Bordellos and Baptists

In the Sunday Star Times:

Most of central Auckland's red light venues are clustered around Fort St, a few blocks further downtown, and the Chow brothers' plans to bring organised prostitution into the mainstream entertainment district near the casino had upset some business owners and residents in the area.

However, the Chow brothers' choice of the Palace site to launch their entry into the Auckland market was probably based on a similar strategy they used successfully in Wellington, where they are the leading players in the capital's adult entertainment industry.

They had been quick to realise the business opportunities that became available when prostitution was legalised in 2003, opening Wellington's first legal brothel, Il Bordello, on the city's traditional red-light strip, Vivian St.

Their next venture, the Mermaid strip club and its associated facility, the Splash Club, were more controversial because they were located in the centre of Courtenay Place, the hub of Wellington's mainstream nightlife.

The Chows successfully resisted attempts by the council to curtail those businesses and would have benefited handsomely when planning changes were introduced to prevent similar types of operations opening up in the area.

The plan in Auckland appeared to be along similar lines – get established on a prime spot while planning rules allow it, then rake in the cash once the rules are changed to prevent any competitors setting up nearby.

And the cash-generating potential of the adult entertainment business should not be underestimated. Michael Chow said his Wellington brothels had not been affected by the recession.

I'd noted that most of the scraps now are about zoning. It's damned obvious in hindsight that incumbent brothels will have strong incentive to try to zone out new entrants. Bordellos and Baptists is an obvious extension of Yandle's Bootleggers and Baptists hypothesis: inefficient regulations are most probable where there's someone who'll profit from them and someone who'll provide the moral veneer.

I'd love to know more about the zoning decisions. Did the Chow Brothers just luck into locations that were likely to draw later zoning protection, or did they do anything to help things along?