Record amount paid in tribal gaming exclusivity fees in FY 16

OKLAHOMA CITY – The State of Oklahoma collected more than $132 million in tribal gaming exclusivity fees in fiscal year 2016 under the state-tribal gaming compact. The record amount is not only good news for Oklahoma education funding, but also continues an upward trend since the first decline two years ago.

Tribes paid the FY 2016 exclusivity fees based on nearly $2.2 billion in revenue generated from Class III electronic games1 and nonhouse-banked card games.

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Compared to the previous year, FY 2016’s three percent overall uptick mirrored an increase in fees derived from electronic Class III games, about $113.5 million. Tribes do not pay exclusivity fees on revenue generated from Class II gaming.

FY 2016’s collections are the second year in a row exclusivity fee payments have increased after the fees paid to the state by Native American tribes for exclusive gaming rights declined compared to the previous year for the first time since the implementation of the compact in 2005. A variety of factors has caused collections to increase by nearly $9.4 million since FY 2014, including FY 2015 being the first full year during which new staff at the Office of Management and Enterprise Services Gaming Compliance Unit was in place and operating under improved policies and procedures.

Exclusivity fees are distributed to the Education Reform Revolving Fund (1017 Fund), the General Revenue Fund and the Department of Mental Health and Substance Abuse Services. The 1017 Fund received nearly $116 million in FY 2016. The GRF received about $16 million in FY 2016. ODMHSAS statutorily receives a set $250,000 annually from the exclusivity fees.

Data included in this report also show a steady increase in the amount of exclusivity fees from nonhousebanked table games, although still significantly less than that from electronic games.

Until FY 2014, exclusivity payments had grown annually since 2005, when tribes first began operating under voter-approved, state-tribal gaming compacts. The compact established exclusivity payments, onetime startup and annual assessments for the operation of covered games.

Under the compact, tribes pay monthly exclusivity fees based on a sliding scale for Class III electronic games. For the first $10 million in revenue, tribes pay 4 percent to the state; for the next $10 million, the payment is 5 percent; and for revenues more than $20 million, the payment is 6 percent. Tribes pay 10 percent of the monthly net win from table games.

The compact also includes minimum state regulatory requirements on games, accounting and auditing standards, the licensing of employees, liability insurance, property claim procedures and several other provisions. The Gaming Compliance Unit of the Office of Management and Enterprise Services carries out the oversight responsibilities granted to the state under the compact.

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