McAlester News-Capital, McAlester, OK

December 22, 2010

Henry: Gambling expansions paid off

Governor says gaming policies were the right choice

By Trevor Brown
CNHI

OKLAHOMA CITY — Editor's note: This is the second in a series of stories reflecting on Gov. Brad Henry's time in office.



By Trevor Brown

CNHI Capital Bureau

OKLAHOMA CITY – Tribal gaming revenue in the state was estimated at about $466 million when Gov. Brad Henry took office in 2003.

Nearly eight years later, the American Indian gambling industry has burgeoned into a multibillion industry. With new policies that expanded what types of games are legal, both tribal and commercial gaming enterprises have reached new heights in Oklahoma.

Henry said he does not regret pushing an aggressive agenda to lead some of the largest gaming expansions in the state's history. He said weighing the potential benefits against the consequences of increased gaming came down to simply looking at a pragmatic approach of what is best for the state.

“Whatever consequences there are today as a result of gaming, it existed in 2004 before we passed the state-tribal gaming regulation act, because we had virtually every form of gaming in Oklahoma already at the time,” he said. “Unregulated, the state didn't get any money, education didn't get any money but tribal gaming was proliferating across the state. It was a no-brainer.”

In looking back at his tenure as governor shortly before he leaves office, Henry said he strongly backs his efforts to transform the state's gambling industry and provide the state with hundreds of million of dollars in new revenue.



Leading the cause

In addition to creating a state lottery to fund education, voters approved a state question in 2004 that allowed tribes to enter compacts with the state so they could offer additional types of gambling. Henry played a large role in convincing legislators to place the proposals on the ballot and then for voters to approve them.

The tribal-state compact allowed eligible tribes to pay a monthly exclusivity fee to the state in exchange for the exclusive right to operate Class III gaming services, which includes Las Vegas-style slot machines and card games. The state question also set up provisions for a limited number of licensed racetracks to use electronic gaming machines.

Before the state question was approved, tribes were only permitted to run Class II gaming operations, such as bingo halls. But Henry said there was no lack of gambling opportunities in the state before 2004.

Henry argues expanding gambling actually helped regulate what already was occurring. In addition, he said it provided clarity and specific guidelines so tribes could avoid lawsuits concerning what type of gambling is permitted.

“We already had parimutuel racing, bingo halls were on many corners and anybody with a computer and Internet access could go play real Las Vegas-style games,” Henry said. “So, I maintain we had some problems from gaming that already existed in 2004. So I said let us give (the tribes) a little bit of certainty and, at the same time, get in return some ability to oversee these operations and share in the revenue. It just made ultimate sense to me.”



What has changed

Thirty-three tribes entered a compact with the state to operate Class III gaming since the state question passed, according to the state finance office's gaming compliance unit.

Revenue from the Tribal Gaming Exclusivity Fees that tribes pay to the state have totaled more than $366 million during the six-year period. The amount the state receives increased each year and 2010's year-to-date total of $118.2 million is a record high.

Of that money, 88 percent is earmarked for common education funding. The Department of Mental Health and Substance Abuse Services receives $250,000 for gambling addiction services and the rest enters the state's general fund.

“We were able to get a share of the (gambling) revenue for the first time,” Henry said. “We gained a little oversight, gained treatment for gambling addictions and other kinds of problems and consequences that come as a result (of gambling). … So overall, what we have done is made the situation better.”

Wes Pappan, an executive delegate with the Oklahoma Indian Gaming Association and a member of the Kaw Nation, said tribes also have benefited substantially as result of the policy changes. He said the growth of tribal gaming into a $2.8 billion industry in the state has provided far-reaching effects.

“We've been able to create jobs, expand (health clinics) and build things like roads and bridges so it is unbelievable how much it affects our local communities,” he said. “Before (2004) we just had the bingo halls really, which were nothing in comparison.”

Pappan said the rise of casinos also is causing tourism to thrive in the state. He said the casinos attracts many out-of-state residents who would not otherwise visit the Sooner State.

“They come here and they have to eat, go out or go play golf,” he said. “So everything from convenience stores to the hotels benefit from the tourism factor.”

But the gambling reforms are not without their detractors, as was the case when the issue was being debated during Henry's first term. Former state representative Forrest Claunch, who was one of the chief opponents of the gambling proposals in 2004, said he maintains the moves were bad for the state.

Claunch argues not enough oversight is given to the compacts or how the tribes pay the state. In addition, he said the gambling expansions could lead to more crime, gambling addictions and other societal ills.

“It is a basic problem that is associated with man, and that is greed,” he said. “We already knew those things existed with the proliferation of gambling and we cited (that problems would increase) as gambling increases.”



Improving gambling addiction services

Henry said he acknowledges there is still work needed to advance how the state treats and prevents gambling-related addictions and problems.

“I think there is more that can be done,” he said. “Absolutely there are people across the state suffering from all kinds of addictions – whether it is from gambling, prescription drugs, illicit drugs or alcohol. We don't do enough to prevent and treat all kinds of addiction.”

According to the state mental health department, compulsive gambling doubles in areas within 50 miles of a casino. Henry said that is why it was important that the state dedicated a portion of the Tribal Gaming Exclusivity Fees to fund gambling addiction programs.

The mental health department contracts its gambling services to nine centers throughout the state. But the department is looking for more money. The department included a request for $250,000 in next year's funding increase proposal for gambling outreach programs.

Henry said the state needs to pay more attention to preventive programs and training to stop gambling and other addictions from becoming more widespread.

“We've been doing treatment on the back-end,” he said. “But what we need to do is use our resources and invest more before they get in trouble with law, before they end up in prison and before they could commit some violent crime.”

Trevor Brown covers the Oklahoma statehouse for CNHI. He can be reached at tbrown@cnhi.com.



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Tribal Gaming Exclusivity Fees compacted tribes pay to the state

2005: $2.3 million

2006: $14.2 million

2007: $46.8 million

2008: $81.4 million

2009: $105.5 million

2010: $118.2 million

Source: State finance office's Gaming Compliance Unit