Gaming Compact Lawsuit
"This lawsuit is about renewal, not rates," says Chief Gary Batton in the following message regarding the Federal lawsuit against Governor Stitt filed today by the Cherokee, Chickasaw and Choctaw Nations.
Posted by Choctaw Nation of Oklahoma on Tuesday, December 31, 2019

Choctaw Nation of Oklahoma: Gaming Compact Lawsuit

Compacts | Litigation

Tribes sue Oklahoma governor to protect Class III gaming rights

Monday, January 6, 2020

The Cherokee Nation, the Chickasaw Nation and the Choctaw Nation are suing the Republican governor of Oklahoma as a gaming impasse enters the new year.

The tribes, whose operations collectively represent the largest segment of the market in the state, filed their complaint on December 31, 2019. They are asking a federal judge to confirm that they have the right to continue offering slot machines, blackjack and related Class III games while discussions continue with Gov. Kevin Stitt (R), who contends their agreements expired on the following day.

"The Cherokee Nation is committed to being a good partner in our community and with the State of Oklahoma as we have done across two centuries and will continue to do as a peaceful, sovereign nation," Principal Chief Chuck Hoskin Jr. said in a news release. "Governor Stitt has made comments about “uncertainty that exists” regarding Class III gaming after January 1, threats to our casino vendors and their livelihoods and demands for redundant audits. We have little choice but to ask a Federal judge to confirm the compact’s automatic renewal on January 1.”

“We have a solemn duty to protect the sovereign rights of our Tribal Nations as well as the interests of our citizens," added Governor Bill Anotubby of the Chickasaw Nation. "While we prefer negotiation to litigation, the Federal court is now the only reasonable alternative to bring legal certainty to this issue. We remain hopeful we will continue to have a productive and mutually beneficial relationship with the State of Oklahoma once we have resolved this issue.”

#HappyAutoRenewal #HappyNewYear #UnitedForOklahoma https://t.co/zX917OUigA
— Chuck Hoskin, Jr. (@ChuckHoskin_Jr) December 31, 2019

“The Governor’s stance on the gaming compact has created uncertainty and has been seen as a threat to our employees and our business partners. We see this legal action as the most viable option to restore the clarity and stability the Tribes and Oklahoma both deserve by obtaining a resolution that our compact does automatically renew," said Choctaw Nation Chief Gary Batton. "As elected leaders, it is our responsibility to uphold the compact, honor the will of the Oklahomans who approved State Question 712 and the Federal law that defines our relationship with the State on these matters.”

The lawsuit is a direct challenge to Stitt, who is a citizen of the Cherokee Nation and has called on all tribes with Class III gaming compacts to contribute more of their revenues to the state. In hopes of getting them to come to the table, he has insisted that their operations would be operating illegally past January 1, and he has also threatened to bring more non-Indian gaming to Oklahoma despite language in the agreement guaranteeing exclusivity to Indian nations.

Stitt, who took office a year ago, has since declined to say what actions he will take if the tribes continued to offer Class III games past January 1. But on Friday, he announced that he had hired a law firm with a negative history in Indian Country to represent the state on compact issues, both in an out of court.

“With Perkins Coie, the State of Oklahoma is well positioned to work towards a compact that protects core public services and advances the future of our great state, its four million residents, and gaming tribes. Perkins Coie will also respond to and address the Chickasaw, Cherokee, and Choctaw Nations’ federal lawsuit filed on New Year’s Eve," Stitt of the firm he hired.

"The legal experts at Perkins Coie have successfully represented other states in Indian law controversies, to include the State of New Mexico’s compact dispute in 2015," Stitt added, in reference to a dispute in which a tribe was forced to contribute more of its gaming revenues because the Republican governor at the time refused to negotiate different terms.

Notably, the federal courts in Oklahoma and New Mexico fall within the 10th Circuit Court of Appeals, the one whose negative rulings resulted in the Pueblo of Pojoaque being backed into a corner because the state governor asserted sovereign immunity in response to the tribe's lawsuit.

Separately, Sitt announced that two tribes agreed to extend their Class III gaming compacts while discussions continue. However, neither the Kialegee Tribal Town, nor the United Keetoowah Band of Cherokee Indians, are currently operating casinos.

And while Sitt, in a news release, said the two tribes "recognize the January 1, 2020 expiration" in their compacts, the extensions reveal a different position. Both the Kialegee Tribal Town and the United Keetoowah Band preserved their belief that their agreements in fact do not expire.

"Our signing acknowledges that there are differences in opinion on this matter between the tribes and the state," UKB Chief Joe Bunch said in a statement after the extension was announced. "Until the matter is sorted, we simply wish to maintain good relations with the state as we work to improve our tribe's economic status."

UKB Chief Joe Bunch would like to issue the following statement in regards to our recent gaming extension compact...
Posted by United Keetoowah Band of Cherokee Indians in Oklahoma on Thursday, January 2, 2020

Since 2004, when voters approved Class III gaming through State Question 712, 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 state defines such payments to be "exclusivity fees" and 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. Bringing in non-Indian operators would violate the pledge, a situation that has led to court battles elsewhere.

Such provisions are common in Class III gaming compacts even though revenue sharing is not explicitly authorized by IGRA, which became law in 1988. In reviewing agreements, the BIA 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.