INCREASE IN GAMBLING FEES IS AN INDIRECT TAX ON PLAYERS!

Weekly Opinion Editorial

PLAYERS PAY THE INCREASED ANTE!

by Steve Fair

     On Thursday, Governor Kevin Stitt held a news conference on the impasse Oklahoma state government and the Indian tribes have in regard to the Indian gaming compact.  Negotiated fifteen years ago by then Governor Brad Henry and State Treasurer Scott Meacham after the passage of SQ 712, the gaming compact offers ‘exclusivity’ to the tribes for Class III gaming.  It is set to expire on January 1, 2020.   The tribes have taken the position the compact automatically renews and will not expire.  Stitt and legislative leaders believe it does expire. 

     As of last year, thirty one tribes are operating 131 gambling facilities across the Sooner state.  They collectively rake in about $2.3 billion annually through those operations.  Last year, Oklahoma state government got $138.6 million from the operation or about 6% of the total.  In 2018, the state legislature approved ‘ball and dice’ gambling with the state getting a 10% cut from those games.  88% of the total goes to education, 12% into the general fund.  Two observations:

     First, Oklahoma’s gaming compact does allow for a lower percentage of the take to go to state coffers.  Stitt gave the example of four states where the percentage of gambling proceeds exceeds Oklahoma’s 4-6%.  In neighboring Arkansas, tribes return 13-20% of their Class III gambling proceeds to the state.  The governor pointed out the Oklahoma based Cherokee tribe operates two casinos within thirty miles of one another(one in Oklahoma- one in Arkansas) and the compact amounts should be comparable.  But Arkansas is not Oklahoma.  In Oklahoma, 7.1% of the population is Native American compared to only .57% in Arkansas.  It’s doubtful the Cherokee tribe spends much money in Arkansas on helping the community.  That is not the case in Oklahoma.  Oklahoma’s Indian tribes run a meridian of social programs for their citizens and most of that is funded through their gambling operations(including from facilities in other states).  If the tribes are forced to pay a higher percentage, likely those programs will be cut or eliminated.  The question boils down to who will really do a better job spending money- the tribes or the state?

     Second, any increase in the percentage the tribes return to the state will be passed on.  An increase cannot/will not be absorbed by the tribes.  The tribes are running a business.  If the tribes agree to an increase, that increase will come from the source of their income- those pulling the slots.  Changing the payout percentage on the new electronic slot machines requires changing the computer chip that was loaded into the machine from the factory.  While time consuming and expensive for the tribes, they will have to do it to keep their gambling operations viable.  Expect the Casper the Friendly Ghost machine to ultimately not pay out as well if the compact percentages are increased.  The ‘players’ would pay the higher amount, not the tribe.  The increase becomes an indirect voluntary tax.     

     The expansion of gambling worldwide in the last twenty years has been dramatic, but even more so in Oklahoma.   Oklahoma has more slot machines per capita than anyplace on the planet.  Gambling losses worldwide are twice what they were 30 years ago.  Gambling addiction is believed to be more difficult to overcome than drug addiction.  Trying to get more money from Oklahoma citizens through gambling will not make Oklahoma a top ten state.