Oklahoma tribes paid $118.2 million in gaming fees to state

By Randy Ellis
Oklahoma City, Oklahoma (AP) August 2010

Oklahoma tribes paid $118.2 million in gaming fees to the state, helping to ease budget cuts at some state agencies, state records show.

Oklahoma received $33.3 million from the Chickasaw Nation; $22.7 million from the Choctaw Nation and $12.2 million from the Cherokee Nation, according to Office of State Finance records. Twenty-seven other tribes paid the state about $50 million.

Together, the 30 tribes are responsible for boosting state revenues from Indian gaming 5,000 percent in six years as tribes have expanded their casino operations and shifted to more Las Vegas-style games.

Indian gaming has become a huge industry in Oklahoma, with tribes generating about $2.9 billion in 2008, according to the 2009-2010 edition of Casino City’s Indian Gaming Industry Report, authored by California economist Alan Meister.

The success of tribal gaming operations and the resulting windfall to the state could not have come at a better time, said state Treasurer Scott Meacham.

With the state experiencing major drops in revenues from many of its traditional funding sources, state officials used Indian gaming money to stave off some cuts, Meacham said.

Education was the primary beneficiary, since 88 percent of Indian gaming revenue is earmarked for common education funding, Meacham said.

 
The remaining 12 percent goes to the state’s general fund.

The Department of Mental Health and Substance Abuse Services gets $250,000 a year of gaming revenues for treatment and educational programs related to compulsive gambling disorders.

Several factors have contributed to the state’s growth in Indian gaming revenues, but Meacham said the biggest has been a major shift from Class II to Class III gaming machines in Indian casinos.

Class II games are defined as bingo and electronic devices in aid of bingo, Meacham said. The state doesn’t collect any money off those games.

Class III games include electronic games that are similar to Las Vegas-style slot machines, networked games that are linked with games in other locations to produce large progressive jackpots, and skill games like video poker. These games are preferred by most gamblers, experts say.

Tribes are required to enter into state compacts to offer Class III games. The state collects 4 to 6 percent from these electronic games and 10 percent off card games, Meacham said.

The poor economy has hit Indian casino operations nationally, with revenues dropping 1 percent from about $26.7 billion in fiscal year 2008 to $26.5 billion in fiscal year 2009, according to the National Indian Gaming Commission.

Oklahoma Indian casinos have defied that trend, however.

The $2.9 billion generated in Oklahoma trailed only California, where Indian gaming produced $7.3 billion, Meister reported.

The success of Oklahoma Indian gaming operations is perhaps surprising, since state lottery revenues have essentially been flat – hovering around $69 million for the last five fiscal years.

Meacham expects the state’s share from Indian casinos to continue increasing for a few years, but said the rate of increase should decline and eventually level out.

“I don’t think we’ll see the kind of growth we’ve seen in the past because a lot of games have already moved under the compact,” Meacham said. “I think the market will reach saturation at some point.”

Competition from outside Oklahoma also has grown as cash-desperate states have increasingly turned to casinos.

The Associated Press recently reported the race to open new casinos has been particularly frenzied in the Northeast, which has 41 casinos and 20 more planned. But it’s happening in the Midwest, too.

Just this past week, competing casino developers pitched plans for a $225 million casino-hotel complex in southern Kansas, between Wichita and the Oklahoma border, which likely would draw gamblers from Kansas and northern Oklahoma who might otherwise patronize Oklahoma casinos.

“Our leadership team is continuously searching for opportunities to develop new businesses and expand existing operations,” said Bill Anoatubby, governor of the Chickasaw Nation.

Anoatubby credits the Chickasaw Nation’s success so far to having “very talented leadership and hardworking, dedicated employees.”




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