a good thing, I leave to you to decide for yourself.

What is not a good thing are states (like Texas) trying to protect the citizenry from itself. By outlawing gaming the State of Texas is driving it further underground. Illegal gaming parlors can be found in almost every strip mall, some bars have 5-liner machines that operate illegally (despite protestations to the contrary, they do) and people are increasingly heading to illegal offshore sites such as Bovada and 5Dimes to get their fix. Sites that are unregulated, and have a propensity to withhold payouts on wins. (If you want to know why I don't bet online, that's why.)

The biggest problem, right now, is violent crime in the illegal game rooms. While online gaming welshes are a concern they are a victimless crime, shootings in a game-room are not.

But the State is OK with this because it supports their monopoly on the lottery, the gaming option that carries the worst odds, and the highest house advantage.  And which is basically a tax on those who are horrible at math.  Which is fine by the State mind you.

Don't expect any of this to change. Politicians in non-gaming states often run on anti-gaming platforms and people suck it up. The busybodies on the right who want to tell you how to run your life are just as bad as the busybodies on the left who do the same. In fact, the anti-gaming forces cross ideological boundaries. There's good money in politics convincing people that you'll force their belief system on others.

When you think about it, that's what politics today is in it's entirety.

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