Will the state turn to a gambling fix?
The bar and restaurant industry is eager to expand gambling to its venues, promising billions of revenue to the hard-pressed state budget. The tribes will fight the expansion, along with many other doubters of this kind of budgetary fix.
cahwnet.gov
When state budgets go bad, and they often do because the forces that shape them and the people who manage them are unreliable, thoughts of relief often turn to vices, because they are so reliable. Alcohol, sugar, tobacco, and gasoline all help or have helped pay the state’s bills at one time or another. But gambling has not, at least not directly. That may be about to change.
The limited forms of gambling allowed in the state outside of tribal casinos — games like bingo, pull tabs, card rooms, raffles, horse racing, and the lottery — are taxed only by counties and municipalities. That keeps the state officially out of organized gambling, although it does collect a nominal business and occupation tax from gambling licensees.
Over the past decade or so, at least two initiatives to expand non-tribal gambling have been voted down by the state legislature by an overwhelming majority. Now, with the state in the grip of one of its worst budget crises — Gov. Gregoire told reporters she hated her proposed budget so much, “in some places, I don't even think it's moral” — the scent of gambling is once again in the air.
“It's a perennial issue whenever there's a budget crunch,” said Anthony Anton, president and CEO of the Washington Restaurant Association, which represents the state's hospitality industry. “More and more people can go online to gamble but you can't do it at a restaurant where it could be taxed. More and more people are asking, ‘so exactly why is it illegal?’”
In the meantime large casinos run by federally recognized tribes, like the recently revamped Tulalip Resort Casino north of Everett, operated by the 4,000-member Tulalip tribe, have thrived even through the recent recession. Their big advantage is offering a full, Las-Vegas style experience. Twenty-two tribes operate 28 casinos in Washington state, two in King County (Muckleshoot and Snoqualmie). They generated an estimated $1.75 billion in net revenue in fiscal year 2010. By comparison, card rooms and the lottery generated about $200 million each in the same period, according to the Washington State Gambling Commission.
“I haven't seen any proposal by anyone yet,” Anton said. “I haven't seen a coalition come together; I haven't seen any legislator try to get anything organized, but the issue is out there. If we did what Oregon did, we would generate billions [in tax revenue]. Doesn't that say, ‘hey we ought to give it a try.’ No proposal has been brought to us, but everyone out there is wondering what you’re going to do with a six-billion-dollar hole.”
The governor used $3 billion in cuts to her 2011-2013 budget to help make up an estimated $4.6 billion deficit. Oregon allows and taxes various forms of video gambling, like poker and slots, in bars. That generates about $1 billion in state tax revenue every two years said Anton’s counterpart in Oregon, Steve McCoid, president of the Oregon Restaurant and Lodging Association.
“We were one of first states to jump in on it [about 20 years ago],” McCoid said. “There are a significant number of people who don't like it that the state's in gambling, and think it's not the best way to fund public services. Practically speaking, from a dollars and cents perspective, you have to wonder why you don't do it.
“To some degree, it's a discussion on the social impact of the state getting involved. Faith-based groups, and the drug and addiction folks are not going to like it. But if you look at the revenue here to fund things like education, that's a pretty significant discussion, Maybe this is the time for this argument to be had, or at least that conversation.”
Like Washington, Oregon also has casinos run by federally recognized tribes, although Oregon has a third as many. In 1988, states were given the authority (or the obligation) by the federal government to allow gambling on tribal land. The federal Indian Gaming Regulatory Act “requires the state to negotiate in good faith with Indian tribes” to create casino-style gambling. In Washington, slot machines are illegal everywhere, but the state allowed a modified version in tribal casinos, whose mechanisms are similar to those of the state lottery.
The most popular form of non-tribal gaming is the house-banked card room. Before 1997, card rooms could offer only games where gamblers played against themselves. The room itself could have no stake in the games. In 1997, the state authorized card rooms to offer house-banked games like blackjack, capping the number of tables at 15 and the amount of wagers at $300. The number of card rooms rose to 96 in 2006 but has since fallen to 64, said Susan Arland, spokeswoman for the Gambling Commission. The lure of nearby tribal casinos and the ban on smoking probably contributed to the decline.
