Oklahoma sports betting case
Legal Developments

Oklahoma Sports Betting Future to Be Shaped by Hearing

The federal government has permitted two Oklahoma Native American tribes to take in-person sports wagers, but a state Supreme Court ruling could thwart legal betting in the Sooner State before it begins.

Lawyers for Gov. Kevin Stitt, who signed the sports betting deals with the Otoe-Missouria and Comanche Nation, will argue before the Oklahoma Supreme Court Wednesday that their client was within his powers to finalize these compacts. They’ll oppose Oklahoma Senate President Pro Tempore Greg Treat and House Speaker Charles McCall, who argue the governor violated his authority, thus forcing the court to strike down the compacts.

Wednesday’s critical hearing will help determine the fate of Oklahoma sports betting and the future of the nation’s largest per capita tribal gaming market. Here’s what you need to know.

What’s Happening with Oklahoma Gaming?

Earlier this year, Stitt and the two tribes agreed to new gaming compacts that allowed expanded card and table gaming offerings, as well as the right to open retail sportsbooks. On Monday, those deals were formalized by the Department of the Interior.

In theory, that means the two tribes could open sportsbooks Tuesday. But state lawmakers believe the two compacts were finalized illegally.

Led by Treat and McCall, and supported by Attorney General Mike Hunter, officials have appealed to the state’s highest court in hopes it will nullify the agreements. The petitioners argue the governor can’t strike deals with tribes without their consent.

Gaming Background in Oklahoma

Since taking office in January 2019, Stitt has sought to renegotiate the original 2004 gaming compact which first authorized widespread casino-style gaming at sovereign tribal lands.

As part of the original deal, the tribes agreed to give a portion of their net gaming revenues back to the state in exchange for the exclusive access to all types of Class III or “Las Vegas-style” casino games. This generated as much as $150 million a year for the state, but tribes paid one of the lowest tax rates in the region.

Stitt wanted to bump the effective 4-6% tax rate on slots and the maximum 10% tax on table games up to between 20% and 25%. With the original compact set to expire on Dec. 31, 2019 and without a new deal in place, Stitt ruled the tribes could no longer operate their casinos on Jan 1.

The tribes kept their doors open. In absence of a new deal, the tribes argued the compact language extended in perpetuity. That matter is awaiting a separate ruling.

In the meantime, Stitt reached agreements with the Otoe-Missouria and Comanche Nation, two of the smaller tribes of the more than 30 Native American groups with some form of gaming. Stitt said he will continue working on individual deals, in contrast to the sweeping original compact that covered all tribes, even as larger tribes such as the Cherokee, Chickasaw and Choctaw remain opposed.

These tribes, along with the Oklahoma Indian Gaming Association, still want to see the original compact recognized. The OIGA suspended the Otoe-Missouria and Comanches after they signed their new deals.

Key Arguments

At Wednesday’s hearing to determine the validly of the two new compacts, both parties will argue before the court about the extent of the governor’s authority. Both point toward interpretations of the separation of powers set forth by the Oklahoma Constitution.

The governor argues the Indian Gaming Regulatory Act, the 1988 federal statute that regulated Native American gambling, gives him broad power to negotiate and finalize compacts with tribes. Stitt’s legal team filed a brief arguing IGRA gives each state’s chief executive final rights to permit tribes access to a wide range of games on their sovereign lands, even if those violate state law. A state may prohibit gambling on tribal lands, but Stitt’s lawyers write IGRA gives the governor authority to negotiate access to any specific type of gaming option.

The petitioners’ lawyers point to the legislature’s role in public policy, arguing the 2004 Oklahoma State-Tribal Gaming Act reaffirms the critical role the legislature has in all state matters. STGA, first authorized by the legislature and later approved by a voter ballot measure, granted expanded gaming options to tribes on sovereign lands, but didn’t remove existing gambling prohibitions everywhere else.

Without the legislature approving STGA, they argue, there would be no tribal gaming in the first place. The House and Senate leaders believe new deals can not be struck without the legislature’s approval.

What the Governor is Saying

The governor’s brief called the petitioners’ arguments “a blatant attempt to wrest from the Governor his constitutional, statutory, and judicially recognized duty and authority to negotiate and enter into gaming compacts with Oklahoma’s tribes.”

