Gambling and the Government Protection Model

Casino dafa

  • September 06 2008

    Gambling and the Government Protection Model

    Where the Government Protection Model supports regulation for the gambler, the Government Protection Model provides regulation to protect the gaming industry and the economic interests of the state.

    An analogy is to the restrictions that a bank may put on a business to which it lends money. If the bank lends a few hundred dollars to a borrower, a simple promissory note might suffice; if it lends millions of dollars, the loan papers might be hundreds of pages long.

    In both cases, the bank wants to see the business succeed, bit it also puts more restrictions on the borrower when the bank's interest is greater.

    The Government Protection Model is often found where the government has a heavy reliance on the industry to meet tax expectations.

    Often commentators are confused by how a government can claim that gambling is a moral and acceptable activity, but still have an extraordinary regulatory apparatus.

    The basis for regulation is not the government's perception that gambling is immoral or produces undesirable social effects, but instead that if outside parties view the activity as such, the industry as a whole will suffer.

    These parties include federal government, capital markets, and voters.

    Its very existence may be tenuous, as public perception of the benefits and burdens may change and influence the legality of the activity. Besides its fragile legal existence, the casino industry faces eradication if the gambling public perceives it as dishonest, or associated with organized crime.

    This threat may come from a federal government that can make gambling illegal on a local level, voters or legislators who can change the law, or gamblers who choose not to patronize casinos that are perceived as dishonest.

    As a growth of industry, casinos also need the support of capital markets, such as banks and stock exchanges, and access to these markets is often contingent upon the favorable perception of the gaming industry by these institutions.

    Government's response in the Government Protection Model is to protect the industry by providing a mechanism to ensure the national government, the voting public, capital markets, and actual and potential gamblers that the industry is both free of criminals and honest.

    These mechanisms are stringent licensing, detection, and strict enforcement of transgressions by casino operators that violate the perception of honesty and freedom from criminal elements.

    Operators realize that this protection is effective only if provided by government. Convincing others that the industry is honest and free of criminals by self-regulation is difficult, if not impossible.

    Therefore, operators are willing to subject themselves to losses of freedoms, risk, and expense as the price of maintaining both the reality of control, and the desired public perception. Often, this price is high.

    To achieve the desired results, government creates a burdensome licensing process, costly accounting and reporting systems, and disciplinary procedures that could result in severe fines or license revocation.