COMMENTARY: The Sweetheart deal is over
Published: July 22nd, 2019
The fifteen year Indian gaming compact negotiated by former Governor Brad Henry and State Treasurer Scott Meacham with the tribes is set to expire in January 2020. It is estimated the tribal casinos in the Sooner state generate $4.5 billion dollars of annual revenue.
Last month, Governor Kevin Stitt sent a letter to the tribes stating he wants to renegotiate the terms of the compact. Currently four to six percent of gambling proceeds generated at the casinos go into state education coffers.
When the original compact was negotiated, Henry said the funds generated at the casinos and through the lottery would cure Oklahoma’s education funding shortfalls. Actual funding fell well short of Henry’s estimates.
Three observations:
First, the initial compact favored the tribes. Because the tribes were in the process of building casinos, Henry and Meacham granted concessions for building that infrastructure by lowering the percentage of the take. The compact was widely criticized for its lack of auditability of the tribal gaming operations. Some went so far as to say the tribes were on the ‘honor system’ as to how much they paid the state. A necessary correction for allowing the State Auditor to examine the tribal gaming operations books to insure the state is getting the agree upon monies must be a part of the new compact.
Second, the slots will not be shut down. Stitt’s position is if an agreement is not reached by the date of expiration, the Class III gaming(slots, cards) would be shut down until an agreement is reached. Tribal lawyers disagree and believe the original agreement will be rolled over for another fifteen years.
Neither party can afford to shut down the money stream, so an agreement will be reached well before the Willy Wonka Golden Ticket slot is unplugged. The tribes want ‘sports book’ gambling and the state holds that as a negotiating chip. Expect to be betting on the Thunder game next year at your local tribal casino.
Third, expansion of gambling in Oklahoma has hurt the state. Oklahoma is #1 in number of casinos per capita. In a study by WalletHub, Oklahoma ranks #5 in the U.S. in gambling addiction and #26 in treatment. According to the Mayo Clinic, “Gambling can stimulate the brain’s reward system much like drugs such as alcohol can, leading to addiction.”
Gambling produces nothing. It is regressive taxation that tends to hit the poor. The Department of Justice has found that expansion of gambling is linked to higher crime rates and drug use. Dr. Earl Grinols, a Baylor professor of economics, calculates the costs of gambling outweigh the benefits by a factor of 3:1. Gambling fails the cost-benefit test.
A fairer, more equitable compact should be negotiated, but if Oklahoma is to become a top ten state, it will not be by collecting taxes on gambling and marijuana sales from citizens. It will come by growing Oklahoma’s economy past its century long addiction to the oil and gas industry and aggressively recruiting manufacturing and distribution to the state.
Steve Fair is Chairman of the 4th district of the Oklahoma Republican Party. He can be reached by phone at 580.252.6284 or by email at okgop@aol.com. His blog is stevefair.blogspot.com.