Troubling times for La Center cardrooms

The Palace thrives, but industry has bleak future

By Justin Runquist, Columbian Small Cities Reporter

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As the start of construction nears for a massive tribal casino-resort outside La Center, some fear the end is fast approaching for the small city’s three cardrooms.

The Cowlitz Indian Tribe has its sights set on breaking ground this year on a casino that could cover as much as 134,000 square feet next to La Center’s Interstate 5 junction. Plans for the resort have long been in the works, and the tribe recently signed a contract for site preparation after taking 152 acres of land into trust for a new reservation west of the highway.

But the introduction of a flashy new tribal casino doesn’t necessarily mean the end is on the horizon for everyone in the local cardroom industry. After all, La Center is still home to one of the most profitable cardrooms in the state: The Palace Casino.

Year in, year out for more than a decade, The Palace has ranked among the 10 most lucrative cardrooms in Washington. It’s the only Clark County cardroom with that caliber of sustained success, as all of the others have fallen deep into the red or even shut their doors at some point in recent years.

From 2010 to 2012, The Palace was Washington’s top earning cardroom, pulling in a profit of more than $2.34 million each year. The best of those years was 2011, when the casino finished with a profit of $2.79 million.

The Palace dropped one rung in the rankings in 2013, the most recent year available in records from the Washington State Gambling Commission. Even so, the cardroom still made more than $2.17 million that year.

Steve Michels, who owns and operates The Palace, declined The Columbian’s requests for an interview. John Bockmier, a public relations consultant who represents La Center’s three casinos, could only speculate as to why The Palace fares so much better than its competitors just a block away: the New Phoenix and Last Frontier casinos.

“It’s the first one customers see, and they stop at it,” Bockmier said. “Promotions play a big part of it. Your food plays a big part of it. I’m assuming it is a combination of all of those things.”

While The Palace continues to make more money than just about any mini casino in the state, the broader picture looks bleak for La Center’s cardroom scene, Bockmier said.

“The industry as a whole has absolutely plateaued, stifled and declined,” he said. “The overall gaming handle for La Center is not going up.”

With the introduction of the new Cowlitz casino just a short drive away from Southwest Washington’s cardrooms, city officials are desperately trying to diversify their economies, especially in La Center.

In the small city of a little more than 3,000 people, cardrooms play a key role in government spending power. Historically, cardroom tax revenue tends to make up about three-quarters of the city’s operating budget.

When Chips Casino shut down last year, the city suddenly faced a deficit of about $400,000, nearly 10 percent of its operating budget for 2015. At the time, Chips was the smallest cardroom in La Center.

In 2012, Woodland’s Oak Tree casino closed its doors after getting slammed with a tax lien from the Washington State Department of Revenue. It opened a little less than a year later under new management. That year, it was the least profitable cardroom in the state, operating at a loss of more than $1.2 million.

Leaders in the cardroom industry say the best times for their businesses are long gone. Net gambling receipts for cardrooms peaked 10 years ago, and about half the state’s house-banked cardrooms have closed since then.

Revenues fell into a downward spiral after 2005, and though the industry saw its first sign of growth last year — a meager 1.1 percent increase in net gambling receipts — experts don’t expect to see any meaningful improvement soon. In the past decade, cardrooms also have faced increasingly steep competition from tribal casinos, which are allowed to offer electronic games, indoor smoking and much larger quantities of gaming tables.

Unless the playing field levels soon, cardrooms are going to continue to slide, said Dolores Chiechi, the executive director of the Recreational Gaming Association.

“We are operating paper games in a technological world,” Chiechi said. “We’re definitely going to see a further decline.”

The recent push to raise the state minimum wage to $15 an hour is also particularly daunting for the industry, Chiechi said. Cardrooms tend to be more labor intensive than tribal casinos, because each card table needs a dealer, and few cardroom owners could afford to pay such high wages.