There is an interesting situation developing in regards to gambling in the United States that in some ways epitomizes one of the things that Crony Capitalism does to destroy true capitalism. It’s a complex situation and I’m certain that I don’t fully understand all the legal technicalities but I thought it was a story worth exploring.
What is happening is that the state of New Jersey, and several other states, have legalized online gambling. A company called PokerStars is hoping to leap back into that market. Yes, back into that market. For a number of years online gambling was legal and then in 2006 Congress passed a law making it illegal. PokerStars was one of two companies that were market leaders in the industry. Congress passed that law largely not to keep American citizens safe from the awful scourge of making a bet of their own free will but because the gambling industry wanted Americans to only be allowed to make such wagers in their casinos. Crony Capitalism at its finest.
If, horror or horrors, someone comes up with a business model that beats my business model, I can always bribe Congress to pass a law putting my rival out of business. Hooray for the American entrepreneurial spirit. In this case PokerStars created out of country sites and continued to take bets from U.S. citizens. This of course led the gaming industry to convince Congress in 2011 to seize the assets of these companies (essentially stealing money from gamblers who had made wagers but not yet collected their winnings).
This drove PokerStars main rival out of business and PokerStars stayed around by agreeing to pay a $771 million bribe … er settlement to the U.S. government so as to avoid further prosecution. Capitalism as it is now practiced in the United States in full bloom.
So, back to now. With New Jersey and other states legalizing what the U.S. government made illegal in 2006; companies like PokerStars are now ready to resume their former operations. The gambling industry is represented by the American Gaming Association. This group wants to institute their own online gambling business in New Jersey and the other states. They have now asked the state governments to ban PokerStars from being allowed to participate because of their supposed past crimes; continuing to take bets offshore after it was made illegal to bet in the U.S.
Basically it comes down to the idea that a company bribes government officials into passing laws that make it difficult, impossible, or illegal for their rivals to do business. This is what capitalism has come to mean in the United States. This is not an isolated case. Large businesses routinely bribe, I mean contribute to elections hoping to get laws passed that favor them. This sort of crony capitalism is destroying small business, it has essentially eliminated what used to be called the family farm. It is skewing the wealth of this country towards an increasingly unfavorable distribution with a steadily declining middle class.
This sort of unfair business field in which people with good ideas, energy, and drive are prevented from succeeding not only destroys true capitalism but it deprives the citizens of this country great products at a reasonable price.
Anyone remember Tanya Harding hiring a thug to kneecap Nancy Kerrigan? Was that right? That is a microcosm of new capitalism in the United States. We are becoming Tanya Harding. So afraid of losing that we beat up our opponents rather than working hard to make a better product. Nice.
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