House committee recommends two‑year continuation for Arizona Department of Gaming after Auditor General audit

The House Commerce Committee of Reference on July 1, 2025, recommended that the Arizona Department of Gaming implement the Auditor General’s recommendations and continued the department’s sunset review for two years.

The committee heard a presentation from Liam Van Pelt of the Arizona Auditor General, who said the office identified multiple problems in its 2025 performance audit and sunset review, including that “the department did not obtain and review these independent audit reports to confirm that event wagering and fantasy sports contest operators paid the correct privilege fee amounts” for most operators reviewed in calendar year 2023. Van Pelt’s office made 16 recommendations to the department to address revenue verification, conflict‑of‑interest compliance and complaint‑handling processes.

Department director Jackie Johnson told the committee the agency agrees with the audit and “we are already implementing every recommendation, with many completed.” She said the department is doing a historical lookback and validation of operator reporting and that “any overpayments and underpayments will be verified and corrected.” Johnson explained that operators submit annual third‑party audits performed by firms they retain and that the department’s work includes pulling Arizona‑specific figures out of national reports.

Members asked how the state enforces corrections beyond collecting funds. Johnson said the department will assess the full picture during the lookback and “we do, as an agency, have authority to assess fines,” adding that the department will determine appropriate actions after reviewing the historical reporting. Lawmakers also pressed on suitability standards for partnerships with prediction markets and whether actions by other states could put Arizona licenses at risk; Johnson said licensing actions are considered case‑by‑case and the department typically waits for final adjudications in other jurisdictions before taking Arizona licensing action.

On a roll‑call vote the committee passed the motion to recommend implementing the recommendations and continuing the Department of Gaming for two years, 7 ayes to 4 nays. The motion instructs the department to carry out the Auditor General’s recommendations and to report progress during scheduled follow‑ups.