U.S. District Court Judge Timothy DeGiusti recently rejected Oklahoma Governor Kevin Stitt’s argument that tribal gaming compacts in the state expired on January 1, and would have to be renegotiated. DeGiusti ruled in favor of the tribes who claimed the 15-year compacts automatically renewed on that date.
The Cherokee, Choctaw and Chickasaw nations sued Stitt on December 31, and were later joined by six other tribes.
In a statement, Stitt said, “It confirms my fears, and the fears of many fellow Oklahomans, that the state entered into a poorly negotiated deal and now we must bear the cost of this mistake. The federal court determined that the 2004 gaming compact auto-renewed for 15 years because of an action taken by an agency’s unelected board to reissue licenses for gaming at horseracing tracks.”
He referred to a provision in the compacts, approved by Oklahoma voters in 2004, that allowed the compacts to renew if anyone other than the tribes was “authorized to conduct electronic gaming in any form other than parimutuel wagering on live horseracing pursuant to any governmental action of the state.”
Oklahoma Indian Gaming Association Chairman Matthew Morgan stated, “We appreciated that the court moved quickly to confirm the plain language of our intergovernmental agreements mean what they mean, and here, those words mean our gaming compacts automatically renewed January 1, 2020.”
Stitt’s attorneys had argued that “governmental action” meant legislative action, and that licenses granted by the Oklahoma Horse Racing Commission didn’t qualify as governmental action. But DeGiusti wrote that “the state strains in its arguments” and that he was “not persuaded.”
He said he agreed with the tribes’ position that compact renewal was automatic because the state authorized organizational licensees to conduct electronic gaming and live horseracing at Oklahoma tracks.
“The court rejects the state’s narrow view of ‘governmental action,’ which is inconsistent with a common understanding of that term,” DeGiusti wrote. “The court finds that these technical definitions are not required by the compacts and their use would be inconsistent with federal contract principles.”
Tribal officials rejoiced at the judge’s ruling. Cherokee Nation Principal Chief Chuck Hoskin Jr. said, “Everything in our compact now remains the same, and we hope we can move forward and build a relationship built on respect with Governor Stitt in the future.”
Choctaw Nation Chief Gary Batton said, “This is a great day. This is a strong affirmation of what we have known all along. The plain language of the compact stated that it renewed on January 1, 2020. We are grateful this issue has been resolved and are ready to put it behind us. We look forward to continuing to serve our tribal members by providing health care, education and jobs in the communities where we live and work.”
Chickasaw Nation Senior Counsel Stephen Greetham stated, “This is a good day. It’s a good day for the tribes. It’s a good day for Oklahoma. For our economy, for stability, for jobs, this is something everybody needs to be celebrating. It brings certainty and stability back into an important pillar of Oklahoma’s economy.”
Greetham added, “We’ve been saying from the get-go that this is not a complicated issue. The words say what the words say. Gov. Stitt has attempted to inject a level of uncertainty and confusion into our compacts, but it’s just not supported by the plain text of the agreement.”
Now we just kind of need to take a deep breath. We need to kind of let the waters settle and get the relationship with the governor back on track.”
Under the current compacts, tribes pay the state exclusivity fees between 4 percent and 10 percent on gaming revenue. Last year the tribes paid the state about $150 million in exclusivity fees, which mostly go toward public education. All of the current compacts have the same conditions, but Stitt said he wants the agreements to be individualized for each tribe.
DeGiusti gave the two sides until August 7 to express any further concerns. A spokesman for Stitt said he didn’t know whether the governor will appeal the ruling. House Minority Leader Emily Virgin asked him to end his legal actions. “The governor’s compact negotiations are starting to look like a stimulus package for trial lawyers. Having already spent $1.5 million, the governor is wasting money that could be spent on resources that help our citizens. If the governor continues to pursue this through the appeals process, more money will be spent on lawsuits that could have instead helped schools, our state’s IT infrastructure or our health care community. I encourage the governor to reflect on his position and ask if continuing a pursuit with an uncertain outcome is worth the risk of not protecting Oklahomans.”
The state Office of Management and Enterprise Services said the lawsuit against Stitt so far has cost $746,345.92 to Ryan Whaley for litigation preparation, management of multi-party litigation, mediation and compact negotiations; $275,548.30 to Lytle Soule & Felty for litigation preparation, mediation and compact negotiations; $252,614.37 to Revelation Consulting for mediation and compact negotiations; and $9,975 to Perkins Coie for compact negotiations.
The state also paid Dykema Gossett of Lansing, Michigan, $216,816.12 to represent Oklahoma in negotiating compacts and related agreements with the tribes, drafting related legislation and regulations and for the prosecution or defense of a related proceeding or matter. These funds came from the office of Attorney General Mike Hunter, who served as lead compact negotiator on behalf of Stitt until the governor removed him from that role on December 16.
DeGiusti’s ruling is the second recent legal loss for Stitt. On July 21, the Oklahoma Supreme Court ruled that Stitt overstepped his legal authority when he signed new gaming compacts with the Comanche Nation and Otoe-Missouria Tribe which included provisions for sports betting and house-banked card games—which currently are not legal in the state. The justices said the governor doesn’t have the authority to permit an activity prohibited by state law.
Those two tribes had model gaming compacts like the other tribes but signed new gaming compacts with Stitt, which were approved by the U.S. Department of the Interior and published in the federal register.
The United Keetoowah Band of Cherokee Indians and Kialegee Tribal Town also entered into new compact agreements with Stitt. The Oklahoma Supreme Court has been asked to rule on the legality of those agreements.
“In my first six months (in office), I traveled across the state listening to tribal leaders and to leaders from many sectors of Oklahoma’s economy about these compacts,” Stitt said. “What I heard and what I learned is that only a few tribes were receiving most of the benefit from gaming; the one-size-fits-all approach to the Model Gaming Compact was clearly broken.”
