The payouts begin before a single Pennsylvania slots parlor opens. Slots operators must buy the machines through distributors rather than directly from the manufacturers. The only other state with such a law is West Virginia.
Sen. Vincent Fumo, D-Philadelphia, inserted the provision, arguing it creates jobs and tax revenues. The featherbedding is quite remarkable.
We're all familiar with mandatory middlemen -- for example, liquor stores, beer distributors and auto dealerships. Each does provide a service, and their operations are subject to consumer-protecting regulations. But does the service justify the costâ¢
For some consumers, these are fine arrangements. Yet, a system of mandatory middlemen forbids perhaps a less-expensive option. And an element of competition is forbidden to the market.
As for slot machines, The Philadelphia Inquirer reports that each of the 31,000 units purchased in the first round could fetch $2,400 in middlemen premiums -- roughly $70 million, minus taxes. Over time, slots wear out or are replaced by models that attract more play.
In sum, a monopoly with little economic utility is created out of whole cloth for the express purpose of achieving corporate welfare.
The "tax-relief" slots bill passed on Independence Day, also a Sunday, in the dead of night. Our lawmakers are adept at irony.
