Missed 2005 casino audits raise concerns

Gaming panel, state officials spar over taxes, staff shortage

Joanne Kelley, Rocky Mountain News

Published December 30, 2005 at midnight

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LAKEWOOD - Colorado's gaming division has failed to audit casino revenues for the past nine months, making it difficult for regulators to determine whether the industry has paid enough in taxes to the state, officials said Thursday.

The revelation was among the concerns raised in a special meeting called by the gaming commission, which has become locked in a power struggle with the state's revenue department.

Because of a persistent shortage this year of gaming division staff in the state's three casino towns, the only revenue audit during 2005 was conducted in March.

Colorado Gaming Commission Chairwoman Natalie Meyer called it a "horrendous problem."

Added Barbara Jenkins, an accountant who serves as a gaming commissioner, "We don't know whether the taxes coming in are anywhere near appropriate."

Jenkins said state auditors have been focused on other types of accounting tasks at the casinos in Cripple Creek, Black Hawk and Central City.

Last year, casinos reported revenues of about $726 million and paid taxes of $99.5 million. Through November 2005, casinos have reported revenues of $698 million and paid taxes of almost $92 million.

The commission's dispute with the revenue department, which houses the gaming division, also involves who has authority over the state's gaming budget.

"There is a deep division here, and we face a constitutional crisis," said Meyer, a former Colorado secretary of state.

The commission voted 3-1 to ask Gov. Bill Owens and legislative leaders to take action on the issues raised at the meeting. Immediately after the meeting, Meyer and other commissioners placed a call to the governor's office.

Dan Hopkins, the governor's spokesman, said Owens will be meeting with the principals in the dispute over the next few days.

"He has been following it for the last couple weeks, and he does not believe it is . . . a constitutional crisis," Hopkins said. "It's a disagreement between the two entities, and he will resolve it."

The head of Colorado's Department of Revenue defended the actions of her office.

"These are issues that I feel for some reason or another have been blown somewhat out of proportion," said M. Michael Cooke, executive director of the revenue department.

Commenting on the audit issue after the meeting, Cooke said, "If we haven't been (doing audits), then I have an internal problem."

The commission blamed Cooke for the slow hiring process, which has left five vacancies among the 13 auditor positions in the gaming division. But Cooke rejected the contention that she had imposed a hiring freeze in the gaming department over the past few months.

The commissioners also objected to Cooke's denial of their budget request to hold a two-day retreat at the Table Mountain Inn in Golden.

Cooke described the $3,100 cost of the proposed confab as "excessive," noting that it involved overnight hotel stays and dinner for the commissioners.

"It was not consistent with our policies," she said.

The regulatory panel said it sought an informal opinion from the attorney general's office, which concluded the commission had the sole legal authority over the gaming division budget.

But Cooke said, "We've been operating with the assumption that the department does play a role in this budget."

Owens' spokesman said the governor viewed Cooke's ruling on the retreat expense request as "fulfilling her role" as a watchdog.

kelleyj@RockyMountainNews.com or 303-892-5068

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