Drinks are not “on the house”

Casinos are all about having a good time, which includes customer service. Free drinks are an essential part of the business model that keeps guests happy and in their seats. Giving anything away for free may seem like a loss, but the house makes it back in increased sales and gaming. But in several Midwestern states, casinos are barred from offering complimentary drinks to their patrons. At first glance, this regulation appears wholesome, although grossly paternalistic, in intent: the state is attempting to protect its citizens from becoming too inebriated while “investing” their money at a casino. But these states have an ace up their sleeves, and the “A” stands for anti-competition.

The motivation to ban free drinks in Ohio’s casinos, for example, came from a few different advocates, most recognizably Mothers Against Drunk Drivers (“MADD”). MADD became the face of the fight to ban free drinks in casinos, and why not? It’s a noble organization which puts a moral face on an issue that is well understood. Free drinks could conceivably lead to more drunk drivers on the road. But the true lobbyists behind the ban on the complimentary services offered elsewhere in casino havens like Las Vegas and Atlantic City have a much less altruistic motive.

Restaurants associations are no strangers to supporting laws that protect their businesses from competition. The Institute for Justice has led the charge in the fight against anti-competitive food-truck laws throughout the country, and we’ve often found that the main supporters of laws that severely restrict where, when, and how food trucks can operate are restaurants who would rather have the government fight their battles for them.

In this case, restaurants complain that nearby casinos will detract from their business if they are allowed to offer free drinks. “We were concerned it would create an uneven playing field,” said the spokesman for the Ohio Restaurant Association. “[F]ree drinks improve the odds of people not leaving the casinos to go out, enjoy the community and dine at our members.”

Is that really the government’s problem? If a restaurant loses business because a nearby casino is offering free drinks, it needs to adapt and figure out another way to attract customers—not lobby for the government to use its power to protect its bottom line. The market depends on competition, and it works best without the government playing favorites. The restaurants are trying to play with a stacked deck, and the government should know better than to agree to deal it out.

— Phil Applebaum
Phil Applebaum is a Maffucci Fellow at the Institute for Justice

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