OLYMPIA - State Reps. David Taylor and Charles Ross have co-sponsored legislation they say would help level the playing field in Washington's gaming industry between tribal casinos and privately owned card rooms.
House Bill 2044, which has bi-partisan support, would allow about 65 current non-tribal, house-banked card rooms to upgrade from pull tabs to electronic scratch ticket machines. Currently, only tribal casinos can operate the machines, also known as video lottery terminals.
"The monopoly that tribes have on this market isn't fair or equitable. Allowing existing non-tribal card rooms to upgrade their gaming facilities will allow them to adequately compete with tribal gaming activities," said Ross, R-Naches. "This would only apply to card rooms that have proven they can abide by regulations and provide a fair game."
Only house-banked card rooms with five years of experience would be able to upgrade their gaming under the measure. No more than 200 machines would be allowed per location, or no more than 7,875 machines statewide.
"Tribal casinos were first built in rural areas, but now they are expanding to urban areas - providing unfair competition to private businesses," said Taylor, R-Moxee. "We have to ask ourselves - do we want more mega-casinos or do we want to allow established and reputable house-banked card rooms to compete for the same market share?"
The lawmakers said tribes have had an unfair edge over non-tribal card rooms for years.
Amid a more than $5 billion shortfall for the 2011-13 state budget, the lawmakers said this measure could provide about $290 million in revenue to the state, without any increase in taxes.
Under the bill, revenue from new non-tribal gaming activities would be required to be distributed as follows:
- 50 percent to fund K-12 education;
- 30 percent to fund services for the most vulnerable; and
- 20 percent to fund public safety.
Any transfers from the dedicated accounts would require a 60 percent vote of the legislature. Local governments would also receive a portion of the money paid to fund core services.
The bill has not yet been assigned to a committee for consideration.
The proposal comes amidst hundreds of millions of dollars lost in potential state budget revenue because of tribal casino loopholes, say Taylor and Ross. They say the following loopholes need to be closed, both for budgeting and fairness considerations.
They point to three different tribal tax loopholes that lawmakers are taking a closer look at:
- Fuel taxes. In 2007, the state changed the way it taxed gas sold by tribal stations. Instead of keeping all of the gas tax to help build and maintain highways, the new law allowed tribes to keep 75 percent of the money. In other words, the state fuel tax at a non-tribal gas station is 37.5 cents per gallon, but just 9.375 cents at a tribal station. That loophole costs the state $47 million every two years.
- Cigarette taxes. Currently, the state gets a share of the taxes charged on cigarettes from just one tribe, the Puyallups. If the state was to require all of the tribes in Washington state to give us just 30 percent of the cigarette taxes they charge, Washington would receive as much as $60 million every two years in new revenue.
- Property taxes. Non-trust lands owned by tribal governments are exempt from property taxes, even though they may be located right next to privately-owned property that is taxed. Right now, more than $146 million worth of property is untaxed, even though it may be located right next to privately-owned property that is taxed. Closing that loophole will bring in $3 million every two years.
Combined, closing these tax preferences could bring in $110 million every two years for the state's priorities like education, public safety and services for the most vulnerable.
- Gaming equity. Tribes across the states have built casinos - perhaps you have seen one in your area. At first, the casinos started off small, in rural areas away from major economic activity.
Recently, the casinos have been expanding, with hotels, restaurants, spas, recreational activities and theaters. They have also started to build these casinos in urban centers, right off major highways.
This provides an unfair disadvantage to nearby private businesses, say lawmakers supporting this new proposed legislation.