Arizona House of Representatives Committee on Commerce Report of Regular Meeting for January 13, 2026

Summary

The Arizona House of Representatives Committee on Commerce's report of its regular meeting of Tuesday, January 13, 2026, in the Fifty-seventh Legislature, Second Regular Session, convened at 2:01 P.M. and adjourned at 4:22 P.M. with Representative Weninger as chairman. The committee heard the Arizona Office of the Auditor General on sunset reviews of the Arizona Department of Gaming, the Arizona Racing Commission, the Arizona State Boxing and Mixed Martial Arts Commission and the Arizona Board of Barbering and Cosmetology, and on a performance audit of the Arizona Sports and Tourism Authority. It recommended continuation of the Department of Gaming for 2 years on a 7-4-0-0 vote and of the other three bodies for 6 years, by votes of 10-1-0-0, 11-0-0-0 and 10-0-0-1. The attachments include the agenda, attendance record and auditor handouts.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

ARIZONA HOUSE OF REPRESENTATIVES
Fifty-seventh Legislature - Second Regular Session

COMMITTEE ON COMMERCE

RECEIVED
CHIEF CLERKS OFFICE

Report of Regular Meeting

Tuesday, January 13, 2026

JAN 2 § 2026,

House Hearing Room 5 -- 2:00 P.M.

Convened 2:01 P.M.
Adjourned 4:22 P.M.

Members Present

Representative Aguilar
Representative Blackman
Representative Carter
Representative Cavero
Representative Connolly
Representative Diaz

Representative Hendrix
Representative Villegas
Representative Wilmeth
Representative Way, Vice-Chairman
Representative Weninger, Chairman

Agenda
Original Agenda — Attachment 1

Request to Speak
Report — Attachment 2

Committee Attendance
Report — Attachment 3

Members Absent

Presentations
Name Organization Attachments
(Handouts)
Liam VanPelt Arizona Office of the Auditor General 4
Sunset Review-Arizona Department of
Gaming
Arizona Office of the Auditor General 4
Sunset Review-Arizona Racing
Commission
Arizona Office of the Auditor General 4
Sunset Review-Arizona State Boxing and
Mixed Martial Arts Commission
Jackie Johnson, Director Arizona Department of Gaming 3

COMMITTEE ON COMMERCE
January 13, 2026
Katie Grzybowski Arizona Office of the Auditor General 9
Sunset Review-Arizona Board of
Barbering and Cosmetology

Frank Migali, Director Arizona Barbering & Cosmetology Board 10

Katie Grzybowski Arizona Office of the Auditor General 12
Performance Audit — Arizona Sports and
Tourism Authority

Tom Sadler, President Arizona Sports and Tourism Authority 13

Committee Action

Action Vote Attachments

Recommendation Arizona Department of Gaming 7-4-0-0 6
Continuation for 2 years

Recommendation Arizona Racing Commission 10-1-0-0 7
Continuation for 6 years

Recommendation Arizona Boxing and MMA 11-0-0-0 8
Commission Continuation for 6 years

Recommendation Arizona Board of Barbers and 10-0-0-1 11

Cosmetology Continuation for 6 years

Jokvey.

Abby Selvey ommittee Seepiary
January 16, 2026

(Original attachments on file in the Office of the Chief Clerk; video archives available at http://www.azleg.gov)

Cony: QO pm
Adjourn » 4:22 pm

REVISED #2 - 1/12/26 REVISED #2 - 1/12/26 REVISED #2 - 1/12/26

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-seventh Legislature - Second Regular Session

REGULAR MEETING AGENDA
COMMITTEE ON COMMERCE

DATE Tuesday, January 13, 2026 ROOM HHR5 TIME 2:00 P.M.

Members of the public may access a livestream of the meeting here:
https://www.azleg.gov/videoplayer/?clientID=6361 162879&eventID=202601 1006

Members:
Representative Aguilar Representative Connolly Representative Wilmeth
Representative Blackman Representative Diaz Representative Way, Vice-Chairman
Representative Carter, N. Representative Hendrix Representative Weninger, Chairman
Representative Cavero Representative Villegas
Acting as the House Commerce Committee of Reference
L. Sunset Review of the Arizona Department of Gaming

e Presentation by the Office of the Auditor General

e Response by the Department of Gaming

e Public Testimony

e Discussion and Recommendation — A Year com. 7-4 -0-0
2. Sunset Review of the Arizona Racing Commission

e Presentation by the Office of the Auditor General

e Response by the Arizona Racing Commission

e Public Testimony
e Discussion and Recommendation = le YY Corr Cont 10 -|-O-0
3. Sunset Review of the Arizona State Boxing and Mixed Martial Arts Commission

