The U.S. Handling of the Poker Industry Is Another Example of Anti-Jobs Policy

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By EconMatters

Americans have been card players for ages, whether it is playing card games after Thanksgiving Dinner with Grandma for pennies or watching Doyle Brunson play in the World Series of Poker on ESPN, Poker has become as main stream as college football on Saturday afternoons for Americans.

However, the US governmental approach towards the industry for the last decade serves as another example of why the economy is struggling with 10% unemployment.

Sowing The Seeds

A country just doesn`t wake up one day and voilà! there is no economic activity and thus a lack of jobs to sustain a growing population. Rather, the seeds for economic growth and activity are a byproduct of years of government providing the right kind of pro business environment for various types of industries to thrive and grow and build a network of derivative jobs related to each industry. Think in terms of a long range type of fertilizer paving the way for bumper crops of economic job creation 5 and 10 years in the future.

Poker - A Game of Skill

There is much debate whether poker is a game of skill or just pure luck like playing Dice games or the Lottery. It is a game of skill, and at different levels players have been able to find grind out a living for decades. It evolves like any other industry as technology and information changes occur leading certain strategies antiquated and players adjust or move on to other professions.

Not unlike trading strategies or the retail industry, players come and go, and some players outlast the competition, and make a consistent living for decades. Think in terms of the NFL skill-set, many youths play football in High School, and even college, but only a very select few are able to make a consistent career out of the profession, the truly exceptional. And we wouldn`t call football players just lucky, rather they are the best of the best. It takes the exceptional level talents at a given buy-in level to enable a competitive edge to exist and a consistent win-rate and thus professional designation.

However, unlike football many recreational players are able to play the game often alongside the professionals and derive a substantial entertainment benefit that adds positively to their lives in terms of happiness at a social level. Think in terms of bowling, going to the movies, fishing, or playing pool. It serves as a social outlet where they try to master the challenge of winning the hand against other opponents.

The game is actually quite popular, and people like playing it as a social activity, and if the government would start providing better fertilizer, the industry could support an entire supply chain of industry related jobs, and even provide much needed tax revenue for reducing our growing federal deficit.

Job Creation Strategy With Poker

First of all, poker needs to be legalized, regulated, and taxed at a very minimal level. It needs to be legalized so that businesses can start up card rooms which cater to recreational and professional players across the country, not just select states like California, Louisiana, and Las Vegas.  

This would create jobs for waitresses, dealers, floor personnel, bar tenders, cooks, dishwashers, cleaning, maintenance, marketing, and managerial jobs in a direct fashion. But in addition to the direct jobs, there are advertising needs which create indirect jobs in online advertising, as well as in radio, television, and the print media. Plus, all these card rooms opening create jobs for carpenters, remodelers, construction jobs.

Then the companies that supply products to the industry like poker tables, shuffle machines, big screen electronics and entertainment systems, furniture, appliances and lighting benefit as well. All these companies will then hire additional personnel to meet the increasing demand for their products.

I could go on and on with the amount of direct and indirect jobs that can be created by government getting out of the way and letting the market forces take off and really synergistically create jobs for an industry that finally has the constraints to growth removed.

Contractionary Policies Are Counterproductive  

This is how you spur the economic growth engine, not just in poker, but in many other industries as well, by giving an industry all it needs to succeed, and then getting out of the way, and letting market forces decide if it is a legitimate industry worthy of capital allocation. If the demand is there, then businesses will spring up, jobs will be created, and the economy as a whole will benefit, and you get economic expansion.

The policies of the US government for much of the last decade are contractionary for many types of industries and small businesses from both a legislative and tax perspective and a strategic philosophical shift could help alleviate the burden currently being placed upon many of these industries like the Poker Industry.

Balance With Proper Regulation & Taxes

The poker Industry could benefit from regulation, but not coercive regulation, but just to provide a regular third party auditing function to maintain that the games are run efficiently and fair. A consistent maximum rake across the United States in both the physical and online domains would be an important type of regulation that could be positive for the Industry.

In terms of tax, businesses should be taxed similar to any other business, and not have a “sin” type tax or any other special poker tax designation which would stifle growth instead of help foster growth for the industry. The government usually gets it wrong with tax policy, just implement a reasonable level tax rate, and get out of the way.

If demand for the industry or product is pervasive, the tax revenue will follow. Then this becomes self-fulfilling as a given industry starts to flourish, this attracts more participants, the industry growth accelerates, and so does the tax revenue for the government. Too high taxes have the exact opposite effect, it is contractionary in nature, as it limits participants, slows growth, and reduces tax revenue over the long run.

Online Poker Embraced

Finally, yes online poker needs to be fully embraced in this country. This means having the same legal rights and status as the legalized physical domains of casinos so that all the foreign based operations, jobs, and taxable earnings are repatriated back to the US where most of their customers are located.  The entire Full Tilt Poker fiasco could have been avoided, we wouldn`t have American citizens relocating to Canada to play on Poker Stars, and the DOJ heavily involved in dictating whether a business succeeds or fails.

Sure, there are limited cases where an underage kid goes into debt playing online poker by getting around the safeguards. But the response shouldn`t be to effectively close down an industry just because of some failings. The response should be to address ways to better deal with these types of cases, not just get rid of the entire industry. If we applied the same standard to every industry that had failings, we would be left without many productive and socially acceptable industries.

Pro-Business or Get Out Of The Way!

When we start thinking about legislative policy initiatives or changes, we need to ask ourselves this important question first and foremost:

“Is this going to create or destroy jobs and industries?” 

This is actually a much more important philosophical shift than one would imagine on first blush, having the right pro-business attitude towards all industries and businesses creates animal spirits in the economy, think in terms of the great industrial revolution where many new business ventures were allowed to flourish, make mistakes, fail, and succeed at the same time.

The era had the right business entrepreneurial spirit to create jobs and industries out of ideas because the pro business climate was fostered not hindered. This is a radical change from the legislative and governmental philosophical climate that is in place today and being created by policy makers. Get out of the way, and let market forces take hold and create jobs in many places, diverse industries, and non standard businesses that don`t need governmental subsidies to flourish all on their own.

Washington just might be surprised how this type of approach feeds on itself, as success in one industry, leads to the creation of an entire new industry, creating even more jobs, and before you know it, standard industries like retail and housing are being picked up along the way, and voila we have a booming economy once again in the United States.

It’s the Economy, Stupid!

The Poker Industry has been held back by governmental policy over the last decade, many jobs were lost, and much more were never created, all because of failed policy on behalf of lawmakers. Ask yourselves this question did policy initiatives hinder or foster job creation for the Poker Industry?

And like the Poker Industry, you can apply this same question to many other industries in the United States. The fed have done almost all it can do at this point, and maybe even too much at times, but it is about time that legislative and fiscal policy start doing a whole lot more to foster economic growth and job creation by adopting an industry stimulative approach as opposed to their current contractionary, stifling approach.

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