Former Oklahoma Governor Issues Warning to State as Tribal Compact Negotiations Kick Off

Posted on: October 29, 2019, 07:28h. 

Last updated on: October 29, 2019, 11:00h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.

Oklahoma Attorney General Mike Hunter began controversial compact negotiations with the state’s tribal gaming operators on Monday in a bid to squeeze more cash from their operations. But one former governor had a word of warning for the incumbent administration.

Brad Henry
Former governor Brad Henry led the initial compact negotiations in 2004, which were complex and fraught. (YouTube)

Brad Henry, who served as governor from 2003 and 2011, negotiated the original model compact with the state’s numerous tribal groups, which guaranteed them regional exclusivity on Class III casino gaming in return for a cut of the revenues to be shared with the state.

“I am worried that the dispute may end up in court,” Henry told The Oklahoman Monday. “That, in my opinion, won’t be good at all for the state. I think that is the wrong direction … I am hopeful something good will come out of Monday’s meetings,” he added.

Billions at Stake

Governor Kevin Stitt blindsided the tribes over the summer by announcing the compacts must be renegotiated to bring them in line with “current market conditions.” The tribes had expected their hard-won gaming agreements to roll over for a new term, with expiration on January 1, 2020.

Henry said that was also the expectation of his administration when the deals were first signed. With so many interested parties and stakeholders, the original negotiation process was complex and fraught.

Ultimately, 35 of Oklahoma’s 38 federally recognized tribes signed up to the model compact, which was considered a major accomplishment for the Henry administration and a huge revenue generator for the state.

The administration wanted the tribes to be tied to the compact beyond the first term and into the foreseeable future, in case they tried to negotiate a lower rate of revenue share.

Day One Stalemate

But it’s the tribes who would rather maintain the status quo, and Stitt believes he can cut a better deal for the state.

In an op-ed in Tulsa World last July, Stitt claimed that Oklahoma tribes pay the lowest revenue sharing percentages in America. But that’s not the case – Minnesota gets nothing from tribal operators.

Oklahoma gets a baseline 4 percent share of gross gaming revenues from slots and other electronic table games, rising to 6 percent if an operator’s revenue from the machines exceeds $20 million per year. For recently legalized “ball and dice games,” like craps and roulette, it’s ten percent.

In 2018, the tribes contributed $138.6 million to state coffers on revenues of $2.3 billion.

Initial reports from the first day of negotiations suggested little progress had been made, and that tribes and state remain at loggerheads over the renewal language of the compacts.

Matthew Morgan, chairman of the Oklahoma Indian Gaming Association, said in a statement that the parties were locked in “a major dispute” over the language.

“Nothing is more important to the tribes than resolving the automatic renewal, and we are committed to continued dialogue,” he added.