Oklahoma turns to private law firm for help with tribal gaming compacts

Monday, September 16, 2019

The state of Oklahoma is relying on outside legal expertise as it seeks to negotiate new Class III gaming compacts with tribes despite major disagreements about the upcoming talks.

Attorney General Mike Hunter (R) signed a contract to pay up to $250,000 to Dykema Gossett, a Michigan-based law firm, according to news reports. The agreement came after Gov. Kevin Stitt (R) personally interviewed attorneys as part of his push to extract more revenues from tribes, The Oklahoman reported.

“I find it interesting that Gov. Stitt feels the need to spend state funds on additional attorneys to advise him on a matter when the process for requesting to renegotiate the terms of exclusivity and exclusivity rates is already set forth in the gaming compact,” Oklahoma Indian Gaming Association Chairman Matthew Morgan said in a statement to the paper.

@GovStitt are you listening? Leaders of 34 tribes have sent him a second letter citing "fundamental differences" in their views about Class III gaming compacts in #Oklahoma. Gov. Kevin Stitt, a Republican and citizen of Cherokee Nation, has demanded more revenues from the tribes. pic.twitter.com/3oXq2Q9jqk
— indianz.com (@indianz) August 29, 2019

Tribes so far have remained united in their opposition to Stitt's demand for more revenues. They have repeatedly sent him letters and passed resolutions outlining their views about their compacts, a number of which are due to expire on January 1, 2020.

But Stitt, a citizen of the Cherokee Nation who took office in January, has not directly responded to their belief that the compacts will automatically be renewed if the parties cannot come to an agreement. He also has refused to budge from his view that tribes should share a higher percentage of revenues from their facilities.

Since 2004, when voters approved Class III gaming, tribes have paid $1.28 billion to the state, according to the Oklahoma Gaming Compliance Unit's most recent report. The money is derived from a percentage of electronic gaming revenue, as well as table game revenue.

"For the first $10 million in revenue, tribes pay 4 percent to the state; for the next $10 million, the payment is 5 percent; and for revenues more than $20 million, the payment is 6 percent. Tribes pay 10 percent of the monthly net win from table games," the report reads.

The 34 tribes also passed a resolution stressing they are "united in their position" about Class III gaming compacts in #Oklahoma stating: "we cannot simply table a matter as fundamental as our compact’s durability" in response to @GovStitt claim that compacts will expire soon. pic.twitter.com/x3wdGRtz1N
— indianz.com (@indianz) August 29, 2019

The state defines such payments to be "exclusivity fees." The tribes share revenues based on the promise that they are the exclusive operators of Class III games like slot machines, as well as table games like blackjack and poker.

Such provisions are common in Class III gaming compacts even though revenue sharing is not explicitly authorized by the Indian Gaming Regulatory Act The Bureau of Indian Affairs, in determining whether a compact is legal, looks to see whether a state has promised tribes something "meaningful" in return, such as exclusivity.

Revenue sharing rates range from a low of 0 percent to a high of 25 percent, according to a Government Accountability Office report from 2015. Although Stitt has pointed to rates on the higher end of the scale, the majority of the compacts examined by the GAO at the time fell in the same range as Oklahoma's current agreement -- somewhere between 10 percent and 14.9 percent, and below.

Going forward, state officials will be turning to Dykema Gossett for help on the matter.

“Dykema has a proven record of success in tribal compact and gaming negotiations,” a spokesperson for Attorney General Hunter told The Oklahoman. “We believe with their help, we can achieve a successful outcome for both the state and our tribal partners.”

According to Dykema's Gaming & Indian Law practice, the firm has extensive experience in Indian gaming matters. That includes "concluding tribal-state gaming compacts: negotiating compacts, managing approval through state legislative processes, advocating for approval by the U.S. Department of Interior, and litigating challenges brought by opponents."

"Dykema’s compacting and governmental negotiations experience extends beyond just initial compacts, and also encompasses evaluating the interplay between existing compacts and new proposals, and navigating disputes that arise under compacts. In addition to work directly for tribes and their partners, Dykema has also advised local governments in implementing local revenue sharing and mitigation agreements, and state governments with regard to the impact of exclusivity clauses, and permissible arrangements for structuring tribal revenue sharing," the firm's website read.s