Among other things, libertarians — and even most conservatives — are known for extolling the virtues of capitalism, the free market, commerce, trade, free enterprise, and entrepreneurship. They are generally defenders of business as long as there is an absence of protectionism, crony capitalism, and corporate welfare. Even so, from a libertarian perspective, there are still some businesses that should not exist.
According to the U.S. Small Business Administration (SBA), there are in the United States about 28 million small businesses (defined as having fewer than 500 employees) and about 18,500 firms with 500 employees or more. Although most large firms are corporations, small businesses can be organized as sole proprietorships, partnerships, S corporations, or C corporations. But whether a business is large or small is not the question to be addressed. The question is simply this: Are there some of these businesses that should not exist?
The SBA also reports that one-third of small businesses will fail within their first two years of being started, 55 to 60 percent will survive to four years, and the five-year survival rate has historically hovered around the 50 percent mark. Of the half of businesses that close their doors within five years, approximately one-third do so because they fail financially or are shut down through legal action. About 10-12 percent of firms with employees open and close each year. But why a business survives or doesn’t survive past the five-year mark is not the question to be addressed. The question is simply this: Are there some businesses that should not open in the first place?
Pan Am was a popular airline for many years. After declining during the energy crisis of the 1970s, a hijacking and a terrorist bombing over Scotland in the 1980s hastened the demise of the company. Pan Am went out of business in 1991. Circuit City sold televisions, electronic devices, and appliances through its chain of retail stores. At its peak, the company had 1,520 stores. However, Circuit City declared bankruptcy in 2008 when its stock was being traded for well below $1 per share.
In 2011, the last typewriter factory in the world shut its doors after the computer hastened the demise of the typewriter. The Godrej and Boyce company in India had produced 10,000 to 12,000 typewriters a year until 2009. In the 1990s, Compaq Computers was the number-one seller of IBM-compatible personal computers. After the rise of Dell Computers, Compaq was purchased for $25 million by Hewlett-Packard in 2001. Hewlett-Packard discontinued the Compaq line in 2013. At one time, Blockbuster dominated the video rental market. However, the company was slow to move into online distribution, and was trounced by Netflix. Blockbuster closed its last 300 stores in 2013. But why a business that is so successful can go out of business is not the question to be addressed. The question is simply this: Are there some businesses that should go out of business?
Many people would reply in the affirmative to these questions, albeit for the wrong reasons. Some would say that a particular business should not exist because it serves no useful purpose — such as manufacturing video games, vitamin water, or diet doughnuts. Others would say that a particular business should not open in the first place because it is an inherently immoral business — such as a gentlemen’s club, a massage parlor, or a pornographic magazine. More still would say that a particular business should go out of business because of something the business did — such as providing poor customer service, raising prices, or selling goods made in sweatshops. Although those claims (no useful purpose, inherently immoral, bad action) may all be true, they are all very subjective.
Yet, there are some businesses that really should not exist. They should not exist because they do so only in response to some government action. Now, there is a sense in which many of these businesses that should not exist are valuable because they help people to circumvent some government prohibition. But in a free society, there would be no such government prohibitions. Americans in the “land of the free” should not have to settle for workarounds, fixes, and alternatives to their freedoms.
Two examples
They call them cruises to nowhere. And sometimes they never leave the dock. Yet these ships are full of paying passengers. Here are two examples that I know about personally because of where I currently live and formerly lived.
“Vegas with an Ocean View,” say many billboards throughout central Florida. Victory Casino Cruises bills itself as “America’s biggest and best casino cruise ship” that offers “the most authentic Las Vegas-style casino experience in Florida.” Victory Casino Cruises is “the most authentic, affordable and fun casino experience in Florida!” It features five- and six-hour cruises twice daily, including Sundays, along the east coast of Florida that depart from Port Canaveral. The cruise ship has “4 decks and 40,000 square feet casino fun and excitement.” It showcases more than 600 slot machines and the best selection of 27 live casino games, including roulette and craps tables. At the Sportsbook Lounge, you can bet on basketball, football, baseball, soccer, boxing, MMA, hockey, and other sports. You can enjoy “superb food, buffet dining and drinks on all four decks.” There are five bars onboard. For spectacular entertainment, “Big Norm’s Club V offers free shows and a beat-filled dance floor for parties of all sizes.” Don’t forget
that no casino competitor in Florida has what Victory Casino Cruises offers:
- Free alcoholic drinks while gaming
- Earn points for free play
- LIVE roulette and LIVE craps
- The only Sportsbook in Florida
- Lower minimum bets on casino games, including black- jack tables
- Earn points faster than any casino in the state
- All entertainment included in the cruise
- Group discounts for 10 or more
- Personal service second to none!
