Oklahoma Tribal Casinos Blame COVID-19 for $30m Drop in State Fees

  • Exclusivity fee payments fell to $123m for the fiscal year ending June 30
  • March casino closures saw fees drop from $12.5m to $21,000 in one month
  • Exclusivity fees are part of tribal gaming compacts with state of Oklahoma
  • Public schools are main beneficiaries, receiving 88% of gaming tribes' contributions
  • Tribes recently initiated various legal battles against Gov. Stitt over gaming compact agreements 
Entrance sign of Choctaw Casino & Resort Oklahoma with the casino building in the background
The Oklahoma Indian Gaming Association has attributed a significant drop in exclusivity fee payments to the effects of COVID-19 closures on casino revenues. [Image: Shutterstock.com]

A sharp decline since March

Tribal casino owners in the state of Oklahoma have blamed the coronavirus pandemic for a decrease of almost $30m in exclusivity fee payments made to the state.

The comments were made by the Oklahoma Indian Gaming Association after the state’s Office of Management and Enterprise Services released payment information for the fiscal year ending June 30. The data showed fee payments totaling $123m for the period, a significant drop from the $150m accumulated in 2019.

fee revenue was down 34% year-on-year

Until February, the state’s tribal casinos were averaging around $12.5m in exclusivity fees, but the figure plummeted to $21,000 in March. Payments rose again to $2.7m in May as gambling establishments started to reopen, hitting $11.7m the following month. For the six months until June 2020, fee revenue was down 34% year-on-year.

In a statement, OIGA executive director Sheila Morago attributed the fee discrepancy to the temporary shutdown of gaming facilities in Oklahoma starting March 23. Without these closures, Morago said the fees for the fiscal year were projected to reach “between $155-$165m”.

Oklahoma’s exclusivity fees

As per the terms of Oklahoma’s tribal gaming compacts, the state’s casino-owning tribes must pay a monthly fee to the government for the exclusive right to operate in the region. These exclusivity fees range from 4% on the first $10m of annual adjusted gross revenues on electronic games to 10% of monthly net win on table games.

public schools receive 88% of the fees

As part of these agreements, $250,000 of the annual fund is provided to the Department of Mental Health and Substance Abuse Services for gambling and education treatment. Public schools receive 88% of the fees, while the state’s general revenue fund receives the rest.

Despite casinos getting permission to reopen on May 12, recovery has been slow for the state’s gambling industry. Properties have been forced to introduce capacity limitations and shut down some games, such as poker. As a result, exclusivity fee figures still remain low in comparison to 2019. For the month of July, the total fees were still down 6% year-on-year.

Tribal compact concerns

Tensions have been high between Oklahoma’s tribal casinos and state authorities in recent months. Earlier in August, four Oklahoma tribes sued the state over gaming compacts made with two other tribes. The plaintiffs asked the federal court to revoke the contracts signed by Governor Kevin Stitt in April.

The agreements would have permitted the two tribes to offer sports betting and house-banked card games in the state. The Oklahoma Supreme Court already invalidated the compacts in July, ruling that Gov. Stitt had overstepped his authority in signing them into law.

Similarly, this year a number of tribes took action against Gov. Stitt over the renewal of gaming compacts. They believed their 15-year agreements would automatically renew on January 1, 2020, which Gov. Stitt argued was not the case.

In July, a federal judge ruled in favor of the casino tribes, saying the compacts did renew for another 15 years.