OKLAHOMA CITY — Gov. Kevin Stitt has asked tribes to renegotiate gaming compacts, but some fundamental differences of opinion could affect the process.
In a recent letter to tribes, Stitt said the compacts expire Jan. 1, 2020, and will not automatically renew.
Matthew Morgan is chairman of the Oklahoma Indian Gaming Association.
He said the compacts contain an evergreen provision but do allow either side to renegotiate.
“Should either party not be satisfied with those discussions, the compacts will automatically renew for another 15-year term,” Morgan said.
Mark Burget is Stitt’s general counsel.
“We have a disagreement,” he said.
Burget said that unless there is some action by the state or a court authorizing Class III gaming after the effective date of the compact, the compact does not renew.
There has been no state or court action, Burget said.
If the state’s interpretation is correct, Class III gaming would have to cease if there is not a new compact, Burget said.
Class II includes electronic bingo, while Class III includes slot machines, roulette and craps.
In a recent opinion piece, Stitt said that in order to incentivize the industry 15 years ago, the agreement called for an “exclusivity fee” starting at 4% and topping at 6% of revenues received.
While the rate was reasonable and fair at the time, Oklahoma’s current fees are now the lowest in the nation, Stitt wrote.
“Today, most state-tribal compacts around the country provide for exclusivity fees to the state of 20 percent to 25 percent,” Stitt wrote.
Burget was asked whether Stitt is seeking to increase the fees.
“What I believe he said is these agreements are 15 years old and we need to take a fresh look at them in light of what the market rates are in surrounding states and around the country,” Burget said.
Former State Treasurer Scott Meacham negotiated the original compacts under the administration of then-Gov. Brad Henry.
Meacham said exclusivity pertains to games that can be offered, number of games, hours of operation and caps on games.
“The more you give a tribe where they are the only ones that can do this without any sort of limitations, the higher you can charge in general for an exclusivity payment,” Meacham said.
He said it was important that tribes had some long-term stability after making huge investments in casinos and other facilities.
“So the compact has a pretty narrow parameter of what can and can’t be negotiated at renewal,” Meacham said.
Morgan said the revenue fees are “justifiable and well calibrated for this market.”
He said the current compacts offer limited Class III gaming.
“Sports betting is a topic of conversation,” Morgan said. “Currently, it is not allowed in the state. That does provide some economic incentive to tribes to be able to offer that game. That economic incentive will vary from tribe to tribe on what that opportunity is worth to them.”
Muscogee (Creek) Nation Principal Chief James Floyd issued a statement on the issue Tuesday afternoon:
“As with all governments with whom the Muscogee (Creek) Nation interfaces, we approach each collaboration as an alliance that is mutually beneficial to our citizens and to the communities in which we serve.
“The tourism industry is a significant contributor to the state’s economy and our capital investment in the hospitality and gaming industry is only one way the Muscogee (Creek) Nation directly supplements state, county and city operating budgets.
“As the fourth-largest tribe in the U.S., we reinvest in Oklahoma and in Oklahomans. We create jobs where there were none, we build hospitals where others have closed, we rehabilitate aging roads and bridges, and we redevelop land that evolves into future businesses. The Muscogee (Creek) Nation’s annual economic impact on the State of Oklahoma is $866 million through these programs and more.
“A successful collaboration between partners requires dialogue and thoughtful discussion to better understand the full impact, both positive and negative, of any modifications to our current contribution.
“It is simply too early in these conversations to speculate on Gov. Stitt’s interpretation of the compact agreement as we have not had the opportunity to formally meet on this topic.”
Burget was asked if the state was prepared to expand gaming in exchange for increased fees.
“I have no way of answering that,” he said, adding that several factors come into play.
Meanwhile, the state has put out a request for proposals to contract with individuals or firms with a proven track record of negotiating tribal-state gaming compacts in multiple states.
The request for proposals says the successful bidder will have experience and knowledge in the following areas: Indian gaming; commercial gambling; sports betting; horse racing and off-track betting; internet gaming; fantasy and daily fantasy sports; riverboat gambling; and lotteries.
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