SENATE BILL REPORT

SB 5527

BYSenators Vognild, Nelson, Moore and Warnke

Changing provisions relating to taxation of gambling.

Senate Committee on Commerce & Labor

Senate Hearing Date(s):

Senate Staff:Patrick Woods (786-7430)

AS OF MARCH 5, 1987

BACKGROUND:

Currently, gambling activities that are licensed by the State Gambling Commission are subject to taxation by local municipalities.  The rates of taxation include: (1) bingo and raffles, 10 percent of gross revenues; (2) punchboards and pull tabs, 5 percent of gross receipts; and (3) card games, 20 percent of gross revenues.

Gambling tax revenues are to be primarily used for the enforcement of the Gambling Act by local municipalities.

SUMMARY:

The taxation rates that local municipalities may levy on licensed gambling activities are modified to:  (1) bingo or raffles, 7-1/2 percent of gross revenues; (2) punchboards and pull tabs, 7-1/2 percent of gross receipts less cost of prizes; and (3) card games, 7-1/2 percent of gross revenue.

Local municipalities are required to use gambling tax revenues primarily for law enforcement activities.

EFFECT OF PROPOSED SUBSTITUTE:

The statutory rate of taxation is maintained at existing levels.  Business may deduct any license fees paid to the Gambling Commission from their local tax obligation.

Only those local municipalities with a population of 10,000 or more are required to use gambling revenues on law enforcement activities.

Fiscal Note:      requested