Lacey council weighs repeal of social‑card prohibition and gradual gambling‑tax increases
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Summary
City staff presented revenue options for social card games and pull tabs, noting Lacey’s 7.5% social‑card rate yields roughly $500,000 annually; council signaled support to pursue ordinance language to remove the local prohibition and asked staff to return with fiscal analyses and phased increase options.
City staff asked the Lacey City Council whether to change local rules on commercial gambling taxes — in particular social card games and punch-board/pull-tab activity — as part of a broader set of revenue-enhancement options.
Shannon, the assistant city manager, told the council that Lacey’s current social-card tax is 7.5% (state statutory maximum 20%) and estimated the city’s annual revenue at about $500,000 at that rate; she said staff’s table shows each half‑percent increase yields roughly $33,000. Shannon also noted that the city currently allows one grandfathered social‑card operation and that an option on the table is to repeal the local prohibition (Lacey Municipal Code reference to social card-game prohibition noted in staff materials) so additional operators could legally open in the city.
Shannon presented three sample approaches for social‑card-rate increases (a gradual half‑percent run up to 9% over three years, a 1% annual increase toward 10.5% by 2028, or a larger initial step to 9% followed by incremental increases). She pointed to historical context (Ordinance 1,430 in 2014 reduced the rate to its current level) and shared that staff had consulted publicly available Washington State Gambling Commission data on industry revenues and net income trends.
Councilors discussed policy tradeoffs. Several council members favored repealing the prohibition to remove a local monopoly and allow market competition; others urged caution about raising rates too quickly because staff had relayed concerns from the current proprietor that a sharp, immediate increase could threaten ongoing operations. Views on pace differed: some supported a five‑year half‑percent phase-in to allow businesses to adjust; others preferred removing the prohibition first and deferring a tax increase for later consideration.
On pull tabs and punch boards, Shannon said Lacey’s current rate is 4% (average among comparable jurisdictions ~5.3%; statutory maximum 10%) and generates about $40,000 annually. Staff noted increasing those rates (for example, to 8%) would materially increase revenue but also affect numerous small establishments where pull tabs are ancillary to primary activities.
After discussion the chair summarized direction to staff: prepare ordinance language to address the social‑card prohibition and return with further fiscal analysis and implementation options for both social‑card rates and pull‑tab/punch‑board rates. No rate changes or ordinance amendments were adopted at the work session; staff will return for further action.