Since 2005, the State of Oklahoma has collected money from tribal gaming in the state. The yearly fees collected by the state have increased every year since 2005. The current agreement provides that, in exchange for exclusive rights to conduct gaming in Oklahoma, the tribes pay the state an exclusivity fee starting at 4% and topping out at 6% on electronic Class III games. They also pay 10% on the monthly net win from table games. Related Here's a look at what the tribes contributed to the state for fiscal year 2018, July 1, 2018 to June 30, 2019.
What is a compact?
Before we get into the numbers, let's define a few essential terms. A state lacks jurisdiction over tribes. A compact is essentially an agreement between the state and a tribe where the state offers the tribe substantial exclusivity in certain areas in exchange for payments.
What type of revenue does the state collect?
Through the compact with the tribes, the state collects tribal revenues from Class III electronic games. What is Class III gaming? It includes slot machines, roulette, craps and card games. There is also Class I gaming (
social games solely for prizes of minimal value) and Class II gaming ( electronic bingo).
Total exclusivity fees
Tribes paid exclusivity fees in fiscal year 2018 based on almost $2.3 billion in revenue generated from Class III electronic games and card games. Exclusivity fees are distributed to the Education Reform Revolving Fund (1017 Fund), the General Revenue Fund and the Department of Mental Health and Substance Abuse Services. In FY 2018, the 1017 Fund received $121.7 million and the General Revenue Fund received $16.6 million. Mental Health and Substance Abuse Services statutorily receives a set $250,000 annually from the exclusivity fees. Under the compacts, tribes pay monthly exclusivity fees based on a sliding scale for Class III electronic games. 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.
Class II and Class III machines
The number of Class III machines grew for the sixth consecutive year, which along with a coinciding increase in the number of Class II machines, likely impacted the total revenue from all machines. In FY 2018, there was a monthly average of 41,860 Class III machines compared to 41,382 in FY 2017.
The growth of Class III machines was strong from 2005 to 2008, but weakened after the National Indian Gaming Commission withdrew restrictive Class II regulations in 2008. Class II machines declined from 2005 to 2008 but have grown substantially since 2009. While the number of Class III machines has steadily grown since 2012, available recent figures indicate Class II machines have grown at a faster pace as a percentage of total machines. The state collects exclusivity fees from Class III machines and non-housebanked card games but not Class II games.
Where does the state money go?
As required by statute, the exclusivity fees go to the Education Reform Revolving Fund (1017 Fund), the General Revenue Fund and the Department of Mental Health and Substance Abuse Services. Mental Health and Substance Abuse Services receives $250,000 annually. Of the remaining fees, the 1017 Fund receives 88 percent and the General Revenue Fund receives 12 percent. The 1017 Fund received $121,746,609 in FY 2018 compared to $117,647,577 in FY 2017. The General Revenue Fund received $16,601,810 in FY 2018 compared to $16,042,851 in FY 2017.
Exclusivity fees paid by tribes
Note: Red indicates a decrease and green shows an increase compared to the previous year.
A look at Oklahoma's casinos
Note: As of June 30, 2018
Electronic vs. table game fees
The payment from electronic games is typically much greater than the payment received from table games, and FY 2018 was no different, despite an all-time high in exclusivity fees from table games. In FY 2018, tribes paid $118,598,301 in electronic games fees, a $3,953,640, or 3.45 percent, increase from the previous year. FY 2018 table games fees totaled $20,000,119, a $704,352, or 3.7 percent, increase from FY 2017.
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