Objectives

To determine whether the Gaming Commission (Commission) adequately monitors casinos to ensure revenues are appropriately collected, accounted for, and transmitted to the State and regulatory oversight costs are assessed and collected as required by law or compact. Our audit covered the period April 1, 2016 through March 31, 2019. We also considered information received from the Commission through October 28, 2019.

About the Program

The Commission regulates all aspects of gaming activity in New York and is responsible for overseeing three types of casinos in the State: commercial, video lottery terminal (VLT),¹ and Class III tribe/nation (tribe/nation). Commercial and VLT casinos are required to remit a percentage of their gaming revenues to the State, and tribe/nation casino remittances are defined in compacts (agreements with the State). During the three fiscal years ended March 31, 2019, the Commission received $4.2 billion in revenues from casinos.

The Commission has officials at each casino to ensure compliance with gaming regulations and tribe/nation compacts. Costs for this oversight are to be collected from each casino. During the three fiscal years ended March 31, 2019, the Commission collected $144.8 million from VLT casinos and $8.9 million from tribe/nation casinos for oversight costs. The Commission had not billed commercial casinos for oversight costs.

Key Findings

• An estimated $13 million has not been billed or collected from commercial casinos for oversight costs. While the Commission stated that a lack of regulations had delayed assessing commercial casinos, the rulemaking process is now complete and these costs will be billed.
• The Commission does not have policies regarding dispute resolution procedures when a casino disagrees with oversight cost charges, leaving the Commission unprepared to address disputes that may arise.
• We found that, while the Commission is adequately monitoring commercial, VLT, and tribe/nation casinos to ensure that revenues are appropriately collected, accounted for, and transmitted to the State as required, the Commission is not evaluating risks related to tribe/nation revenue reporting.

Key Recommendations

• Assess and bill commercial casinos’ oversight costs in a timely manner.
• Develop and implement policies and procedures for handling oversight cost disputes.
• Include tribe/nation casino revenue reporting in the Commission’s annual risk assessment, and adapt procedures as needed based on results.
   

¹ For the purposes of this report, the term “VLT casinos” describes the ten New York State gaming facilities (including the two facilities that have since ceased operating as VLT casinos) that were remitting percentages of their VLT gaming revenues to the State during our audit period of April 1, 2016 through March 31, 2019.