klahoma casino exclusivity fee revenues were down nearly 34% from January through July 2020 compared with the same period in 2019, according to an analysis of data provided by the Office of State Management and Enterprise Services, as the COVID-19 pandemic forced Oklahoma’s 128 licensed casinos to close in March.
At the state’s two commercial race tracks and casinos — Remington Park and Cherokee Casino Will Rogers Downs — revenue was down about 34% from January through June compared with the same period in 2019, according to an analysis of data released by the Oklahoma Tax Commission, CNHI reports.
Casinos across the state were having one of their best revenue years in a decade before the pandemic, and lawmakers have become heavily reliant on the casino gaming fees, which fund common education and other services for Oklahomans.
Voter-approved compacts have long granted Oklahoma’s tribes the sole right to operate casinos in exchange for paying the state exclusivity fees ranging from 4% to 10% on a certain subset of games known as Class III. In budget year 2019, those exclusivity fees generated about $148.2 million, the state's gaming association reported. The commercial race tracks generated about $28.5 million for Oklahoma coffers, state records show.
Under the compacts, the Department of Mental Health and Substance Abuse Services receives $250,000 for gambling education and treatment. The bulk of the remainder — 88% — flows to public schools. The state’s general revenue fund receives the rest — 12%.
“Obviously, that’s going to hurt us in terms of funding education for the upcoming fiscal year,” said House Minority Leader Emily Virgin, D-Norman. “That’s always a very important part of our revenue and the education budget.” In a normal year, the tribal gaming fees are “a very steady stream of funding” the Legislature can count on for education, she said.
Oklahoma’s casinos typically have an economic impact of nearly $9.8 billion and support nearly 76,000 jobs, according to an American Gaming Association analysis.
Matthew Morgan, chair of the Oklahoma Indian Gaming Association, said casino exclusivity payments were $3.5 million over 2019’s numbers during the first eight months of the budget year. The industry was averaging about $12.5 million in exclusivity fees a month until February, but due to the COVID-19 outbreak, casinos voluntarily started shutting their doors March 15. By March 22, the entire industry was shuttered completely for safety reasons, Morgan said.
July’s numbers show casino exclusivity payments are down about 5.6% from the year prior, state records show. In May 2019, casinos paid nearly $12.2 million in exclusivity fees, while in May 2020, they paid $20,804. June 2019 netted nearly $13 million for state coffers. June 2020 netted just $2.8 million, state records show.
Recovery has been slow for casinos as many patrons are hesitant to return to the entertainment venues. For safety reasons, tribes have limited casino capacity, continue to shut down popular games like poker, and canceled big-draw concerts, Morgan said.
“(COVID) just devastated us,” Morgan said. “We’re classified as an entertainment- and leisure-type business. There’s a lot of families and individuals that are hurting, and they’re worried about where their next paycheck comes from. They’re not spending their time in any entertainment venues. We will have less customers, less revenue coming in until we’re able to recover from the pandemic.”
The vast majority of Oklahoma tribes never laid off a single worker while they were shuttered. Morgan said each tribe is not only looking at its savings, but trying to forecast what it's going to do in terms of economic development, and how it can best serve residents.