State-Tribal Gaming Compact Automatic Renewal

The language is clear in Oklahoma’s state-tribal gaming agreement: The compact automatically renews on January 1, 2020.

Posted by United For Oklahoma on Sunday, December 8, 2019
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Oklahoma governor threatens tribes with non-Indian gaming

Oklahoma Gov. Kevin Stitt (R), a citizen of the Cherokee Nation, is threatening to bring non-Indian casinos to the state if tribes don't agree to his demands to share more of their gaming revenues.

Stitt, who took office in January, claims that non-Indian developers have already contacted him. In statements given to the local media, he said one operator is promising to to pay an 18 percent "fee" to the state -- far higher than what the tribes share.

“Commercial operators have proactively reached out and shown interest in Oklahoma’s market,” Stitt said in the statements quoted by the media. “One operator explicitly told me over the phone he’d sign a deal tomorrow at an 18% fee, and this business person is eager because his offer is a low rate for what his casinos are paying on average across the nation.”

The 18 percent figure is an odd one, given that Stitt just a few days ago told tribes that they should share 25 percent of their revenues. He also said he wouldn't talk about Class III gaming compact negotiations in "public" even though he appears to be doing that with his statements to the media.

“I am trying to be a good-faith partner and not negotiate in public,” Stitt said at a news conference last Thursday.

At the same conference, Stitt unveiled another threat. Tribes that continue to offer Class III games on January 1, 2020, will be in violation of federal law, he said.

“Are they going to be operating illegally Class III games?” Stitt said in Oklahoma City, the state capital. “That brings a whole host of issues with vendors.”

Stitt's statements escalate a dispute that started just a few months ago. Tribes continue to assert that their compacts contain a provision that allows them to keep operating past a December 31 deadline if a new agreement can't be reached.

“The fact is our compacts renew and that our gaming will be as lawful in January 2020 as it is in December 2019,” Stephen Greetham, the senior counsel for the Chickasaw Nation, whose Indian gaming operation is the largest in the state, told The Tulsa World. “Governor Stitt’s position is not supported by law, logic or the compact’s plain language.

The tribal view is supported by Ross Swimmer, a Republican and Cherokee citizen who ran the Bureau of Indian Affairs during a critical time. He served in Ronald Reagan's Republican administration when the Indian Gaming Regulatory Act was being debated and eventually became law.

"The compacts are a continuing agreement, they do not terminate, and there is no need for either party to spend large sums of money to defend that position in court," Swimmer said in a letter published by The Tulsa World. "The governor needs to come to the table, state his case and not waste this opportunity."

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 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.

Read More on the Story
Commercial gaming could put $150 million a year in fees to state at risk, Oklahoma tribes tell Gov. Stitt (The Tulsa World December 11, 2019)
Governor Kevin Stitt gives an update on negotiations on Gaming Compacts (KOKH December 11, 2019)
Stitt: Commercial casinos interested if deal with tribes not renewed (CNHI News Oklahoma December 9, 2019)
Tribes will be operating Class III games illegally on Jan. 1 if no compact deal is reached, Gov. Kevin Stitt says (The Tulsa World December 5, 2019)
Five Tribes say they're waiting for an offer from governor on gaming compacts (The Tulsa World November 25, 2019)

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