Presentation by the Office of the Auditor General
Response by the Arizona State Boxing and Mixed Martial Arts Commission
Public Testimony
¢ Discussion and Recommendation -e year cont. ||-O-O-O
4. Sunset Review of the Arizona Board of Barbering and Cosmetology
e Presentation by the Office of the Auditor General
e Response by the Arizona Board of Barbering and Cosmetology
Public Testimony
e Discussion and Recommendation - le N ear eont. 1O-0-O0- }
5. Review of the Office of the Auditor General’s Performance Audit of the Arizona Sports and Tourism Authority
e Presentation by the Office of the Auditor General
e Response by the Arizona Sports and Tourism Authority

Public Testimony
Discussion — INO Motion

vc
01072026
01/12/2026

People with disabilities may request reasonable accommodations such as interpreters, alternative formats, or
assistance with physical accessibility. If you require accommodations, please contact the Chief Clerk's Office at

(602) 926-3032 or through Arizona Relay Service 7-1-1.
Page 1 of 1 ATTACHMENT |
Information Registered on the Request to Speak System

House Commerce (1/13/2026)

1, Sunset Review of the Arizona Department of Gaming

2. Sunset Review of the Arizona Racing Commission

3. Sunset Review of the Arizona State Boxing and Mixed Martial Arts
Commission

4, Sunset Review of the Arizona Board of Barbering and Cosmetology

5. Review of the Office of the Auditor General’s Performance Audit of

the Arizona Sports and Tourism Authority

ATTACHMENT 2.
COMMITTEE ON

ARIZONA STATE LEGISLATURE

Fifty-seventh Legislature - Second Regular Session

COMMITTEE ATTENDANCE RECORD

COMMERCE

CHAIRMAN: Jeff Weninger VICE-CHAIRMAN: _ Michael Way
DATE 01/13/26
CONVENED '

RECESSED = -_

RECONVENED

ADJOURNED f° 40 on
MEMBERS PRESENT. NOT PRESENT
Aguilar rd
Blackman gal"
Carter N gal
Cavero ra
Connolly oF
Diaz \4
Hendrix VA
Villegas yy
Wilmeth i
Way, Vice-Chairman 4
Weninger, Chairman wi

TOTAL 11

ATTACHMENT 3
|
ATTACHMENT

ARIZONA

AuditorGeneral

Making a Positive Difference

Arizona Department of Gaming, Racing Commission, and
Boxing and MMA Commission

Performance Audit and Sunset Review

January 13, 2026
Liam VanPelt

PRESENTATION OVERVIEW
>
>
b
>
>
De
>

Arizona Auditor General Making a positive difference by promoting better government

Key context

Positive performance
Problems identified

Why the problems matter
What led to the problems
Key recommendations

Additional information and issues
KEY CONTEXT

Department history and purpose

> Department of Gaming established in 1995 to fulfill Tribal-State Gaming
Compact responsibilities

> Jackie Johnson serves as director

> Auditor General conducted Department’s last sunset review in 2018

Arizona Auditor General Making a positive difference by promoting better government
KEY CONTEXT

Department’s key responsibilities

> Regulating tribal gaming, event wagering and fantasy sports contests,
and horse racing

> Supporting education, prevention, and treatment efforts aimed at
reducing problem gambling

> Providing staff support to the Racing Commission and the Boxing and
MMA Commission

Arizona Auditor General Making a positive difference by promoting better government
KEY CONTEXT

Racing Commission history and responsibilities

> Racing Commission established in 1949 to regulate and supervise horse
racing and wagering in the State

> Racing Commission consists of 5 Governor-appointed members
>» Racing Commission responsible for approving racetrack permits

> Auditor General last reviewed Racing Commission in 2007 and it
conducted a self-review in 2024

Arizona Auditor General Making a positive difference by promoting better government
KEY CONTEXT

Boxing and MMA Commission history and responsibilities

> Boxing/MMA Commission established in 1958 and is responsible for
regulating and supervising all boxing, kickboxing, tough man, and mixed
martial arts events in Arizona

> Boxing/MMA Commission consists of 3 Governor-appointed members

> Boxing/MMA Commission responsibilities including issuing licenses to
event promoters and participants

> Auditor General last reviewed Boxing/MMA Commission in 2000 and it
conducted a self-review in 2017

Arizona Auditor General Making a positive difference by promoting better government
POSITIVE PERFORMANCE

Department met requirements for some responsibilities

> Distributed more than $158 million in tribal contributions to various
State programs and funds in FY 2024, in accordance with statute

> Issued event wagering operator licenses to qualified applicants

Arizona Auditor General Making a positive difference by promoting better government
POSITIVE PERFORMANCE

Racing Commission met requirements for key statutory
responsibility

> Commission conducted hearings related to and approved application
for renewal of commercial racetrack permit

> First hearing on permit application in July 2024

> Not granted due to necessary racetrack repairs and financial review

> Approved application in August 2025

Arizona Auditor General Making a positive difference by promoting better government
PROBLEMS IDENTIFIED

