Don't raise the casino tax
Gov. Kevin Stitt has indicated a desire to renegotiate the tribal gaming compacts, which expire next year, to increase the exclusivity fee paid to state government by the tribes. Though it's called a fee, it is essentially a tax with casinos required to pay a percentage of their revenue to the state to do business, 4% of the first $10 million in adjusted gross revenue, 5% of the second $10 million, and 6% of everything over that. The casino tax has generated nearly $1.4 billion for the state since 2005 when it went into effect, including $138.6 million in 2018.
The governor argues the casino tax in other states is much higher, in the range of 20% to 25%, although the tribes say more than half the compacts have a casino tax rate of less than 10%. The tribes also disagree with the contention that the compact must be renegotiated, claiming that without agreement by both sides then the compact continues as is. Regardless, the governor states that he wants to see even greater economic growth for the tribes.
Taxes only have two possible purposes, either to reduce the taxed behavior or to generate revenue. In this case, the governor seems to want more money that he and the Legislature would then be able to spend.
The compact was a topic
during the gubernatorial campaign last year. My recollection is that neither Stitt nor any other candidate spoke in favor of increasing the casino tax, while praise for the economic and cultural contributions of the tribes to our state was virtually unanimous. Indeed, tribal support of health care and education, particularly in rural areas, has been vitally beneficial to Oklahomans. To turn around now and tell our tribal members that they aren't doing enough demonstrates a lack of gratitude.
Oklahoma's casino industry supports more than 75,000 jobs and has an economic impact of nearly $10 billion, according to the American Gaming Association. Much of that benefit comes from outof-state visitors, with most of the largest casinos being near our borders with Texas, Arkansas, Missouri and Kansas. A substantial increase in the casino tax risks not just future growth but the current level of economic gain as gaming increases.
If we want to respect the contributions of the tribal nations and see Oklahoma continue to grow as a gaming tourism destination, then risking long-term revenue for an attempt at a quick payout is a bad idea. Don't raise the casino tax.