Disagreement between Kevin Stitt and three Oklahoma tribes leaves the gaming industry in question.
On Dec. 31, the three largest gaming tribes in Oklahoma — the Cherokee, Chickasaw and Choctaw — filed a lawsuit in the Oklahoma City federal court, naming Oklahoma Governor Kevin Stitt as its defendant. This lawsuit marks the latest development in an ongoing dispute between the governor and tribal authorities regarding the state gaming compact. The situation began in July 2019, when Governor Stitt sent a letter to all casino-owning tribal governments that indicated his desire to renegotiate.
The compact — an agreement which establishes the rules that govern legal gambling in Oklahoma — was officially adopted in 2006 and was set to automatically renew every 15 years. Governor Stitt had previously communicated some dissatisfaction with the amount of money collected by Oklahoma’s state government and attempted to initiate some form of arbitration.
However, tribal governments declined Stitt’s request, which prompted a series of headline-grabbing responses from Governor Stitt. Following the tribes’ rebuttal, Stitt declared that absent an attempt at renegotiation, the compact would expire on Jan. 1, 2020; as a result, all tribal casinos would be complicit in illegal gambling at the start of the New Year.
Additionally, Stitt threatened to hike the percentage of casino profit given to the state from 10 percent to 25 percent, a significant increase that did not interest the tribal governments. This threat was accompanied by a publicly addressed letter sent by Stitt to the government of the Chickasaw Nation declaring the intent of the state to extensively audit the tribe and the financial data of their casinos in 2020. Notably, the ability of the state to audit the casinos is severely limited without the compact in place, so it is unknown as to how this will be accomplished.
All of these actions culminated with the filing of a federal lawsuit, with Cherokee, Choctaw and Chickasaw tribal governments seeking a ruling that would affirm that the pact renewed automatically on Jan. 1. Gov. Stitt has retained lawyers from a Seattle-based law firm to litigate the lawsuit, using funds collected under the gaming compact to finance his defense. According to a statement released by Stitt, the law firm is being paid up to $300,000, all from the compact’s coffers.
Under the initial rules of the compact, the tribes pay between four percent and 10 percent of revenue; this payment guarantees the exclusive right of the tribes to operate casinos that host Class III gambling. The exclusivity fees alone amounted to almost $140 million paid to the state in the last fiscal year, which has been used to supplement a relatively small state budget.
The outcome of the lawsuit will not be clear for a long time. However, tribes have been continuing to conduct business in casinos normally and have given no indication of halting operations. Two tribes have signed an eight-month extension to the compact — Kialegee Tribal Town and the United Keetoowah Band of Cherokee Indians — however, these tribes do not currently operate large-scale gaming casinos in Oklahoma.
