Negotiators gambled to save horse racing

State-tribal compacts' history entangled with efforts to preserve tracks

Did the state's compacts with Oklahoma gaming tribes expire on Jan. 1 or did they automatically renew?

It sounds like a simple question that ought to have a simple answer.

So why are Gov. Kevin Stitt, Oklahoma's gaming tribes and more than a dozen attorneys lining up in federal court to fight over the issue?

The answer can be found in one sentence on Page 27 of the state's model gaming compact.

But before you read it, beware: That one sentence was constructed by multiple attorneys, and it is more than 100 words long.

Also be warned: That solitary sentence includes the words" this compact shall have a term which will expire on January 1, 2020," as well as "the compact shall automatically renew for successive addition alf ifteen-year terms."

Interspersed around those seemingly contradictory declarations are a number of head-scratching phrases and clauses.

Here's what the sentence states:

"This Compact shall have a term which will expire on January 1, 2020, and at that time, if organization licensees or others are authorized

to conduct electronic gaming in any form other than pari-mutuel wagering on live horse racing pursuant to any governmental action of the state or court order following the effective date of this Compact, the Compact shall automatically renew for successive additional fifteen-year terms; provided t hat, within one hundred eighty (180) days of the expiration of this Compact or any renewal thereof, either the tribe or the state, acting through its Governor, may request to renegotiate the terms of subsections A and E of Part 11 of this Compact." Huh?

To find out why the sentence was written that way, The Oklahoman talked to a number people involved in drafting the compact, including former Oklahoma Secretary of Finance Scott Meacham, the primary negotiator for the state, and attorney William Norman Jr., who helped negotiate the compact on behalf of the Absentee Shawnee Tribe.

Both men said that to understand why the wording is so complicated, a person must first look back 15-20 years and understand why the state wanted to enter into gaming compacts in the first place.

The state' s primary motivation wasn't to bring Las Vegas-style gambling to Oklahoma's Indian casinos or provide a lucrative source of new revenue for Oklahoma education, Meacham and Norman said.

Those things have happened over t he past 15 years, but they weren't the main goal.

The goal was to save Oklahoma's then-struggling horse racing industry, they said.

A look back in the archives of The Oklahoman confirms their recollection.

"We were on a 10-year slide," Scott Wells, president and general manager of Oklahoma City' s Remington Park, was quoted in a 2007 article in which he was reflecting back on the summer of 2002.

Attendance was slipping at state racetracks. Purses were shrinking, and breeders were moving to New Mexico, Texas and

Louisiana, taking jobs as well as their spending on horse supplies and equipment, the article said.

Horsemen were moving to states that offered Las Vegas-style Class III slot machines at their horse racing facilities because that' s where gambling customers were going and that meant higher payouts for winning races.

Oklahoma's elected officials decided they needed to compete, Meacham said.

Politically, state officials and horsemen knew they needed backing from tribes to obtain the support of the Legislature and Oklahoma voters for putting Class III slot machines in racetrack facilities, he said.

"If you think about it, they all would have been trying to kill our bill," Meacham said, explaining that tribes would have been loathe to support the state putting in Las Vegasstyle Class III gaming devices at racetracks if the tribes were going to have to compete with them with Oklahoma's Indian casinos that only offered lower level Class II gaming machines at the time.

Another issue is that under the federal Indian Gaming Regulatory Act, once a state offers any type of Class III electronic gaming, it is required to negotiate in good faith to allow tribes to offer Class III gaming, as well, Meacham said.

"We felt the only way to get something passed was to simultaneously work out this agreement with the horsemen to have gaming at the tracks at a level that would produce the purses they needed ... and at the same time get these compacts with the tribes so we could start getting money from what they were doing and have some regulation over what they were doing."

Norman said Oklahoma's gaming tribes were supportive of the concept, but not entirely trusting of the motives of state officials.

"What we wanted to make sure of was that at the end of the initial term, if the racetracks were able to continue to operate the games that had been permitted, or anyone else, under federal law the state would still be obligated to negotiate and have a relationship with the tribes via Class III gaming," Norman said. "The easiest way to make sure that was protected was to require automatic renewal."

Now, back to the controversial language in the compact.

From the tribes' point of view, the goal of that rather complex language was to make sure that the compacts would automatically renew if Class III gaming was still going on at racetracks or anywhere else in the state at the end of 15 years, he said.

"The language for that section was negotiated extensively over a couple year period ," Norman said ." It went through many variations in terms of whether there would be any time frame or the length of the time frame and how detailed the triggers would be that would be spelled out or how broad the triggers would be... . Of course, we ultimately settled on what we have today.

"That was an extensive and important part of negotiations, at least on the tribal side, to make sure we wouldn't be left out in the cold 15 years down the road if others were still gaming."

As far as the current legal dispute goes, Norman and Meacham both told The Oklahoman they believe the tribes are right in their position that the gaming compacts automatically renewed Jan. 1.

Stitt and his legal team disagree.

"If these contracts automatically renew, like a lot of people constantly say, then why is this in here?" Stitt said, pointing to the specific language in the 15-year compact that says, "This compact shall have a term which will expire on January 1, 2020."

"Oklahomans need to ask that question," he said.

"The state has not authorized electronic gaming since the effective date of this contract," he argued. "All this mumbo jumbo talks about if the state authorizes new gaming. Basically what it's trying to protect is if we go out and authorize gaming commercially, it would allow the tribes to operate these casinos without an exclusivity fee."

Stitt said it is his position that the state is not authorizing gaming by renewing a gaming license.

"Authorizing gaming is left up to the Legislature. That's who authorized gaming," he said. "We have not authorized any gaming."

The tribes and the main architects of the gaming compacts disagree.

The issue is now pending in Oklahoma City federal court.