Audit Shows NYSGC Never Billed Commercial Casinos For Fees

Posted By Derek Helling on January 27, 2020

The best way to avoid paying government fees is to never receive a bill for them. The New York state comptroller found that out while conducting an audit in regards to gaming commission fees.

Thomas DiNapoli discovered the four upstate commercial casinos in New York never paid the fees because the state never billed them for services. What could simply be a classic case of oversight is actually more complicated.

Why the gaming commission fees went uncollected

According to the Buffalo News, the fees totaled $13 million dollars. The time period during which those fees should have been collected started in 2014.

The fees were for on-site oversight of gaming operations at the casinos. According to a press release from DiNapoli’s office, the casinos should shoulder the entire cost of those services.

Because the fees weren’t collected, taxpayers absorbed the costs instead. In that way, New York’s citizens effectively subsidized the casinos for years.

The commission disputes the failure. Rather, it says that the bills weren’t sent because rules for assessing the fees weren’t adopted.

The commission provided no explanation as to why it took three full fiscal years to finalize those regulations. In the meantime, it wasn’t tardy on billing those casinos’ competitors for the same services.

The rest of the story on collecting oversight costs

While Tioga Downs and others got off easy on this issue, video lottery terminal and tribal casino operators weren’t so lucky. During the same three fiscal years, the commission collected nearly $154 million from those businesses for this purpose.

While those gaming providers operate on a different set of rules in many ways, their need for oversight is identical to the commercial casinos. Their responsibility to cover those costs is the same, as well.

Because of that, it’s perplexing why the commission couldn’t have simply applied identical rules on this issue for the commercial casinos. That would have allowed the bills to go out as scheduled.

A possible answer to that question exists. It’s all about those casinos not meeting revenue projections.

How the state’s failure was very conveniently timed

This audit surfaces at the same time that the same casinos are looking for more taxpayer subsidies. For example, Del Lago lobbied the state Legislature for relief from property taxes last year.

The Albany Times-Union reported that the four facilities combined to fall $203 million short of their projected revenues for the past fiscal year. Obviously, it helped that the commission failed to add to their expense list.

Those facilities’ troubles may compound in the future as well. The state is currently studying expanding gambling, which could include new casinos and online sports betting.

If that happens, not only will the casinos’ current state-protected “monopoly” on legal sports betting vanish, but they would have new competition for slots and table games, as well. That puts pressure on these casinos to turn their situations around now.

While the audit turned up no evidence that the delay in billing was deliberate, it’s hard to miss how it was convenient. Hopefully, the commission will be on top of this going forward.

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Derek Helling

Derek Helling is a freelance journalist who resides in Chicago. He is a 2013 graduate of the University of Iowa and covers the intersections of sports with business and the law.

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