FAIR COMPACT

FOR OKLAHOMA EDUCATION

2020

With Oklahoma’s outdated 15 year tribal gaming compact set to expire next year, NOW is the time to focus on adjusting Oklahoma’s below market gaming revenue share rates so that they are in line with those of other major gaming states.

WHO WE ARE

We are citizens concerned about the level of funding for education in Oklahoma.

WHO WE AREN'T

We are not anti-tribal gaming or even anti-gaming in general.

We fully accept that the state of Oklahoma has granted a valuable and exclusive gaming contract right to tribal interests in Oklahoma, with this 15 year revenue share contract running through the end of 2019. These contract rights allow the tribes to earn significant monies annually and are only permissible after being granted exclusive authority to operate by the Oklahoma state government.

When compared to the other tribal gaming states with revenue share, we believe that Oklahoma’s compact drafted nearly a decade and a half ago is severely outdated and contains rates dramatically below the new market rates being negotiated in other tribal states.

THE CURRENT OKLAHOMA MODEL TRIBAL COMPACT

  • 15 year term expiring 1/1/2020.
  • Class III slot machines share revenue with the state, but “bingo” (class II) does not.
  • 88% of class III revenue share received by Oklahoma goes directly to fund education.
  • Oklahoma’s marginal revenue share rate is 6% for slot machines and 10% for table games.
  • When signed 14 years ago, revenue share rates were considered “fair market” as few states except for California had tribal gaming and these rates were similar to the California rates existing at the time.
  • While tribal gaming has exploded in Oklahoma, the state’s net revenue share has barely budged over recent years, with the latest reported numbers increasing only $14 million from the $118 million paid to Oklahoma by the tribes way back in 2010.

WHAT HAS CHANGED IN THE LAST 15 YEARS?

    • Tribal Gaming is a large and lucrative business in Oklahoma. The vast majority of tribal casino infrastructure needed has already been built.
    • Oklahoma now has an amazing 77,385 slot machines and over 120 different casinos. It is home to the world’s largest casino.
    • Market rates for granting tribal gaming have increased significantly since the original Oklahoma compact.
      • Florida, a market with 30% of the slot numbers in Oklahoma is currently negotiating a new compact that has rates going up to 25%. The new Florida compact is being negotiated to contain a minimum guaranteed amount to the state of $3 billion over the first 7 years.
      • California, the only tribal gaming state currently larger than Oklahoma (20% more slots) is signing compact renewals with marginal rates as high as 25%.
    • Although little information exists comparing gaming rates in multiple states, a recent (2017) study by Pennsylvania looked at the effective gaming tax rates on a blended basis for slots and table games in its 7 adjacent states. The average gaming rate in these 7 states was 33.20%. It should also be noted that many of these are non-tribal facilities that are also subject to federal and state income tax.

WHAT ARE THOSE TRIBAL SLOTS WITH LITTLE BINGO CARDS TUCKED IN THE CORNERS OF THE MACHINE?

When the current Oklahoma compact was negotiated back in 2004, traditional “call out bingo” games were properly excluded and thus free of revenue share under the compact.

Over the last 15 years, tribal casinos have blurred the lines between state revenue sharing true class III slots and look alike “bingo” slots. These new generation “bingo” slots look and feel like a real Las Vegas slot machine except for a small bingo card located somewhere on the face of the machine. Amazingly, “Bingo” slot machines are claimed by the tribes to be class II bingo games exempt from the Oklahoma revenue share.  They pay nothing to the state.

This makes a huge difference for teachers in Oklahoma since these “bingo” slots are played indistinguishably by the vast majority of players, resulting in an estimated $2 billion of “bingo” slot machine revenue being completely free of the state’s 6% revenue share.

In fairness, this is a national, not just Oklahoma issue. Interestingly, Florida negotiated for the removal of all non-revenue “bingo” slot machines as part of their last tribal gaming compact. We MUST do the same in Oklahoma.

WILL A NEW COMPACT TO BE EFFECTIVE ON JANUARY 1ST, 2020 INCREASE AMOUNTS FOR EDUCATION?

Although the new compact will become effective in less than 2 years, unless something is proactively done by Oklahoma politicians, we are at risk that the compact will be renewed at the existing below market marginal rate of 6% for slots and 10% for table games.

Although this is believed to be the largest contract ever negotiated by the state of Oklahoma, zero fact finding or planning appears to have occurred to date towards assuring Oklahoma citizens that they will receive fair value for public school education to the extent these valuable and exclusive rights are granted for another 15 year term.

The new compact must properly address the estimated $2 billion plus dollars of “bingo” slot machine revenue not currently subject to revenue share in Oklahoma.

Although we would argue for a higher rate in the new compact, just adjusting both slot and table game rates to 15% while removing the “bingo” slot loophole is estimated to bring in an additional $300-$500 million for Oklahoma education each year.

WHAT CAN BE DONE?

The current compact is set to expire in less than two years. Oklahoma must seek today’s market rate before these exclusive gaming licenses are renewed or extended in any way.

A “bingo” slot machine pays nothing towards education. The new Oklahoma tribal gaming compact must include tribal consents to pay regular compact revenue share rates on all “bingo” slot machines.

Oklahoma’s oversight in the existing tribal compact is woefully inadequate, with 3 full-time state employees overseeing more than 100 separate casino operations. The new compact must include adequate oversight from a newly formed and funded state gaming commission, incorporating best compliance practices from other major tribal gaming states.

Sports betting should not be added until a comprehensive and market rate driven new 15 year compact is negotiated with the tribes. Alternatively, Oklahoma should seriously consider running sports betting through the existing lottery system so that all profits are retained by the state.

Contact your friends and legislator. Demand that gaming revenue share rates in other states are exhaustively studied before any new compact is negotiated. Make sure they know how important these additional dollars are for the education of our children.

Have Questions?

Fill out the form to let us know what you think or to inquire more information about the Fair Compact for Oklahoma Education.