The Oklahoman: Oklahoma Indian Gaming Association response to gaming compact negotiations

Republican leader agrees with tribes in gaming compact dispute

A key Republican lawmaker is siding with tribes in an ongoing Class III gaming compact dispute in Oklahoma.

State Rep. Charles McCall, the Speaker of the Oklahoma House, told The Tulsa World that he believes the compacts automatically renewed on January 1 since a new agreement wasn't reached. That's what tribal leaders have been saying all along.

“In my opinion, the compact has renewed for another 15 years,” McCall told The World.

But not every Republican official is as enlightened. Gov. Kevin Stitt (R), who is a citizen of the Cherokee Nation, claims the compacts expired on January 1 and has asked a federal judge to shut down all forms of Class III gaming as a result, The World reported.

Since 2004, tribes have paid $1.28 billion to the state of Oklahoma in exclusivity fees. Tribes set a record in fiscal year 2018, paying nearly $138.6 million to the state, an increase of 3.48 percent from the prior fiscal year. Source: Oklahoma Gaming Compliance Unit Annual Report, Fiscal Year 2018

“Continuing to conduct class III electronic gaming in the absence of valid Gaming Compacts with Oklahoma has resulted, is resulting, and will continue to result, in unjust enrichment to the tribes,” Stitt's legal team said in response to a lawsuit filed by the Cherokee Nation, the Chickasaw Nation and the Choctaw Nation, whose leaders contend the agreements automatically renewed on January 1.

“Unjust enrichment will continue unless and until a new gaming compact is entered into by and between the tribes and Oklahoma," the response continued, The World reported.

The standoff began a few months after Stitt took office a year ago. He called on tribes to share a greater percentage of revenues with the state.

To make the case, Stitt has cited "market rates" for revenue sharing that run from 12 percent in Florida to 25 percent in Connecticut. In comparison, he said tribes in Oklahoma share between 4 percent and 6 percent.

But the graphic on Sitt's casino industry page does not offer a complete picture. For example, tribes that offer Class III table games, such as blackjack and poker, share 10 percent of their monthly net win from those games, according to the state's own reports, but that information is left off the chart.

The inclusion of Connecticut is also misleading. Two tribes there share 25 percent of their slot machine revenues, and only slot machine revenues, with the state -- other types of Class III games are not covered.

In comparison, tribes in Oklahoma must share revenues from all types of Class III electronic devices.

Additionally, a Government Accountability Office report from 2015 looked into revenue sharing. It found that majority of Class III gaming compacts at the time offered rates in the same range as the ones in Oklahoma.

The overwhelming majority of Class III gaming compacts in effect as of October 2014 offered revenue sharing rates below 15 percent, according to the Government Accountability Office. Source: GAO analysis of tribal-state compacts | GAO-15-355

Of the 276 compacts reviewed by the GAO, 146 -- or more than half -- offered revenue sharing rates between 5 percent and 14.9 percent. When the 107 agreements with no revenue sharing at all are factored in, the data shows that nearly 90 percent of tribes share less than 15 percent of revenues with their respective states.

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 Cherokee Nation owns and operates the Hard Rock Hotel & Casino Tulsa in Tulsa, Oklahoma. Photo: Anadisgoi

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.

Read More on the Story
Speaker McCall on tribal gaming: 'In my opinion, the compact has renewed for another 15 years' (The Tulsa World January 28, 2020)
Gov. Stitt asks federal court to shut down Oklahoma tribes' Class III casino gaming (The Tulsa World January 23, 2020)

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