Georgia Bets to Lose

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I was riding the Chicago El one night, on my way to meet an old friend at a northside blues club. I had 20 bucks in my pocket. A guy was sitting across from me with a newspaper folded on his lap, three plastic caps and a pea on that. From the corner of my eye, I watched him go through a couple phantom games, enticing a girl next to him to play. She bet a buck and lost, then another and another, before saying, “unh-unh, I ain’t giving you no more of my money!” But I had properly guessed every game. Actually, I wasn’t guessing. I could see the pea. I thought he was pretty lousy and how 40 bucks would buy twice as much beer as 20.

“OK,” I said, pulling out my twenty. “Let’s do it.” And poof! He and his shill jumped off at the next stop.

I laughed at my stupidity all the way to the club, hoping my friend would find it funny enough to loan me some money.

It doesn’t matter if you’ve been taken by a short-con or by a legitimate dealer at a casino, gambling is a sucker’s game. And because suckers are born every minute, there is going to be gambling, like it or not.

Gambling is legal in Georgia, thankfully, and it brings needed revenue to the state. I’ve written about problem gambling and seriously think it’s an issue that needs to be addressed in Georgia, like all other addictions. There are some lawmakers, however, that think banning gambling will make gambling addiction go away.

Here’s my little piece about the banning law from the Moscow Times:

A GOOD GEORGIAN GAMBLE

What started as crusade to outlaw gambling advertisements has morphed into a push to prohibit casinos in Georgia. Lawmakers say they want to protect youth from the iniquitous vice of gambling, but they’re betting on the wrong horse. Closing casinos won’t keep kids out because they are already prohibited from entering them.

The most popular – and addictive – forms of gambling are electronic machines and internet gambling. Until last year, slot parlors were unregulated and proliferated all over the country, contributing to a boost in gambling addiction. But when the government implemented a flat-tax regime and raised the annual fee for a slot parlor in Tbilisi from $12,000 to $60,000, virtually every slot club shut down. However, youth and problem gamblers just moved to on-line sites, which are booming.

In Georgia, only land casinos have the right to operate on-line gaming sites at quarterly fees of up to $36,000. If the government wants to combat problem gambling, then it should restrict online betting sites, not casinos.

Last year, casinos contributed over $10 million in licensing fees alone to the state budget. Rather than banning casinos, the government should be fine tuning its efforts to turn the Black Sea port of Batumi into a regional gaming haven. With an average of 208 rainy days a year and a tourist season that barely lasts 2 months, Batumi needs all the help it can get attracting visitors.

The previous government banked on luring investors by offering dirt-cheap licensing fees and tax-free incentives and letting the free market take care of itself to lure all the gamblers from neighboring countries where gambling is forbidden or restricted, such as Azerbaijan, Turkey, Iran and the Russian Federation.  Having a vision is great but it will just be a mirage without a plan to go with it.

The flat tax system, where table and slot fees are set, is fine for an established casino but terrible for a casino just starting up. This might explain why no other country uses such a system. Moreover, Georgia has not established a limitation on permits. For an investor, limitation equals return and lack of a limitation is a sign the government has no strategy.

The government expected that the more casinos they build, the more people would come to gamble, but it doesn’t work like that. Since the tax incentives were enacted in 2005, Batumi has only managed to accommodate 4 casinos. No studies have been done to determine the city’s gambling capacity. Infrastructure remains a hurdle as Batumi has one small airport that serves about 6 small airlines and Tbilisi is 8 hours away, on a mostly treacherous road.

Casino clients are either tourists that drop a few bucks for fun or serious players that can typically afford to lose. Prohibiting casinos will do nothing to prevent kids from gambling and it will eliminate an opportunity to use the funds casinos bring to help establish treatment programs the country severely lacks. Gambling is an addiction that goes in hand with drug and alcohol addiction. Therapists in Tbilisi state that 90% of those they treat for substance abuse are gambling addicts too. The problem in Tbilisi is that there too many fiends and far too little treatment facilities.

Restrict the obnoxious gambling advertisements that are plastered across the city if you must, but don’t ban casinos. If the prohibition of alcohol and drugs has failed then why should the prohibition of gambling succeed? It too will drive people underground and it will be the house that gets nothing for something.

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