Governor asks tribes to sign gaming compact extension
Oklahoma Gov. Kevin Stitt on Tuesday issued a public request for Oklahoma tribes to sign an agreement to extend the state's tribal gaming compacts to avoid disruptions when the compacts expire Jan. 1.
"To protect hard-working Oklahomans and tribal members, the State of Oklahoma will be signing an extension to the gaming compact, and hope tribal leaders will join us," Stitt said.
Oklahoma's gaming tribes have taken the legal position that the 15-year compacts will automatically renew Jan. 1, while Stitt contends they do not.
"If we do not take action, all Class III (Las Vegas-style) gaming activity will be illegal on Jan 1, 2020," Stitt insisted. "This creates tremendous uncertainty of Oklahoma tribes, for those conducting business with the casinos, for casino patrons. I cannot put Oklahomans in this position."
Stitt said the length of his proposed extension has not yet been determined.
The state is prepared to craft the extension in a way that would preserve all the legal positions of the tribes and state while negotiations continue, he said.
"I want business to continue as usual while we resolve this dispute," he said. "We do not want gaming to be illegal and we do not want vendors to be operating illegally."
Matthew Morgan, chairman of the Oklahoma Gaming Association, said the tribes are not in a position to comment on Stitt's extension proposal because they have not yet seen it in writing.
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"I think tribal leadership would be open to all conversations, but we haven't seen it, and apparently the document hasn't been written yet, so it's hard to comment on something we haven't seen."
Morgan reiterated the tribes' contention that the compacts automatically renew so tribes believe they can continue operating their casinos beyond Jan. 1 with or without an extension.
In a related matter, Oklahoma Attorney General Mike Hunter announced Tuesday that he has stepped aside as the state's lead negotiator on tribal gaming compacts to allow Gov. Kevin Stitt to negotiate directly with the tribes.
Under the state constitution, "the governor is given authority to enter into agreements with the federally recognized tribes," the attorney general's office said Tuesday in a prepared statement. "Accordingly, the attorney general and the governor have agreed to return the lead agency over tribal gaming compact negotiations to the Governor’s Office. This will allow the governor and his legal counsel to negotiate directly with tribes to hopefully develop a path forward.”
At a news conference Tuesday, Stitt sought to dissuade speculation that Hunter was removing himself from negotiations because of some disagreement with the governor over compact negotiations.
"No, the attorney general and I have a great relationship," Stitt said. "I've been talking to certain tribes. He's been talking to different sets of tribes and I just felt like it was best to have one unified voice, so I told him I would be the lead negotiator from here on out."
Stitt said the conversations he and the attorney general have had with various tribal leaders have revealed tribes are not united on the issue of whether the compacts automatically renew.
"One thing that is abundantly clear from our negotiations is that the needs of Oklahoma tribes are not united," Stitt said. "Contrary to the TV commercials and what some of the newspapers are reporting, the tribes are not united on this issue. The state cannot reach an agreement that addresses the needs of every single tribe in the state within the next 18 days."
Stitt declined to say what specific actions state officials will take if tribes refuse to sign an extension and continue operating after Jan. 1.
"There's going to be tremendous uncertainty and all legal options are on the table," the governor said, adding that his office was in negotiations with an out-of-state law firm to represent the state in a potential lawsuit.
Stitt indicated the state may seek to take action against vendors who service tribal casinos if tribes continue to operate their casinos after Jan. 1 without a new compact or extension.
"That's absolutely a possibility," Stitt said. "That's why we need this extension in place, to make sure the vendors feel safe, the state feels good and the patrons and workers."
Morgan insisted Tuesday that Stitt is the only person who seems to be asserting that there will be great uncertainty if an agreement or extension hasn't been reached by Jan. 1.
Stitt has repeatedly told the public he wants tribes to pay a much higher exclusivity rate on on the Las Vegas-style Class III slot machine type games that they operate than the 4-6 percent graduated rate that they have been paying under the current 15-year model gaming compact.
In anticipation of Stitt's news conference, several Oklahoma tribal leaders issued a news release Tuesday reiterating their position that the compacts automatically renew Jan. 1, but that they are willing to negotiate exclusivity rates.
Exclusivity payments are the fees tribes pay the state for the right to offer Las Vegas style games with strict limitations placed on any competition.
“Tribal leaders remain open to negotiations about exclusivity fee rates,” Choctaw Chief Gary Batton said. “We have not received a formal proposal from the state. We have always been open to a fair and reasonable discussion on rates and still are today as long as Governor Stitt is willing to honor the plain language of our existing agreement, which includes automatic renewal.”
Chickasaw Gov. Bill Anoatubby said the tribes believe Stitt's insistence the compacts must be renegotiated by Jan. 1 is unfounded. Tribal leaders said they plan to continue operating casinos after that date, even if no agreement has been reached.
“The holidays are some of the busiest times of the year for the entertainment industry and casinos are no different," said Seminole Nation Chief Greg Chilcoat. "The more than 75,000 Oklahomans who work in the tribal gaming industry in Oklahoma will provide our patrons from Oklahoma, Texas, Arkansas, Kansas, Missouri and Colorado with a wonderful entertainment experience on New Year’s Day and beyond.”
Tribal leaders said they plan to continue to remit their exclusivity fees to the state next year, even if the dispute has not been resolved.
“We will continue to fulfill our commitments under the compacts,” Muscogee (Creek) Nation Principal Chief James Floyd said.
Whether or not the state could accept those payments if no extension or new compact agreement is in place could be a sticky legal question, because it would place the state in the awkward position of accepting money from enterprises that the governor has contended would be illegal. It's possible that a court could construe acceptance of such payments as an acknowledgment that the casino operations continued to be lawful.
The tribes said they would pay the exclusivity fees to help the state avoid any unexpected budget shortfall next year.
In fiscal year 2019, alone, the tribes paid the state more than $148 million in exclusivity fees, records show.
Any drop in those fees could prove challenging for legislators in light of difficulties currently facing the state's oil and gas industries.
Stitt has publicly mentioned having recent conversations with commercial gaming representatives who have voiced an interest in coming to Oklahoma.
Tribal leaders insisted Tuesday that introducing corporate commercial gaming to Oklahoma would be a complicated process that would require the Legislature to change the current law. They claim that would constitute a breach of their compact, which could cause the state to forfeit its right to share in any tribal gaming revenues.
“The mature and competitive nature of the Oklahoma market would also make it difficult for a private commercial operator to succeed in Oklahoma," said Cherokee Nation Principal Chief Chuck Hoskin, Jr. "It would be exceptionally disruptive and put hundreds of millions of dollars for the state at risk. Corporate commercial operators export most of their money out of state for the benefit of their shareholders and executives. On the other hand, tribes invest their money in Oklahoma to help create a better, stronger and more prosperous state benefiting all Oklahomans.”
Hoskins said tribal leaders are considering a framework for a potential discussion with the governor on rates.
“Absent a proposal, leaders will be working on a framework for a reasonable conversation on rates that will deliver value-for-value benefit for both the tribes and the state,” Hoskin said. “We are thoughtful in our approach as we meticulously consider ideas at this time – we will be ready whenever the time comes to have a conversation.”