Phil Krinkie, St. Paul, column: Minnesota should stop granting monopolies

By Phil Krinkie ST. PAUL -- 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 also is used in business jargo...

By Phil Krinkie

ST. PAUL -- 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 also is 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 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 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.


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 which was granted to Minnesota's Indian tribes has been a contentious issue at the Capitol for years. It's 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 tribal-operated bingo halls have evolved into profitable Vegas-style casinos, there is little reason 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 which 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 gained the most support over the years is racino.

The racino legislation would establish casino-style gaming at Minnesota's two horseracing 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.

But these two gambling operations would be closer to downtown Minneapolis and St. Paul than any of the 18 tribal gaming operations, and therefore would 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 actually are 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 shortsighted plan.

It does little to diminish the tribal gaming monopoly and results in a new tax which will grow government spending.

But what's 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 pay for another government-created monopoly. Establish a new tax for people who gamble so we can subsidize people who want to watch football, while enabling three private businesses to make millions because the government granted them a monopoly.

Makes perfect sense if you are in government.

Creating a government-granted monopoly in a free market always is a mistake. The state made that mistake when it granted the tribes a monopoly on casino gambling in perpetuity.


Legislators can't do anything to change that reality, but they can learn from their mistake and not create more government-granted monopolies.

Putting slot machines at two horse tracks to pay for a new home for Zygi Wilf's NFL monopoly is a bad idea. (By the way, 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.

Krinkie, a former eight-term Republican state representative from Lino Lakes, Minn., is president of the Taxpayers League of Minnesota.

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