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It’s time to think about taxing the casinos
Legislators have just staggered away from the state Capitol having made cuts (actually, reductions from increases) nobody expected six short months ago. And there will be more. One-time federal grants and an inexcusable raid on the building budget to cover operating expenses makes another round of cutting all but inevitable. Some legislators are also talking up taxes, and a handful (mostly Democrats) tried pushing through an increase in the sales tax or the introduction of the income tax on wealthy earners. They didn’t make it – this time. But they jacked up college tuition and raised $100 million in other taxes.
Is there an alternative?
Let’s talk about gambling in Washington for a moment.
“Gaming,” as its supporters like to call it, is happening almost everywhere: the Snoqualmie Casino off Interstate 90 in Snoqualmie, the Muckleshoot Casino in Auburn, and dozens more in western and eastern Washington. It’s an incredibly lucrative industry. Last year the tribes pulled in $1.5 billion more than they paid out in winnings. Revenues have doubled in five years. They are earning seven times more than the state Lottery. It’s a sweet deal for the tribes, because no off-reservation establishment can have slot machines or virtual slot machines like you’ll find at Emerald Queen or Tulalip.
And best of all (from the tribes’ perspective) it’s tax exempt. The Gregoire administration authorized the expansion of thousands of additional slot machines several years ago, and agreed not to pursue a portion of the proceeds from the tribal casinos. The governor’s supporters saw this as a victory, because the tribes had initially asked for even more machines. But legislators in both parties were dismayed because it left Washington as one of the only states in the country that neither taxes tribal gaming nor allows private competition with tribal casinos. Is this the tribes’ fault? Of course not. Having lavished money on lobbying and campaigns they simply negotiated a deal that benefits their members.
But is it good for the state of Washington? In Oregon, the private sector is allowed to compete with tribal casinos. The number of machines is strictly limited and the proceeds are taxed, which gives the tribes a competitive advantage. But hundreds of millions of dollars flow into Oregon’s coffers from taxable gambling activity, which doesn’t happen here. If Oregon’s numbers were applied proportionately to Washington, well over a billion dollars a biennium would be generated for a government that is clearly short of money.
I enjoy playing poker with friends, but I’ve never gambled at a tribal casino or played poker at a private casino, so I have no stake in this issue. But if there are already dozens of tribal casinos throughout the state, why not permit county governments to allow private competition in their jurisdictions? Let’s say we taxed the proceeds at 20 percent, while the tribes continue running their businesses tax free. Who would that hurt? Gray’s Harbor County has 12 percent unemployment. Why not allow a ritzy, Vegas-style destination resort-casino at Ocean Shores? I opposed casinos and gambling a decade ago but the tribes have made most of my arguments obsolete. The question on the table now is whether the state allows private competition and thereby creates a new revenue source to help our schools and keep down taxes and tuition, or whether it stands by while the tribes get it all.
How would you vote on this if YOU were in Olympia?