Nebraska Gaming Commission faces scrutiny amid proposed legislative changes, audit concerns

The Nebraska Racing and Gaming Commission, responsible for regulating the state's casino industry, is facing heightened scrutiny as the local gambling industry expands. Legislative concerns, recent audit issues, and public attention to the commission's expenditures have brought the regulatory body under closer examination.

A state lawmaker is proposing legislative changes to enhance the governor's oversight of the Commission, the Omaha World-Herald reported. The move comes in response to growing concerns, including questions raised by the state auditor regarding the commission's auditing practices for new casinos and its recent purchase of $30,000 worth of semi-automatic rifles.

State Sen. John Lowe of Kearney, who introduced the Legislative Bill 839, asserts that it is time for the governor of Nebraska to wield more authority over the agency.

Denny Lee, the commission's chair, acknowledged the increased attention, noting that closer scrutiny is reasonable given the commission's evolving responsibilities. The proposed legislation aims to involve Nebraska's governor in the selection of the commission's executive director, a move deemed sensible by Lee.

“I think anybody can look at that job and say it’s just growing in importance,” Lee was quoted as saying in the report.

Traditionally focused on horse racing, the commission's profile has risen significantly since voters approved casino gambling at licensed racetracks in 2020. The subsequent legislative mandate tasked the commission with overseeing the emergent casino industry, resulting in a substantial growth in its budget and workforce.

According to records from the Legislature's fiscal office, total expenditures for the commission surged by 381% over three years, from $540,661 in fiscal 2019-20 to $2.06 million in 2022-23. The agency's workforce expanded from 2.85 full-time equivalent employees to 11.9 during the same period.

The bill proposes granting the governor the authority to approve the choice of the executive director, while also imposing restrictions on the director's professional engagements to ensure focus on the commission's mission. Additionally, the proposal would grant the governor the authority to dismiss a commissioner for misconduct or other reasons, the report said.

Meanwhile, concerns raised by State Auditor Mike Foley earlier this month questioned the commission's verification of revenue from new casinos. His office discovered that the commission failed to conduct timely audits of the three gambling operators in the state for fiscal year 2023 and neglected to carry out the mandated "integrity and security assessment" for one of the operators.

“When the citizens voted for casino gambling, a lot of promises were made about the influx of tax dollars. Now we need to be assured that the monies generated by casino gambling are verified by an independent licensed CPA firm which thus far has not happened,” Foley said, as per the report.

Lee responded that commissioners appreciate the auditor's assistance and are actively addressing the identified deficiencies. The auditor did not uncover any wrongdoing; instead, the issue pertained to incomplete audits, he said. Lee clarified that the commission has been receiving quarterly independent audits from all three operators.

The controversy surrounding the commission's purchase of semi-automatic rifles remains under discussion. According to Lee, the rifles are currently secured in a safe at the commission's Lincoln headquarters office, the report said.