Stealth Bill Expanded Gaming ‘Technical Change In The Law’ Ignited Gambling Boom

Washington’s gambling industry hit the jackpot last year with a proposal lawmakers now say should have faced tougher odds.

Last week, Gov. Gary Locke said he mistakenly thought a bill he signed in 1997 igniting Spokane’s gambling boom was merely a “technical change in the law.”

This week, seven of eight Eastern Washington lawmakers contacted by The Spokesman-Review said substantially the same thing.

Many - Republicans and Democrats alike - said they would change their vote today if they could.

“It was presented to us as a house-keeping measure,” said Rep. Jeff Gombosky, D-Spokane.

Colville Republican Rep. Cathy McMorris, who chairs a committee that held hearings on the bill, said: “We understood it to be a minor change.”

McMorris blamed the miscommunication in part on the former director of the Washington State Gambling Commission, Frank Miller. He since has retired to work as a Seattle attorney representing gambling interests.

At issue is Senate Bill 5560, which allowed casinos to play against blackjack gamblers and keep the winnings - a first for nontribal card rooms in Washington.

No one spoke against the proposal during three legislative hearings in spring 1997. It passed the Senate 44-4, and the House 97-0.

Since then, 14 nontribal card rooms - five in Spokane County - have opened house-banked games. Another 25 are expected by year’s end, bringing Spokane County’s total to 10.

Gambling receipts at these mini-casinos already are up 58 percent, with some individual card rooms taking in 12 times what they did a year ago.

“For the industry, (the bill) was a bonanza,” said Rep. Duane Sommers, R-Spokane.

Yet the governor and most of Eastern Washington’s 15-member legislative delegation insist they’re not fans of gambling.

What happened?

Many lawmakers admit they acted on third- and fourth-hand information. Others expected the Gambling Commission to raise red flags. Most were lobbied by local card room operators.

“Maybe we were asleep at the switch,” said Sen. Bob McCaslin, R-Spokane Valley. “Sometimes we pass legislation and aren’t really sure what the impact will be.”

Robert Saucier, general manager of the Mars Casino in Spokane and the man who wrote the original version of the bill, refused to answer questions this week. He did issue a statement that contends the bill’s significance has been exaggerated.

But in a March interview, Saucier said he started three years ago trying to convince tavern owners not to grumble about the growth of tribal gambling. Instead, Saucier said, let the tribes expand and then demand equality.

It works, “as long as you don’t mind that tribes are going to get new things first,” he said. “If you be patient, and position yourself well, you’re going to get it.”

Saucier spent 1997 telling lawmakers that house-banking would put nontribal card rooms on an “even playing field.”

Some legislators were so unfamiliar with gambling - and so eager to help local businesses compete against tribal casinos - they didn’t recognize the bill’s magnitude, lawmakers said.

As chairwoman of the House Commerce and Labor Committee, McMorris explained the proposal to her colleagues, after state gaming officials set up a table to show her how the change would work.

“I certainly did my best to become informed,” she said. “I didn’t understand the consequences.”

Gombosky got much of his information during a five-minute presentation to House Democrats by his party’s ranking member on McMorris’ committee.

“On gambling bills, we typically have 20 to 25 people who will always vote no,” Gombosky said. The unanimous vote indicates it was not seen as a “real change,” he said.

Meanwhile, the state Gambling Commission - proud of its reputation as the country’s third-largest gaming regulatory agency behind Nevada and New Jersey - focused much of its attention on the bill’s advantages in fighting fraud.

Previously, card room players themselves acted as the bank and casinos made their money renting table space or taking a percentage of the pot. The change to Vegas-style house-banking prevented unlicensed dealers from controlling the money.

But it also gave card rooms their first substantial stake in the game.

McMorris said the Gambling Commission, which oversees gaming in the state, did not stress enough that the bill would make card rooms more lucrative, and, therefore, more plentiful.

During hearings before House and Senate committees, Miller, the commission’s former director, touched only briefly on those points, according to recorded transcripts.

“I think the (casinos) would certainly make more money, although it varies,” Miller told the House committee on March 26, 1997. “Right now, they charge per hand. In many ways, this is certainly a better game for the player because when you lose, you lose, but you don’t lose and pay a fee to lose.”

But Miller also filed paperwork with both committees declaring he’d need 31 new employees if the measure passed. The reason: The bill likely would prompt 50 new commercial and nonprofit operations to open.

In that paperwork, he also repeatedly said the bill marked a “significant policy change.”

“I think the commission was very up front on all the issues,” Miller said this week.

Miller isn’t worried that his departure to work with gaming companies - or a continued friendship with Saucier - might appear odd.

Most of his clients are out of state, he said, and he won’t appear before his old commission for “at least a year.”

“I think my credibility was pretty high in Olympia,” he said.

Besides, Saucier and Miller insisted then - and maintain now - that SB 5560 wasn’t an expansion of gambling because the type of games being offered didn’t change.

In fact, that line of thinking was adopted by so many people that one chance to debate it was completely missed.

Under the state’s constitution, any bill that expands gambling must pass both Houses by a 60 percent majority. Typically, a lawmaker will ask before a vote if the bill falls into that category.

House and Senate lawyers already had done the research. While they suspect they would have agreed with Miller, the question might have prompted debate.

It just never came up.

Now that house-banked card rooms are popping up in Spokane, lawmakers are debating what to do.

Sommers and McMorris said they’re eager to see legislation in Olympia that would repeal SB 5560 - even though mini-casinos are up and operating.

“It’s been done before,” Sommers said.

Rep. Larry Sheahan, R-Spokane, said it’s time to scale back tribal gambling, which in turn would relieve pressure on lawmakers to keep “ratcheting up” nontribal gaming.

Gombosky maintains the simplest solution would be to have the city of Spokane ban card rooms as Seattle has done.

Just this week, attorney Steve Eugster filed an initiative seeking to do just that.

But at the same time, Gombosky, McCaslin and Rep. Alex Wood, D-Spokane, said they’re not prepared yet to support such a ban at all - local or statewide.

“People are saying ‘Hey, there’s a big boom in gambling,”’ Wood said. “But other people are saying ‘Hey, there’s a big boom in revenue for city coffers.’ “It’s a mixed bag.”

HINDSIGHT Here’s what some Eastern Washington lawmakers say about last year’s legislation that led to a dramatic increase in casino gambling:

“It wouldn’t have had my vote if I’d known it would expand anything. I didn’t look at it in those terms.” Sen. Eugene Prince, R-Thornton

“I think the marketplace will take care of it. There’s only so much gambling money out there.” Rep. Alex Wood, D-Spokane

“Before, six guys sat down to play poker. When they left they had the same amount as when they started … it was just in different hands.” Rep. Duane Sommers, R-Spokane

“Had this bill been viewed (as an expansion of gambling) you would have seen some opposition. You would have seen many, many more legislators voting against this bill.” Rep. Cathy McMorris, R-Colville

“From my experience, I think there are a lot of legislators who, No. 1, are not gamblers. They don’t know, really, what it means to be ‘the house.’ When the lobbyists came in, they quickly picked up on that.” Former Rep. Mark Sterk, R-Spokane Valley

“Do we want to start pulling in our horns and start slowing everything down? At this point I want to say what kind of problem have we created?” Sen. Bob McCaslin, R-Spokane Valley