1. 1 Division of Gaming Legislative Audit Bureau December 2002

2. 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 42.85 full-time equivalent positions u Spent $3.8 million in FY 2001-02

3. 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. 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. 5 Tribal Payments to the State u $350,000 specifically to help fund regulatory costs u Since FY 2000-01, 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. 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. 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. 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. 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. 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. 11 Dog Racing u From FY 1996-97 through FY 2001-02: –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. 12 Bingo, Raffles, and Crane Games u 6.75 FTE staff devoted to these activities u Since FY 1997-98: –revenue from bingo activities and crane game registrations has declined –revenue from raffle license fees has remained steady

13. 13 Position Funding u In FY 2000-01 and FY 2001-02: –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. 14 Division of Gaming Legislative Audit Bureau December 2002