OKLAHOMA CITY — Gov. Kevin Stitt has decided not to appeal a federal court ruling that the state’s tribal gaming compacts automatically renewed at the beginning of the year.
The deadline for the governor to file an appeal was Friday.
“While I have chosen not to appeal this decision, I believe that the people of Oklahoma will demand a fair deal that benefits all 4 million Oklahomans,” Stitt said in a prepared statement.
The governor said he looked forward to working with the state’s congressional delegation, other state officials and leaders of the state’s tribal nations “to create an environment of fairness, clarity and unity.”
“Our state is facing unprecedented uncertainty as a result of the U.S. Supreme Court ruling in McGirt v. Oklahoma,” Stitt said, referring to a landmark U.S. Supreme Court decision dealing with tribal jurisdictional issues. “Therefore, it is essential for state and tribal leaders to join together to resolve the challenges this ruling presents for Oklahomans and their businesses.”
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More than a year ago, the governor said he was seeking higher “exclusivity fees” from tribes. Tribes pay the state between 4% and 10% for the exclusive right to operate Class III gaming, which includes slot machines.
Stitt had maintained that the compacts expired on Jan. 1 and that Class III gaming would be illegal after that without a new compact.
Some of the state’s gaming tribes filed suit in U.S. District Court for the Western District in Oklahoma on Dec. 31, seeking a ruling that the compacts automatically renewed.
U.S. District Judge Timothy D. DeGiusti in July sided with the tribes.
The action came after those who crafted the original compacts about 15 years ago said they believed the compacts automatically renewed.
On Oct. 17, 2019, the Oklahoma Horse Racing Commission, an executive agency, quietly approved the final horse track gaming and racing license applications. The action provided to be critical in the tribes’ case. Supporters said it triggered automatic renewal of the gaming compacts.
The fight over tribal gaming compacts has cost the state more than $1.5 million in legal fees, according to figures provided earlier this year.
The Office of Management and Enterprise Services, despite numerous requests, had not provided updated figures as of late Friday.
Video: Gov. Kevin Stitt talks about the U.S. Supreme Court’s landmark McGirt decision.
Oklahoma Gov. Kevin Stitt on Oct. 22 talked about how the state will move forward after the McGirt decison
Gallery: A breakdown of the nearly $139 million that Oklahoma collected from state tribes in FY 2018
A breakdown of the nearly $139 million that Oklahoma collected from state tribes in fiscal year 2018
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.
Total machines
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