The brief argues federal statute supersedes any state-level law. While lawmakers can be consulted in the compact negotiation process laid out by IGRA, it explicitly grants governors the capacity to finalize deals.

“If the Court reaches the merits of the Application (sic), one would be hard-pressed to find a more settled question of law than that of the Governor’s ability to negotiate and enter into compacts with Indian tribes under Oklahoma law,” Stitt’s lawyers wrote.

The brief goes on to dismiss – without mincing words – lawmakers’ accusations that Stitt is using the negotiations as a power grab from the legislative branch.

“The only ‘unilateral power grab’ here… is the unashamed – and unsupported – attempt by key legislators to grab power and control from the executive branch,” the brief says.

Notably, the brief argues, the federal government already approved the two compacts. That means there’s nothing state-level lawmakers can do to stop it.

What Lawmakers Are Saying

Lawmakers argue state statute prevents the governor from agreeing to new compacts because they expand sports wagering, which remains against state law. Lawyers for the legislators point that the legislative branch has concurred with prior gambling expansions, not unilateral gubernatorial action.

“There can be little question that the New Agreements (sic) do not conform to enacted public policy, or purport to executive existing state law, but rather attempt to authorize violations of state criminal law,” lawyers for Treat and McCall wrote in their brief.

Furthermore, lawyers for the petitioners write in their brief that Stitt is violating the Oklahoma Constitution’s separation of powers, presenting the legislature’s roles in matters of public policy as a “bulwark against tyranny.”

“(Separation of power) rejects the view that decisions of public policy can be made unilaterally by one person – a view the Governor, unfortunately, takes in this case,” the lawyers wrote.

“When and how to agree to permit gaming in the State is a question of public policy, not one committed to the Executive alone.”

What Happens if the Governor Wins?

With the federal government and state Supreme Court on board, there’s little to stop legal sports betting, at least via the two tribes, from passing into law.

This will likely bolden Stitt’s efforts to strike individual compacts. With two tribes signed off already, it wouldn’t be surprising to see more agree to deals in the coming months and weeks.

For Oklahoma sports bettors, this will mean at least two sportsbooks, though online sports wagering remains illegal. Oklahoma tribes are not subject to state regulatory measures, which can take several months to finalize rules for sportsbooks even when they’re approved by law, but it’s conceivable the tribes wouldn’t begin taking bets until late this year or early 2021.

What Happens if the Lawmakers Win?

The two compacts would not be able to take effect. The tribes and/or Stitt could appeal to the U.S. Supreme Court, but it would be a major blow. Even in the unlikely chance the high court takes the case, it would likely be many more months until legal sports betting could begin.

This would also greatly restrain the prospect of sportsbooks beyond just the lands of the two tribes. Any new deal would have to go through the legislature, adding another hurdle in the complex path for gaming compacts.

More importantly, it puts even more weight on the earlier debate about whether or not the original compact is still in effect.

What About the Original Compact Ruling?

If Stitt prevails in the Oklahoma Supreme Court, the fate of the original compact is less important – the governor can continue negotiating with individual tribes and seek terms more favorable to the state.

If not, the future of Oklahoma gaming comes down to a mediator’s ruling on the status of the existing compact. Should Stitt fail in the Oklahoma Supreme Court, and if the existing compact is then allowed to stand, the governor loses all his leverage.

The tribes could renegotiate, but would only do so on their terms. And, since the compact extends in perpetuity, they would have little motivation to amend such a favorable deal.

However, Stitt’s hand improves dramatically If the original compact is deemed to have expired. He can proceed full force with the individual deals. The tribes, even the larger ones, may have few other options.

Bottom Line

Any of the above scenarios could plausibly be delayed, appealed, dismissed or upheld by another body, meaning Wednesday’s Supreme Court hearing may not be the last stop in the long road of Oklahoma gaming. Still, it will go a long way in shaping the future of one of the nation’s most important tribal gaming markets.

Myriad possibilities remain ahead of decisions by the court as well as the status of the original compact. All that’s certain is the significance of the stakes.

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