Oklahoma House of Representatives
June 3, 2003
A Commentary By State Rep. Wayne Pettigrew
OKLAHOMA CITY -- The lack of time to digest the complex
issues relating to the classifications of types of gaming and the
failure of legislators to understand the impact of the horse
industry on Oklahoma's economy led to inaction on passage of a key piece
of legislation at the end of the recently adjourned legislative
session.
Senate Bill 553 was designed as a pro-business bill to give the
state's four sanctioned horse racing facilities the ability to offer the
same types of gaming machines that are currently being operated at
tribal facilities throughout the state.
The measure is crucial to the state's horse industry which has an
economic impact in Oklahoma of approximately $4 billion. The horse
industry as a whole represents the state's third largest industry
(behind agriculture and the oil and gas industry) and employs 57,000
people.
Horse racing has suffered in recent years in Oklahoma due to the
introduction and advancement of tribal gaming facilities throughout the
state. More than 65 tribal gaming facilities are now operated by 26
Native American tribes in Oklahoma.
Of the state's four horse tracks, only three are operating. One
track is in bankruptcy and Remington Park, the state's premier racing
facility, has had business losses for the past seven consecutive years.
It is apparent that the Legislature never fully understood Senate
Bill 553.
The bill became bogged down after it emerged from conference
committee with tribal compacting language added and the allowance of a
borderline Class III game included.
The tribal compact language was necessary in order for the state to
place some oversight on Oklahoma's multibillion-dollar tribal gaming
industry. Under the provisions of the bill the state would get prior
gaming machine approval, independent financial audits and be allowed to
set minimum insurance coverage requirements at tribal facilities. The
tribes also agreed to accept tort liability for occurrences at their
facilities under the bill.
The tribes also agreed to remit approximately $30 million in
"exclusivity fees" to the state to help pay for this oversight and in
order to limit the other entities allowed to conduct gaming to just the
four horse tracks.
All of the games allowed under Senate Bill 553 except one were
classified as Class II skill games. These electronic amusement games
require decisions or actions by players that can substantially affect
the result of the game. The bill specifically outlawed slot machines or
games where the outcome is based on prior wins or prior losses or any
factor relating to the profit or revenues returned to the operator of
the game. The bill also specifically prohibited dice games, roulette
wheels, house banked card games or games where the winners are
determined by the outcome of a sports contest.
The only game allowed by Senate Bill 553 that possibly crossed the
line with regard to Class III gaming was a so-called "Electronic Instant
Ticket Machine".
This electronic instant ticket machine is the electronic version of
the Class II skill game of pull tabs. The court has ruled that the paper
version of this game is Class II. The court has also ruled that an
electronic version of this game that issues a paper ticket is Class II.
However, the court has ruled that the electronic version of this game
that displays the result on a display screen is Class III.
Quite frankly the court is splitting hairs with regard to this
issue.
So what is the harm in allowing a video display result instead of a
paper display result of a video game? Someone should welcome the
Legislature and the courts to the computer age. Virtually everything is
displayed on a computer terminal these days, from your credit card
receipts to your banking transactions.
The tribes want to operate these types of games because they are
less labor intensive and require less service than do older machines
that must continually have the paper pull tabs loaded into them. The new
more modern machines are also preferred by the players since they are
more user friendly.
Many legislators couldn't overcome the hair-splitting issue of
whether this particular machine was Class II or Class III and refused to
support the entire bill.
All legislators were bombarded with inaccurate information alleging
that if the state allows one type of Class III gaming then the
floodgates are opened to full casino gambling.
Oklahoma has operated Class III pari-mutuel wagering at the horse
tracks for almost twenty years without it opening up other forms of
gambling. The courts have consistently ruled that by allowing one type
of game that a state does not allow other games that are not
specifically allowed by law.
The classifications of types of gaming and the negotiations of
Indian compacts will continue during the interim between the legislative
sessions. Senate Bill 553 will remain in conference and will be
available when the next legislative session begins in February.
The viability and survival of the state's horse racing industry
hangs in the balance of getting additional legislators to understand the
economic impact of the horse industry and the need for business fairness
on this issue.
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Oklahoma House of Representatives
Mike W. Ray, Media Division Director
June 3, 2003
OKLAHOMA CITY -- A bill that passed both the House and the Senate
on the next to last day of the annual session represents many of the
worst practices of the Legislature, a veteran state lawmaker complained
Tuesday.
Rep. Larry Ferguson, R-Cleveland, said a 26-page compromise version
of Senate Bill 408 that was unveiled in the waning hours of the session
exemplifies much of what is wrong with the legislative process in
Oklahoma.
-- The final revised bill was drafted and submitted to House
members less than 48 hours before the 5 p.m. May 30 constitutional
deadline for adjournment of the Legislature.
-- A parliamentary maneuver by backers of the bill choked off
discussion of the measure before it could be thoroughly debated in the
House.
