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P.J. Pockets Casino Will Reopen This Summer After City Council Voted To Slash Gambling Tax In Half

Posted on June 5th, 2010

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P.J. Pockets Casino owner Steve Griffiths said he plans to reopen his gambling establishment this summer or within 45 days, in the wake of the city council’s decision cutting in half the card room gambling tax. Griffiths decided to close the casino last May 3 because he said it was not making money anymore because of the economic crisis, coupled with the city’s 20 percent tax on gross gambling receipts which he considered too heavy in this time of recession.

With the minicasino’s closure, 85 full time employees also lost their jobs. Members of the city council, in an attempt to rescue the city’s biggest revenue generator from being put out of operation, held a meeting last week to discuss considering lowering the tax on card rooms and pull tabs, which are also operated by P.J. Pockets as well as other restaurants, taverns and pubs.

Last Tuesday, the City Council finally announced that by a 6-0 unanimous vote, it has enacted an emergency ordinance to reduce the current 20 percent gambling tax on card rooms to 10 percent that would take effect this Sunday, June 6. In that same meeting, council members also voted to lower the gambling tax on pull tabs from the maximum 5 percent to 3 percent.

However, there was one opposing vote from council member Jeanne Burbridge, which moves its going into effect to August 1 because the vote was not unanimous. Burbridge said she preferred a 4 percent tax rate because it was nearer to what the other cities are charging at 5 percent, and she said a lower tax promotes an increase in gambling activity, something she does not want to see.

In 1998, card room taxes were increased by the city council from 11 percent to 20 percent to discourage any more gambling operations and also to help pay for salaries of new police officers. But since then, and with the expansion of tribal casinos in the area, some council members said the economic situation in the city has not been the same. Before Griffiths made his decision to shut down, he first tried several cost-saving measures such operating only during the night time hours and initially laying off 20 employees. And then he decided to just put the casino up for sale.

It was only a week after he closed the facility that City Manager and Police Chief Brian J. Wilson suggested to him in a meeting the idea of a tax reduction. Before he can reopen, Griffiths needs to work with the Washington State Gambling Commission. He also has to rehire the 85 laid off workers and since he now has to restore the daytime business hours, he will need to employ from 100-120 workers.

According to the Washington State Gambling Commission, the city of Federal Way received from P.J. Pockets Casino $842,369 in card room tax revenue in 2009. The city’s total revenue from gambling in 2009 was $1.13 million. The reduced card room tax rate will result in a decline in the city’s gambling tax revenue.

P.J. Pockets is the only card room among Federal Way’s 18 gambling establishments, and 75 percent of the city’s gambling tax revenue comes from P.J. Pockets. According to finance director Tho Kraus, it would mean a loss of about $420,000 per year for the city, based on the city’s take from P.J. Pockets in 2009.

For the city of Federal Way, a decrease in revenue is better than losing all of the casino’s contribution to the city’s coffers. As per records of the state gambling commission, the average card room tax of cities around the state is 9.8, with some cities charging rates of 10 and 11 percent. Jeanne Berbridge wanted an 11 percent tax rate, but conceded on the 10 percent so that the emergency ordinance could be immediately effective.