Betting on a boom

Betting on digital kings and aces at Marilyn’s on Monroe in downtown Spokane may take a little faith for the average gambler. Though the dealers are real-live human beings, the cards are computerized images. When the dealer pushes the “Hit” button, a five or seven or jack (if you’re lucky), magically appears face-up on the blackjack table. Additional buttons allow players to stand or double their bets.

The tables have been inspected and approved by the Washington State Gambling Commission, and the casino’s managers say their ease of operation frees up dealers to entertain the players. Marilyn’s on Monroe’s owners have bet more than $1 million that their business will be a smashing success.

The new downtown casino is one of four that have opened recently in Spokane County, aiming to tap into the nation’s passion for poker. The new businesses almost have doubled the number of non-tribal card rooms in the county, causing some in the industry to wonder just how many will survive.

“If you analyze the numbers in Spokane, the money being generated in mini-casinos, you’ll find the market is flat or going down a little bit,” said H.T. Higgins, whose family has owned casinos for years. “It isn’t like they’re bringing in a new market. I think you’ll see most of them close within 24 months.”

Even some of the new casino owners acknowledge the market may become saturated.

“I think there’s definitely going to be a thinning of the herd,” said Chuck Randazzo, owner of the Season Ticket, a bar and restaurant across from the Spokane Veterans Memorial Arena. In November, the business added a 3,200-square-foot casino.

November also ushered in Ringo’s Little Vegas Casino in Spokane Valley. New Year’s Day brought in Bluz at the Bend, a blues club and card room which also features digital gambling tables. Last weekend marked Marilyn’s entrée to the scene, and the Owl Club Casino, owned by a Hooters franchisee, has slated a July opening in Spokane Valley.

Two of the casinos opened as a showcase for the digital gambling technology developed by the Spokane Valley company Digideal. That company’s CEO, Mike Kuhn, is a partner in Marilyn’s and another company executive, Randy Sines, owns Bluz at the Bend. Kuhn said he wanted to open Marilyn’s in part because the digital technology has been slower to catch on in Washington than elsewhere.

“Gaming is growing, and we’ll all have our own audiences,” Kuhn said. “We want to show all the marketplaces that you can be almost 100 percent digital and do a very good job.”

Randazzo said the Season Ticket added a casino because the business had extra space that wasn’t used efficiently. The Hooters franchisee decided to build the Owl Club Casino because the company had extra land and wanted something that would complement the restaurant. And a co-owner of Ringo’s said his business entered the market because the gaming industry is booming.

Though the reasons cited vary, a recently failed state initiative may also have provided some enticement. I-892, which lost at the polls in November, would have allowed casinos to add the same slot machines offered by tribal casinos.

The initiative only applied to casinos licensed by Jan. 1, 2005, and the application process can take months, said Dolores Chiechi, executive director of the state’s Recreational Gaming Association. That may have helped spur the wave of new casinos, she said. When the initiative failed, the businesses had invested significant sums of money, so they went ahead with their plans anyway, she said.

State Gambling Commission figures support that idea.

“Following I-892, we saw a surge of applications,” said Susan Arland, public information officer for the commission.

Additional legislation making its way through the Legislature also may be motivating businesses to toss their chips on the table. State Sen. Margarita Prentice, D-Renton, is backing a bill that would put a moratorium on future card rooms and additional legislation that would ensure all non-tribal casinos pay at least 15 percent of their gross revenues in taxes.

“It won’t grow and we will now be able to control it,” Prentice said of the state’s house-banked card room industry.

The new tax legislation wouldn’t change things in Spokane, however, because the tax rate already is 20 percent. But in the city of Spokane Valley, the tax rate is 10 percent, so the new law would add 5 percent in state taxes. In unincorporated Spokane County, the tax rate already is 15 percent.

“It really seems like somebody is shooting at us,” said Jerry Heggestad, part owner of Players and Spectators and general manager of Ace’s Sports Bar and Casino, both in Spokane Valley. “If I get 5 percent (in state taxes) added on, there will be 25, 30 people cut off my payroll. I can’t afford it. The mini-casinos don’t do very well at all. I think I’m busy when I have 50 customers in here.”

Prentice contends that card rooms became “incredibly” profitable after new state laws allowed them to have up to 15 tables and to be house-banked, meaning players play against the business, rather than each other.

“Those guys are millionaires,” Prentice said of casino owners.

According to the state gambling commission, gross receipts for all licensed gambling, which includes pull-tabs, bingo and raffles, decreased by 3.5 percent from 2001 to 2004, but money earned at card rooms grew by 18.7 percent during the same time.

However, Higgins, whose family owns Big Daddy’s on the South Hill, said he’s losing money. Gambling revenues don’t include losses on restaurant operations, promotional fees, depreciation, interest or rent, he said. Though figures reported to the state gambling commission may show positive balance sheets, he said, the numbers don’t depict the full picture.

The 20 percent tax revenues collected by the city of Spokane support Higgins’ statement that the industry is flat. Tax revenues from card rooms peaked in 2000, with $1.9 million collected. Last year, that number dropped to $1.4 million.

“If I didn’t have a business, I definitely would not open a business,” Higgins said.

And the business environment has claimed its fair share of victims over the years, Higgins added. Among those that have folded in recent years include the Home Plate in Liberty Lake, Sunset Junction and the Chef Restaurant.

“We all think we know how to do it better than someone else,” Higgins said. “God bless their souls. I wish them luck, but it’s a tough market.”

Card rooms make money when players bet against the house’s “bank” in games like blackjack, and lose. Most businesses also offer poker games, where players play against each other and the business may take a percentage of the pot.

To hedge their bets on the casinos, many businesses also offer other entertainment venues, including restaurants, nightclubs and bowling alleys.

Fred Glick, president of HootWinc, the Hooters franchisee for this region, predicts his nationally known restaurant will provide a steady draw that will flow over into the new Owl Club Casino. Larry Foland, general manager of Bluz at the Bend, said the blues club has been a “phenomenal success” and should pay the bills while the casino establishes itself.

“The gaming side of it has been slow to go, but it’s been increasing weekly,” Foland said.

Foland and some of the other managers said it’s possible all of the businesses will survive because they attract different clientele. Marilyn’s is in downtown Spokane, targeting a more upscale market, and benefiting from a 1,500-seat concert hall next door. Bluz at the Bend is on the southern edge of Hillyard, traditionally a more blue-collar section of town, which Foland says goes hand-in-hand with the blues. And the Season Ticket draws from people attending events at the Arena.

“I think there’s room for all the card rooms,” said Kuhn, the co-owner of Marilyn’s. “It’s about delivering a product. We hope to feed off of the whole downtown resurgence that’s going on. It’s just a question of getting people congregated in a location.”

And the nationwide popularity of poker will help, said Tom Schaefer, one of the owners of Ringo’s. People are drawn to the idea that an average Joe could become a champion in the World Series of Poker, he said.

“All you have to do is look at the increase in gambling that’s been going on for the last few years. Showing poker on TV has just been huge,” Schaefer said. “It’s unbelievable the way people are following that. Everybody’s watching it, it seems like. They’re all trying it.”