Law & Principles

Oklahoma lawmakers kill non-campaign-donor tribes’ compacts

October 26, 2023

Ray Carter

During the summer, lawmakers went to extreme lengths to approve tobacco compacts for a handful of tribes who are also the source of significant campaign funds in state politics.

The actions taken to approve those tobacco compacts with campaign-donor tribes appeared, even under the most charitable interpretation, to bend state law and flout decades of precedent.

But on Oct. 25 some of those same lawmakers, serving on the Joint Committee on State-Tribal Relations, killed casino-gaming compacts for two small tribal governments, citing the thinnest of legal objections—i.e., that the two tribes have already received legally required compact approval from the federal government.

While the tobacco compacts approved last summer would divert millions from state government to the participating tribes, the proposed gaming compacts would have provided millions in new funding to the state with the two tribes paying the highest exclusivity fees for casino gambling in Oklahoma.

But the two tribes seeking approval of the gaming compacts – the United Keetoowah Band of Cherokee Indians and the Kialegee Tribal Town – are poorer tribes who are not big campaign donors. And their gaming agreements were opposed by several larger tribes that are big campaign donors, such as the Cherokee Nation of Oklahoma.

Officials with the two small tribes believe campaign cash, not legal concerns, explains the dramatic difference in how lawmakers responded to their gaming compacts after those same lawmakers waived off legal concerns about other tribes’ tobacco compacts earlier this year.

“I think that’s the major role right there,” said Jeff Wacoche, assistant chief of the United Keetoowah Band of Cherokee Indians. “We’re not able to generate these dollars that are able to go to these campaign contributions. The bigger tribes, they always say if you’re not at the table then you’re on the menu. And that’s exactly true. We always seem to be on the menu because we can’t do that because we’re always being held down.”

“I agree,” said Stephanie Yahola, mekko of Kialegee Tribal Town.

Tribes get very different treatment from lawmakers in similar circumstances

Earlier this year, lawmakers voted to approve one-year “extensions” of expiring state-tribal tobacco compacts with several tribes that failed to renegotiate new compacts with Gov. Kevin Stitt. Although described as extensions, the compacts were effectively new, one-year compacts. In the case of the Seminole Nation, the tribe’s prior tobacco compact had actually expired.

The provisions of the legislative tobacco compacts provided a multi-million-dollar windfall to those tribes and were written with language that could allow that windfall to grow exponentially.

Under federal law, the state of Oklahoma cannot collect tobacco taxes on products sold at tribal smoke shops to members of that federally recognized tribe. Census data shows that 9.5% of Oklahomans are of American Indian descent.

But the tobacco compacts advanced by the Legislature this year allowed tribes to keep half of tobacco tax collections, far in excess of the share of sales to tribal members.

Officials said tribes have been receiving $57 million annually under the compacts, but based on Census data perhaps only $17.1 million may have been owed the tribes due to the exemption on sales to tribal members. That means tribes are reaping nearly $40 million in excess annual payments from the state as a result of the legislative compacts, or $400 million per decade.

While a number of tribes benefitted from the Legislature’s action on tobacco compacts, including the Kialegee Tribal Town, the benefit was potentially greatest for a handful of tribes because language in the compacts could allow their tobacco revenue to balloon dramatically.

The legislatively created tobacco compacts declare that the agreements apply to tribal sales in “Indian country” under federal law. Until recent years, that phrase referred primarily to land held in trust for a tribe, but due a 2020 court ruling it now applies to the pre-statehood reservation boundaries of the Muscogee (Creek) Nation as well as the Choctaw, Chickasaw, Cherokee, Seminole and Quapaw nations.

Based on federal records, that means the tobacco compacts may now expand the territory subject to state-tribal agreements by up to 18,200% for those six tribes.

The Muscogee (Creek), Choctaw, Chickasaw, Cherokee, Seminole and Quapaw tribes combined have just under 97,760 acres in trust, which is about 153 square miles, based on records obtained from the federal Bureau of Indian Affairs.

But under the new definition of “Indian country,” which the Legislature did not amend in their tobacco compacts, the compacts may now apply to any tobacco-selling business owned by a tribal member within approximately 28,000 square miles.

In addition to that dramatic change, several lawmakers who opposed the new tobacco compacts said the agreements did not comply with existing state law and potentially the Oklahoma Constitution since the agreements were not negotiated by the tribes with the Oklahoma governor.

Oklahoma law states, “The Governor is authorized to negotiate and enter into cooperative agreements on behalf of this state with federally recognized Indian tribal governments within this state to address issues of mutual interest.”

Article 6, Section 8 of the Oklahoma Constitution states that the governor “shall conduct in person or in such manner as may be prescribed by law, all intercourse and business of the State with other states and with the United States, and he shall be a conservator of the peace throughout the State.”

Supporters dismissed those legal concerns. Lawmakers convened in special session to pass the new tobacco compacts and voted to override Stitt’s subsequent veto of the agreements.

According to the Oklahoma Ethics Commission, the Cherokee Nation has given more than $1.3 million directly to candidates and political entities in Oklahoma since 2015, including the Political Action Committees of both Democratic and Republican caucuses.

The Chickasaw Nation has donated more than $2.5 million to political candidates and committees during that time, according to the Oklahoma Ethics Commission.

