An evaluation of the Division of Gaming in the Department of Administration by the nonpartisan Legislative Audit Bureau (LAB) indicates the Division needs to conduct a more thorough and accurate review as it oversees the gaming operations of 11 tribes that have negotiated compacts with the State.
Oversight of Indian gaming is critical because casino players expect the games to be fair. The state and the tribes rely on accurate accounting of revenue to calculate payments the tribes make to the state. Compacts between the state and the tribes require tribes to inform of instances where amounts recorded by a meter in, for example, a slot machine, differ by at least three percent and more than $25 from amounts counted by casino staff. When there are differences, tribes are required under the Compacts to investigate and explain the cause since the discrepancies could point to possible theft or fraud at the casinos.
The LAB examined 2006 daily revenue recorded in the State’s Data Collection System that stores data on the transactions of electronic gaming devices, and found differences between amounts recorded by the electronic meters and amounts counted by casino staff for every day of the year. Making matters worse, the LAB found the Division was unaware of almost all of the discrepancies the LAB discovered. The Division claims the problems were due to computer errors.
Between March 2006 and April 2007, the LAB also found the Division did not review data kept by casinos to determine if the tribes had identified, investigated, and documented differences between amounts recorded by electronic meters and amounts counted by casino staff. While the LAB was conducting its research in May 2007, the Division once again began conducting the required reviews, after a lapse of 14 months.
It is alarming the Division not only was unaware of problems in the state’s data collection system, but also failed for over a year to conduct required reviews of the differences between data from electronic meters and data collected by casino staff.
The audit by the LAB uncovered some important numbers:
· The State’s revenue from gaming totaled $121.3 million in Fiscal year FY 2005-06.
· Tribal gaming revenue increased from $1.0 billion in 2002 to $1.3 billion in 2006.
· Tribal gaming profits, or revenue in excess of expenses, increased 13.3 percent, from $490.8 million in 2002 to $555.9 million in 2006.Two years ago, after a similar audit, I issued a
press release that Indian tribal casinos are cash cows and that Governor Doyle should negotiate compacts where tribes pay their fair share that result that result in the maximum payments possible to the state. After the latest audit, I continue to believe that compacts must be negotiated that give the state a better take.
I agree with the LAB recommendations that the Division of Gaming report to the Joint Legislative Audit Committee by January 31, 2008, on steps it has taken to ensure the State’s Data Collection System and the casinos’ electronic accounting systems are recording and calculating gaming revenue correctly, and the Division of Gaming, in every casino, incorporate procedures for determining whether tribes are appropriately identifying, investigating, and documenting differences between amounts recorded by electronic meters and amounts counted by casino staff.
I also renew my belief that the Legislature should have oversight over Compact negotiations. This is an authority that should not be exclusive to the Governor, Republican or Democrat.
Once again, the LAB has done a thorough examination and I commend the Bureau on its outstanding work.
Here is a link to LAB web site with complete details on the
audit.
