NEWS RELEASE

Contact: Dolores A. Chiechi, Executive Director
Recreational Gaming Association
360-352-0514

PO Box 1787  ♦  Olympia, WA 98507-1787  ♦  360-352-0514  ♦  FAX: 360-352-4579
Op-ed: Allow nontribal cardrooms to offer electronic scratch-ticket machines.
New revenues from nontribal gaming could go a long way toward closing the state's budget shortfall, writes Dolores A. Chiechi, executive director of the Recreational Gaming Association of Washington.

By Dolores A. Chiechi
Special to The Times

WASHINGTON'S tribal casinos poured jackpot-sized contributions into state political campaigns in 2012 — more than $1 million, according to public-disclosure records.

That comes as no surprise, given the tribal casinos' overwhelming dominance over the state's gaming market, which netted a record $2.7 billion in the 2012 fiscal year. The tribes' share of this market climbed to 79 percent, with more than $2.1 billion in net receipts. Gaming receipts have grown steadily every year since 2000, when the total stood at $863 million, with tribal casinos then garnering a 31.6 percent share worth $273 million.

Tribal receipts are not taxed by state or local governments, and Washington's compact with the tribes does not provide for revenue sharing. All other states with tribal gaming have revenue sharing or provide at least some competitive equity for nontribal operations.

The phenomenal growth of tribal gaming is driven largely by the tribal casinos' exclusive operation of some 23,000 electronic scratch-ticket machines. The tribes have made it clear that maintaining their de facto monopoly on these machines is a top legislative priority for them.

These slot-like machines are immensely popular with gaming patrons, drawing customers away from other gaming venues, such as house-banked cardrooms. House-banked cardrooms, also known as "minicasinos," were authorized by the Legislature in 1997 to allow patrons to play against the house, rather than just against each other.

Last year's proposal by the trade association for nontribal cardrooms, which would raise nearly $400 million a biennium for the state, gained some traction among legislators, but did not garner enough support to move forward.

With our state's projected revenue shortfall of about $2 billion, including the impact of the state Supreme Court mandate regarding education funding, new revenues from gaming could make a significant difference. For example, it could replace the $367 million in fuel-excise taxes, extended in former Gov. Chris Gregoire's budget proposal. Or, it could fund K-12 class-size reductions, full-day kindergarten and professional development for teachers, which together would amount to about $320 million. It could also fund a 4 percent cost-of-living adjustment for school employees, or roll back 7 to 10 percent in tuition hikes at our higher education institutions.

The money would be generated by allowing nontribal cardrooms to operate a limited number of the same slot-like machines that tribal casinos already have. The proposal would limit machines to the 56 (down from 60 in 2010) existing cardrooms, and would cap the total number of nontribal machines at 7,875 statewide. New entrants into the market would have to operate card games for 5 years before they would qualify for electronic gaming.

This is a responsible proposal that addresses the concerns about proliferation of gambling venues and stands in sharp contrast to the 2004 ballot measure, defeated by voters. That measure, would have made an estimated 18,000 nontribal machines available in a large variety of locations.

Another reason given by opponents is that the state should not rely on gambling revenues because of potential social costs. This contradicts the reality of the state relying on revenues from the lottery, alcohol, tobacco and soon marijuana — all of which entail potential social costs. (For that matter, fast food could also be included in that category.)

The fact is, there is a huge, sustainable, untapped source of revenue in our state's growing gaming market. Granting nontribal cardrooms a limited number of machines is a way to tap into this revenue source without challenging the tribes' success, or renegotiating the state-tribal compact for a revenue-sharing agreement. It will also help to sustain the cardroom industry, which provides more than 6,000 well-paying jobs and millions of dollars in local tax revenues.

Our state needs to take another look at the gaming industry, and the role gaming revenues should play in state finances, especially when it comes to adequately funding education. It is time for a new deal in Olympia that puts the needs of our state and its citizens ahead of the tribal casinos' political clout, fueled by huge campaign contributions.

Dolores A. Chiechi is the executive director of the Recreational Gaming Association of Washington, the trade group for house-banked cardrooms.

Click Here to see the article at Seattle Times.

