Casino Compacts
- alwjones3
- Jun 29, 2020
- 2 min read
Updated: Sep 24, 2020
Governor Kevin Stitt rightly wants to renegotiate Oklahoma's gaming compacts. Significant advantages – including virtual exclusivity or monopoly of casino revenue and operation, casino revenue-base subject to fees, and other provisions – are contained in the compacts.
Those opposing changes argue the compacts continue in perpetuity unless both sides agree. That's an interesting argument as Oklahoma's constitution has explicit limits on current policymakers and legislators' ability to bind future legislatures and the state. State laws even broadly prohibit state government agencies from making multi-year guarantees.
Gov. Stitt wisely noted: "I know that they say that they auto-renew. They don't auto-renew. You can't have a contract in perpetuity that continues forever on one side."
A review of market conditions strongly suggests casinos should pay more than the below-market 6% fee now collected on slot machines in exchange for their virtual exclusivity and monopoly.
Oklahomans should support Stitt because it makes no sense for the Oklahoma government to levy a lower tax on monopolized casino gambling when the Oklahoma government imposes a higher tax upon many other goods.
Oklahoma is home to more than 100 casinos. Only Nevada and California have more. Casino gambling, as a share of Oklahoma's GDP, has doubled since 2004, even after adjusting for inflation. Unbiased analysis of gambling's economic impact reveals that gambling is an extremely redistributive endeavor, especially in Oklahoma, wherein billions of dollars are extracted from the normal economy. Yet, the 6% fee paid on slot machines is less than the state-local sales tax rate on a bottle of water, which averages 8.94%.
In other states, tax rates on non-tribal casinos often range between 20% and 40%. Some object that tribal casinos are different, but even when you compare Oklahoma casinos to other states' tribal casinos, it's clear Oklahoma casinos often pay less. Elsewhere, tribal casinos may pay fees of around 20%. An estimated 44% of tribal gaming compacts nationwide include fees of 10% or greater.
While not ideal, tribal entities have a near-monopoly on Las Vegas-style gambling in Oklahoma. This makes casino gaming roughly comparable to a utility with a monopoly, which puts the state in the business of determining fair prices.
As the public learns more, a majority will support Gov. Stitt's reasoned and fact-based view that it's time to renegotiate gambling compacts in Oklahoma.
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