Stitt wants to raise gambling tax, increase state revenue

The lawsuits over the agreement are unlikely to deter the governor from increasing the tax rate on gambling.

While most of us were either really drunk or really asleep on New Year’s Day (I was a member of the latter group), leading members of the Chickasaw, Cherokee and Choctaw nations received a monstrously important transmission from Oklahoma Governor Kevin Stitt. The turn of the decade marked the expiration of the compact made between the state government and the native tribes on the subject of legal gambling. While this was not completely unexpected – Stitt had indicated the agreement would expire and renegotiations would indeed happen – Governor Stitt has intimated that any casino operating without a new deal would be breaking state law and subject to legal recourse.

Now, if you ask someone outside of Oklahoma what they know about our gracious state, they would probably answer teepees, meth and gambling, and there’s no use in denying the popularity and prevalence of casinos in the Great Plains state. Generally, Native tribes are given a special status in the gaming market, with an agreement between them and the state government giving them exclusive rights to the gambling market in Oklahoma. These Native nations are given special treatment due to genocidal actions committed against their peoples, but federal law states that an agreement must be made between the prospective nation and the state government.

Whether or not one agrees with the ethical boundaries of gambling and the effects it has on a populace, it faces no challenge on a legal basis. However, Stitt has exercised a statute in Oklahoma’s compact that indicates upon the expiration of the compact, either party may request to renegotiate certain terms of the deal, such as government tax cuts and that important exclusivity deal. Part 15.B in the Model Tribal Gaming Compact directly states Stitt has the opportunity to renegotiate in this period of time.

In response to Stitt’s bold proclamation, the three aforementioned Indian nations have initiated legal proceedings against Governor Stitt, not the Oklahoma state government. The Native leaders contend that the compact auto-renews after 15 years, but, according to the letter of the law, Stitt has the legal option to renegotiate, and he does have a point.
Casinos are huge in Oklahoma, and while they do not have to make their gross gaming revenue (GGR) public knowledge, one can use the amount of money gained in tax dollars from that source – approximately $148 million – then multiply it by the rate at which the casinos are taxed, which lies somewhere between six and 10 percent. The math indicates that the casinos generate somewhere around $2.5 billion per year. However, this is without paying for operating costs and other mandatory costs. In his statement against the casinos, Stitt mentioned going so far as forcing a 25 percent tax on all gambling operations, which would bring approximately half a billion into the Oklahoma state books, and this is where it gets messy. Now one has to weigh the responsibility of currently living citizens’ culpability on actions taken decades ago versus the potential future of the state.

Stitt, a man with Cherokee ancestry, has used his pulpit to try to equalize the playing field, stating that if no agreement is made, he will open up the state to commercial casinos, companies that would drive competition and potentially generate more revenue. Oklahoma, historically lacking in funds, needs to find new sources to maintain and upgrade the state’s infrastructure, education and economic opportunities. With oil drying up, half a billion would be a grand gift to a struggling state. Stitt’s position makes sense, but opponents of his enforcement of the legal law indicate that by enforcing this statute, he would be directly responsible for the scaling back of gambling operations in the state, which would cause the dealers at the affected casinos to lose their jobs. However, most card dealers already make below minimum wage, relying on tips to make it to their next paycheck, which indicates to me that the funds made from these casinos are already moving away from the betterment of the employees, and I cannot justifiably track their line of logic. How is the poverty of individuals employed by these casinos Stitt’s fault? If they cannot take care of their own employees by providing a living wage, then how can we trust these casinos to appropriately use their funds?

Government taxes would make the use of this money more transparent and go to more individuals, which would potentially produce support systems to help these horribly paid workers. However, funds made by Native businesses are sometimes sent to measures protecting and preserving their culture, which is exceedingly important, but in a $2.5 billion marketplace, a six percent to 10 percent tax on their operations seems extraordinarily low. If these operations are not taking care of their employees by giving them a living wage, then should they enjoy exclusivity of the marketplace? It’s an exceedingly murky situation, but Stitt has the legal grounds to renegotiate, and has offered a no strings attached contract extension to any tribes that want it, but he has made it clear that a new deal will be negotiated.

Post Author: Adam Walsh