NEWS RELEASE

Contact: Dolores A. Chiechi, Executive Director
Recreational Gaming Association
360-352-0514

PO Box 1787  ♦  Olympia, WA 98507-1787  ♦  360-352-0514  ♦  FAX: 360-352-4579
Washington's card rooms re-launch electronic machine gaming proposal with bi-partisan support.
Focus on sustainable revenues for education,
human services and public safety
FOR IMMEDIATE RELEASE - WEDNESDAY FEBRUARY 15, 2012

OLYMPIA—Washington's house-banked card room industry is back before the legislature with a fresh proposal to authorize limited electronic gaming in the 62 currently operating "mini-casinos" across the state. House Bill 2786 was submitted today for Thursday's introductions with bi-partisan sponsorship of five Democrats and seven Republicans. It provides for up to 200 machines per existing card room location, with a maximum number of 7,875 machines statewide. A senate companion measure is expected to be introduced later this week.

According to a comprehensive gaming market study commissioned by the Recreational Gaming Association of Washington (RGA) last year, the measure will generate about $380 million in state revenues per biennium at full operation. Local governments that have card rooms will receive about $19 million, $7.6 million will go to the Gambling and Lottery Commission's respectively, and $1.9 million is allocated for problem gambling awareness and treatment programs.

The rest is allocated to K-12 Education ($176 million), Health and Human Services ($105 million) and Public Safety ($70.3 million). The card room proposal has been discussed among legislators as way to ease the pressure for additional cuts in vital services or a temporary sales tax increase, according to Dolores Chiechi, the RGA's Executive Director. "We see this bill just as much as a long term, sustainable revenue source for these programs," Chiechi said. "And most of all it helps sustain and grow jobs in our industry, which will benefit local communities as well as the entire state."

Chiechi also said that the RGA proposal is the only realistic way state and local governments will be able to garner tax revenues from gaming receipts, which totaled over $2.5 billion last year. More than 78%, or an estimated $1.95 billion, was generated by tribal casinos, which are not required to pay local or state taxes. "Some people have suggested that the state renegotiate the tribal compacts for a revenue sharing agreement similar to other states, but that isn't likely in the foreseeable future," she said.

Chiechi said that legislators she has talked with like the proposal's limited footprint, both in the number of machines allowed and the locations where they could be installed. "This is strictly limited to existing, recognized gaming establishments which addresses past concerns about the proliferation of gambling," she said.

"Recreational gaming is a stable source of revenue growth" Chiechi said. "In fact, the latest figures on gaming receipts show a year over year increase of more than $200 million, almost all of which came from tribal operations. We believe allowing card rooms to operate a limited number of machines will help our industry and state and local government, while retaining high revenue levels for tribal governments and their economic needs."

NEWS RELEASE

Contact: Chris Kealy, President
Recreational Gaming Association
253-209-2841

PO Box 1787  ♦  Olympia, WA 98507-1787  ♦  360-352-0514  ♦  FAX: 360-352-4579
Tukwila advisory vote validates community support for house-banked card rooms.
FOR IMMEDIATE RELEASE…Wednesday, November 9, 2011

OLYMPIA—Tukwila's favorable advisory vote on mini-casinos once again demonstrates that house-banked card rooms are valued partners in the communities in which they operate, according to the Recreational Gaming Association (RGA), the state's trade group for the card room industry.

Chris Kealy, president of the association, said that the 61-39% margin in Tukwila, which is nearly identical to the outcome of a measure in Lakewood in 2008, shows that when voters understand the value of the jobs and revenues these businesses contribute, they solidly support house-banked card rooms in their communities.

Kealy said that these election outcomes track closely with the results of a statewide opinion poll conducted by Elway Research for the RGA earlier this year. The poll showed that 62% of the state's voters support extensions of electronic gaming machines to house-banked card rooms to enable them to compete more effectively with tribal casinos, which currently have a monopoly on these machines. Non-tribal casinos, according to the RGA, need to be able to offer machine gaming in order to survive in the face of overwhelming competition from tribal venues.

The RGA submitted legislation late last session to authorize a limited number of machines for currently operating house-banked card rooms. The bill had bi-partisan sponsorship and received statewide media attention. It would raise an estimated $380 million a biennium for state and local programs, including K-12 education, health and human services, and public safety.

"The Lakewood and Tukwila votes show that communities recognize that house-banked card rooms are important economic partners in their communities," Kealy said. "With legislative authorization of electronic gaming, our industry can strengthen this partnership and bring much needed revenue to the state."

KUOW NEWS

Wash. Looks At Gambling As Budget Solution

Lesley McClurg
12/27/2011

The latest idea to solve Washington State's budget shortfall is to expand gambling. Some politicians say it's a coffer the state should have tapped long ago. Tribal leaders say it's not fair to meddle in their turf. KUOW's Lesley McClurg reports.


