Casino owes Moses Lake $100,000 in taxes

Porterhouse receives 15-day suspension

MOSES LAKE - A Moses Lake restaurant and casino faces several charges, which resulted in the state's gambling commission ordering a 15-day suspension.

Susan Arland, Washington State Gambling Commission spokesperson, said Cardroom Inc., doing business as the Porterhouse Restaurant in Moses Lake, has three charges against it.

Those charges are failure to pay local gambling taxes, failure to disclose a lawsuit and failure to disclose financial contributions from an owner.

City of Moses Lake Manager Joe Gavinski said the restaurant owes about $100,000 in back taxes to the city.

"One of the conditions of retaining a license is to keep current in your taxes," he said.

Gavinski said the situation is not a typical situation.

"Usually people keep current on their taxes," he said. "This was really unusual."

The situation is in the hands of the gambling commission, Gavinski noted.

"We are looking for recovery of those taxes," he said.

Businesses are required to report criminal, administrative and civil actions, Arland said, including things like divorces and bankruptcy.

Failure to disclose contributions is a fairly common occurrence, she said.

"Having charges issued against you for failure to pay gambling taxes (is) very unusual," Arland said.

Normally, the city contacts the commission and lets them know that the licensee is late. The commission sends out a letter and the licensee would contact the city and work out a payment plan to pay off the debt in full.

"Our part is to send out the letter and that usually takes care of it," Arland said. "This is probably the first one I've ever heard of that's ever had administrative charges brought against them for that."

At a commission meeting Jan. 10 and Jan 11, commission administrators imposed a verbal 15-day suspension. Arland said a written order will be issued to the company following a commission meeting in mid-February.

Because the commissioners issued charges at the last meeting, Arland said, it put the owners in violation of an earlier settlement agreement. The gambling commission asked for 10 days' suspension for the three charges, and five for violating the earlier agreement.

"It was all administrative that there were some errors," explained owner Brian Rosborough, partner with Steven Crothers. "It wasn't criminal charges. It was just because I was late reporting some things. They're having issues. That's how regulatory they are."

Rosborough said he and Crothers are new to the gaming industry and the "excessive" amount of regulatory requirements that go with it.

Porterhouse consultant Monty Harmon said he has a background as a manager with the gambling commission.

"Brian has done a great job just to take on a totally new industry, learn the regulation, keep people employed and continue to work toward compliance and everything else," he said.

Harmon used a pull-tab operator who forgot to file a quarterly activity report with the commission as an example.

"It's an information report only, it doesn't have any tax associated with it at all," he said. "If you look at the penalties those taverns are paying, thousands of dollars for not filing an activity report, then you have to start asking yourself, what was the heinous crime? There was no heinous crime, it's a matter of failing to file administrative information. If it was serious, we'd have something more. That, I think, is very disturbing, that you're looking at putting 80 people out of work for a late filing."

Harmon noted Rosborough and Crothers have many regulators to deal with and entities to answer to and make payrolls.

"They failed to give the gambling commission some pieces of paper, and that's their undoing?" he asked. "Hello, how reasonable is that? When you look at the crime and you look at the penalty, you would think there was something nefarious here … when you're being shut down for 15 days. It's not the case."

The gambling commission has no ceiling on a penalty, Harmon said, so it will only escalate if a mistake is made a second or a third time.

"And so you could end up with revocation for failing to submit an activity report if you do it too many time," Harmon said. "That's the regulatory environment (Rosborough) is willing to continue to deal with in order to operate business."

Woodall said justified penalties will be a focus of the next gambling commission meeting in February.

Paying debts

The company would still have to pay the gambling taxes following the suspension, Arland said.

She was told the Porterhouse filed bankruptcy, so the debt would be handled through bankruptcy courts.

Under a normal scenario, Arland said, the company would resume operation after the suspension period is lifted.

"There are other issues, I think, out there with regard to this," Gavinski echoed. "I understand there was a bankruptcy filing and there are things going on with that we're really not a part of."

Rosborough said the corporation is working with a company to restructure the debt in order to make flat payments in order to repay the taxes.

"We did the bankruptcy. It was more for a short term deal to get things under control," he said. "We have now hired an agency that will negotiate with the tax agencies and, quite frankly, we'll just be set up on a payment plan. It is part of the process.

"We've admittedly made some administrative mistakes," Rosborough continued. "We admittedly would tell you we were rookies at this business. That's why we've gone through and made a distinct plan. One of the parts of the plans was to hire a professional manager, i.e., Tim. Two, we went and got an investor and that's where the remodel comes in."

New manager hired

They hired Tim Woodall to come on board as a manager and partner.

"Tim's a professional. He knows what he's doing with the gaming," Rosborough said. "We've come a long way since we've hired Tim. He's put in some real positive standards, some expectations and so what we've seen with Tim is an immense turnaround in numbers."

Woodall believes the establishment is a "whole new Porterhouse."

"From staff to attitude to the amount of fun," he said. "Brian wanted to make sure there was a statement made when we remodeled."

Woodall met Rosborough through the gaming industry about a year ago, when he was a casino manager in Pasco at "the largest casino this side of the mountains."

"For me to give up that job, move my family, four children, my mother, my wife, up here that's how strongly I think this place can go," he said. "This place is ready for good gaming, good restaurant, good atmosphere, a good venue to see whatever it is you want to see. I wouldn't have made that move and left that security job if I thought this wasn't going to make it."

Remodel under way

Rosborough said the business is trying to coordinate a remodel during the closed time.

"Keep in mind that we have about 80 employees," he said. "I'm trying to make sure they're employed a minimal amount of time. The remodel will be major and it's going to take, I'm not exactly sure how long, but probably a week, maybe to two."

Rosborough anticipated the "extensive" remodel would happen in mid-February.

"We're trying to focus this around when we need to be closed to make it as much of a positive out of a negative as we can," he said.

The remodel includes moving areas of the business around, new carpet, new paint, remodeled bathrooms, new plasma televisions, new tables, new chairs and turning the present casino into the bar, while the casino moves further into the building and the facility opens up.

"Porterhouse has been in need of a remodel and for quite some time," Rosborough said. "It's now that we are able, because of the new investor and do it right. Our intent is to make it a fun atmosphere with good food, reasonable priced. It will be kind of the same Porterhouse it's been for years, but with a little bit of twist of a sports bar, I guess you'd say."