Why Midwestern Casinos Ban Free Drinks

Moneybox
A blog about business and economics.
Oct. 10 2013 11:45 AM

Why Midwestern Casinos Ban Free Drinks

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Creative Commons photo by Erik Drost.

All the glamor of Cleveland.

There's a casino in downtown Cleveland near my hotel, so I swung by last night to play a little blackjack and made $7.50 but I was surprised to find that by Ohio state law they won't bring you free drinks at the table. I asked about this on Twitter and apparently such laws are common outside the traditional gambling zone of Las Vegas and Atlantic City. Many people were also under the adorable impression that this is a paternalistic move aimed at preventing casinos from taking advantage of inebriated gamers.

Obviously there's no point in allowing casino construction as an economic development strategy while simultaneously trying to prevent gamblers from being taken advantage of. Having gamblers lose money is the whole business! No giant gambling losses, no economic development. Fortunately USA Today looked at the "no free booze" laws afflicting Midwestern casinos back in 2010 and came to a more sensible answer:

The economic interests of other businesses also play a part. Restaurants, bars and taverns are among groups that have lobbied legislatures for laws preventing new casinos from offering free alcohol. It's a business issue, not a moral one, said Jarrod Clabaugh, spokesman for the Ohio Restaurant Association.
"We were concerned it would create an uneven playing field," Clabaugh said. "Free drinks improve the odds of people not leaving the casinos to go out, enjoy the community and dine at our members."
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I'm not 100 percent sure that Clabaugh's lump of booze theory of the economics here is entirely right, but it certainly might be right. If you're in the business of selling food as a loss-leader for drinks, then you have reason to worry about someone else coming to down and offering drinks as a loss-leader for food. The whole state of casino regulation in America is a total mess right now.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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