Oklahoma’s lawmakers are taking a closer look at legalising sports betting as a potential solution to offset a projected revenue decline in the state. With the elimination of the grocery tax expected to impact state finances in 2025, sports betting is emerging as a possible economic boost.
The push for legalising sports betting
After the state’s revenue fell short of expectations, state legislators began examining alternative sources of income. The potential budget shortfall, combined with recent tax reductions, has heightened the urgency for alternative funding sources.
Senator Dave Rader has been a long-time supporter of the legalisation of sports betting. He shared that should an agreement emerge between the tribes and state officials, sports betting could be a beneficial vector. Such a measure could be advantageous to the state, tribes, and taxpayers.
Rader said, “If tribes and state officials could reach an agreement, sports betting could be a windfall. In the last three years, we’ve reduced taxes somewhere close to $1bn. If we’re going to continue to do that, we must offset it in some way, and this is one way that we could do it. It just seems like it would be a win for the state, a win for the tribes, and a win for the taxpayers.”
Details of Senate bill 125
Senator Rader introduced Senate Bill 125, which outlines the conditions under which tribes with existing compacts could offer sports betting services. The bill requires tribes to sign a supplemental agreement to their current compacts to enable this expansion.
The proposal comes at a time when the relationship between the state and its tribes has been strained due to past compact negotiations. Governor Kevin Stitt’s efforts to renegotiate compacts in 2019 led to legal battles, as several tribes opposed the state’s push for a larger share of gaming revenue.
According to the bill, tribal fees from sports pool revenues will be structured as follows: 5 percent on the first $5 millions of monthly net winnings received by a tribe in a calendar year, 6 percent on the next $5 millions of adjusted gross revenues, and 7 percent on all subsequent revenues within the same year.
Rader further added, “Sports betting must be done between the executive branch and the tribes. What I have here is hopefully a bill that can be used as they reach an agreement. We just put the car tag agreement down, so this is also us encouraging them to reach an agreement. We have many Oklahomans crossing state lines to participate in this type of gambling, so let’s keep it in state.”
The legal battle over gaming revenue
Governor Stitt’s attempts to renegotiate the compacts were met with resistance, leading to a protracted legal dispute. His position that the voter-approved deals from 2004 had expired was challenged by multiple tribes in federal court. In late 2023, Stitt proposed a sports betting plan to the tribes. His proposal included allowing casinos to operate sportsbooks with a 15 percent tax rate and mobile sports betting with a 20 percent tax rate. However, the tribes were generally opposed to the plan.
Stitt described his plan as a free-market system, noting that the $500,000 fee would be significantly cheaper than gambling licence fees in some other states. He also mentioned that the tribes would have a geo-fenced sportsbook at their casinos for free and would pay the state 10 percent.
A federal judge eventually sided with the tribes, automatically renewing the compacts. This legal victory reinforced the tribes’ control over gaming operations and complicated the Governor’s efforts to secure additional state revenue from these agreements.
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