Gaming Officials Say Slot System A Lemon Analysis Shows Record-Keeping Errors To Blame

Despite gambling industry insistence that it doesn’t need electronic monitoring of thousands of video-gaming machines, an Associated Press study found that almost half the Montana gambling violations cited since 1990 have involved record-keeping errors.

State officials say many of those violations could be eliminated if regulators could use a computerized system to track the wagering and payouts for each machine.

The AP analyzed 764 violations of gaming laws and regulations during the last 6-1/2 years and found 372 of them, or 48 percent, were the result of inaccurate or incomplete records kept by taverns or machine owners.

Most of the problems were related to faulty electronic data taken from the gambling machines, and some involved wrong information about the machines themselves.

Janet Jessup, administrator of the Justice Department’s Gambling Control Division, said that with some 1,600 gaming operations reporting on paper forms for about 18,000 video gambling machines, she is worried about the staff of 45 losing the reins.

“There could be huge problems waiting to happen if we don’t stay on top of it,” she said.

The danger with record-keeping mistakes is that the state can’t determine whether adequate taxes are paid on each machine, Jessup said.

‘Most are instances where someone has done something that prevents the department from following the money trail in audits,” she said. “It could be deliberate deception, but typically it’s sloppy paperwork.”

Whatever the reason, the bottom line is that the large number of record-keeping violations mean regulators are not able to do their job, said Attorney General Joe Mazurek.

“We have a responsibility to make sure the correct amount of taxes are collected and to make sure machines comply with requirements of the law in terms of payout,” he said.

“We don’t know what the answers are under this paper-intensive manual system. Nobody can say with certainty whether we’re losing a lot of money or people are overpaying.”

Industry leaders maintain the regulators exaggerate the problem.

“Out of the millions of documents and records developed as part of this industry, this really is a small number of violations and only a small percent are serious in nature,” said Dennis Casey of the Gaming Industry Association.

In many cases, the problem is a wrong date on a reporting form or transposing serial numbers of machines, and those errors could be handled with phone calls rather than fines, said Larry Akey, spokesman for the Montana Coin Machine Operators Association.

Mark Staples of the Montana Tavern Association said no one should be surprised that mistakes are made.

“This is a very infant industry that’s only been around for six years and the regulations are extraordinarily complex,” he said. “I’ve rarely seen an application that doesn’t get sent back for some deficiency.”

The most severe administrative punishment is revocation of a gambling license, but violations also can bring administrative fines of up to $10,000. Record-keeping errors usually have a standard $250 fine and late taxes carry a minimum penalty of 10 percent.

Although division records do not list fines and penalties in each case, the most frequent violations - record-keeping and late taxes - resulted in total payments of nearly $540,000. That’s an average of $1,006 per violation.