California Lacking Knowledge On Problem Gambling, Audit Finds

September 21, 2022
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With less than two months before Californians decide the fate of two ballot initiatives to open the nation’s largest state to legal retail and mobile sports betting, a recent audit found the state agency charged with raising awareness of problem gambling is unprepared for any expansion of gaming.

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With less than two months before Californians decide the fate of two ballot initiatives to open the nation’s largest state to legal retail and mobile sports betting, a recent audit found the state agency charged with raising awareness of problem gambling is unprepared for any expansion of gaming.

The report by California acting state auditor Michael Tilden found the state's Department of Public Health’s Office of Problem Gambling (OPG) “lacks data on the number of individuals who are currently suffering or who have recently suffered from problem gambling.”

The most recent official study was in 2006, which found that 3.7 percent of California adults will experience problem or pathological gambling at some point in their lives. That translates to about 1.1m adults, according to U.S. Census data from 2020.

The 2006 survey also found that the prevalence of problem or pathological gambling was higher among men, African Americans, unemployed people and disabled people.

If the OPG had better information, the audit dated August 25 found, that would help it better identify which populations need problem gambling prevention or treatment services and the factors that contribute to problem gambling.

“Because the Office of Problem Gambling has not incorporated into its program evaluation the use of strategic planning best practices toward meeting these goals, the office is unable to identify whether it is providing effective services,” the audit states.

Tilden also recommended the OPG obtain data on the number of Californians who currently suffer or have suffered from problem gambling to better identify which populations need problem gambling treatment services and the factors that contribute to problem gambling.

The OPG should also update this information annually and use it to identify the locations and populations most in need of program services and to evaluate how well it is serving that population.

“We found the OPG’s evaluation efforts to be ineffective,” the audit states.

“Most importantly, the office evaluates its programs against nonspecific goals that cannot be easily measured. The office does include its mission and the goals for its programs in its strategic plans, which generally cover a five-year period.”

In a letter responding to the audit, Dr Tomás Aragón, director and state public health officer, agreed with the audit’s recommendations but stressed that the OPG already works with existing population-level surveillance studies to estimate prevalence of problem gambling behaviors.

“The office will also take steps to evaluate California rates of service compared to other states,” Aragón wrote.

The prevalence of gambling disorder among the general population in the United States typically ranges from about 1 percent to 2 percent of the population, per year.

These estimates, according to the OPG, have been fairly stable between studies, locations, and over time.

In a statement emailed to VIXIO GamblingCompliance late Monday (September 19), the OPG made it clear that it was “committed to better understanding population levels of problem gambling behaviors in California."

To that end, the OPG has been working since 2020 “collecting state-wide prevalence data to better understand prevalence rates for gambling and problem gambling behaviors and among the state’s population and track trends over time.”

Tilden’s audit also recommended the OPG ensure its training expenditures are reasonable and, beginning with its next event, the agency should obtain quotes from multiple vendors and select the vendor that offers the best value.

The audit found that the OPG used $24,200 and $35,800 in distribution funds for its problem gambling conferences in 2019 and 2020 respectively, without ensuring those costs were reasonable.

“The office needs to be prudent when using its funds: the more funding the office spends on conference, the less it can use for prevention and treatment services.

“Until it obtains this information, the office should take additional steps to determine whether it is providing services to a reasonable number of individuals by comparing its programs to those in other states,” the audit states.

Legal gambling is widely available throughout California with 84 cardrooms and 67 tribal casinos, according to the California Gambling Control Commission (CGCC). There are also four racetracks, charitable gaming and some 23,000 California Lottery retailers.

The audit also found that the state has been mismanaging the Indian Gaming Special Distribution Fund, which exists to cover the costs of regulating tribal casinos and providing services to individuals suffering from problem gambling.

That mismanagement has allowed the fund’s balance to reach $127m, which is enough to pay for nearly four years of expenditures. Tilden noted that without deliberate action from the legislature, the distribution fund balance will remain excessive.

The California Nations Indian Gaming Association (CNIGA) said it is still reviewing the report and declined to comment as of Tuesday (September 20).

The audit suggests two steps the legislature should take to make sure the fund “has sufficient, but not excessive, funding to fulfil its purposes,” including having the CGCC and state's Department of Finance identify a prudent reserve amount, and lawmakers deciding how to reduce the fund balance.

The legislature could reduce the balance by increasing funding for problem gambling prevention and treatment programs or return the excess funding to the tribes by refunding a portion of their distribution fund fees.

Last year, California collected $34m more in distribution fund fees from tribes than it spent on regulatory costs, contributing to the fund’s excessive reserve. The state also has not repaid nearly $2m plus interest from a loan issued by the fund 13 years ago.

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