Adding more forms of gambling to bars and restaurants is one of several issues in constant orbit at the Washington Restaurant Association, Anton said, along with amendments to the minimum wage and adjustments in the regulatory and tax culture of the state.
"We have a list of several issues that would help small business in Washington,” Anton said. “This is on that list. We would love to have a conversation about how to do some of these things. Gambling has been a boon to Oregon; I don't see anyone trying to repeal the Oregon model.”
Oregon's McCoid said about 2,500 establishments — they are all bars so that minors do not have access to gambling — offer some form of gambling. A bar can have up to six machines. Video slots were added about four years ago, boosting play by 25 percent in places that had them. The state collects 75 percent of the net proceeds from gambling; the business owners keep 25 percent (they used to keep 35 percent). The state competes only with tribes for gambling revenue. Its advantage is that it can locate gambling anywhere, while tribes are limited to their land.
The morality of gambling aside — clearly it can both enrich and ruin lives — the interests of the tribes in Washington are also a huge consideration in the gambling debate.
“The tribes are a major political entity in the state,” Anton said. “I'm not begrudging that fact. I understand they want to protect that. The tribes' reluctance to give up their monopoly is a barrier [to expand state-run gambling]. I'm not sure the right proposal has been put together yet in Washington, a way to balance everyone's interests. It takes the right year, the right coalition and the right leaders.”
The constant push to expand gambling outside of reservations comes from the beleaguered card rooms, said state Rep. John McCoy of the 38th District, which encompasses Everett, Marysville, and the Tulalip reservation. He called it a constant “drumbeat.” “The private card rooms are always trying some angle,” he said. “They try every year.” There's another complication: “In order for the state to try to enter into a revenue-sharing agreement with the tribe,” McCoy said, “they [the tribes] have to have exclusive gaming, which the state does not have.”
In states where the government shares the revenue generated by tribal casinos, all gambling in the state is restricted to those tribal casinos. In Connecticut, for example, people have to go to either the tribal-run Foxwoods or Mohegan Sun casinos to gamble (apart from the lottery and off-track betting). In turn the two casinos pump billions into the state economy. Mohegan Sun is the second largest casino in the country.
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Comments:
Posted Mon, Jan 3, 6:53 a.m. Inappropriate
The State cannot bargin in good faith with the Tribes on the issue of gaming because the negotiators for the State and its taxpayers are essentially on the payroll of the Tribes. Hundreds of Thousands of dollars flow to the majority party at the Federal, State and County level.
If we had independant negotiators, perhaps by now we would have sold licenses to non-tribal, taxable casino interests. It would probably mean that in order to level the playing field, those licenses would need to match the number of tribal casinos (28) and they would have to be properly zoned and mitigated for in the communities that they are built in. They would need exemptions from the State Smoking Laws and restrictions on the number of games and electronic gaming.
Until the electeds are off the tribal payroll, nothing will happen on this front. The Governor claiming "morality" is a joke.
Posted Mon, Jan 3, 11:33 a.m. Inappropriate
Never spend anything at a tribal casino.
Posted Mon, Jan 3, 12:37 p.m. Inappropriate
The people of Washington have made it abundantly clear they want to live in Pottersville, not Bedford Falls. Fine. Let them.
Posted Mon, Jan 3, 2:35 p.m. Inappropriate
Will the state turn to a gambling fix? Gosh, I sure hope not. Let’s let the Native Indian tribes keep their monopoly. The gaming industry is essential to their livelihood, not “ours”. If we crack the door open, even a tiny bit further to non-tribal gaming establishments, who is to say how long before the door is WIDE open. I certainly don’t want to hear the ching ching of slot machines while shopping at QFC or picking up my dry cleaning. There are plenty of other channels for state tax revenue opportunities; we just need a brighter idea than gambling.