TRANSCRIPT

State records show tribal casinos in Washington netted almost $2 billion this year. And it's a growing business. Recently Governor Chris Gregoire asked tribal leaders if they would be willing to share that money with the state. Tribal leader Ron Allen says it not fair to ask. He's the chairman of Washington's Gaming Association and CEO of Jamestown S'Kallam Tribe.

Allen: "We spend it on health care; we spend it on schools, education, and scholarship kind of programs. We spend it on elder programs, cultural programs, natural resource programs, public safety, and fire protection. Like my tribe for example spent a million–and–a–half on a fire station in our community."

But some politicians say those programs already get money from the federal government. Jerome Delvin is a Republican state senator from Richland. He says tribes should give up some of their gambling profits.

Delvin, "I'd be curious if they would be willing open their books up to see what they're supplementing what monies they are receiving from the state and what monies they receive from the federal government. Maybe it's time for that to change."

Delvin also says it's not fair that tribal casinos have been raking in the cash, while non–tribal gambling outlets have been losing money in the past few years. Legislators are proposing several ways the state could benefit from increased gambling off reservations. One proposal would let bars and restaurants have video poker machines.

Another anticipated bill would let non–tribal casinos carry the same slot machines as tribal casinos. Tribal leaders say both proposals would bring unfair competition and cut into crucial revenues. State legislators will take a look at these options in the next session beginning on January 9.

From KUOW News, I'm Lesley McClurg.

Editorials/Opinion

The Seattle Times

Originally published Tuesday, December 6, 2011 at 3:45 PM
Guest columnist
Open up electronic gambling beyond tribal casinos to generate more state revenue

Under a Washington State compact, only tribal gambling operations can provide electronic gambling. Guest columnist Chris Kealy suggests the Legislature expand that authority to nontribal card rooms, which would generate taxes to help the state's budget crisis.

By Chris Kealy
Special to The Times

The governor's list of potential new revenue generators includes gaming sources, but their impact is characterized as "indeterminate." There is nothing indeterminate about the fact that the recreational gaming market in our state continues to grow despite the economic climate.

Year over year, total net receipts for all gaming activities have grown from $2.29 billion in fiscal year 2010 to more than $2.5 billion in 2011. Nearly all of that growth, however, is attributable to tribal casino operations, which have grown to an estimated $1.95 billion from $1.75 billion last year, according to the Washington State Gambling Commission.

Nontribal house-banked card rooms, which pay gambling taxes that help sustain local budgets in addition to state business-and-occupation taxes, have declined steadily since the advent of electronic gaming. This decline is due to a number of competitive advantages the tribal operations enjoy, the most important of which is their monopoly on electronic gaming machines. Tribes do not pay any state or local taxes on their gaming receipts.

In view of the state's dire financial situation, it has been suggested the state consider renegotiating tribal compacts to extract a revenue-sharing agreement. Other states receive an average of 11 to 22 percent of these tribal gaming revenues in exchange for similar exclusivity.

It is unlikely that the tribes would agree to such an arrangement. Why should they? With a monopoly on up to 30,000 electronic gaming machines, they have a solid grip on the recreational gaming market, which is driven by up-to-date gaming technology such as the electronic scratch ticket games authorized under the state-tribal compact. At best, negotiations could drag on for months or years before the state sees even a minimal amount of revenue from tribal receipts.

A better way to tap gaming revenues is to authorize electronic gaming for the state's house-banked card rooms, or "mini-casinos." The Recreational Gaming Association, which speaks for the nontribal card rooms, has put a proposal before the Legislature for a limited number of machines — no more than 200 per location and a maximum of 7,875 statewide, allowed only in the 63 existing cardroom locations.

This limited-footprint proposal addresses the proliferation concerns with which other proposals have been met, while raising significant revenues for state and local governments. According to an extensive study by gaming-market experts, the gaming association's proposal would raise $380 million per biennium at full operation, with a potential for about $160 million the first year. After allocating funds to local governments, the gambling commission and problem gambling programs, the bulk of the revenues would be distributed to K-12 education (50 percent); health and human services (30 percent) and public safety (20 percent). This would mean about $176 million to "buy back" education cuts, and $105 million for health and human services.

House-banked card rooms have been operating in Washington since 1997, providing as many as 10,800 jobs, millions of dollars in taxes and hundreds of millions of dollars to the state's economy.

They are valued and welcomed partners in the communities in which they operate, as evidenced by overwhelming voter support for local card rooms in communities such as Tukwila and Lakewood. Tapping gaming revenues to support vital programs is a good idea. Doing it to sustain taxpaying, job and revenue-generating businesses is a great idea.