-- By introducing the overhauled bill at practically "the 11th
hour," the authors of the measure "circumvented the legislative
committee process" designed to give a proposal a thorough analysis and
consideration before it is submitted to the full House for a vote,
Ferguson stressed.
-- The focus of the bill is an overhaul of the administration and
operation of the Grand River Dam Authority. However, buried toward the
back of the bill is a provision that would allow fuel to be pumped from
unattended marina fuel dispensing facilities. Another section, on the
next to last page of the bill, would allow fiber-optic cable to be
carried on electric towers alongside conventional power lines.
-- SB 408 would allow the GRDA "to support and assist the efforts
of ... public and private agencies to obtain new and foster expansion of
existing service, industrial and manufacturing facilities, businesses
and enterprises to enhance the quality of life for the citizens" of the
GRDA and Oklahoma. That "support and assistance" would be limited to
$15,000 per year for "projects or efforts" in "each city or community
located within the boundaries" of the GRDA.
The GRDA is a wholesaler that transmits and delivers electricity
across a 24-county service area in northeastern Oklahoma, Ferguson
noted.
"How can GRDA afford to shell out $15,000 apiece for economic
development projects in communities throughout its service territory,
without raising rates?" the legislator wondered. "And if they can do it
without raising rates, their current rates are too high," he contended.
GRDA's biggest customer is Northeast Oklahoma Electric Cooperative,
which maintains more than 34,000 customer meters. GRDA's other electric
cooperative customer is KAMO, whose member co-ops include Central Rural
Electric Co-op headquartered in Stillwater, Cookson Hills Electric Co-op
in Stigler, East Central Oklahoma Electric in Okmulgee, Indian Electric
Co-operative based in Cleveland, Kiamichi Electric Co-op in Wilburton,
Lake Region Electric Co-op in Hulbert, Ozarks Electric Co-op in
Stilwell, and Verdigris Valley Electric of Collinsville.
GRDA sells electricity to Claremore, Cushing, Miami, Pawnee, Pryor,
Sallisaw, Skiatook, Stilwell, Stillwater, Stroud, Tahlequah, Wagoner,
and Siloam Springs, Ark. GRDA provides power to the MidAmerica
Industrial Park at Pryor. And off-system contract customers of GRDA are
the Byng Public Works Authority; the Chickasaw Tribal Works Authority;
Paragould, Ark., Light & Water Commission; Poplar Bluff, Mo., City Light
& Water; and City Utilities of Springfield, Mo.
-- SB 408 would require the GRDA to pay $60 per month of the health
insurance premiums for its retired employees throughout their lifetimes;
however, the total annual payout would be limited to $100,000.
That sum would pay the full benefits for 138 retirees. However,
records indicate the GRDA has 180 pensioners. Consequently, the monthly
payment would have to be prorated among the eligible retirees.
Furthermore, the $60 per month benefit is an unfunded mandate. No
money was appropriated in SB 408 to cover that additional pension
expense, which a professional actuary calculates would ultimately cost
$1.25 million.
-- GRDA lake patrolmen and dispatchers would be allowed to transfer
from the Oklahoma Public Employees Retirement System (OPERS) to the
Oklahoma Law Enforcement Retirement System (OLERS).
Ferguson, who is chairman of the House Committee on Retirement
Laws, pointed out that the proposed switch might enable GRDA lake
patrolmen and dispatchers to receive higher pension benefits. Senate
Bill 411, which the Governor signed May 23, calls for a study to
identify all state employees who are engaged in hazardous duty and to
develop a special retirement system for them.
For starters, Ferguson asked, "Why would a GRDA dispatcher be
considered someone in a 'hazardous duty' position?"
Further, the House's consulting actuary reported that if the state
contribution to OLERS for this year was the same as last year, the
contribution would be $3 million less than the required contribution.
"The transfer of any participants would increase the shortfall," the
actuary added.
And state Rep. Joe Eddins claimed that if the same pension benefits
proposed for GRDA retirees were provided to Oklahoma's retired teachers
and retired state employees, the cost would reach approximately $40
million. Eddins is a Democrat from Vinita -- which is the home base of
the GRDA and the Northeast Oklahoma Electric Co-op -- and opposed SB
408.
"That bill is a true Christmas tree," sighed Ferguson, who was the
House GOP Leader for seven years.
Neither the $60 health insurance subsidy nor the proposed switch
from OPERS to OLERS "had ever been discussed in committee," he said.
"And that's how the taxpayers wind up getting stuck with costly and
inappropriate financial obligations."
Ferguson warned, "Mark my words: Down the road, someday, someone
will ask, 'How did this become law?' And no one will be able to justify
the answer."
Senate Bill 408 passed the Senate, 33-10, and the House, 63-35, on
May 29, and was transmitted to Gov. Brad Henry for his consideration; he
has until midnight June 14 to decide whether to sign the measure.
Ferguson said he, Eddins, and Rep. Larry D. Roberts, D-Miami, who is
chairman of the State Pension Commission, all have written letters
asking the Governor to veto the bill.
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