Drive a few hundred feet north of the Texas border, or east, or south for that matter, and you will find out very quickly that many Texans like casinos. But a familiar if idiosyncratic coalition has so far blocked more gambling in Texas.
When government makes a good or service artificially expensive, the spread between the natural market price and the artificially high price creates an opportunity for arbitrage — taking advantage of the difference in price for personal gain. High taxes on cigarettes, for example, created well-understood incentives for smuggling, theft and street sales of “loosies” — single cigarettes.
But when government makes something illegal, the arbitrage opportunity is even stronger.
