Lakewood - Happy Days Casino is looking to make another comeback after falling behind on city taxes and closing its doors for the second time in less than three years.
That leaves four minicasinos operating in one of the few remaining South Sound cities where nontribal card rooms are still allowed – and a city where gambling has proved controversial.
Happy Days owner Douglas Searle said the Aug. 28 closure is temporary and that interest is high among potential investors who could provide capital to help reopen soon.
“I have a moral obligation to do everything I can to pay the city its taxes and some of the vendors we owe money to,” he said. “I don’t want to walk away if I don’t have to. ... I want to fight and try to do the right thing.”
Happy Days owed Lakewood $35,500 plus penalties in gambling taxes for three months.
The city imposes a 11 percent tax on gross receipts and budgets for $2.8 million a year in gambling taxes, which pay for basic city services. The revenue through August is down about $300,000 compared with the same period last year.
City Manager Andrew Neiditz notified Happy Days ownership in August that it had 60 days, or until late October, to pay the back taxes in full or the city would revoke its business license.
Searle said he faced a choice: Exhaust his available cash to pay the city and risk leaving employees in a lurch if business doesn’t improve and he couldn’t make payroll, or else temporarily close the business, pay off his employees and attempt to raise enough capital to reopen.
He chose the latter. Reasons he cited for the closure include the economy, a poor business image left behind by the prior owner, a lack of support from city leaders and competition from Indian casinos.
Chris Kealy, president of the Washington Recreational Gaming Association of Washington, a card room trade group, said the chief “killers” of the businesses are the economy and Indian casinos, which can offer more games – including craps and roulette – higher limits and more tables than card rooms.
“Happy Days is a complete victim of that,” said Kealy, who owns a minicasino in Auburn. “It just can’t compete with the Emerald Queen,” the casino run by the Puyallup Tribe of Indians.
The number of card rooms licensed to operate in the state has declined from a high of 96 in 2005 and 2006 to 64 today, according to figures from the state Gambling Commission.
At least one of the remaining four card rooms in Lakewood also has felt the economic pinch.
“Any entertainment dollars out there in any family are subject to the recession we’re in,” said Greg Bakamis, general manager of the Great American Casino on South Tacoma Way. “We have noticed a decline.”
Bakamis said business has stabilized and he’s optimistic it will turn around soon.
Macau Casino declined comment. The Chips and Palace minicasinos didn’t return a phone message seeking comment.
Searle, who said he has 30 years of management experience in the gaming industry, recognized reopening Happy Days would be a challenge in these economic times. Adding to the challenge was something he was unaware of at the time of purchase: the plight of the former owner.
Jerry Bolser made headlines three years ago when he walked away from the business without paying wages to employees or outstanding gambling taxes to the City of Lakewood.
Searle said he hired back at least 30 of those employees. His recent decision to close Happy Days has cost 75 full-time employees their jobs.
Searle asked the city in an Aug. 16 letter to agree to a tax repayment plan through daily deposits, but officials turned down the request.
In his written reply, Neiditz said the city had made similar arrangements in the past with gambling businesses, but they didn’t abide by the terms. Neiditz cited one case in which the city unsuccessfully tried to secure payment of unpaid gambling taxes through bankruptcy court.
Neiditz said in an interview this week he’s not inclined to modify payments for one minicasino when the others are staying current.
“It really in my mind is a fairness issue,” Neiditz said.
Searle said Happy Days is a family-owned business and doesn’t have the corporate backing to withstand such a downturn in the economy. He said the state Department of Revenue and gambling commission have been willing to work with him to pay business taxes and the fee for his gambling license.
“Everybody is willing to work with you, especially in these hard times,” he said. “It’s unfortunate that one didn’t.”
Two days after Searle closed Happy Days, the gambling commission charged it for failure to submit required financial statements by the June 30 deadline, sufficient for the suspension or revocation of Happy Days’ gambling license. Searle filed the documents Sept. 16. The two sides are in talks to settle the case, said Susan Arland, an agency spokeswoman.
Minicasinos have been a hot-button issue in Lakewood for years, with voters rejecting a measure in November 2008 that would have banned them. The city has adopted temporary moratoriums and taken other steps to block new minicasinos from opening, while simultaneously wanting to keep the existing ones open so they continue to provide jobs and generate tax revenue.
Christian Hill: 253-274-7390 firstname.lastname@example.org