My understanding is there are actually three tiers for showing movies. But what they are doing is legal. All the dollar theaters are showing movies 'late' and because they are typically chain owned, they just move them (the reels) from the first run or second run to the third run (discount) theater.
I'm a huge theater person and I often watch the matinees or dollar run. It didn't slow down my renting when I was at the peak of my movie watching
I know a lot of people have dollar rentals as a common thing, but I only have it once a week for one day. It's my most successful day (only through volume). It works because people want a cheap movie. I couldn't live on dollar day, but it draws the people in. I also don't budge/negotiate dollar day late fees. I say, "you got it for a buck! I can't lower the late fee!"
Something to consider.