Department did not Department and Department and
consistently obtain Commissions did Boxing/MMA
and review not comply with Commission lacked
operators’ some conflict-of- complaint handling
independent audit interest processes
reports requirements

Arizona Auditor General Making a positive difference by promoting better government
KEY CONTEXT

Licensed event wagering and fantasy sports operators
statutorily required to pay privilege fees

> Event wagering and fantasy sports contest operators must pay monthly
fees to the Department for privilege of operating event wagering or
fantasy sports contests in the State

> Most privilege fee revenues are remitted to State General Fund

> Privilege fees for event wagering and fantasy sports operators based on
adjusted receipts or revenues

Arizona Auditor General Making a positive difference by promoting better government
PROBLEM IDENTIFIED

Department did not consistently obtain and review
independent audit reports to ensure accuracy of reported
revenues and associated privilege fees

> Department policy requires staff to review operators’ independent
audit reports to verify revenues and associated fee amounts due

> In 2023, Department did not review audit reports for:
> 15 of 17 licensed event wagering operators

> All 10 licensed fantasy sports contest operators

Arizona Auditor General Making a positive difference by promoting better government
WHY THE PROBLEM MATTERS

Risks of not reviewing independent audit reports to verify
operators paid correct privilege fee amounts

> Failure to identify operator underpayments results in lost State
revenues

> Failure to identify operator overpayments could negatively impact the
operators’ revenues and profits

Arizona Auditor General Making a positive difference by promoting better government
WHAT LED TO THIS PROBLEM

Department lacks accountability mechanisms for ensuring it
obtains and reviews audit reports

> Department lacked process to track receipt of and review independent
audit reports and:

> Follow up with operators or their independent auditors

> Take disciplinary action, such as issuing fines, to noncompliant operators

Arizona Auditor General Making a positive difference by promoting better government
PROBLEMS IDENTIFIED

Department did not
consistently obtain
and review
operators’
independent audit
reports

Arizona Auditor General

Department and

Commissions did
not comply with
some conflict-of-
interest
requirements

Department and
Boxing/MMA
Commission lacked
complaint handling
processes

Making a positive difference by promoting better government
PROBLEM AND WHY IT MATTERS

Failure to comply with conflict-of-interest requirements

> Department and commissions lacked comprehensive conflict-of-
interest policies and procedures

> Noncompliance with conflict-of-interest requirements increases risk
that substantial interests that might influence or affect official conduct

are not disclosed

Arizona Auditor General Making a positive difference by promoting better government
PROBLEM IDENTIFIED

Department did not
consistently obtain
and review
operators’
independent audit
reports

Arizona Auditor General

Department and
Commissions did
not comply with
some conflict-of-
interest
requirements

Department and

Boxing/MMA
Commission lacked
complaint handling

processes

Making a positive difference by promoting better government
PROBLEM AND WHY IT MATTERS

Department and Boxing and MMA Commission lacked
processes for tracking and resolving all complaints

> Department unable to demonstrate if it timely and appropriately
investigated and resolved most complaints it received

> Both Department and Boxing and MMA Commission lacked
comprehensive processes for handling and resolving complaints

> Lack of comprehensive complaint-handling processes limits ability to
ensure complaints are timely investigated and resolved, increasing risk
to public welfare and safety

Arizona Auditor General Making a positive difference by promoting better government
RECOMMENDATIONS OVERVIEW

16 recommendations to Department, including:
> Obtain and review independent audit reports
>» Develop and implement conflict-of-interest policies and procedures

> Establish comprehensive complaint-handling processes

5 recommendations to Racing Commission, including:

> Develop and implement conflict-of-interest policies and procedures

9 recommendations to Boxing and MMA Commission, including:
> Develop and implement conflict-of-interest policies and procedures

> Establish comprehensive complaint-handling processes

Arizona Auditor General Making a positive difference by promoting better government
ADDITIONAL INFORMATION

Tribal-State Gaming Compact Questions and Answers

> Information on the Compact’s development and requirements

> Key changes to Compact negotiated between Governor’s Office and
tribes in 2021

> New gaming categories

> Changes to the number of casinos allotted to certain tribes

Arizona Auditor General Making a positive difference by promoting better government
ADDITIONAL INFORMATION

Tribal-State Gaming Compact Questions and Answers

>» Compact Trust Fund established to mitigate impacts to certain tribes
from expanded gaming

>» Department responsible for distributing monies to beneficiary tribes
consisting of:

>» Category 2 tribes, which do not conduct gaming operations

> Category 3 tribes, which conduct gaming operations

Arizona Auditor General Making a positive difference by promoting better government
PROBLEM IDENTIFIED

Department has not timely made payments to some tribes

> Department distributed monies to 2 Category 2 tribes 5 months late in
FY 2024.

> