oklahoma sports betting
Legal Developments

Oklahoma Sports Betting Legalized, But More Work Remains

Oklahoma sports betting was technically legalized Tuesday at a handful of Native American casinos operated by two separate tribes, though further operational and possibly legal challenges could delay or derail legal wagering.

If regulated betting is allowed to commence, Oklahoma will likely become the 23rd state to either begin taking sports bets or approve the authorization to do so.

A new compact struck between the Otoe-Missouria Tribe and the Comanche Nation and Gov. Kevin Stitt would allow the two tribes to offer retail sports bets once the deal is approved by the Department of the Interior. Stitt said during a press conference Tuesday that sports betting authorization wouldn’t require any further action from the Oklahoma legislature.

Governor Stitt is live providing an update on tribal gaming compact negotiations.

Governor Stitt is live providing an update on tribal gaming compact negotiations.

Posted by Governor Kevin Stitt on Tuesday, April 21, 2020

Matthew Morgan, Chairman of the Oklahoma Indian Gaming Association, refuted the governor hours later, writing in a statement that authorizing sports betting without an act of the Legislature was “simply not the law.”

Possible Impact

As potential further legislative and legal challenges loom, this is still a breakthrough for the long-stalled impasse between the Oklahoma government and numerous additional tribes, the pair of new gaming compacts are just the tip of the iceberg for the still contentious debates between the state and tribal officials.

“If (the two tribes) are happy with the deal, then great,” said Kevin Slicker, Managing Partner of GP Gaming Consultants, ”Hopefully everyone else will follow suit and then we’ll start moving here in Oklahoma.”

There are around 120 additional casinos overseen by more than 30 Oklahoma tribes that are still awaiting compact resolutions. Stitt said Tuesday the government will seek individual deals with the tribes, instead of the “one-size-fits-all” approach of the previous agreement.

That includes deals for the Cherokee, Chickasaw and Choctaw tribes, which have the three largest gaming operations in the state. Unlike most of the Oto-Missouria and Comanche casinos, which are in the northern half of the state, several of these larger tribes’ casinos are near the Oklahoma border with Texas, which has virtually zero casinos near its population centers and the second-most residents of any state.

Sports Betting Details

Tuesday’s announcement is significant in Oklahoma as the first crack in the long stalemate between the government and the tribes. For sports betting, it means another state is set to offer bets.

For Oklahoma sports bettors, the two deals in and of themselves won’t mean much.

The compacts restrict betting to retail locations within the two tribes’ lands and only allows an individual tribe to open two total sportsbooks. That means sports betting could only be offered at two of the five Otoe-Missouri casinos and two of the four Comanche casinos. Mobile betting, which makes up nearly 90% of wagering handle in more mature markets such as New Jersey and Pennsylvania, is not permitted under the compact.

Both deals permit wagering on college sports but prohibit bets on in-state teams. That means bettors won’t be able to wager on games involving popular football programs from the University of Oklahoma and Oklahoma State University. However, the compact is one of the first regulatory frameworks in the country to explicitly permit eSports wagering.

Casinos will be taxed at 1.1% of a bettor’s gross wager, instead of the usual tax structure in other states that charge gross gaming revenues, typically at rates between 10% and 20%. That means that under the Oklahoma compact, $1.10 of every $100 bet would go to the Oklahoma government, win or lose.

Under a gross gaming revenue tax, the casino would only have to remit a percentage of any bet they win. Assuming the historical hold average of between 5% and 7%, the Oklahoma compact equates to a rough, effective tax rate of around 20% gross gaming revenue.

Each individual compact also includes language that permits the state up to five commercial sportsbooks. Aside from the lottery, commercial gaming has been a relative footnote in the state’s overall gaming revenues. The state’s two commercial “racinos” grossed around $125 million in revenue in 2017 comparted to $2.2 billion for the more than 130 Native American gaming facilities.

Though sports betting is now technically legal at these facilities, all Oklahoma casinos remain closed due to the coronavirus outbreak with no firm timeline for reopening. Those closures, along with the inherent process of equipping employees and casinos to take sports bets means betting is still likely months away.

Oklahoma Gaming Background

Deals with the Otoe-Missouria and the Comanche are the first breakthrough in months of tense negotiations following several fruitful decades of legal gaming in Oklahoma.

Oklahoma has far and away the most tribal gaming facilities of any state on a per capita basis. If compared with commercial gaming states, it would be the sixth largest market in the country. In 2004, voters approved Class III gaming on federally recognized Native American casinos, allowing them to offer table games and slot machines.

This approval included a 15-year compact between the government and tribes that allowed the tribes exclusive rights to operate certain games in exchange for a monthly fee. That generated as much as $150 million a year in revenues for the state.

New Compact

After taking office in 2019, Stitt sought a new compact which would increase the fees from between 4% to 6% for slot machines and as much as 10% for table games up to between 20% and 25%.

In response, the tribes argued that language in the 2004 deal said that, in absence of a new deal agreed to by both parties, the existing deal remained in effect until when, or if, a new compact was agreed to. The government argued the deal would expire, and with no deal explicitly permitting the casinos to take Class III bets, they would be operating illegally after the compact expired on Dec. 31, 2019.

The casinos remained open in 2020, and the two parties became entangled in a protracted legal battle which still awaits a decision. Ironically, the COVID-19 outbreak forced the casinos to close just a few months after Stitt said they were operating illegally.

In the meantime, the government went away from the one-compact approach for all tribes and instead began pursuit on an individual basis. The Otoe-Missouria and the Comanche are the first to agree publicly, and at least a half dozen have reportedly been offered formal deals. The Otoe-Missouria fees range from 6% to 12% and the Comanche’s range from 6% to 13%, with fees varying depending on game type and the host facility’s location.

Gaming industry representatives such as Slicker remain optimistic this will create a domino effect for both the smaller and larger tribes. He said it remains to be seen if tribes such as the Cherokee, Chickasaw and Choctaw will come on board with deals or await further legal decisions, but Tuesday’s unexpected announcement could help spark further interest as the two early adaptors of the new compacts will look to open the state’s first legal sportsbooks, despite the possible controversy over legislative action, with hopes sports leagues return and casino doors can open.

“Coming into this September, you could be looking at NFL football, NBA playoffs, NHL playoffs and more all in one season,” Slicer said. “To have a sportsbook in a casino would be a huge draw for all of that.”

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