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Oklahoma's gaming compacts fill up coffers at an alarming rate



The impact of tribal gaming can be seen from the highways and from the balance sheets. Casinos dot the Oklahoma landscape by the dozens and impact the state's treasury by the millions. Revenues have doubled to roughly $2 billion in the past two years, according to Indian Gaming magazine. Yes, that's billion with a B.


"When I first started negotiating, there were about 60 (casinos)," said State Treasurer Scott Meacham, who led the negotiations between the state and tribes as director of state Office of Finance in 2003. "By 2004, we were up to the 70s."

Today, approximately 100 facilities offering some type of gaming " slot machines, bingo games or poker tables " are scattered across the state. The gambling opportunities range from Riverwind Casino just south of Norman, where eager patrons can choose between 2,200 slot games and 71 card tables, to a Cherokee tobacco shop in Catoosa, which has a bank of four slot machines.

"What we're seeing is more destination-type facilities," Meacham said.

Take the WinStar casino on the Red River border along Interstate 35. The 2,100 slot games and 38 blackjack tables just weren't enough; the Chickasaw Nation plans to expand the facility to include an 11-story hotel and convention center to go with its massive casino and golf course. The expansion should be completed next year.

All of this results in state revenue that has met, if not exceeded, expectations. Unlike the underperforming lottery, the gaming compacts are filling up the state's coffers at an alarming rate.

"This year, we will get very close (to), if not hit, $90 million," Meacham said. "It's still continuing to grow on a month-by-month basis." 

The compacts " a legal agreement between the state and tribes " went into effect in 2005 after a statewide vote approved giving Oklahoma the authority to work deals with the tribes on gaming. During the first fiscal year of the compacts, only $2.29 million was brought in, as a mere handful of tribes was running casinos with games that fell under the agreement. As months went by, more and more tribes signed on, and more casinos began dishing out money to the state.

"Compacting with the state created certainty and a stable environment, which is one reason for the increase in the number of casinos built in Oklahoma," said Brian Campbell, Chickasaw Nation commerce division chief executive officer.

The first full fiscal year of the state-tribal agreements was 2006, which brought in more than $14 million for the state. By the end of the 2007 fiscal year, that figure tripled to $46.82 million.

Through 10 months of the 2008 fiscal year, tribal compacts have handed over more than $65 million to the state's treasury.

When totaled, the state has earned nearly $130 million since the first compact was signed in January of 2005.

Almost all federally recognized tribes within Oklahoma that offer gaming have signed state compacts, leading to the construction of more and bigger casinos. But Meacham attributed the increased revenue to other factors.

"It is some growth in new facilities, but it is also to a greater extent existing facilities doing a higher (percentage) of their operation with compacted games," he said.

Most casinos have a combination of Class II and Class III games. Class II games involve some form of bingo, including electronic slot machines. Federal laws prohibit states from regulating or taxing Class II games.

Class III games are non-bingo-type slot machines, table games and off-track betting for horse races. Those games fall under the compacts.

Under the agreements, the state receives up to 6 percent of net revenue from electronic games and 10 percent from table games. Using those figures, the estimated amount tribal casinos have raked in during the 2008 fiscal year hovers around $1 billion.

If that figure isn't staggering enough, Meacham said, "I would estimate that still 50 percent of the games out there are the old Class II games." And more games may start to fall under state compacts.

"From a business perspective, customer preferences are driving our decisions about what types of games to place on the floor," Campbell said. "Initially, our customers preferred the Class II games because that's what they were used to playing. But over the past few years, we've seen a gradual shift toward the Class III games."

The bulk of the money comes from electronic games, which account for $54 million of the state's 2008 revenue. Table games amount to $11.75 million.

Meacham attributed the success of the casinos as part of the reason why lottery sales have fallen below expectations.

"Gaming is a little more dynamic," he said. "It's more entertainment. Playing the lottery really isn't entertainment. It's a different type of attraction."

The state's largest tribes are also the state's biggest contributors to the compact.

The Chickasaw Nation leads the field, contributing more than $34 million since signing a state compact. The Chickasaws own some of the state's largest casinos, including Riverwind and WinStar. Spokeswoman Robyn Elliott said the majority of the tribe's revenue now comes from gaming, compared to nearly 20 years ago when 98 percent of the tribe's funding was federal.

The Osage Nation, fifth on the contributor list, reported last week its six Million Dollar Elm casinos generated $139.6 million in 2007.

The flourish of tribal gaming has also helped out local communities. The tiny town of Miami, Okla., up in the far northeastern corner of the state, has seen more tourists come into the city on one night than the town's entire population of 13,000. Interim City Manager Tim Wilson said a Rascal Flatts concert brought in more than 15,000 people to the community.

"Like casinos or not, it has cash registers ringing at the gas stations and eating establishments," Wilson said. "Our sales tax has increased $250,000 this past year."

Miami sits just a stone's throw away from both Kansas and Missouri " the main reason why the town is embedded with and surrounded by five casinos. Ottawa County, one of the smaller counties in the state geographically, has a total of at least eight casinos, more than any other county.

"For the first time ever, it is not uncommon to see the Miami (Interstate 44) turnpike entrance backed up a half a mile with patrons coming into town," Wilson said. "What a good sight to see." "Scott Cooper


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