We urge you to vote NO on HB-593 - regardless of whether it permits 2, 3, or 4 casino monopolies - when it comes to the House floor next Wednesday, February 8.

Your vote will determine whether the legislature can be persuaded for the first time to compromise a fundamental principle of the New Hampshire constitution, the people's right to free and fair competition.

Constitutional Impediments

The House Constitutional Review Committee voted unanimously to oppose HB-593 as amended by the Ways & Means Committee, in part, because of widely-shared concerns that the bill is inconsistent with Part II, Article 83 of the New Hampshire constitution, which states:

Free and fair competition in the trades and industries is an inherent and essential right of the people and should be protected against all monopolies and conspiracies which tend to hinder or destroy it.

Public purpose exception.

In narrow and rare circumstances where the legislature has identified a significant public purpose, private entities have been permitted to own and operate business monopolies. Monopoly status was granted to some utilities because of the significant inefficiencies in stringing multiple sets of wires or pipes, to healthcare facilities via certificates of need to avoid driving up healthcare costs, and to liquor distributors to reduce historic criminality involved in the industry during prohibition.

No public purpose in casino monopoly.

There is no discernible public purpose in granting monopolies to providers of privately-owned table games or slot machines. These activities cannot even remotely be classified as public necessities, nor would monopoly status permit them to be delivered more efficiently. If legalized and sheltered from the market discipline imposed by free and fair competition, these activities would be far less tailored to public demand, and price (house win) competition would be nearly eliminated, driving up prices, a benefit to the monopolists and a detriment to the public.

Artificially increasing profit margins on slot machine and table gambling for two (or four) monopolies would seriously impair the people's inherent and essential right to free and fair competition. Gambling monopolies in other states always use their artificially high gambling margins to subsidize meals, liquor, lodging, entertainment, retailing, and patron transportation. In New Hampshire, such a monopoly grant would cause serious economic harm to the thousands of non-gambling businesses offering those activities but unable to subsidize them.

Gambling enterprises have not heretofore been granted monopoly status.

Because there is no discernible public purpose in granting gambling monopolies:

• The lottery is owned and run by the state, with lottery outlets unlimited in number, with any applicant given reasonable opportunity to obtain a license;
• A business wishing to offer wagering on horse racing may apply to the state at any time for a license, without limit as to the number of licenses available; and,
• Prospective charity gaming operators are not limited to any number and may apply to the state to operate venues in unlimited number.

Exclusive provider contracts (like E-Z Pass) are not monopolies.

Exclusive providers of services to the state or operators of state owned entities - such as EZ-Pass, a building maintenance contract, or the contract to operate the state lottery system - are not monopolies because the state can terminate such relationships at the expiration of provider contract periods and thereby routinely obtain the consumer benefit of free and fair competition among prospective providers. Such contractors retain no right to or control over state property or state functions that survive beyond the expiration of the contact.

Granting monopoly creates a property right.

The state may not terminate or restrict rights attendant to a state-awarded monopoly without exposing the state and its taxpayers to takings claims. For example, in 2000 when the legislature terminated the electric utility generating monopoly granted to Public Service Company of New Hampshire, it imposed upon PSNH ratepayers a still ongoing "stranded cost" surcharge initially amounting to $2 billion to settle litigation by PSNH asserting its right to be compensated for its unamortized below-market investment in its privately-owned generating infrastructure built and acquired attendant to its performance obligations under monopoly.

Should the legislature grant a monopoly to two (or four) privately-owned casinos, as proposed in HB-593, and later attempt to increase that number, or to allow more businesses to offer table games or slot machines, or to operate state-owned table gambling or slot machine establishments, the state and its taxpayers will face a substantial takings claim. For taxpayer protection reasons alone, the legislature should not grant any type of gambling monopoly.