Friday, November 21, 2008

Lottery says illegal pull-tabs cost Wis. millions

By RYAN J. FOLEY , 11.20.08, 01:45 PM EST

Illegal pull-tab games are costing the Wisconsin Lottery millions in revenue, but prosecutors rarely go after their operators, according to an audit released Thursday.

The Lottery's sales of such tickets fell 22 percent to a low of $3.2 million in the budget year that ended June 30, according to the Legislative Audit Bureau report. Twenty years ago, pull-tab games brought in $25 million a year.

The Lottery offers 10 such games ranging in cost from 50 cents to $2 per ticket. Players pull back tabs and win money if their tickets reveal certain symbols, such as three cherries in a row.

Taverns, gas stations and other retailers are choosing to sell games offered by private vendors because they get commissions of up to 30 percent compared to no more than 6.25 percent under the state-run program.

Lottery officials say the private games are being sold illegally or under a loophole in Wisconsin law.

State law specifically bans private vendors from operating lotteries but exempts "promotional games of chance" that are sold with products. The Lottery says that's a loophole that vendors are exploiting to sell tickets, commonly with coupons or collectible "milk caps." A court decision in 2001 found such tickets qualified for the exemption.

In a letter to auditors, Revenue Secretary Roger Ervin said a staff analysis has concluded the Lottery could generate up to $23 million more per year if state law were changed to put shady competitors out of business.

Looting manager puts Kusko 300 in jeopardy: Sports |

Looting manager puts Kusko 300 in jeopardy: Sports
"Out an estimated $15,000 and shaken by a manager looting race coffers, the one-time richest, middle-distance sled dog race in the north is scrambling to prepare for the January start of the mushing season.

The Kuskokwim 300 Sled Dog Race from Bethel to Aniak and back is still scheduled for Jan. 16, but the purse won't be set until Dec. 15. It was $100,000 last year, mushing's third largest purse, behind only the three-times longer Iditarod and Yukon Quest International sled dog races.
But a lot has changed since the dog teams took their summer hiatus.
One-time Kusko race manager Staci J. Gillilan was arrested in May on charges that she had been embezzling race funds for almost a year. By then, she'd already been fired after the race's board of directors found out the Kusko had failed to pay the city of Bethel upwards of $20,000 in gaming taxes.
The Kusko raises a big chunk of its budget with the sale of pull tabs. Both the city and the state levy taxes on those games. The race was left liable for taxes Gillilan was supposed to pay but didn't.
Myron Angstman, the Kusko race chairman, said Gillilan is prepared to plead guilty to taking money from the race, and the race is hoping she will pay back some of the missing funds as part of a plea settlement."

Independent study challenges NIGC’s Class II figures

The Oklahoma Indian Gaming Association has released an independent study that shows the National Indian Gaming Commission underestimated the cost of implementing Class II regulations by $137.2 million.

The NIGC issued a cost-benefit study prepared by Policy Navigation Group on Sept. 24 prior to its adoption of new Class II regulations establishing technical standards and Minimum Internal Controls (MICs).

The study’s purpose was “to provide a comprehensive estimate of the social benefits and costs” of proposed Class II gaming regulations. The study was meant “to update and to supplement” an earlier independent study by economist Dr. Alan Meister on the potential impact of the same Class II regulations, which the NIGC had commissioned earlier this year.

OIGA hired Meister in turn to review the Policy Navigation Groups’ work. Meister has extensive experience analyzing economic issues related to the gaming industry, especially Indian gaming and online gaming. His work has included economic and fiscal impact analyses, industry and market analyses, assessments of regulatory policies, analyses of Tribal-State gaming compacts and revenue sharing, feasibility studies, surveys, and expert testimony in litigation and regulatory matters. He has also conducted independent, academic research on Indian gaming and is the author of the annual Indian Gaming Industry Report.

“When the NIGC published its cost-benefit Study on Sept. 24, 2008, we were surprised at the very low level of negative impacts found by the study – so low that we decided that an independent analysis was needed,” David Qualls, OIGA chairman, said in a press release.

The NIGC’s cost-benefit study found that the Class II MICS and Technical Standards would only impose negative costs of $7.8 million over 10 years. Meister’s study found that the negative economic impacts could be as high as $145 million in hardware costs alone.

“Our member tribes had expressed concerns for over a year that these regulations were seriously flawed and would impose significant, unnecessary costs on our tribal gaming operations. This independent assessment shows our concerns were justified and that the NIGC has purposely ignored those concerns,” Qualls said.

Oklahoma has around 60 percent of all the Class II gaming machines in the country and will be hard hit by the costs of compliance with the new regulations, which will include upgrading current machines or buying new ones.

In his executive summary, Meister said he was asked to review and comment on the methodologies and conclusions of the Policy Navigation Groups’ cost-benefit study especially as it related to his earlier study. He found a number of shortcomings, including a lack of transparency; questionable assumptions; unsupported/speculative assumptions; assumptions contradicted by available information; biased assumptions; omission or minimization of negative impacts on tribes; mischaracterizations of results from his earlier report; and lack of an adequate basis for determining whether the proposed regulations are a “major rule” within the meaning of the Small Business Regulatory Enforcement Fairness Act.

The NIGC used the cost-benefit study as a justification for declaring the regulations to not be a “major rule,” and for not conducting additional consultation with tribes or allowing for congressional oversight hearings, according to the press release.

“These shortcomings raise significant doubts about the reliability of the Cost-Benefit Study’s quantitative results and qualitative conclusions. Therefore, policymakers should be cognizant of these shortcomings when considering the impact of the proposed Class II gaming regulations,” Meister said.

The Class II MICS and Technical Standards regulations were made final and published by the NIGC in the Federal Register on Oct. 10; they became effective on Nov. 10.

Class II regulations still hot | Indian Country Today | Gaming

Class II regulations still hot Indian Country Today Gaming:
"LAS VEGAS – National Indian Gaming Commission Chairman Phil Hogen is still questing after a “bright line” between Class II and Class III gaming, and may find it by enforcing compliance with an opinion he issued rather than the normal way through regulations.

But Jess Green, a Chickasaw attorney in Oklahoma who is an expert in Indian gaming law, said he’s ready to litigate if Hogen takes that route.

At a presentation called NIGC Roundtable: The Commission View, Hogen spoke at length about his perception of the need for changes that would “clarify” the difference between Class II and Class III gaming machines.

Class II machines, which are used for bingo, lotto, pull tabs and other such games, don’t require a tribal-state compact or sharing the tribe’s gaming revenues with the state. Class II gaming is particularly useful to tribes in states that refuse to negotiate gaming compacts.

Class III slot machines do require a compact with the state, which usually takes a share of the tribe’s profit.

Hogen recalled the early years of Indian high stakes bingo when a bingo blower randomly selected the numbers and players could see the balls being selected and who they were playing against. Players were confident that the game wasn’t rigged because everything was transparent, Hogen said.

“It’s not easy with all this complicated environment, all this high speed electronic equipment. You’ve got to convince the player that this is fair and a square kind of deal"