On December 28, the Michigan Auditor General released a 32-page report of an audit that was conducted to assess “the sufficiency of the gaming control board’s regulatory and enforcement activities for charitable gaming and the three commercial casinos in Detroit.” The audit, which reviewed a period from October 2013 to May 2015, concluded the Michigan Gaming Control Board is satisfactorily regulating the state’s .37 billion gaming industry, with three exceptions.
One of those exceptions was that a license review in May of the three casinos indicated 213 employees at two of the casinos were “not licensed in accordance with administrative rules.” The auditors said “because they held supervisory positions within the gambling operation as table game supervisors, table game assistant supervisors, table game team leaders or poker room supervisors,” those individuals’ licenses needed to be at the highest level.
The state gaming board disagreed, stating it believed the rules meant supervisors would need to oversee entire department or “make long-term discretionary decisions.” The gaming board told the auditors the one casino that did upgrade its staff licenses did not need to do that. The board also said existing licensing standards make employee reclassification unnecessary. “The board feels there are minimal risks in ensuring that eligible, suitable and qualified individuals are selected to work in positions of authority at the commercial casinos by utilizing the current licensing processes,” the board wrote.
However, the auditors disagreed, and noted, “Licensing these individuals as a level 1 would provide both greater assurance of integrity and heightened public confidence in the regulation of casino gambling.” The employees affected are 9 percent of the two casinos’ 2,345 total.
Another exception the auditors pointed out was that Michigan’s internal controls need to be updated to reflect changes since 1999 and should include more computerized gaming technology. However, the gaming board disagreed, stating, “The casino minimum internal controls noted by the Michigan Office of the Auditor General were issued in 1999 as a guideline for the casinos until the creation of their own internal controls. In many cases, the casinos’ internal controls are more stringent than the minimum internal controls were. As the casinos update and modify their internal controls with approval by the Michigan Gaming Control Board, the minimum internal controls have become obsolete.”
The third exception, which the gaming board agreed with, concerned ensuring regular compliance monitoring. The three audited casinos did not complete 14 percent of the required quarterly inspections. The gaming board noted it created a new policy in March to ensure required quarterly inspections would take place.
Detroit’s three commercial casinos are the MGM Grand, with $582 million in 2015 revenue; Motor City, with $465 million; and Greektown, with nearly $330 million. In 2015, Detroit’s three casinos accounted for $111.4 million paid in state wagering tax, or 8.1 percent of revenue.
No recommendations were made in the audit regarding Indian tribal gaming. Michigan has no regulatory authority over gambling on tribal lands, but it does oversee tribal and state gaming compacts, including background checks for employees of the 23 casinos and payments.
