Renegotiating Compacts With the Oklahoma Tribes Can Be Difficult for Governor Stitt

Republican Governor Kevin Stitt
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There seems to be a bit of a clash going on between the Native Americans and the Governor of Oklahoma. Kevin Stitt, the current governor of the Sooner State, came clean about his intentions in an op-ed published in Tulsa World in July. He believes that the compacts between the Oklahoma administration and the tribes should be reviewed. The shared-revenue agreements expire on Jan 1, 2020, and it looks like the Governor wants to extract additional funds from the Native American gambling business.

This did not go well with the tribes because they assumed that the status quo would continue with the deal that was not so easy to make in the first place. However, they see their chance in the recent approval of horse-race betting and other electronic gaming, which Oklahoma Horse Racing Commission issued for 2020.

Native Americans in Oklahoma have been running successful gaming operations for years. They hold the national record on the gambling activities since there are 31 tribes that own 131 casinos in the Sooner State. They also generate the most significant revenue in the country, apart from California. The compacts that each tribe signed with the government grants exclusive rights to gaming operations in exchange for a cut of the income.

Last year $138.6 million poured into the state budget from the Indian casinos. The total revenue was approximately $2.3 billion, so the tribes contributed with about 6% to Oklahoma’s finances.

Kevin Stitt thinks that it is not enough. Though he is a Cherokee himself, he is eager to change the terms of the agreements and ask for more money. The state’s share in the revenue for slots and electronic games is 4% though it can rise to 6% if the operator turns over more than $20 million. For table games, it is 10%. In Oklahoma, the numbers are from 1% to 8% while in Minnesota, the tribes do not pay anything.

Many thought that by saying that the tribes in Oklahoma pay the smallest cut out of all the American states, Stitt provoked his fellow Native Americans. They answered that they pay the same percentage as the Arizona tribes, and significantly more than Minnesota.

The question is whether the Governor is ready to play hard. If he decides to hold his position and the deal fails, the Native tribes will not be able to continue with the class III gaming activities that include slot machines and table games. They do not require permission for class II games (f.e. bingo), so they would still be able to operate on some level.

Although Stitt claims that the current agreement does not reflect the market conditions, taking down a billion-dollar industry can have unpredictable consequences on the state economy. It is not just gambling, but the income from tourism, job opportunities, etc. that are beneficial for all the residents of Oklahoma. The tribes have been investing in hospitals, infrastructure, and housing, so the pros go way beyond generating tax revenue.

The illegal forms of gambling would be taking over if the tribes were not allowed to run their business. Offshore online operators that offer slot apps that pay real money, video poker, or live roulette could thrive, and the state would be empty-handed. It’s a scenario that no one desires.

Since the state hired a top-notch law firm from Michigan for representation, it would be wise to assume that Stitt means business. The firm in question has a proven record of successful negotiations of the compacts all across the States, so the officials believe that they will make a deal with the tribes.

On the other hand, Steven Greetham, who is the senior counsel at the Chickasaw Tribe, advises that the recent horse-track licenses mean that the state has no valid argument in the dispute. Though the compacts date back to 2004, the Native Americans are unanimous in sticking to the original deal.

It seems complicated to predict what course will the negotiations take, as Kevin Stitt mentioned the mind-blowing 25% as the state’s starting point. The tribes responded that they are the biggest employer in the Sooner State and that the governor has to take that into consideration.

We may be looking at an exhilarating game since the state seems determined, but the tribes in Oklahoma are very powerful and, most importantly, rich. Various meetings have been announced, and everybody is eager to see what the future holds for gambling in the Sooner State.

As far as the gamers are considered, they will always have the option of switching to the services of online casinos, like the slot apps that pay real money. The situation may be trickier for everybody else that benefits from the gaming industry through work or other activities that accompany it.

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