And of course, “Just for playing slots and casino games, you can earn Reward Points for perks like free drinks, free food, free gifts and even dollars taken off your final bill.”
Other than the requirement that those who sail on casino cruises must have a valid government I.D. to prove that they are at least 18 years old, there is one very important stipulation that must be strictly adhered to: No one can gamble until the ship is at least three miles offshore. Casino gambling is illegal in Florida, except at eight Florida Indian casinos. Casino cruise ships get around the gambling prohibition by opening their casinos only after they get beyond Florida’s three-mile territorial boundary.
The Indian Gaming Regulatory Act of 1988 (PL 100–497, 25 U.S.C., §2701) established the National Indian Gaming Commission and has led to the approximately 360 Indian gaming establishments in the United States operated by more than 200 federally recognized tribes. After seeing the Indian gaming industry take in $100 million in revenues in its first year, some states realized the revenue that could be generated by legalizing gambling. Like Mississippi, which already had a long history of gambling along its Gulf Coast. In 1990, the Mississippi Legislature passed the Mississippi Gaming Control Act. It legalized casino gambling in counties along the Mississippi River and the Gulf Coast as long as voters in those areas approved it.
There was one major caveat, however. Casinos were not allowed to be built on land. Gambling riverboats were required to be permanently moored at the dock. That allowed them to offer 24-hour dockside gambling. Regular casinos were built on barges with the appearance of a land-based building instead of a riverboat. Hotels and parking lots could still be built on land. This casino-barge regulation was changed after Hurricane Katrina devastated the Mississippi Gulf Coast in 2005. Casinos could be rebuilt on land, but only if they were located within 800 feet of the water.
Casino cruise boats and casinos built on barges or near the water are businesses that should not exist. They exist only because of government gambling laws that infringe on individual liberty and private property.
Gambling laws
Gambling in the United States is technically legal under federal law. However, each state can prohibit or regulate various forms of gambling within its borders. This is a perfect example of federalism in action. Nevertheless, the federal government does have a number of gambling laws:
- The Transportation of Gambling Devices Act of 1951
- The Wire Act of 1961
- The Travel Act of 1961
- The Interstate Transportation of Wagering Paraphernalia Act of 1961
- The Gambling Devices Act of 1962
- The Illegal Gambling Business Act of 1970
- The Racketeer Influenced and Corrupt Organizations Act of 1970
- The Interstate Horseracing Act of 1978
- The Professional and Amateur Sports Protection Act of 1992
- The Illegal Money Transmitting Business Act of 1992
- The Interstate Wagering Amendment of 1994
- The Gambling Ship Act of 1994
- The Indian Gaming Regulatory Act of 1998
- The Unlawful Internet Gambling Enforcement Act of 2006
On the state level, only Nevada and Louisiana permit casino-style gambling statewide. Other states that allow commercial casinos in some form (California, Colorado, Delaware, Illinois, Indiana, Iowa, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Jersey, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Washington, and West Virginia) generally restrict it to certain geographic areas. They also require state licensing and heavily restrict and regulate the gambling industry. Local governments may further impose zoning restrictions. Private gambling not done under the regulatory eye of the state is generally illegal in any form. No one can rent a storefront and advertise a blackjack or poker tournament. And in some states, hosting poker games with your friends in your home on a Saturday night can get you arrested if you break the state’s rules and regulations concerning “social” poker games.
Gambling rights
Most Americans would say that gambling is neither a necessary nor a wholesome activity. Supporters of gambling laws argue that gambling is psychologically addictive, that it is financially ruinous, that it results in increased political corruption, that it leads to criminal activity to support gambling habits, that it increases crime in areas where gambling venues are located, that it harms families and children, that it results in money laundering and tax evasion, that it augments organized crime, that it is a regressive tax on the poor, or that it is immoral, a vice, or a sin.
But even supposing that all of those claims are true all of the time (a very dubious proposition), it doesn’t follow that people don’t have the natural right to gamble — as long as they gamble peacefully and consensually and don’t violate the personal or property rights of others. In a free society, consenting adults are free to engage in any voluntary activities that are peaceful without government supervision, licensing, or regulation as long as they don’t infringe on the freedom of anyone else. A free society can’t have it any other way.
