Opinion: A Frosty Future Ahead for Gaming Expansion Possibilities In Oklahoma

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The dust is still settling nationally on the 2022 midterm elections. In Oklahoma, however, most of the dust settled within a few hours of polls closing on November 8.

Pre-election polls had shown a strong chance that Oklahomans might elect a Democrat as Governor for the first time in over a decade. However, reality disagreed with the pollsters, as it often does.

In fact, the contest turned out not to be particularly close. Governor Kevin Stitt won his re-election to a second term with just under 56% of the vote. For those keeping score, his Democrat opponent Joy Hofmeister finished with less than 42%.

Stitt remaining in office creates a lot of uncertainty about what might be in store for gaming over the coming four years. However, the status quo would seem to be the current odds-on favorite.

The State of Stakeholder Relationships

As it stands, gambling in Oklahoma belongs mostly to tribes.

The current relationship between the Oklahoma tribal gaming community and the Governor is, in a word, frosty. The Governor and many gaming tribes have been at an impasse since shortly after his win in the 2018 election.

Things came to a head when Gov. Stitt contended that the state’s tribal gaming compacts did not renew automatically. The initial 15-year terms for these compacts were set to expire in 2020.

Ultimately, federal Judge Timothy DeGiusti came to the tribes’ rescue. DeGiusiti, a George W. Bush appointee, ruled that electronic gaming at the state’s horse tracks was sufficient to trigger a provision in the compacts for automatic renewal.

The situation became even more contentious when several tribes broke off from the group. These tribes attempted to negotiate for new compacts and a better deal for themselves, which would have included the right to offer sports betting. They were able to strike a deal with the Governor, only to have those new compacts rejected by the Oklahoma Supreme Court.

The Court’s ruling was that the Governor had exceeded his authority. Since he had not included the legislature in the negotiations, the Court found the compacts invalid.

In response, the Oklahoma Indian Gaming Association issued suspensions to the tribes which had sought these new compacts.

Further Antagonism

Oklahoma’s feud with the tribes didn’t end there. No sooner had the issue with the compacts concluded than the two parties found themselves engaged in months of public spats over the scope of the Supreme Court’s McGirt and Castro-Huerta decisions. These had to do with jurisdictional boundaries and tribal sovereignty and had the potential to impact gambling.

By early October 2022, things had grown heated enough for the tribes to take a rare step. Though they have been traditionally non-partisan, the Cherokee, Chickasaw, Muscogee (Creek), Choctaw, and Seminole Nations announced their endorsement and support for Hofmeister in advance of the midterms.

Hofmeister’s loss means that the tension is likely to continue. Something will need to change in the relationship if we are to see any positive change to come to the gaming industry in Oklahoma.

There is a silver lining, however. The Governor’s chilly relationship with the tribes does not appear to extend to the legislature. If other lawmakers are still on good terms with the tribes, then perhaps they could serve as a bridge between the two sides. That would still require finding some point of common interest to bring everyone to the table.

What’s Next for Oklahoma?

In the wake of the Governor’s re-election, the tribes appear willing to start anew. There are undoubtedly still lingering issues, but several tribes have acknowledged the importance of working with the Governor moving forward.

Gaming is likely a secondary issue at the moment. Far more important are the many issues related to sovereignty stemming from the McGirt decision. Even so, gaming could potentially be the common ground both sides are looking for if they want to improve their relationship.

That said, iGaming is likely off the table for now. The case involving the Seminole Tribe of Florida awaits a resolution at the D.C. Court of Appeals. That may settle the question of whether online gaming is even permissible under the Indian Gaming Regulatory Act. Regardless, Oklahoma Tribes have not appeared especially bullish on expanding into online offerings.

Sports betting, on the other hand, seems within reach. Indeed, it was this same bargaining chip that the Governor used to tempt some tribes into negotiating new compacts. Although the Court deemed those compacts invalid, sports betting seems likely to come up again as an incentive. If both sides agreed to renegotiate, it’s conceivable that they could include the legislature and create new compacts that would stick.

That said, sports betting alone might not be enough. The Oklahoma Tribes, collectively, have built successful casino and entertainment businesses across the state. Sports betting is, at best, an ancillary product. The casino industry sees it as a way to bring people in the door who otherwise might not visit a casino.

As long as sports betting remains the low-margin product that it is, it is likely there would need to be something bigger added to the pot to encourage most of the State’s Tribes to reopen their Compacts.

What does all this mean?

The long and short of the election result is that Oklahoma is unlikely to abandon the status quo in the immediate future. It is possible that the Governor and Tribes could come together and work out new gaming agreements. However, their past disputes are unlikely to be forgotten very quickly.

And even if the relationship improves, other factors make it unlikely that Oklahoma will jump into online sports betting, let alone full iGaming.

About the Author

John Holden

John Holden is a writer at Bonus, focused on legal and regulatory issues in the gambling industry. He is a full-time academic but has been writing for a number of gaming publications since 2018. He is the author of more than 50 academic publications and hundreds of mainstream articles on the regulation of the gaming industry.

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