Friday, October 22, 2004

“Godfather” Pawlenty making another offer

Posted by Craig Westover | 11:52 AM |  

Let’s set the matter straight. The lead in this Associated Press article misplaces the underlying danger of Gov. Pawlenty’s “Godfather” policy to increase gambling revenue for the State of Minnesota.

ST. PAUL - Gov. Tim Pawlenty has a dollar amount to go along with the pressure he has been exerting on Indian tribes to share some of their gambling profits:
$350 million. In a letter sent to tribal leaders Oct. 12, Pawlenty asked them to meet with him on Oct. 27 to discuss a new agreement that would, for the first time, require Minnesota tribes to turn over a portion of their gambling revenues
to the state.

The casino gambling issue is not about tribal gaming compacts. It is not about the evil and social consequences of gambling. It’s not even about revenue for the state.

The real issue is whether or not government can legitimately use it’s legislative authority as a negotiating tool to coerce revenue or confer profit on private businesses. And that’s exactly what Pawlenty is doing.

In return for the $350 million payment, tribes would be given exclusive casino gambling rights for a "time period to be agreed upon," the letter said. Pawlenty proposes that the tribes receive a written guarantee of exclusivity.

Whether or not Minnesota should open itself up to a free-market casino gambling industry is a legitimate debate. That action would not violate the current compacts with Minnesota tribes. However, creating a free market in gambling is not what Pawlenty is betting on. What underlies his “negotiation” with the tribes is the threat of a state-owned/privately run or privately run under a revenue agreement with the state arrangement.

As I wrote for the St. Paul Pioneer Press Opinion Page --

The state should not go into competition with citizens who pay taxes that the state then uses to operate a business that competes with those same taxpayers for customers.

Entertainment dollars spent at a state-owned casino are entertainment dollars not spent at privately owned restaurants, movie theaters, bowling alleys and sports stadiums. These and similar businesses are certainly in competition with each other — and with Indian casinos — but none has the state's ability to tax its competitors, regulate its competitors or relax regulations on its own operations. None has the backing of the state treasury and more taxpayer dollars if it runs into trouble.

The state owning a casino is little different from the state opening a department store at the Mall of America that didn't charge sales tax and didn't pay state income tax and consequently lured customers with prices well below those of rivate sector competitors.

Owning a casino is not a legitimate government function — period. Nor is running a state lottery. On a broader scale, neither are state subsidies for nonprofit "public" media outlets that compete for listeners with for-profit private broadcasters. Nor are state subsidies for sports stadiums, civic centers, theaters for the arts and the plethora of other "civic" projects that the state shuffles from player to player.

State government's function is protecting the free market, not competing in it.

Fun read . . . .