Beshear endorses auctioning casino licenses?
Posted by Caleb O. Brown on October 14th, 2007 in economics, frankfort, gambling, governor, kentucky, racing, spending, taxes |
I could be behind the curve here (I don’t actually live in Kentucky anymore), but in Steve Beshear’s appearance on KET’s “One-to-One” program, he responded this way to a suggestion that the state actually own the casinos Mr. Beshear is hoping to establish in Kentucky (transcription and emphasis mine):
What does the state of Kentucky know about running a casino? You know, I think you need to have these franchises out there. We’re gonna strictly control it and strictly regulate it so that everything is above board. Who gets these things is not gonna be a back room deal. I mean, it’s gonna be all up front. It’s gonna be open and people are gonna have to be the high bidder in order to get these things. But I really think probably the best way to go is outsourcing this. You’re going to get the revenue from it, but you’re gonna put people that understand this business and know how to run these places in charge.
Two points on this. First, Mr. Beshear appears to be endorsing a Bluegrass Institute suggestion from earlier this year that if the state must go into the gambling business that it simply auction off a strictly limited number of licenses to maximize revenues. Let the casinos bid against each other to reveal their preferences and let Kentucky taxpayers reap the gains. If Mr. Beshear is endorsing that idea, then he truly understands at least the basics of supply and demand. I applaud him for it.
If Beshear is serious about requiring that competitors bid against each other for these licenses, then Churchill Downs should definitely not receive any preferential treatment when it comes time for casinos to locate. Reporters need to ask Mr. Beshear to clarify what he means by “high bidder.” I’m sure Churchill Downs would be interested in a clarification as much as anyone.
My other thought is this: If Mr. Beshear were to magically be governor in a Kentucky that already had casinos that were owned by the state, should we interpret his statement to mean that he would privatize those casinos? After all, what does the state of Kentucky know about operating a casino?
One Response
I watched the interview you referred to. I think just as noteworthy is the fact Beshear ducked the question about people having to lose $1.5 Billion in the casinos to generate the 500 million in tax revenue.
Further, how hard is it, really, to run a casino? If we were to do them, I would actually side with Gatewood and say let the state own and run them. If all net revenue to the casino went straight to the state, the numbers would almost make sense. If two thirds of profits go out of state, there just isn’t enough money to make up for the negative effects.
Bottom line, though, is it is a moot point. The casino bill won’t get through the legislature.