P.J. Pockets Casino prepares to re-open Oct. 1 under new gambling tax
September 21, 2010 · 2:13 PM
From staff reports:
P.J. Pockets Casino, whose closure in May sparked a revision of Federal Way's gambling tax, will re-open Oct. 1.
The casino laid off nearly 100 employees last May, and a majority will be rehired, said general manager Steve Griffiths. The casino and property landlord Harsch Investments finalized a five-year lease this month — a process that delayed the reopening, he said.
"We anticipate bringing back well over 100 people," Griffiths said.
A lagging economy and a high local gambling tax contributed to the casino's closure in May. Federal Way's gambling tax rate was sliced in half June 1 in an effort to save P.J. Pockets as well as tax revenues generated from the business. The city council enacted an emergency ordinance to change the city's gambling tax, as it applies to card rooms, from 20 percent of gross gambling receipts to 10 percent.
"The city council, much to their credit, did an amazing job of moving quickly to resolve the tax issue," Griffiths said.
The new rate went into effect June 6. On June 15, the city council voted unanimously to lower the tax on pull tabs from 5 percent to 3 percent.
P.J. Pockets is the only local gambling establishment offering a card room. Under the 20 percent tax model, it generated roughly $840,000 of the $1.1 million in gambling taxes collected by the city.
Reducing the tax on card rooms means the city stands to lose approximately $420,000 per year, based on revenues generated by P.J. Pockets in 2009, according to past reports.
In 1998, the city's gambling tax ordinance was raised from 11 to 20 percent, the maximum allowed per state law. The measure was taken to halt the proliferation of gambling activities and establishments. At one time, Federal Way had five card rooms, and city leaders worried about the venues' clientele breaking the law.
The average tax for similar card rooms is about 9.9 percent, according to the Washington State Gambling Commission. Neighboring cities have rates around 10 and 11 percent, for the most part.