This article presents a unified theory explaining several conflicting empirical observations in the politics of campaign finance. It identifies those circumstances that foster or frustrate the enactment of financing laws that increase the competitiveness of elections. I argue that the competitiveness of financing laws is a result of three strong incentives when they operate in differently structured party systems. First, lawmakers have an incentive to make laws to protect their incumbency from competitors. This incentive generally overwhelms the (weaker) incentive to enact popular, competition-enhancing reforms. Secondly, lawmakers, when they act through political parties, have an incentive to cooperate with rivals to reduce the costs of political defeats. Thirdly, lawmakers seek to enact reforms that are consistent with their normative goals. These incentives combine with several party system variables to determine when campaign finance reform is likely to occur and how it will impact on the competitiveness of elections.