An Exhibit in Overregulation

There was an interesting story in The Baltimore Sun yesterday about an example of state regulation I had never considered. I had no idea, for example, that the State of Maryland regulated how a dealer can play a hand of blackjack:

Maryland casinos asked the state last March to permit their blackjack dealers to draw a card on a “soft 17” hand — a hand adding up to 17 including an ace, which can be counted as a 1 or an 11 — instead of having to stand pat.

The effect of such a rule change might seem as thin as a casino chip — experts say it raises the dealer’s advantage by about 0.2 percent — but anything that tilts the balance between dealers and players is considered serious within the industry. In blackjack, players try to score higher than the dealer without going over 21.

“To have the ability to hit on soft 17 will increase the house advantage, which will increase revenue, tax dollars and make us comparable with other markets,” the casinos wrote in a 2014 memorandum — obtained by The Baltimore Sun under a public records request — proposing more than 50 rules changes.

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I had absolutely no idea that Maryland’s draconian casino laws allowed the state to regulate what a Blackjack Dealer can or cannot regulate when it comes to playing a simple hand of blackjack.

I had also no idea that Maryland actually regulates the odds for blackjack games. In Maryland, you apparently always get 3:2 odds when playing blackjack, whereas in some other states the odds are 6:5.

So why am I drawing attention to this story and these proposed rule changes the casinos want to see put into place? It’s to show how onerous Maryland’s regulatory climate can be.

Let’s face it, states that have gambling have pretty serious regulatory processes put into place. A lot of that is instituted to protect the consumer, of course, and a lot of it is to minimize the ability of organized crime to wind up with a stake in the games. But of what benefit is it to the state of Maryland to regulate how a Blackjack Dealer plays his hand? Why can’t the casino companies, with their professional gambling experts, decide what the best way to play a “soft 17” is? Wouldn’t it be better for the State (from the perspective of an entity that is looking to maximize its tax revenues) to let the casinos decide for themselves how to instruct their dealers? Isn’t in the best interests of the casinos to allow for competition between them, allowing consumers to play at the casino with the rules that are most comfortable for them or the odds that are most enticing to them?

Of course it benefits everybody to let the casinos decide. But in Maryland’s onerous regulatory climate, state regulators get to decide what is or is not an acceptable way to gamble. And that’s not even the only way the state overregulates gaming. Regulations limit the amount of money a patron can take out of an ATM. Regulations mandate how a casino can distribute winnings to a patron. And in the ultimate overreach of gaming regulation, remember that each slot machine and other electronic games are owned by the State of Maryland and leased back to the casinos. This inhibits the ability of casinos to stay up-to-date with industry trends, and creates an onerous burden to swap machines for newer technology.

Obviously the casino industry is a new, highly visible, and highly regulated industry. We know that the stakes are high in that field, and we know that casino revenue has been declining as gambling has expanded across the state. However, this kind of onerous regulatory environment exists all across the State of Maryland, affecting hundreds of industries and thousands of businesses and workers each year.

A “soft 17” is merely an obvious and glaring example of life here in the State of Maryland. Every Marylander is impacted by these onerous regulations that hurt businesses, workers, and homeowners. And I’m looking forward to Governor-Elect Hogan and his administration having the opportunity to start to dismantle these regulations over the course of the next four years.

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