Proposed gaming limits could benefit Oklahoma
Saturday, November 11th 2006, 7:56 pm
By: News On 6
OKLAHOMA CITY (AP) A study commissioned by the National Indian Gaming Commission concludes that Oklahoma's gaming revenue could get a $75 million boost from proposed federal restrictions on Class II gambling.
The study, by economist Alan Meister of The Analysis Group, predicts the new rules would force tribal casinos to use Class III machines exclusively. The state's share from tribes would range from $49.6 million to $74.5 million above the $9.3 million that tribes paid last year in revenue sharing agreements.
The extra income would flow to Oklahoma's public education system and exceeds funding levels predicted by Oklahoma politicians before voters authorized the expansion of tribal casino gaming two years ago.
``We always felt that once the tribes migrated from Class II to Class III...that it would result in substantial revenue for the state,'' Meacham said.
Meacham originally calculated the state's share at $71 million a year from tribes and three racinos and has been criticized because receipts came in below expectations.
Meister's study reveals rapid expansion in Oklahoma's casino market as tribes and their customers migrate from Class II, or bingo-based devices, to those more closely resembling Vegas-style slots.
It also says Oklahoma remains the nation's biggest Class II gambling state. At the end of last year, Oklahoma casinos contained 28,101 of the country's 48,970 Class II machines. Florida was next with 8,577.
The National Indian Gaming Commission, which regulates tribal gaming, has been trying for three years to implement the new Class II rules. Commission Chairman Phil Hogen has said gambling machine makers have blurred the intended distinction between Class II and Class III.
The proposed new rules would make Class II devices considerably slower and more cumbersome, according to Meister's study. He calculated an average revenue drop of 57 percent per machine because of the reduced appeal and reduced ability for players to lose money quickly.
Unlike tribes in 14 other Class II gambling states, Oklahoma tribes could benefit from the proposed federal restrictions because they have state compacts in place to offer more lucrative Class III gambling, according to Meister's study.
To offer Class III games, tribes must forge compacts with the state. In Oklahoma, tribes pay 4 percent to 6 percent of the ``net win,'' or the amount left in each machine after winners are paid.
Tribes also pay part of the fee they receive for offering card games not banked by the house such as poker and blackjack.
But tribes have been almost universally opposed to the proposed new rules, saying they are too restrictive and would cut revenue needed to run tribal governments.
The Chickasaw Nation's head of gaming described the potential impact as ``virtually unthinkable'' in an October 24th letter to federal regulators.
Brian Campbell, chief executive officer for Chickasaw Enterprises, said Class II represents more than 75 percent of the tribe's gaming operations.
``We could be forced into a default situation with regard to our loans and financing agreements. Massive layoffs affecting thousands of employees are foreseeable,'' Campbell wrote.