1 Division of Gaming Legislative Audit Bureau December 2002

2 Overview u Division is responsible for regulating: –tribal gaming operations; –pari-mutuel wagering at dog tracks; –charitable gaming (bingo and raffles); and –crane games u full-time equivalent positions u Spent $3.8 million in FY

3 Indian Gaming Revenue u Tribal casinos generate revenue from: –Class III gaming (electronic gaming devices and blackjack); –Class II gaming (bingo operations); and –other casino operations, such as hotels and restaurants u Net revenue totaled $970.9 million in 2001

4 Net Revenues and Profits u Total tribal gaming revenues and profits have increased each year since 1997 u Revenues increased from $660.2 million in 1997 to $970.9 million in 2001 u Profits increased 58.6 percent, growing to $428.3 million in 2001 u Not all tribes had growth in these areas

5 Tribal Payments to the State u $350,000 specifically to help fund regulatory costs u Since FY , have paid an additional $24.0 million annually u Revenue funds regulatory costs and many other activities u Tribes may also make payments to local governments in lieu of taxes

6 Oversight of Casino Operations u Division conducts three types of reviews: –compliance audits; –financial audits; and –inventory reviews u We analyzed the number and type of reviews conducted by the Division

7 Compliance Audits u Based on list of possible topics u Of the 24 Class III gaming facilities: –no compliance audits of the 3 Ho-Chunk facilities –3 facilities not audited since 1996; –2 facilities not audited since 1997; and –1 facility not audited since 1999

8 Financial Audits u Conduct on-site financial audits and review financial statements u Audits typically conducted only after a problem has been identified u On-site audits first conducted in 2000 u Since 2000, conducted 12 on-site financial audits at 10 casinos

9 Inventory Reviews u Staff count the number of games and affix barcodes to each device u From January 1999 through August 2002 conducted 14 inventory reviews u No reviews of 3 facilities operated by the Oneida Tribe or 3 operated by the Ho-Chunk Nation

10 Electronic Monitoring of Gaming u Spent $268,500 to create and modify an electronic inventory system –operating at casinos for 9 of the 11 tribes –Ho-Chunk Nation and the Oneida Tribe have not agreed to permit electronic monitoring u Spent $706,344 for an electronic data collection system –provides information on machine operations –not operational for 13 casinos managed by 4 tribes

11 Dog Racing u From FY through FY : –attendance declined from 1.2 million to 626,911; –racetrack association revenues declined from $30.3 million to $16.0 million –State’s revenue declined from $5.6 million to $3.3 million u Declines largely the result of closing two racetracks

12 Bingo, Raffles, and Crane Games u 6.75 FTE staff devoted to these activities u Since FY : –revenue from bingo activities and crane game registrations has declined –revenue from raffle license fees has remained steady

13 Position Funding u In FY and FY : –6 positions were funded from sources unrelated or not fully related to position responsibilities –3 positions funded entirely from Indian gaming even though they had other duties u We have recommended the Division track staff time and correct funding issues

14 Division of Gaming Legislative Audit Bureau December 2002