Oklahoma tribes, governor butting heads over gambling compacts

Federal Lawsuit Threatens To Derail Legal Gambling In Oklahoma

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While much of the country has been discussing the chances for expanded gambling — via authorizing sports betting, poker, and/or online casinos — Oklahoma appears to have taken a step in the other direction.

Following months of posturing between Gov. Kevin Stitt and the state’s tribal members over the scope of their gaming compacts (and whether they renewed automatically on Jan. 1), three of the most prominent tribes filed a federal lawsuit against the governor.

The lawsuit comes on the heels of a bill introduced by Congressman Anthony Brindisi (D-NY), which would remove federal barriers to tribes offering mobile betting imposed by the Indian Gaming Regulatory Act (IGRA). The bill is tailored to support the efforts of tribes in California to move sports betting forward in their state.

A battle for the Benjamins

Why would the tribes and the governor want to get into a dispute in a state where tribal gaming has become a massive success? As usual, it all comes down to money.

Oklahoma’s tribes presently pay between 4%-10% to the state in exchange for the exclusive right to offer Class III gaming activities. Gov. Stitt, who opines that the compacts have expired, believes that the tribes should pay a higher rate to the state.

The governor has floated the idea of opening the market to commercial operators who have reportedly announced a willingness to pay a tax of 18%.

A quick overview of the legal landscape

In 1987, the Supreme Court decided the case of California v. Cabazon Band of Mission Indians. The court’s ruling effectively meant that states did not have the authority to regulate gaming conduct by Native American tribes on their sovereign land.

As a result, Congress acted just about as fast as it has acted on anything and passed the Indian Gaming Regulatory Act (IGRA). It required states to enter into gaming compacts if tribes offered certain types of gaming activities — notably Class III games (which include poker and sports betting).

The Oklahoma narrative

In 2004, the state of Oklahoma drafted a model gaming compact allowing tribes to conduct on tribal land certain Class III games that were otherwise legal.

The Cherokee, Chickasaw and Choctaw tribes who filed the lawsuit in the federal court for the Western District of Oklahoma argue that Part 15.B of the compact ensured its renewal this year. From their filing:

“The Compact renews automatically at the close of its initial term if electronic gaming continues to be offered at state-regulated horse racetracks or by others at that time, as the Compact the State offered to the Tribes expressly provides.”

The governor disagrees. He believes that the compacts expired on Dec. 31, 2019, and the tribes are therefore operating without a valid compact in violation of IGRA.

Why is there ambiguity?

Whether there is any ambiguity is a matter of who you ask or which side of the disagreement you are on.

In their federal complaint, the tribes argue that the compacts continue as long as the requirements set forth in Part 15.A are met. The plaintiff tribes believe all conditions were fully satisfied by each back in 2005.

Part 15.B is really the key to the dispute, though. The tribes argue that the compact automatically renews indefinitely for 15-year terms as long as horse racing tracks (or anyone else) are authorized to conduct “electronic gaming in any form other than pari-mutuel wagering on live horse racing.”

The first electronic gaming licenses were issued in August 2005 and continue to be refreshed. Two state-regulated race tracks, Remington Park and Will Rogers Downs, received updated licenses on Oct. 17, 2019.

The governor’s position

Alternatively, the compacts can be terminated by mutual agreement of the governor and the tribes.

According to the lawsuit, the governor first declared his intention to disavow the compacts in a letter to the tribes in July. The letter stated, in part: “Since there has been no governmental action of the State, or court order authorizing electronic gaming in the State since the effective date of the Compact … the Compact will not renew automatically renew.”

Since that time, the governor has argued the continuing operation of tribal gaming into 2020 is in violation of the law.

Who’s right in Oklahoma?

Time will tell which side will prevail.

For what it’s worth, however, former Solicitor General of the United States Seth Waxman authored a legal opinion for the Chickasaw Nation arguing that the compacts automatically renewed on Jan. 1.

In the interim, the governor has seen a number of key people on his side step down, including the state’s attorney general, who recused himself and Lisa Billy, the Secretary of Native American Affairs in the state.

What do the tribes want?

The tribes are asking the federal court to declare that Part 15.B’s requirements are satisfied and that the compacts automatically renewed on Jan. 1, 2020, plus any additional relief the court should decide to order.

This is simply the first filing in what could be protracted litigation. Next will be a response from the governor’s office, likely making the opposite arguments to the tribes, or at least attempting to clarify the state’s position.

In the interim, the expansion of other types of gaming activities (sports betting, online poker, etc.) are not coming to Oklahoma. Some glimmer for hope would shine through if the tribes and the governor got together and decided that they could renegotiate around some expanded offerings. There were, for instance, rumors circulating that some tribes might be willing to revisit payments to the state if the types of Class III offerings available were to expand.

At this point, however, the common ground looks like it’s still far off in the distance.

- John Holden J.D. / Ph.D. is an academic. His research focuses on policy issues surrounding sports corruption.
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