Posted Mon, Jan 3, 3:16 p.m. Inappropriate
Legalize it. Tax it. Don't give the indians a monopoly to sell it
Posted Mon, Jan 3, 4:13 p.m. Inappropriate
The state could reverse course on onlne gambling. Due to the political influence of the tribes, Washington is the only state that makes online gambling a felony. It is ridiculous to me that an activity that is legal and even encouraged by the state (lottery) is a felony when practiced in the comfort of one's own home. Maybe if the state regulated it and got its cut then the moral objections could be overlooked, just as with other forms of gambling.
Posted Mon, Jan 3, 7:15 p.m. Inappropriate
Legalize gambling and tax it. Then, when Olympia wants to continue raising their spending as they have been doing, raise taxes on it again.
Then, one day, realize there are problems associated with it and decide you must do something about it, to protect citizens from themselves. So, as we see time and time again, raise taxes once more, except now to discourage gambling.
But also, as usual, claim the increased taxes are a must for some "children's program" to make people more willing to accept them.
Then, once you realize that discouraging people from the practice actually results in less revenue off of it, what else but raise taxes again?
It's a vicious circle that Olympia will not get out of and we Washington taxpayers take the brunt of it.
If they managed state funds properly, we wouldn't even have to consider this prospect!
Posted Mon, Jan 3, 7:30 p.m. Inappropriate
The state is slowly but surely taking over all the things that the mob once did. Numbers racket (lotto), booze. If they can ever truly crack down on payday loans, they will set the stage for a state loan-sharking operation. Prostitution and drug sales are possibilities too. I doubt the former will get enough traction here in prudeville, but I would not be surprised to see state-run Pot stores one day.
Posted Mon, Jan 3, 10:49 p.m. Inappropriate
the Indian casinos are not regulated as are casinos in Vegas....they do not have to guarentee a certain payback...its a crock..
some tried to allow taverans and restaurants to have slot like machines but the democrat controlled state rulers nixed it.....notice too how fast Washington state made online betting illegal...
bending over backwards to protect their Indian casino donations....
I say if its good enough for the Indians, than its good enough for the regular citizens.....most of us would rather lose our money to the state, where the money can go to pay for roads,hospitals,police,etc than to a private unregulated tiny minority like the Indian casinos...
wake up people......for once....wake up....
Posted Tue, Jan 4, 8:37 a.m. Inappropriate
Sorry lee but you are incorrect about the regulation of Indian casinos in Washington.
The rules of operation of machines (including minimum payback) are strictly defined by the Tribal/State compact. The machines are tested, verified, and regularly inspected by both State and Tribal regulatory authorities. Whatever the arguments about the merits/evils of gambling, one thing you can be sure of is it is very highly regulated in this State. More so than just about anywhere else in the country.
Posted Tue, Jan 4, 11:05 a.m. Inappropriate
The state has very little to do with enforcement and Nevada has a much tighter control on casinos there. Just talk to your local gaming agent. While it is in the best interests of the tribes to do things the legal way that should not be inferred to mean it is the right way or what's fair. It has been stated many times but bears repeating. Just because it's legal doesn't mean it's fair.
Most like to call these machines slots but they are far from it since true slot machines are illegal in this state. These are basically electronic pull tab dispensers. Rather than give you a paper ticket these machines simply show the player a colorful screen.
The basic problems in this state are rather easy to see. Tribal casino pay millions each election cycle to elect or un-elect legislators and elected officials who play ball by their rules. You cross the tribes as mini casinos did with I-892 and tribes will spend millions to confuse the voters and distort the issue(s). Is this legal? Sure, but that doesn't make it right.
You have the Washington State Restaurant Association which suggests the best place to put machines is at a restaurant. Really? How many restaurants are in this state? 2500 or more. Certainly this was tried and failed with I-892. Voters have clearly voted and stated they don't want machines everywhere. Why even try this approach again?
