Objective

To determine the extent of implementation of the four recommendations included in our initial audit report, Oversight of Casino Revenues and Regulatory Oversight Reimbursement Collections (2019-S-8).

About the Program

The Gaming Commission (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), 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). The Commission has officials at each of the 19 commercial, VLT, and tribe/nation casinos to ensure compliance with gaming regulations and tribe/nation compacts and collect the costs for these oversight activities (also known as regulatory or operation and administration costs) from each casino. During the State fiscal year ended March 31, 2020, the Commission reported that it received $1.34 billion in casino revenues: $1.07 billion from VLT casinos, including $917 million as education aid; $183.7 million from commercial casinos; and $85 million from tribe/nation casinos.

The objective of our initial audit report, issued on January 10, 2020, was to determine whether the Commission adequately monitored casinos to ensure revenues were appropriately collected, accounted for, and transmitted to the State and that regulatory oversight costs were assessed and collected as required by law or compact. Our audit identified an estimated $13 million in oversight costs that the Commission had not billed to commercial casinos. In addition, the Commission lacked policies regarding dispute resolution procedures for commercial casino oversight cost charges, leaving it unprepared to address disputes that might arise. Finally, while we found the Commission was adequately monitoring casinos to ensure that revenues were appropriately collected, accounted for, and transmitted to the State as required, it was not evaluating risks related to tribe/nation revenue reporting.

Key Finding

Commission officials made limited progress in addressing the problems identified in the initial audit report. Of the initial report’s four audit recommendations, two were partially implemented and two were not implemented.

Key Recommendation

Officials are given 30 days after the issuance of the follow-up review to provide information on any actions that are planned to address the unresolved issues discussed in this review.