Speaking in broad strokes, there are two main reasons why companies merge. It’s either for improving efficiency, or it’s to increase lobbying leverage. Judging by the attitudes and statements of top executives at Tabcorp, it seems that a Tabcorp/Tatts merger would primarily be for lobbying, and only secondarily for purposes of market efficiency.

When faced with competition, a company can do one of two things. It can actually compete, or it can call on the government to kick its competitors out of the market by force. Gambling is generally prone to the second, unfortunately for consumers, because the industry comes with an innate and heavy regulatory burden for historical reasons that have to do with religion.

Here’s a good example: Markets just witnessed an enormous merger in a different industry also heavily regulated for historical-religious reasons. That is, the alcohol industry. The merger between SABMiller and Anheuser-Busch Inbev (BUD) almost certainly had to do with increasing lobbying power. That $107B deal earlier this month had no compelling reason to occur other than to gear up for the fight against Federal marijuana legalization.

The biggest players in the anti marijuana legalization movement by financial contributions are Big Pharma, Big Beer, private prisons and police unions. It is patently obvious in each case as to why. Big Beer has done its marketing research and concluded that people getting stoned is going to put the munchies into its revenues from people getting drunk. So the two beer giants made a deal and will now descend on the politicians in a united front to block alcohol’s most threatening competitor from being legalized.