Chris Kealy is president of the Recreational Gaming Association of Washington and owner/operator of the Iron Horse Casino in Auburn.

Editorial

Casino-rich tribes might be shrewd to share more
The Spokesman-Review
December 3, 2011

More gambling is a bad idea, but that is where the state of Washington could be headed if legislators hungry for revenue allow card rooms to introduce the slot machine-like devices now exclusive to tribal casinos.

Republican legislators are circulating a bill that would expand gambling and potentially generate $380 million per biennium in new revenues, according to Rep. Gary Alexander, the ranking member of the House Ways and Means Committee.

About $33 million would go to local governments.

With the two-year state budget about $2 billion in arrears, potential new revenue from gaming has powerful appeal if the alternative is cutting health care services and education; $160 million to state-run colleges and universities alone.

It looks good, too, if the alternative revenue option is the one-half-cent sales tax increase Gov. Chris Gregoire would like the Legislature or, more likely, the voters to approve.

But her plan, at least, would sunset the tax in 2015, presumably when the economy will be stronger. Gaming machines, on the other hand, will surely multiply until they infest many establishments beyond the 60 – five in Spokane County – that would be allowed to have them initially.

If the new legislation adopts the limits set in HB2044, a bill introduced in the regular session, nontribal casinos would be allowed to install a maximum 7,875 machines. The 28 tribal casinos, by comparison, are allowed a maximum 27,300, although there are fewer than that in place.

The tribes netted about $1.7 billion in gaming receipts in 2009, by far the lion's share of the $2.2 billion total for all gaming operations in Washington. Of the tribal share, by law, $6.5 million went to local governments, $7.8 million to charities, and another $3 million to smoking cessation and problem gambling programs. The more prosperous tribal casinos – Northern Quest among them – give more, some to tribes without gaming operations.

Still, roughly $20 million out of $1.7 billion seems awfully modest. The state gets nothing directly, but it does collect sales taxes on activities associated with casino construction and operations.

The tribes have been approached about further revenue sharing. Many allege, but Alexander denies, that the new legislation is intended only to force the tribes to give up a more generous portion of their revenues.

Rep. John McCoy, a member of the Tulalip Tribe, says Native Americans remain among some of the most impoverished of Washington's people despite the progress brought by casino gambling. Nontribal gaming will choke off that progress, he warns, noting there are only so many recreational dollars – for gambling, movies, restaurants, etc. – to go around.

True. But right now there are only so many education and health care dollars to go around. The tribes are not the answer to the state's budget problems. They have their own. But they might want to look at this as an opportunity, and act accordingly.

Get more news and information at Spokesman.com

Local News

The Seattle Times

Originally published December 5, 2011 at 8:01 PM | Page modified December 5, 2011 at 8:48 PM

GOP sees expanded gambling as state budget solution

Republicans say they have an alternative to Democrat-proposed tax increases to help balance the Washington State budget. They want to let nontribal casinos offer the same slot machines as tribal casinos, with the state getting a piece of the revenue.

By Andrew Garber and Lynda V. Mapes
Seattle Times staff reporters

OLYMPIA — Republican lawmakers steadfastly opposed to any tax increases suggested by Democrats say they have other ideas for raising money to help plug a $2 billion state budget shortfall.

Their biggest proposal on the table: gambling.

Republican leaders want to let nontribal casinos offer the same slot machines as tribal casinos, with the state receiving a cut of the revenue. Advocates say it would bring in nearly $160 million next fiscal year and $380 million in the subsequent two years, although the Governor's Office questions those numbers.

"This to me seems like a pretty lucrative option," said Rep. Gary Alexander, R-Olympia, ranking Republican on the House Ways and Means Committee. "Besides generating significant amounts of money, it also hits the other major issue we're addressing, and that is putting people back to work."

Republicans say they want to help level the playing field for small, nontribal gambling halls that struggle to compete with glitzy tribal casinos.

Democrats, who have been saying "everything is on the table" when it comes to balancing the state budget, seem inclined to leave this idea in the freezer. Democrats control the House, Senate and Governor's Office.

Gov. Chris Gregoire doesn't see the proposal going anywhere. "If I had my way," she said, "we would not have any gambling in Washington State at all, on or off reservation."

The GOP grumbles that Democrats don't want to anger the tribes, who are big political contributors.

The state Democratic Party alone received about $1 million in direct contributions from the tribes between 2004 and 2010. The state Republican Party received $4,500.

The tribes say they will fight any legislation that tries to break their monopoly on electronic gambling machines.

