Oklahoma tribal gaming fees continue growth

By Michael, McNutt
Oklahoma City, Oklahoma (AP) June 2010

Five years after the state signed its first tribal gaming compact, money from Oklahoma’s 30 gaming tribes is on target this fiscal year to raise nearly twice the amount expected, Oklahoma Treasurer Scott Meacham said during early June.

Tribal gaming fees have contributed $107.5 million to the state coffers so far this fiscal year, Meacham said. It’s expected tribal gaming fees will bring in about $120 million by the end of this fiscal year, June 30, he said.

It was estimated when the state signed the first gaming agreement in January 2005 that the fee would bring in about $70 million a year, said William R. Norman Jr., an attorney who worked on behalf of the Absentee Shawnee Tribe, the first tribe to sign the gaming compact.

Tribes last fiscal year paid about $105 million to the state and $81 million the year before that, records show. The gaming fee brought in $46 million in the 2007 fiscal year.

Clay Pope, a former member of the state House of Representatives who supported tribal gaming, said the quick growth of American Indian casinos since then makes it likely tribal gaming fees could bring in as much as $300 million a year to the state.

“It’s the growth of the existing casinos,” Pope said. “New machines ... additional traffic coming in – talk about The Temptations, Smokey Robinson, the model of going just from having a casino to having one of the entertainment venues.”

Pope said tribal gaming fees to the state will continue to grow especially if neighboring states “are foolish enough” not to work with tribes to develop gaming compacts. It’s believed a large number of out-of-state visitors come to Oklahoma’s casinos, especially along the Texas, Arkansas, Kansas and Missouri borders.

Pope and Cal Hobson, who in 2004 was president pro tempore of the state Senate, said they had no idea tribal gaming would be this successful based on the opposition the issue faced in the Legislature. Legislators struggled for more than a year on the issue and finally revised a measure that sent it to a vote of the people in November 2004. Nearly 60 percent of the voters approved it.

“It’s one of the best moves that we made,” Pope said. “The way that those numbers have continued to grow and economic activity continued to grow pans that out.”

Meacham, Pope, Hobson, Norman and fellow attorney Kirke Kickingbird talked about the status of the tribal compacts as part of the annual Sovereignty Symposium.

About 600 are attending the event, which concludes Thursday at the Skirvin Hilton Hotel in downtown Oklahoma City.

Meacham said most of the tribal gaming fee goes to public schools; $250,000 is set aside each year for problem gambling assistance through the Mental Health and Substance Abuse Services Department.

The state receives a percentage of each tribe’s revenue from card games and Las Vegas-style gaming machines under the terms of gaming compacts negotiated with tribal officials. The present compact expires in 2020.

The tribes pay 4 to 6 percent of the adjusted gross revenue of the games covered in the compact, Norman said. The agreement allows gaming to tribes and licensed horse tracks, which are limited to having no more than 750 games. Some of the larger casinos have more than 2,000 games.

While the state received a new source of money, the tribes achieved a more stable gaming environment that resulted in traditional lenders getting involved in projects, Norman said.

Also, the tribal revenue sharing payments to vendors were reduced about 10 percent, which more than covered the fees being paid to the state, he said.

About 110 casinos are operating in the state.

Oklahoma ranks second, behind California, in revenue generated from tribes’ gaming enterprises, according to the Indian Gaming Industry Report for 2009-2010. The state surpassed Connecticut in 2008, the latest date numbers were available.

“Oklahoma has really become a center for tribal gaming across the whole country as a direct result of this compact and the stability that this compact introduced into Oklahoma,” Meacham said.

Oklahoma tribal casinos drew in almost $2.9 billion in gaming revenue in 2008, behind California’s $7.3 billion, an 18 percent growth from the previous year, according to the industry report conducted by Alan Meister, an economist with Nathan Associates Inc.

Meacham said the percentage fee assessed by the state was determined by looking at what comparable states were receiving in 2004. The Interior secretary had to approve the agreement.

“You can’t just charge whatever you want,” he said. “What this payment is is an exclusivity payment so the tribes cannot and do not pay tax to the state of Oklahoma. They pay a fee so they have a protected market for this economic activity.”

Hobson said the main economic engine in Oklahoma is the combined efforts of the tribes.

They have succeeded in getting casinos and resorts, which often result in attracting other business, being built in rural areas, he said; they have been much more successful than the state’s tax credit program to entice economic development.

“Five years ago, if you had said in a corn field south of Norman, Oklahoma, you could see over a number of months B.B. King, Diana Ross, Tony Bennett, Earth Wind & Fire – people would have locked you up in a mental hospital,” Hobson said. “There’s a hell of a lot more to this entity than just the machines and the card games. It’s driving the economy of this state in a very positive way.”