Hedging Bets

Spokane considers giving tax relief to the city's casinos

Hugo's casino revenue - JESSIE SPACCIA
Jessie Spaccia
Hugo's casino revenue

The smiling employees and gray-haired Friday afternoon crowd inside Hugo's give little indication of anything less than placid contentment. But behind the scenes, this business is bleeding.

Like other luxuries, gambling is still recovering from the recession's toll, and here at Hugo's on the South Hill, staff say profit margins have dwindled to the point where they're facing the prospect of closing. According to information provided by Hugo's owner H.T. Higgins, gross revenue at the casino has fallen from more than $3 million in 2004 to $1 million last year — all while, Higgins says, wages have increased. Each year, 10 percent of that gross has gone to the city of Spokane. Next door in the county, that tax rate is just 2 percent.

Now, in an unlikely alliance, Spokane City Council President Ben Stuckart and Councilman Mike Fagan are considering a push to lower the tax inside the city, first to 5 percent, then to 2 percent. The tax rate doesn't directly affect gamblers since they buy chips at their cash value, and lower taxes wouldn't necessarily allow more casino tables at Hugo's. Instead, managers there say it's a question of survival.

"We've done all we can do," says casino manager Bill Varner. Restaurant manager Tami Borja finishes his sentence: "Without sacrificing what we've built."

The city of Spokane today has three remaining casinos, down from a dozen in the '90s, according an estimate from Higgins.

"Is it a sign of the times? Yeah, probably," Fagan says, "but to me we're talking about 150 living-wage jobs."

Fagan and Stuckart acknowledge that lower taxes will mean a decline in cash to the city's general fund, where gambling tax is already shriveling.

"If they close, we get zero [tax revenue]. Maybe it's worth it to decrease the percentage, save some jobs and get some revenue," Stuckart says. "Plus, I think it'd be awesome if we're going to have a five-vote liberal majority and everyone says we're going to raise taxes, but one of the first things we do is decrease taxes."

During debates over cutting gambling taxes in the city and county, opponents have argued that the move would attract new casinos. Amid new discussions about a cut, Councilman Jon Snyder says he'd prefer to see a graduated rate, where casinos making more money would pay higher taxes. He says that would address the needs of small casinos and concerns that a tax cut could increase gambling.

Hugo's dealer Jerry Trukositz says other casinos' closures prove increased gambling is a non-issue: "It's not the gold mine they think it is." ♦

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About The Author

Heidi Groover

Heidi Groover is a staff writer at the Inlander, where she covers city government and drug policy. On the job, she's spent time with prostitutes, "street kids," marriage equality advocates and the family of a 16-year-old organ donor...