And Brian Cladoosby, chairman of the Swinomish Tribe, noted Washington voters have turned down expansion of slot-machine gambling outside tribal casinos.

In 2004, voters rejected with more than 61 percent of the vote an initiative that would have allowed as many as 18,000 new electronic slot machines in nontribal casinos, bars, restaurants and bowling alleys.

"Washington voters have spoken loud and clear that they are comfortable with this kind of gaming being limited in tribal facilities, and I would hope they would look at those past votes," Cladoosby said.

No revenue from tribes

House and Senate Republicans say they plan to introduce bills in both chambers as soon as this week that would allow a limited number of electronic slot machines in 60 existing licensed card rooms, with a maximum of 7,875 machines statewide.

Alexander said he planned to meet with representatives from several tribes Tuesday in Olympia to discuss the legislation.

"If you are going to have gambling, it should be equal between non-Indian and Indian," said Sen. Jerome Delvin, R-Richland, who plans to sponsor legislation in the Senate.

Delvin and others note the state does not receive a cut of the money the tribes make from their 28 casinos. Nontribal casinos pay local gambling taxes as well as business-and-occupation taxes — but tribes do not.

The state Gambling Commission said it knows of 24 states that have tribal gaming. Ten have some type of revenue sharing with the tribes.

Under their gambling compacts negotiated with the state, tribes are required to spend some of their revenues on smoking cessation, problem gambling, impact fees, and charitable contributions in their communities. But there is no revenue sharing.

State records show tribal casinos had an estimated $1.95 billion in net receipts in fiscal year 2011, up from $1.57 billion in 2009.

Gregoire said she convened an emergency meeting of tribal leaders last month, at the request of Republicans, "to see if tribal leadership was interested in revenue sharing or something short of revenue sharing."

The governor said 24 tribes were represented at the meeting in Kitsap County.

"I laid out the crisis that we're in, and the cuts that I was going to make are going to impact not just all of the nontribal folks in the state, but the tribal folks," she said.

The tribes were not willing to budge on revenue sharing, she said.

"Then I simply said, 'Bottom line is there anything you can do to help us?'"

Gregoire said she's still waiting for an answer.

No leverage over tribes

W. Ron Allen, chairman of the Washington Indian Gaming Association, said tribal leaders reminded the governor that under the gambling compacts, revenue sharing can't be entered into without renegotiating the agreements and receiving Department of Interior approval.

Tribes also would not agree to revenue sharing without a guarantee of exclusivity — cutting other nontribal gambling out of the action, without any grandfathered operations, Allen said.

Further, he said tribal leaders reminded the governor that tribes have troubles of their own. Reducing gambling revenues they need to pay for their programs would shift budget problems to the tribes, Allen said.

Tribal leaders did pledge they would try to help fund services in their communities the state can't afford, something some tribes already are doing, both Cladoosby and Allen said.

Last February the Tulalip Tribes donated $1.26 million to the Marysville School District to help it weather budget cuts, benefiting not only tribal students, but all 11,000 in the district.

Gregoire said the reality is the state has no leverage over the tribes when it comes to revenue sharing.

"If we got revenue sharing," she said, "they'd have to get something in the deal. The court cases have been real clear about that. I don't know what I have to give them, other than unfettered gaming."

That's something the governor said she's unwilling to do.

60 percent threshold

There is nothing to stop the state from allowing slot machines in nontribal casinos, except an apparent lack of votes.

Democrats say 60 percent votes in the House and Senate are necessary to approve an expansion of gambling — a threshold unlikely to be achieved.

Republicans, however, contend their proposal is not an expansion — machines would go only to existing nontribal casinos — and would require a simple majority vote.

Supporters say the popular slot machines would help keep those businesses afloat.

Chris Kealy, owner of the Iron Horse Casino in Auburn, said he once had 300 employees but is down to 92 full-time positions. It's hard to compete with the Muckleshoot Casino — with more than 3,000 slot machines — only three miles down the road, he said.

Kealy said he would install 100 slot machines if the Legislature allowed it.

"For me personally," he said, "it will save me from bankruptcy because I'm headed there otherwise. I'm definitely not in a good spot."

Gregoire, however, said she's not sure helping card rooms is in the state's best interest.

"This state has taken a very reserved approach to gaming because we're on cleanup committee," she said. "We deal with the addiction that ensues; the people who lose all their money and come to us because they don't have a dime to care for their families.

"I don't know the state feels an obligatory role, like it does for small business, to do what it can to help those particular forms of business."

Andrew Garber: 360-236-8266
or agarber@seattletimes.com

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