Summary of LBAO Pari-Mutuel Commission audit

Jim Rubens

Why do so many legislators continue to have confidence in the Pari-Mutuel Commission, assigning it new duties while it heaps on proof of its untrustworthiness?  The Commission has long failed to properly regulate horse and dog racing.  Some now want to legalize video slots casinos and have the Commission regulate those.

A 2005 state audit by the Office Of Legislative Budget Assistant found that the New Hampshire Pari-Mutuel Commission is saturated in a culture of self-dealing, evasion of legislative budget authority and sloppy recordkeeping. 

Specifically, the audit tagged the Pari-Mutuel Commission with 24 deficiencies, including:

·       Failure to establish a formal fraud prevention, deterrence and detection program.  (Observation 5).  This failure continues one year after a federal investigators charged Lakes Region greyhound track owners and management with complicity in a $200 million Gambino crime family illegal gambling operation.

·       Knowing evasion of legislative budgetary spending caps by assigning expenditures to unauthorized accounts.  The Commission was cited for the identical problem in a 1995 state audit.  (Observation 18).

·       Five of six PMC commissioners had failed to properly file required statements of their financial interests due on July 1, 2004.  The Commission was cited for the identical problem in a 1995 state audit.  The problem was not resolved as of April 7, 2006.  (Observation 21).

·       Contracting with relatives of employees to provide services.  Amounts disclosed in the audit were found to be small, but the audit warned against the appearance and actual risks of self- and related-party dealings.  Observation 16).

·       Failure to license half of dog owners racing at Lakes Region greyhound track during the audit period.  (Observation 1).

·       Failure to cross check Lucky 7 ticket distributors’ financial reports against information in its possession from authorized ticket purchasers.  (Observation 12).

·       Payment to its Director of $3,622 for use of his car to commute from his home to his job in Concord and did not properly report this income as required by federal tax law.  The Director is now using a state-owned vehicle at state expense to commute to work.  Unlike other state employees, some PMC employees are paid for their drive time to work in Concord.  (Observation 3).

Pari-Mutuel mess: Director has some explaining to do

New Hampshire Union Leader

Editorial

June 13, 2006

AN AUDIT of the state's Pari-Mutuel Commission found what auditors like to call "irregularities," which is a polite word for bumbling, corruption or ineffectiveness.

The audit found that Commission Director Paul Kelley and two other employees had their homes designated as their main office, though they all reported to work in Concord. The cost of travel from a main office to another office is eligible for reimbursement. The switch allowed them to be reimbursed by the state for the cost of commuting to and from their homes to the main office in Concord or to other offices. Kelley was reimbursed for $3,622 in mileage expenses, "a significant portion of which resulted from the Director's daily commute to the Concord office," the report found.

The auditors examined four racing programs at the Lakes Region Greyhound Park and found that in no case were even half of the dogs entered by licensed owners. Greyhound owners are required to be licensed with the PMC, but more than half were not. The PMC blamed the trouble on Gov. Craig Benson's hiring freeze for keeping it from filling a counter clerk position, but the other employees assigned the duty of checking licenses failed to do the job.

The auditors found numerous control problems. The commission had no fraud prevention and detection program, no double-checking of inventory lists, inadequate control of its revenue recording, inadequate controls for the collection and processing of Lucky 7 and bingo revenue, and other problems.

There was one incident apparently intended to save taxpayers' money, however. An employee said her husband could move office equipment for $20 an hour less than the contract bidder, and the PMC gave him the job. Unfortunately, the commission did not consider liability and insurance issues that could have proved extremely costly had the man been injured doing the work.

Most disturbing was that the audit covered only nine months, ending March 31, 2005, and the last audit of the PMC was conducted a full decade earlier. What other shenanigans went undetected in those ten years?

With the great temptation for corruption inherent in gambling, the state should see to it that the Pari-Mutuel Commission is audited more frequently. And with Director Kelley having cheated the taxpayers out of several thousand dollars, some explaining and reimbursing is in order.