NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

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(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates/Conflicts with/Companion to/Relates to

SOURCES OF INFORMATION

Legislative Finance Committee Files

State Treasurer's Indian Gaming Payment History

SUMMARY

Synopsis of SFl#1 Amendment

This amendment provides for the inspection of documents obtained by the state gaming representative to be subject to access pursuant to the Inspection of Public Records Act.

Synopsis of Bill

Senate Bill 469 makes the following changes to the Indian gaming compacts and revenue sharing agreements.

• It puts in place a new revenue sharing structure. Currently, Indian gaming tribes are required to share 16 percent of the net win from casino gaming machines with the state. (Net win is defined as the revenue that is left after paying out prizes and certain regulatory costs.) The bill would replace the 16 percent requirement with a stepped structure such that the gaming tribes would pay 4 percent on the first $6 million of net win; 8 percent on net win above $6 million but less than $12 million; and 12 percent on net win above $12 million. The basis for payments is annual net win, but payments are made quarterly based on the net win during the same quarter in the prior year. The payment in the last quarter is adjusted up or down based on the actual net win made by the tribal gaming operation during the year.
• It reduces the regulatory fees imposed on gaming. Current regulatory fees are paid quarterly. The quarterly payment is equal to $6,250 per casino plus $300 for each gaming machine plus $750 per gaming table. The proposed regulatory fee would be set equal to $500 per gaming machine per year.



• The bill creates a tribal infrastructure fund which receives 40 percent of the revenue sharing payments paid by the tribes on their first $12 million of net win. The remaining 60 percent goes to the general fund, and revenue sharing dollars on net win above $12 million continue to go to the general fund. The moneys in the infrastructure fund are to be used for roads and other infrastructure.



• The bill has a delayed repeal for the provisions of state law governing non Indian gaming on January 1, 2000. The repeal takes effect if Indian gaming tribes that had entered into an Indian gaming compact and revenue sharing agreements based on existing law are delinquent in their payments on January 1, 2000.




FISCAL IMPLICATIONS





The fiscal implications of this bill depend on how it affects compliance with the law. Current estimates of gaming activity subject to the revenue sharing agreements are that net win is approximately $320 million. This suggests that if gaming tribes were complying with current law revenue sharing receipts would be approximately 51 million. Indian gaming representatives have reported that their obligations under the revenue sharing agreement represent an additional $7 million. The state is expecting to receive $32 million based on actual payments, however.





If the lower rates provided for in this legislation induced full compliance the state could expect to receive $31 million from the revenue sharing requirements. The regulatory fees would raise an additional $2.3 million, for a total of $33.3 million.





The sharing of revenues between the general fund and the tribal infrastructure fund would lower the general fund share by about $2.6 million. Given, the uncertainties associated with this revenue source, the fiscal impact of the legislation is essentially revenue neutral for the general fund, assuming the new law induces full compliance.





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