Mini-casino owners’ poker faces melted in relief when a bill being considered in Olympia that would tax card rooms an additional 5 percent on top of the city’s gambling tax failed in the House of Representatives.
Senate Bill 5287, proposed by Sen. Margarita Prentice, D-Renton, died in the House after passing the Senate. The bill would have allowed the state to tax casinos 5 percent on the gross revenue of social card games in addition to the gambling tax already levied by local jurisdictions. Before the bill died, it was altered to focus on stopping the expansion of casinos by enacting a freeze on licenses.
“They finally made the right decision in Olympia,” said Goldie’s Casino general manager Larry Wheaton. “Now all we have to do is worry about the Aurora Corridor Project and see how it will affect business; it is always something.”
Wheaton anticipated Goldie’s Casino could not afford to pay an additional tax on top of what is already paid to the city. He expected he would be forced to cut all employee benefits if the bill passed, as well as lay off staff and pursue other cost-saving measures. With 160 employees, Wheaton was concerned about the future of the business. Casino employees contacted state representatives, which is why Wheaton said the bill did not pass.
“It was really scary, Sen. Prentice had a lot of backing,” Wheaton said. “For some reason, she was sour on casinos.”
Prentice said the bill no longer included the state 5 percent tax, lowered from 10 percent, but pushed a freeze on licenses.
“It was alive until the last minute, but the bill did not pass,” Prentice said. “But all bills are alive next year and I will still be on the gambling commission.”
Sen. Darlene Fairley, D-Lake Forest Park, supported the bill because she said it is time for the state to receive revenue from gambling. She believes there are too many card rooms and if casinos eventually end up bankrupt, it is likely because they do not have a good business model.
Because local jurisdictions have been able to tax the casinos up to 20 percent, Fairley said casino operators should have included the possibility to be taxed at the maximum rate in their business model.
Fairley said the proposed license freeze would’ve made it so only someone with a current license could operate a cardroom.
“We gave up on the tax,” Fairley said. “The tax wouldn’t get through the House.”
Fairley said that in the Senate, there was not much testimony from casino owners and employees. She, too, expects the topic to surface again next year.
“I believe the House sees casinos as just another business,” Fairley said. “And doesn’t like to put any restrictions on them.”
In February, casino owners persuaded the Shoreline City Council to reduce the city’s gambling tax from 11 percent to 10 percent for six months. Owners claimed their businesses were no longer profitable. Five casinos operate in Shoreline, including: Drift on Inn, Goldie’s, Parker’s, Golden Nugget and Club Hollywood Casino. The Hideaway closed, but is expected to eventually open as a Silver Dollar Casino, according to city staff.
The tax rollback ordinance includes a clause to automatically put the city’s tax back at 11 percent if the state tax had passed.
The city council voted unanimously to oppose the state tax. The 2005 city budget includes about $3 million of revenue from gambling taxes, or 10 percent of general fund revenue. Each 1 percent of card room gambling tax is worth approximately $240,000 to the city.
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