The Choctaw Nation has contributed more than $1.5 million.

That does not account for money the tribes may have spent via independent expenditures that were not direct donations to a candidate.

When non-campaign donor tribes seek compacts, lawmakers take different approach

While lawmakers went to great lengths to authorize tribal tobacco compacts that would provide a financial windfall to campaign-donor tribes like the Cherokee, Choctaw and Chickasaw, they took a very different approach when the United Keetoowah Band of Cherokee Indians and the Kialegee Tribal Town sought approval of gaming compacts they negotiated with Stitt.

When the two tribes’ gaming compacts came before the Joint Committee on State-Tribal Relations this week, lawmakers objected that the compacts have received federal approval from the U.S. Department of Interior.

Committee members pointed to a letter sent to them by Attorney General Gentner Drummond. In his letter, which is not a binding legal opinion, Drummond argued that state law required the joint committee to approve compacts prior to submission to the federal government.

However, Trevor Pemberton, general counsel for Gov. Kevin Stitt, noted the law does not mandate a specific order, only that both actions must occur.

And Pemberton told lawmakers the governor’s office would resubmit the compacts to the federal government a second time following committee approval if lawmakers wanted that sequence taken.

Despite arguing that federal approval should follow the joint committee’s approval, lawmakers rejected the governor’s offer to abide by their wishes.

Some members of the committee also said they were concerned that the compacts would expand gambling in Oklahoma, and Oklahoma County in particular.

But there are already roughly 130 casinos in Oklahoma, and Pemberton noted that casino gambling already exists in Oklahoma County through a casino at Remington Park, which is owned by a subsidiary of the Chickasaw Nation. In addition, he noted a tribal casino now operates in the Oklahoma panhandle even though that area is outside the historic reservation of the tribal owner.

Under the United Keetoowah Band of Cherokee Indians and Kialegee Tribal Town’s compacts, each tribe would pay the state exclusivity fees of 12% to 15% on slot-machine revenue and 18% on card and table games in exchange for permission to operate casinos in the Oklahoma City metro area.

Neither tribe currently operates a casino.

Those rates are far higher than what the state receives from any other tribal casino. Other tribes typically pay just 4% to 6% on slot-machine revenue.

The two tribes also agreed to allow valid auditing, in contrast to the language in other tribal gaming compacts.

However, several large tribes that are associated with donations to state political campaigns opposed the United Keetoowah Band of Cherokee Indians and Kialegee Tribal Town’s compacts.

Data on exclusivity fees contained in the Oklahoma Gaming Compliance Unit’s Annual Report for fiscal year 2019, the most recent available, indicates 66 percent of Class III gaming revenue is currently generated in casinos owned by the Cherokee Nation, Chickasaw Nation, and Choctaw Nation.

“If you read the tea leaves, it’s probably because there’s competition and they don’t want a precedent of a smaller tribe competing, and also not one where there’s some transparency and a higher fee in there,” Stitt said in a press conference after lawmakers rejected the two compacts. “It doesn’t take a rocket scientist to see what’s happening here.”

Drummond’s letter also argued that the Oklahoma Supreme Court found the two compacts are not legal. But Pemberton noted the court’s ruling in that case actually declared the compacts must receive approval from the joint committee. The opinion stated, “Without proper approval by the Joint Committee, the new tribal gaming compacts are invalid under Oklahoma law.” By submitting the compacts to the joint committee, the agreements were in compliance with the Oklahoma Supreme Court ruling, he said.

Ethics records show Drummond was the recipient of campaign contributions from officials or entities associated with tribes that reaped major financial benefit from the tobacco compacts, including the Cherokee and Chickasaw nations.

Tribal officials feel disrespected by lawmakers

After the members of the Joint Committee on State-Tribal Relations voted to disapprove their gaming compacts, officials with the United Keetoowah Band of Cherokee Indians and Kialegee Tribal Town felt disrespected.

The two tribes have followed state law and have been willing partners with the state throughout the process. That’s in sharp contrast to the leadership of the Cherokee, Chickasaw and Choctaw nations, who have often balked at even meeting with the governor to negotiate state-tribal compacts.

Although United Keetoowah Band of Cherokee Indians and Kialegee Tribal Town officials attended the joint committee meeting, lawmakers did not give them an opportunity to speak.

“We’re disappointed we didn’t get to tell our side of the story,” said Joe Bunch, chief of the United Keetoowah Band of Cherokee Indians. “It’s unfortunate that now our attempts to try to improve the quality of life for our members, that was pretty much taken away.”

“I’m disappointed that we were not able to give our side of the story of what these compacts would do for our members,” said Gina Powell, second warrior for the Kialegee Tribal Town. “We are some of the poorest tribes in Oklahoma.”

“I’m just kind of disappointed how the bigger tribes try to keep the smaller tribes down,” said Stephanie Yahola, mekko of Kialegee Tribal Town. “We just want to make money for our members and our community too.”

Stitt called the rejected compacts “a good deal for Oklahoma” and “a great deal for our tribal partners.”

“It’s just really weird why these guys aren’t allowed to game and others can,” Stitt said. “So, the question to me is why in the world would the Legislature decline an agreement where these guys can game just like everybody else and then pay the state? If every casino was on this compact or this agreement or this rate, it would be worth more than double what we currently get, and it’s still a win-win for them.”