Casino inspections are pledged

A sharp drop in state inspections of slot machines and blackjack tables at Minnesota's 18 Indian casinos has prompted internal reforms that will include a buildup of technology skills, a top regulator told lawmakers Wednesday.

Michele Tuchner, the new director of Alcohol and Gambling Enforcement in the Department of Public Safety, readily admitted to inspection failures at her agency. In 2011, she said, there were zero game inspections and no financial audit reviews.

"They [inspections] have declined. They have simply declined," Tuchner told the House Public Safety and Crime Prevention Policy and Finance Committee.

The tribal gaming enforcement staff was busy with other duties, Tuchner said, and in the past had not encountered significant problems at the casinos. Under her command, she said, inspections will be revived to meet the mandate for state monitoring that was written into state-tribal compacts that established casino gambling two decades ago.

"I understand the concerns that the Legislature and the public has and I take that responsibility very seriously," she said.

Striking a balance with other duties will require her office to start from scratch: a strategic plan, new standards and written procedures, said Tuchner, who was hired in October to a position that has had constant leadership changes in the past decade.

Committee Chairman Tony Cornish, R-Good Thunder, said a Star Tribune report on four years of lax casino inspections prompted him to put the issue before his committee.

Replied Cornish: "It's hard to find fraud when there are no inspections."

Tuchner said the most common question her agency gets about Indian gaming enforcement is whether slot machines are making proper payouts. The compacts require that slots pay out 80 to 95 percent of the money that goes into them over the life of a game.

'Go deeper'

Legislative Auditor James Nobles also testified Wednesday, noting that one reason for inspections is that the computer systems running the machines can be changed to alter payouts. His office studied regulation of tribal casinos in Minnesota seven years ago and found shortcomings in state inspections.

One recommendation in his 2005 report was for the gambling enforcement division to upgrade its technology skills to keep pace with the games and their software. "We thought they should go deeper," Nobles said.

Committee member Rep. John Kriesel, R-Cottage Grove, said he would be willing to look at new funding, if needed, or a restructuring of state enforcement to fix the inspection deficiencies. Other legislators noted that the $150,000 a year that state gaming tribes currently pay in fees for gaming inspections may be inadequate.

"It's obvious that what we are doing is not working," Kriesel said. "I think our public deserves better."

Mary Ellison, deputy commissioner of public safety, told the committee that her department warned lawmakers in 2009 that a $100,000 budget cut would result in curtailed casino inspections.

There was no testimony Wednesday from the casinos, but Nobles and Tuchner said the tribes have worked cooperatively with state inspectors and also received federal scrutiny.