Column: Phil Krinkie, Guest Column

You’ve heard the term a hundred times; “we want a ‘level’ playing field.”

It’s an old axiom that refers to a flat playing surface so that one side is not advantaged over the other. The term is also used in business jargon to discuss the desire for fair and equal treatment from the government. Businesses and unions alike spend hundreds of thousands of dollars each year to lobby the government in order to tilt the playing field to their advantage through government regulation or to preserve an economic advantage they’ve already established through legislation.

One such economic advantage that has been an issue for years at the state legislature is tribal gaming.

Years ago the U.S. Supreme Court ruled that sovereign Indian tribes could conduct gambling on tribal lands without interference from the state, but the Federal Gaming Regulatory Act of 1988 added a requirement that in order for tribes to operate casino-style gaming they must enter into a compact with the state to provide some measure of control at the state level over Indian gaming.

Minnesota tribes were the first in the nation to negotiate and sign gaming compacts with a state government. Then-Gov. Rudy Perpich signed the compact that permits video games of chance (slots) and blackjack (a class of gaming illegal in the rest of the state) to be operated on tribal land and a gaming monopoly was born.

The Minnesota compact has no expiration date and doesn’t require the tribes to pay taxes to the state on gambling proceeds, but it does grant the state power to impose and collect specified fees to reimburse the state for gaming enforcement costs. This gaming monopoly granted to Minnesota’s Indian tribes has been a contentious issue at the Capitol for years.

It is estimated that tribal gaming produces up to $600 million a year from the 18 casinos in the state. Year after year there is an eager group of lawmakers who want to end the tribal gaming monopoly. But the difficult question is how?

Minnesota’s tribal-state compacts may not be “re-opened” or renegotiated unless both sides agree to do so. Because the once modest tribe-operated bingo halls have evolved into profitable Vegas-style casinos; there is little motivation for the Minnesota tribes to agree to reopen negotiations with the state.

State lawmakers have proposed dozens of methods in an attempt to end the monopoly on gaming they created more than 20 years ago. The legislative proposals have ranged from electronic pull tabs to a state-run casino in downtown Minneapolis. But the proposal that has gained the most support over the years is racino.

The racino legislation would establish casino-style gaming at Minnesota’s two horse-racing tracks; one in Shakopee and the other in Columbus.

Under this proposal; both establishments would be allowed to install thousands of slot machines to be operated by the state Gambling Control Board. The estimate is that should these two facilities be permitted to add slot machines it would bring in more than $100 million a year in new tax revenue for the state. These two gambling operations would be closer to downtown Minneapolis and St. Paul than any of the 18 tribal gaming operations and therefore impact the casino-gambling monopoly held by the tribes.

A level playing field? No. The two horse tracks are privately owned, for-profit businesses.

In the legislators’ attempt to level the playing field, they are actually creating a separate field for two racetrack owners, based on the premise that it will produce hundreds of millions in new tax revenue for the state.

Granting a gambling monopoly to two private business owners in order to compete with the tribal gaming monopoly is a very short-sighted plan. It does little to diminish the tribal gaming monopoly and results in a new tax, which will grow government spending.

But what is even more bizarre than proposing to fix a monopoly by creating a new monopoly is the fact that lawmakers are proposing to use the new tax revenue from the horse-track-gaming monopoly to fund another government-created monopoly, a new Vikings stadium.

That’s right. Create a monopoly enterprise and use the revenue produced to fund another government-created monopoly. Makes perfect sense if you are in government. Establish a new tax for people who gamble so we can subsidize people who want to watch football, while three private businesses make millions because the government granted them a monopoly enterprise.

Creating a government-granted monopoly in a free market is always a mistake, and the state made a mistake when it granted the tribes a monopoly on casino gambling in perpetuity. There is nothing legislators can do to change that reality, but they can learn from the mistake and not create more government-granted monopolies.

Putting slot machines at two horse tracks to fund a new home for Zygi Wilf’s NFL monopoly is a bad idea. The only reason the Vikings owner can extort hundreds of millions of dollars from Minnesota taxpayers is because the federal government has made the NFL a multi-billion-dollar monopoly.

The goal of legislators in the upcoming session should be to create a level playing field for all businesses. Don’t provide millions in subsidies to some businesses while at the same time selectively taxing others. Protect the free market by preventing more government granted monopolies.

 

Phil Krinkie, a former eight-term Republican state rep from Lino Lakes who chaired the House Tax Committee for a while, is president of the Taxpayers League of Minnesota. You can contact him at: philk@taxpayersleague.org.