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OIGA: Current gaming fees are ‘justifiable’

 The Journal Record | July 9, 2019

OKLAHOMA CITY – The chairman of the Oklahoma Indian Gaming Association said Tuesday that many tribal leaders in the state may have felt “caught off guard” this week by a letter written by Gov. Kevin Stitt stating his interest in renegotiating an important “compact or contract” agreement with tribes that would affect hundreds of millions of dollars in tribal government gaming revenues.

The letter, printed in the Tulsa World, concerned compacts that are open for renegotiation every 15 years and define how much revenue the state would receive from gambling operations of tribal governments. In exchange for rights to conduct gaming in Oklahoma, the tribes agreed to pay the state an exclusivity fee based on revenue and starting at 4% and rising to 6-10% of revenues earned. In his letter, Stitt said the percentages reflected the state’s interest in incentivizing what then was an industry in its “infancy.” He wrote that tribal government gaming has since grown to become the eighth-largest industry in the Sooner State and that the time has come to review and renegotiate the arrangement.

“Today, most state-tribal compacts around the country provide for exclusivity fees to the state of 20% to 25%,” Stitt wrote.

OIGA Chairman Matthew L. Morgan said the compacts signed in 2004, which apply to the state and 31 tribes, are evergreen but may be renegotiated between now and Jan. 1, 2020, as outlined in the original agreements, as they pertain to the exclusivity of tribes to operate gaming facilities, as well as to the exclusivity fees received by the state. He said the state hasn’t formally proposed anything so far.

“There should be some type of proposal from the state. We’re in a wait-and-see mode at this point,” he said.

Morgan said the compacts as they are currently written have worked out very well for the tribes and state. He noted that when they were first agreed to in 2004 expectations were that the state’s annual revenues would be about $70 million. Last year, they rose to $145 million.

“I think that speaks to the success of the compact. I can’t think of another economic initiative that’s been more successful. Unless the state comes with some better offer as reviewed by each tribe, I think the compact has been the most successful collaboration effort between the tribes and the state in its history.”

In his letter, Stitt emphasized the success of the tribal governmental gaming industry as well as the state’s commitment to ensuring its future.

“My intent is that any new agreement protects the dynamic success of economic growth and development for our tribal partners, while also fairly building the state of Oklahoma to the benefit of every citizen,” the governor wrote.

Morgan said comparing the state of Oklahoma’s arrangements with the tribes to those made by other states with other tribes is not a fair “apples to apples” comparison. In fact, each tribe within Oklahoma’s boundaries is a separate and sovereign nation unto itself. He said the term “substantial exclusivity” would be more appropriate to use than “exclusivity” in defining the agreement the tribes have with the state, since Oklahoma has a state lottery and allows for gambling at horse tracks. Another extremely important consideration should be the fact that tribes have become critical “economic drivers” across the state, especially in its rural areas, he said. While tribal government gaming operations alone have contributed $1.5 billion to state coffers over the past 15 years, tribes have also employed tens of thousands of Oklahomans and have provided invaluable support for health care, education and infrastructure development.

“Those (current) fees are economically justifiable and well-calibrated for our market,” Morgan said.

If there’s no agreement on a new compact before the start of 2020, the old arrangements will remain valid. Morgan said that while tribal executives are anticipating action by the state, it’s difficult to say how they would respond. Most would likely discuss issues internally before addressing anything with other tribes.

“Not knowing what the state’s expectation is, it’s hard for me to comment on just what to expect or what timeline would be appropriate,” he said.

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