Brief Description: Raising the exemption for charitable or nonprofit bingo organizations from the gambling tax on bingo and amusement games.

Sponsors: Representatives Conway, Chase, Morrell and Wood.

Hearing Date: 2/6/06

Staff: Mark Matteson (786-7145).

Background:

Counties, cities, or towns are permitted to tax the gambling activity authorized under the Washington Gambling Act (Gambling Act) that occurs within their respective jurisdictions. The revenues from the gambling tax are to be used primarily for enforcing the Gambling Act by the jurisdiction's law enforcement agency.

The statute sets maximum tax rates that vary depending on the activity being taxed. For bingo, the maximum tax is 5 percent of the gross receipts less the amount awarded as prizes (net receipts). For amusements games, the amount may not exceed the amount sufficient to pay the actual costs of enforcement, but in no case more than 2 percent of the net receipts.

There is an exemption from these taxes for bona fide charitable or nonprofit organizations that conduct bingo and/or amusement games and that do not have: (1) net receipts of more than $5,000; and (2) any paid operating or management personnel.

Summary of Bill:

The exemption from the gambling tax for charitable and nonprofit organizations conducting bingo and/or amusement games is modified. The threshold to receive the exemption, which is based on the organization's annual net receipts on bingo and/or amusement game activities, is increased from $5,000 to $200,000. The requirement that such exempt organizations have no paid operating or management personnel is removed.

Appropriation: None.

Fiscal Note: Available.

Effective Date: The bill takes effect 90 days after adjournment of session in which bill is passed.