State budgets revenue from tribal gaming operations
Oklahoma state officials continue to include anticipated exclusivity fee revenue from tribal casinos in state budgets, despite Gov. Kevin Stitt arguing in federal court that the gaming operations, themselves, are now illegal.
State budget estimates presented to Oklahoma's Board of Equalization Tuesday included projections that the state's Education Reform Revolving Fund will receive $131.5 million in exclusivity fees from tribal casinos during the current fiscal year and $133.32 million next fiscal year.
The Equalization board, which includes the governor, treasurer and other top state elected officials, also approved projections that included calculations that the state's General Revenue Fund would receive an additional $17.94 million from tribal casinos this fiscal year and $18.18 million next fiscal year.
The state receives additional revenue from casino operations at Oklahoma's horse racing facilities. Although those casinos are operating by tribal-owned businesses, those gaming operations are not covered by tribal compacts and operate under different revenue sharing rules. Altogether, the state is projecting it will receive about $184.3 million from casino operations this fiscal year and about $180 million next fiscal year.
Stitt and the state's gaming tribes have spent the last several months locked in a dispute over whether the state's 15-year gaming compacts for tribal casinos expired Jan. 1 or whether they automatically renewed for another 15-year term.
Stitt, who wants the tribes to pay higher exclusivity fees, has argued that the compacts expired and that Las Vegas-style Class III gaming at tribal casinos is illegal until new compacts are negotiated and approved.
The tribes contend the compacts automatically renewed and have continued to operate as usual while continuing to send exclusivity payments to the state on a monthly basis.
“As noted in previous comments, tribes are honoring the compact by remitting in a timely manner their exclusivity fees to the state," said Matthew Morgan, chairman of the Oklahoma Indian Gaming Association. "Tribes will make their next remittance in March for February revenue to ensure the funds continue to flow smoothly to support school districts, many of which depend significantly on these funds.”
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Exclusivity fees are payments tribes make to the state in exchange for having limited gaming competition. The tribes pay a 4-6 percent graduated rate on Class III gaming machines and 10 percent rate on certain table games.
Whether or not the state should accept and spend those funds while litigation is pending has been the subject of behind-the-scenes discussions.
The $131.56 million projected to go education represents about 4.4 percent of the state's $3 billion education department budget.
Brandy Manek, the state's director of budget, policy and gaming compliance, wrote a letter letter to the executive director of the Comanche Nation Gaming Commission on Jan. 30 explaining how the state plans to deal with the situation.
In that letter, Manek said the state has created two special funds to hold tribal administrative assessments and exclusivity fees until the federal court lawsuit is resolved or further direction is received from the state.
Acceptance of those funds "is not intended and should not (be) interpreted to be a waiver of any legal position advanced by the governor or the state in federal court litigation," Manek wrote.
"Going forward, these funds received and deposited by the state will be characterized as being held in escrow and/or a credit to any constructive trust implemented by federal court," he stated.
Baylee Lakey, the governor's communications director, said it is not the governor's goal to end Class III gaming in the state.
"The governor is not advocating to end Class III gaming in Oklahoma, but instead he has been trying for 10 months now to protect Class III gaming fees by making multiple formal requests to begin negotiations of a compact before it expired," she said. "We are cautiously optimistic that the court-ordered mediation will help create an environment where we can achieve a win-win for both the state and all of Oklahoma's tribes."
At a news conference following the Board of Equalization meeting, Stitt confirmed that tribal gaming revenues have been included in the state's budget projections.
"If the courts escrow those or do anything different, I'm committed to work with the Legislature to make sure we protect common education," Stitt said. "I'm going to protect education either through the $100 million that I'm wanting to save this year or from our Rainy Day Fund."