The tribes certainly do whatever they have to in order to protect their money making monopoly. Problem is monopolies are completely illogical in almost every case that I know of and almost always cost the consumer more. What would Las Vegas or Reno be if all the casinos were owned by one company? Does anyone really believe consumers would get better odds at the tables or machines by creating a monopoly?
Open up competition on a limited basis and consumers will benefit in the form of better payouts and prizes. It's called competition. In Las Vegas you see signs over machines saying this machine pays out 99%. Ever seen this in a tribal casino? I never have and it's easy to see why. Why should they? If you want to play you have to play at their casino and by their rules or go home. For that matter tribes don't even have to post what percentage they are paying the players. It's legal but that doesn't make it right.
What the tribes offer any other private business could easily offer including living wage jobs. It really should not be about whether a tribal member has a job. It should be about the best qualified people having a job. What company in the real world can practice hiring practices that are clearly discriminatory and get away with it? This is another case where it is legal for the tribes to do it but is it right? I believe it's clear it's never okay to discriminate no matter how noble your cause is.
How many people would like to be able to pick their own cable company, garbage company and for those still with a land line pick your own phone company? Aren't we told competition is good for the consumer?
How many times have you gotten upset about one of the above service providers and you know you are stuck with them. Is this really the best idea for gaming in this state? Consolidate all the goodies with one entity creating a complete and utter monopoly and at the same time the holders of the monopoly pay virtually nothing for this right and this is a good thing for Washington?
Let's face it, the sensible solution is to allow a 2 year test of 20-30 machines in designated mini casinos or businesses around the state that already have the infrastructure in place (Security and Surveillance Departments) so that reliable data can be gathered to see the effects on neighborhoods. Have the machines run through the lottery. If the tests show that gambling is as bad as naysayers state then stop the tests after two years. Running a limited test allows the Washington State Gambling Commission and the Washington State Lottery to have a better eye on what is going on. The state could take 75% of the money and the business owner gets 25%. What makes better sense, doing a limited test or a full blown test with 2500+ outlets and many of these businesses don't have the training or expertise to monitor or police the machines?
What is also clear to me is that in these hard economic times tough decisions need to be made. One group should not be allowed to enjoy a monopoly. No one person or group deserves a free ride and whether you agree with gambling or not the tribes are getting a free ride and have for years.
Tribes and their members benefit at the expense of taxpayers. If the tribes want to sign compacts giving the state 25% of the gross revenue then maybe they can be partners. Otherwise the choice seems simple. Open up these machines to others and tax them. People want and will gamble. The only question is who should benefit? A small minority or the majority.
Have tribes been treated badly in the past? Yes, but at some point someone has to say enough is enough. I believe that time has come. The tribes have had ample opportunity to diverse themselves beyond gambling. If they haven't is that the taxpayers fault anymore than a company that operated poorly and closed?
The state should be responsible to monitor and enforce laws to protect players and collect taxes not be a co-conspirator in maintaining a monopoly which is the case now. Cities and counties should be able to decide whether they want to allow gambling as they can now. Those that don't want it should be allowed to ban it within the county or city and that ban should apply to tribes as well. If the voters don't want gambling then all gambling stops.
Posted Tue, Jan 4, 10:15 p.m. Inappropriate
When I went to file for bankruptcy over two years ago it was because I had gambled my life savings, and my husband's live savings away and we were now deeply in debt. I did not own a credit card and I had never been in debt before, a simple act, playing a slot machine devastated my life in five short years and the life of my family. At the bankruptcy hearing there were two other couples at the mandatory education class about handling finances. Not one person was there to represent how gambling could bring you to your knees even though all three couples were there for the same reason. I'd be very interested to know what the financial damages are to having gambling in a community. There is increase of theft, larceny, predatory lenders, and predatory bill collectors. Gambling does not breed a healthy environment, and by the state's own facts, you are 10X more likely to become a problem gambler if there is a casino within 20 miles of where you live. We all ready have that, we don't need more.
Posted Wed, Jan 5, 5:26 a.m. Inappropriate
So you would be against the State being in the lottery business as well?
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