First of all, supporters of anti-gambling laws must overcome an insurmountable obstacle: the U.S. Constitution. As much as anti-gambling zealots might wish the contrary, the Constitution gives the federal government no authority whatsoever to pass laws and make regulations that have anything to do with gambling. If any such laws and regulations are to be made, they must be made only on the state level. This principle of federalism that is enshrined in the Constitution was pithily explained by James Madison — the father of the Constitution — in Federalist No. 45:
The powers delegated by the proposed Constitution to the Federal Government, are few and defined. Those which are to remain in the State Governments are numerous and indefinite. The former will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce; with which last the power of taxation will for the most part be connected. The powers reserved to the several States will extend to all the objects, which, in the ordinary course of affairs, concern the lives, liberties and properties of the people; and the internal order, improvement, and prosperity of the State.
This is why (to take Florida as an example) Title XLVI, CRIMES, Chapter 849, GAMBLING of the Florida statutes reads,
849.46 Exercise of police power. — It is deemed by the Legislature that this chapter is necessary for the more efficient and proper enforcement of the statutes and laws of this state prohibiting lotteries and gambling, and a lawful exercise of the police power of the state for the protection of the public welfare, health, safety and morals of the people of the state. All the provisions of this chapter shall be liberally construed for the accomplishment of these purposes.
The federal government has no authority to prohibit, license, regulate, control, or discourage any form of gambling, online or otherwise. The states have the sole authority to prohibit, license, regulate, control, or discourage any form of gambling, online or otherwise. Whether the states should do so, and to what extent, is, of course, another matter. When the federal government enacts legislation concerning gambling, it unconstitutionally usurps powers never intended to be exercised by the national government and makes the states mere appendages of it. Those who contend for gambling laws at the federal level are contending in vain. Their contention is really with the Founding Fathers, the Framers of the Constitution, federalism, and the Constitution itself.
And second, although state governments have the power to prohibit or regulate gambling, it does not follow that they should prohibit, license, regulate, control, or discourage any form of gambling, online or otherwise, for any reason. It is simply not the proper role of government to do so. The purpose of government is supposed to be the protection of life, liberty, and property from the violence or fraud of others. It is not the job of government to legislate morality, and especially not to selectively legislate morality. The government should not be concerned with any activity that takes place on private property between consenting adults. The government should not have a say in how people choose to spend their money. The government should not convert vices into crimes. The government should not commit violence against people for engaging in peaceful, voluntary activity. The government should not be concerned with what people do in the privacy of their homes. The government should not prohibit or regulate any activity that takes place between a willing business and a willing customer. It is not the business of government to mind people’s business. And of course, this is all predicated on the fact that the gambling is occurring peacefully and doesn’t violate anyone’s personal or property rights.
Government hypocrisy
As usual, the government is woefully inconsistent and hypocritical when it comes to making and enforcing its laws. Here are a few examples.
First of all, if gambling is bad, addictive, immoral, crime-fostering, family-destroying, wasteful, and financially ruinous, then it is bad, addictive, immoral, crime-fostering, family-destroying, wasteful, and financially ruinous whether it is done in a state-approved and state-regulated gambling facility or in secret in the privacy of one’s home. If gambling is all of those negative things, then shouldn’t state governments prohibit all gambling activity? The conclusion is inescapable: State governments often allow gambling to take place only when they can get a cut of the action with licensing, taxes, and fees.
Second, state governments are very inconsistent when it comes to other vices. Americans can purchase alcohol and tobacco in any quantity and drink until they are so drunk that they pass out and smoke until they die prematurely from lung cancer. They can even invite their neighbors to join them and do likewise — as long as they don’t gamble while they are drinking and smoking.
And third, although the states try to discourage their residents from gambling, they at the same time encourage those within their borders to gamble. Only Alabama, Alaska, Hawaii, Nevada, and Utah have no state lotteries. Just this year the governor of Mississippi signed legislation authorizing a state lottery. Some states dedicate the revenue raised from lotteries to education or transportation, some to general government expenditures, and others to other things. But regardless of whether the states spend the revenue they raise from lotteries on “good” causes, it doesn’t change the nature of the lottery: It is gambling — with even worse odds of winning than found at casino table games.
Conclusion
Would casinos be built on barges or would gambling riverboats be permanently moored at docks if all gambling were legal? Would there be casino boat cruises to nowhere in the absence of anti-gambling laws? Those businesses would not exist in a free society.
The decision to gamble or not to gamble should be an individual decision. Just like any other decision to take a financial risk, violate a moral code, engage in a bad habit, perform an immoral action, be a bad example to one’s children, commit a sin, practice a vice, or spend money.
In a free society, people have the freedom to do what they will with their own money: spend it, save it, waste it, donate it to charity, give it away to strangers, invest it, burn it, throw it out the window, bequeath it, squander it, bury it in the backyard, put it under the mattress, and yes, even gamble it away. A free society can’t have it any other way.
This article was originally published in the December 2018 edition of Future of Freedom.
