LAKE STEVENS – The city is considering a gambling tax before it annexes the 708-acre Frontier Village, an area that includes several gambling businesses with everything from pull tabs to card tables.
If passed, the gambling tax would help pay for police services, Police Chief Randy Celori said.
Washington law requires local police to enforce state gambling regulations, he said.
While the city has yet to decide what a gambling tax would look like, several gambling businesses, including those operating within Lake Stevens’ current city limits, have voiced opposition.
“Just because others have it doesn’t mean we have to have it,” said Jan Larsen, a past president of the Greater Lake Stevens Chamber of Commerce.
Many in the business community testified at an Oct. 9 public hearing.
Snohomish County already imposes a tax on gambling businesses.
The businesses don’t want the city to copy the county gambling tax. Instead, they want a lower or different kind of tax.
The Frontier Village area is scheduled to go from county to city control later this year, if the annexation gains approval.
If the city does nothing, gambling businesses there would no longer pay a tax after annexation.
The annexation must be reviewed by Snohomish County officials and then go back to the city for final approval.
If all goes according to plan, the annexation will be effective in mid-December, Lake Stevens annexation coordinator Carl Nelson said.
At least four businesses offer gambling in the Frontier Village area: the Highway 9 Casino, Hawkeye’s, the Hitching Post Bar &Grill and the China House Restaurant.
The businesses agreed to the annexation plan because they believed the city would not copy the county’s gambling tax, Larsen said.
The City Council voted against a gambling tax in 2005, he said.
Now, the businesses are urging the city to consider a lower tax than the county’s gross tax or a tax on net sales, he said.
The gross tax can be inequitable, said Craig Ohm, co-owner of Buzz Inn, a restaurant in downtown Lake Stevens that offers pull-tab gambling. Pull tabs are similar to scratch tickets; potential prizes are revealed by pulling back a piece of paper.
A customer who spends $100 on pull tabs could win that money back, Ohm said. But under a gross tax, the business still must pay for the money it took in, no matter how much it paid to the winners.
That’s why a net tax, or a tax on the proceeds a business earns, would be better, Ohm said.
“It would be a fairer tax to the business operator,” he said.
The City Council must now consider whether and what kind of gambling tax to impose, Celori said.
Additional public hearings on a gambling tax will be scheduled, he said, and the matter is likely to be settled before the Frontier Village annexation is finalized.
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