Financial Impacts of Gambling on Lakewood Wa.

Financial Impact

Some state-wide gambling facts:

• # minicasinos already open: 86

• # Indian gambling facilities: 34, generating $892 millionⁱ
• # casinos owned by Evergreen Gaming Corp. in Vancouver, B.C., that bought out CEO and Founder Tim Iszley’s SilverDollar casino chain: 11 (“It claims to be the largest non-native gambling operator in the state”)ⁱⁱ
• # cities that allow minicasinos: more than 50
• # cities and counties that have banned minicasinos: more than 50
• Leading the state in the number of card room tables among cities:
  • Lakewood, with 90 – “the nontribal gambling capital of Washington State. Only Shoreline, with seven casinos but only 87 licensed tables, comes close. After those is La Center, with four casinos and 60 tables, and Spokane, with five casinos and 59 tables.
  • “Of the four leading commercial gambling cities in the state, three have something in common – they are suburbs of bigger cities that ban minicasinos. That might be why Lakewood, Shoreline and La Center accept more gambling than would be considered adequate for their own population”ⁱⁱⁱ
• Tax range: 0.5 percent to a 20 percent flat tax, which is the maximum allowed by the state
• Locally, Ruston charges half a percent, Fife charges 4 percent and Federal Way the full 20 percent.
• Cities that use the sliding scale method: Only Long Beach (Lakewood, the only other, dropped this method in favor of the 11 percent flat rate on March 21, 2007)
• What is the primary source of problems associated with gambling?
  • Bingo? No. In millions of dollars, 49 to 25 drop in the last 10 years.
  • Horse racing? No. Only a small increase, 23 to 35 in the last decade.
  • Lottery? No. Barely a blip difference since 1996 – 166 to 177.
  • Indian Casinos are the biggest culprit, but
  • Local card rooms jumped from 15 to 302 million in the last 10 years.^iv

Statistics regarding Lakewood’s gambling revenue

Note: On July 25, 2007, Community Development Director and Assistant City Manager Dave Bugher presented an extensive report to the Planning Advisory Board covering the revenue generated from Lakewood gambling:

There are currently (as of October, 2007) six ‘mini-casinos’*, also called house-banked cardrooms, in Lakewood. In 2006 the income from gambling taxes was $2.1 million (“The city says gambling tax revenues are on track to increase this year”^v), mostly from those minicasinos (compare to Tacoma’s receipt of $1.5 million in 2005 from its three minicasinos). Great American Casino (GAC – intersection of Highway 512 and South Tacoma Way) has 175 employees (estimated to be 287 at its July, 2003 opening; with “only 17 percent of the casino’s 30,000 square feet devoted to gambling, the rest occupied by two restaurants, a lounge, pool tables and a 422-seat multipurpose showroom wired both for live music and Internet presentations)^vi, of nearly 800 in Lakewood, with an annual payroll of $2.4 million (estimate placed at $3.2 million, 2003). Tacoma’s 2006 closure of casinos is attributable to GAC’s income growth.

*AMF Bowlero (Amusement)

Grand Central Casino/Great American

Happy Days

Jimmy G’s Casino/Chips

Macau Casino (new 5/2007)

Palace

Comparing Lakewood’s position with Tacoma’s (and 63 other cities and 5 counties state-wide)

Tacoma:

Tacoma’s Mayor (and gambling opponent) Bill Baarsma said that the loss of tax revenue from banned casinos (Tacoma banned them and voters turned back Initiative I in September, 2006 that would have allowed them to reopen) “won’t have much affect on the city budget because officials considered it short-term revenue and weren’t counting on it continuing.”^vii

Lakewood:

• Lakewood City Manager Andrew Neiditz “proposed eliminating the sliding scale gambling tax and replacing it with a flat tax of 11 percent to make it easier to administer and to predict revenues.”^viii

• “The Lakewood Chamber of Commerce supports it (dropping tax rate on mini-casinos to 11 percent from previous sliding-scale of 11 to 20 percent) – its directors said in a letter to the council that the sliding tax was unfair and singled out one industry.”^ix
• Lakewood City Councilman Pad Finnigan favors dropping the tax rate on mini-casinos even lower from 11 percent (from previous sliding-scale of 11 to 20 percent) in 2008.^x
• Lakewood City Council member Helen McGovern said, “The budget crunch forces this avenue (gambling revenue) to make up the shortfall. . . . A ban on casinos would also end raffle sales, bingo games, etc. and would take likely a minimum of five years to take place. Litigation would likely follow. . . .”^xi
• McGovern stated that litigation by banned casinos would “bankrupt the city.”^xii
• Upon the opening of the Grand Central Casino in Lakewood, McGovern remarked, “It’s a legally licensed business in the state of Washington. I don’t mind where the location is. I’m not a person who believes you can legislate morality. We do get a nice chunk of change from them, and they are good neighbors. . .very supportive of the community.”^xiii
• General Manager of Great American Casino/Grand Central Casino Greg Bakamis said that “ in 2005, when the tax rate moved between 14.5 percent and 11 percent, his business paid $851,000 in city taxes. In 2006, at the 11 percent rate, the casino paid $676,000.”^xiv

• “(Bakamis) told the City Council (March 12, 2007) that a sliding scale tax makes his business more hesitant to donate to charities and other community causes because it doesn’t know for sure how much discretionary income it will have.”^xv

• A ban on gambling, allegedly would result in “eliminating about 25 police officers, or requiring each city department to cut its budget by 10 percent.”^xvi

Is the money gained worth the money lost?

In an op-ed piece “State weighs the odds – Poor Bet: Lure of a quick fix to budget crisis shouldn’t lead state to ignore wishes of those who want no more gambling”, former Washington State Governor Booth Gardner, together with King County Prosecutor Norm Maleng wrote:

“Is this really how the state wants to raise revenue – by luring citizens to gamble away their hard-earned wages?”^xvii

“The amount of money lost to gambling is considerable. According to a recent report documenting gaming industry revenue, Washington residents lost over $1.5 billion to gambling in 2002. . . . Casino and card room gambling accounted for over two-thirds of the money lost. Money lost to in-state Tribal Casinos accounted for one-third of the total gambling losses.”^xviii

Is there money even really gained?

“It’s a shame that it (the City) turns a blind eye to problem gambling, whose cost to society is almost half that of drug abuse, according to economist Earl L. Grinois of the University of Illinois at Urbana-Champaign.

“Those costs include increased crime, time off work, bankruptcies and financial hardship of gamblers’ families. Grinois, a senior economist for the Council of Economic Advisers to President Reagan in 1987-88, says casino gambling creates $289 in social costs for every $46 of economic benefit.”^xix

Does Lakewood have an “addiction to gambling”?^xx

“. . .once gambling enters a community, local government tends to become a dependent partner in the business of gambling, according to the National Gambling Impact Study Commission.”^xxi

“. . .the most important and aggressive promoter of gambling in America is government. Forty-four states have lotteries, 29 have casinos, and most of these states are to varying degrees dependent on – you might say addicted to – revenues from wagering. . . . Gambling has passed pornography as the Web’s most lucrative business.”^xxii

“If the government wants to stimulate the economy, it should outlaw gambling. Gambling is a catalyst for economic downturn. A ban on gambling would boost the economy by freeing up dollars for consumer spending that now go to the gaming industry.”^xxiii