Games and Gambling
Many taverns offer entertainment in the form of games, such as pull tabs, punchboards, pool, and video games. The tavern may own the games or may receive commissions from the owner for allowing placement of the games or vending machines in the tavern. Tax applies as follows:
Commissions - Taverns that receive commissions from the placement of vending machines or other games are subject to B&O tax under the Service and Other Activities classification.
Retail sales tax applies on the purchase of games from suppliers as well as merchandise given as prizes for punchboard winners.
Pool/Darts/Shuffleboard - Participatory activities such as pool, darts, shuffleboard, and billiards are within the definition of "retail sale." Gross receipts from these activities are subject to retail sales tax and the Retailing classification of the B&O tax.
Video Games/Amusement Devices - Includes slot, pinball and electronic dart machines, and those machines or devices which permit the patron to see, hear, or read something of interest. Gross receipts are subject to B&O tax under the Service and Other Activities classification.
Vending Machines - Retail sales tax applies to the sale of merchandise through vending machines. This includes machines that vend photographs, toilet articles, and cigarettes. Gross proceeds are subject to B&O tax under the Retailing classification.
The owner of the machine is liable for reporting and paying the tax. For practical purposes, such persons are authorized to absorb the amount of the tax on the individual sales and to pay directly to the Department the retail sales tax on the total amount received from vending machines.
Retail sales tax does not need to be separately stated from the selling prices or collected separately from the buyer for sales through vending machines. The seller may deduct the tax from the total amount received in the machines to arrive at the net amount, which becomes the measure of the tax.
Reference: WAC
458-20-187
Gambling - Contests of Chance
“Contests of chance” means any contests, games, gaming schemes, or gaming devices, other than the state lottery as defined in RCW 67.70.010, in which the outcome depends upon an element of chance. The skill of the contestants may also be a factor in the outcome. “Contests of chance” include:
- social card games
- dice games
- bingo
- raffles
- punchboard games
- pull-tabs
(“Contests of chance” does not include race meets for which a license must be obtained from the Washington Horse Racing Commission or “amusement games” as defined in RCW 9.46.0201.)
“Increase” means gross gambling receipts less the monetary value of payouts or in the case of merchandise, the actual cost, of any prizes awarded (for donated merchandise, cost is the fair market value).
“Gross receipts” (with regard to contests of chance) means amounts received before deduction of payouts or cost of prizes.
Gross receipts from “contests of chance” are reported under Column one of the Service and Other Activities B&O tax classification. Except that if the gross receipts from contests of chance are (or expected to be) $50,000 or greater in any calendar year, report such amounts in Column one of the Gambling Contests of Chance ($50,000 a year or greater) B&O tax classification.
Note: If the gambling receipts are $50,000 or greater, the income is subject to tax under the “Gambling Contests of Chance ($50,000 a year or greater)" B&O tax classification.
Reference: WAC 458-20-131