Among the 11 states that have commercial casinos, Colorado has the fewest slot machine regulators per device, according to an analysis by The Denver Post.
There are 17,000 slot machines in Colorado and five Division of Gaming employees assigned to oversee them.
That’s 3,400 machines for one official. Most other states have a ratio of fewer than 1,500 machines per official.
A recent crackdown, the first of its kind by Colorado’s slot unit, found that 14 of the state’s 46 casinos had defective or illegal slot machines.
In many cases, the slots had been on the gaming floor for more than two years after regulators had initially asked the casinos to remove them.
The state in August and September fined five casinos – Century Casino, Colorado Central Station, Isle of Capri, Riviera Black Hawk and Double Eagle – a total of $111,200 for slot violations.
Nine more casinos will face fines this month for similar violations, according to the Gaming Division.
Bradford Smith, a gaming consultant and former chairman of the New Jersey Casino Control Commission, said states shouldn’t tolerate deficiencies in regulatory oversight.
“(Having) defective machines on the floor which people are continuing to play can destroy the credibility of the industry and the regulatory authority, and that’s something that you want to avoid at all costs,” Smith said.
Ron Kammerzell, Colorado’s Gaming Division director, said the state is sufficiently staffed to regulate the cash-flush gaming industry. ” We’re in a better position today than we’ve ever been,” Kammerzell said.
“I see these problems that we’re experiencing today diminishing over the next couple of months,” he said. “We’ve sent a message to the industry – we’re not going to tolerate this.”
He said that if a casino is caught a second time with a defective or illegal slot, it may face a suspension or revocation of its Colorado gaming license.
Gamblers bet $12.3 billion on slots and $87.2 million on table games in fiscal 2006, which ended June 30. The casinos’ adjusted gross proceeds, which is bets minus payouts, was $736 million from slots and $29 million from table games.
Others more aggressive
With beefier staffs, other states inspect slots more aggressively than Colorado.
Missouri has 17,750 slots, similar to Colorado, but has a staff of 11 dedicated to ensuring the machines are compliant.
Unlike Colorado, Missouri checks every machine before it goes on the gaming floor, said Clarence Greeno, gaming enforcement manager for the Missouri Gaming Commission.
If a glitch is found after the approval process, the state has its inspectors ensure that the machine is removed immediately, Greeno said.
New Jersey, which has more than 40,000 slots, has 31 slot inspectors and checks all slots before they can be used.
Nevada, by far the largest gaming jurisdiction in the country with more than 207,500 slots, has 182 slot inspectors.
Frank Streshley, senior gaming analyst for the Nevada Gaming Control Board, said members of the state’s audit group also conduct random checks.
Under rule changes that took effect in May, the Colorado Gaming Division no longer checks every slot machine before it goes on the gaming floor. The state had done that since gaming started in October 1991.
Now the state provides the casinos with a list of approved games, and the casinos are responsible for cross-checking their machines with the list.
Regulators then inspect the new machines within 90 days to make sure they are compliant.
The shift came after the industry complained that the division was taking too long to inspect new machines.
The change allows the slot unit to check new machines on their own schedule, and gives them time to inspect older machines, which had not been done in the past, Kammerzell said.
Colo. change backfired
But the self-regulation policy stung the division immediately.
One casino, Century Casino in Central City, didn’t carefully cross-check its new machines and put slots on the gaming floor that hadn’t previously been approved for Colorado. Century had five slots that allowed gamblers to wager more than the state’s mandated $5 limit.
Most of the violations have been with slots that had already been approved but were later found to have glitches.
When the division is notified that there is a glitch in a slot’s software, it typically gives casinos 30 to 180 days to remove the machine. Until the recent checks, regulators never followed up to ensure that the casinos removed the machines.
The violations recently uncovered include machines that could inadvertently clear their memory while a game was in process. The defect could also wipe out the record of how many times the machine has paid out. Colorado law requires slots to pay out at least 80 percent of wagers.
Natalie Meyer, former chairwoman of the Colorado Limited Gaming Control Commission, said she proposed adding as many as four new positions to the slot unit before she was ousted in January.
Meyer wrangled with Department of Revenue executive director Michael Cook over which agency should control the gaming budget.
Gov. Bill Owens sided with Cook and replaced Meyer, two other commissioners and former Gaming Division director Mark Wilson.
“The gaming industry is going to continue to grow, and that means that the staffing at the division is going to have to grow to meet the challenge,” Meyer said.
The industry has boomed since its start in the state, and the vast majority of wagers are placed in slot machines.
The Gaming Division has an annual budget of $7.5 million and a staff of 70. The emerging technologies unit – the group responsible for inspecting slot machines – has five allotted positions. The bulk of the gaming staff is focused on dealing with problems with patrons, approving licenses and auditing financial reports.
Instead of increasing the slot staff this year as Meyer had proposed, the division implemented the new oversight strategy.
“Those resources can be better utilized elsewhere,” Kammerzell said.
But the breaches that regulators have found have left an impression with some gamblers that the casinos are not being carefully monitored.
“The casinos seem to be getting away with a lot up there … which is really scary, especially if you’re dumping a lot of money,” said Edgewater resident Steven Edelen, 36, who gambles in Black Hawk a few times a month.
The industry, however, isn’t too concerned about the division’s staffing levels, said Lois Rice, executive director of the Colorado Casino Association, which represents 19 state casinos.
“We’ve been assured from the division that staff is making sure that all of our games and machines are in compliance,” Rice said.
Staff writer Andy Vuong can be reached at 303-954-1209 or avuong@denverpost.com.
Of 11 states with commercial casinos, Colorado ranks last in investigators per slot machine.
COLORADO
Investigators: 1 per 3,400 slots
Staff: 5
Slots: 17,000
SOUTH DAKOTA
Investigators: 1 per 3,100 slots
Staff: 1
Slots: 3,100
MISSOURI
Investigators: 1 per 1,600 slots
Staff: 11
Slots: 17,750
MICHIGAN
Investigators: 1 per 1,500 slots
Staff: 5
Slots: 7,725
NEW JERSEY
Investigators: 1 per 1,300 slots
Staff: 31
Slots: 40,700
LOUISIANA
Investigators: 1 per 1,250 slots
Staff: 17
Slots: 21,200
NEVADA
Investigators: 1 per 1,100 slots
Staff: 182
Slots: 207,500
MISSISSIPPI
Investigators: 1 per 1,000 slots
Staff: 30
Slots: 30,200
INDIANA
Investigators: 1 per 740 slots
Staff: 24
Slots: 17,700
IOWA
Investigators: 1 per 560 slots
Staff: 25
Slots: 14,000
ILLINOIS
Investigators: 1 per 140 slots
Staff: 73
Slots: 10,000
Sources: State gaming divisions, commissions
