OPA: Liberation Carnival games of chance ‘generally complied with applicable laws, rules and regulations’


The Office of Public Accountability has released a performance audit on the 75th Liberation Day Carnival Games of Chance. This audit sought to determine whether the gaming room activities were conducted in accordance with applicable laws, rules and regulations.

The audit found that gaming operations, under the oversight of the Department of Revenue and Taxation (DRT) generally complied with applicable laws, rules and regulations.

However, OPA did identify some deficiencies and violations of Public Law (P.L.) 35-10 and tax law.

Specifically, OPA identified:

  1. DRT personnel lacked the expertise in game room operations;

  2. Backup withholding on gambling winnings was not conducted placing heavy reliance on winners to self-report to DRT on their income tax filings;

  3. Gaming operators permitted the use of cash to be used during games which were a violation of P.L. 35-10; and

  4. Concerns for the personal safety of DRT employees assigned to provide oversight over gaming activities.

Total collections from the 75th Liberation Day Carnival gaming activities amounted to $414 thousand (K), of which $398K was from the vendor fees, $15K from business privilege and other taxes, and $1K from license fees. The revenues forecasted in P.L. 35-10 for vendor fees was $580K.

We also identified Guam lacks a Gaming Control Commission (Commission) for gaming activities. Previous public laws called for the establishment of such a Commission to be empaneled with the main responsibility of administering gaming regulations and developing license fees and tax rates to be assessed to the various forms of allowable gaming. Without an empaneled Commission, gaming activities go unregulated and unchecked.

To address these findings, OPA recommended the Department of Revenue and Taxation:

· Request additional funding to address the issue of personnel expertise and technology and properly regulate the gaming industry.

· Provide proper and adequate training to DRT personnel assigned to oversee the game room operations.

· Implement exclusion or ejection of disreputable personalities from the gaming activities.

· Dedicate staff resources to enforce on-site tax withholding on taxable gambling winnings.

· Empanel the Gaming Control Commission in compliance with Section 6 of P.L. 32-60.

“I want to recognize and acknowledge the thorough and professional audit conducted by the Accountability Auditors of the OPA. With these findings and lessons learned in the operation of gaming activities, we hope this provides the Legislature and the Department of Revenue and Taxation with guidance on the economic and social benefits and drawbacks of this activity,” remarked Public Auditor Benjamin J.F. Cruz.

“I also want to assure the People of Guam that the staff of the Office of Public Accountability are complying with the Governor’s directive to work remotely. We will continue to issue quality performance audits and informative financial audits as they are completed in the coming weeks,” concluded Cruz.