SENATE BILL REPORT

                   SB 5950

              As Reported By Senate Committee On:

                Commerce & Labor, March 3, 1997

Title:  An act relating to taxation of gambling activities.

Brief Description:  Lowering the rate of taxation for social card games.

Sponsors:  Senators Schow and Heavey.

Brief History:

Committee Activity:  Commerce & Labor:  3/3/97 [DP].

SENATE COMMITTEE ON COMMERCE & LABOR

Majority Report:  Do pass.

  Signed by Senators Schow, Chair; Horn, Vice Chair; Anderson, Franklin, Fraser, Heavey and Newhouse.

Staff:  Traci Ratzliff (786-7452)

Background:  Businesses that sell food or drink for on-premise consumption are allowed to operate card rooms.

Local governments are allowed to impose a tax of up to 20 percent on the gross revenues derived from social card games.

Summary of Bill:  The maximum tax rate imposed on the gross revenues from social card games is reduced to 10 percent.

Appropriation:  None.

Fiscal Note:  Requested on February 21, 1997.

Effective Date:  Ninety days after adjournment of session in which bill is passed.

Testimony For:  The card room industry is faced with increasing costs in order to compete in a competitive gambling market.  We support a lowering of the tax rate to help us be more competitive.  Our biggest competition, the tribal casinos, do not pay a tax at all.

Testimony Against:  The revenues generated from the gambling tax are used by local governments to provide law enforcement services specifically for establishments operating gambling activities. A lot of problems are generated by such establishments.  Therefore, reducing the tax would significantly impair our ability to provide law enforcement services to these establishments.

Testified:  Steve Dowen, Recreational Gaming Association (pro); Vito Chiechi, Licensed Beverage Association (pro); Dan Hyde, City Attorney, City of Lakewood.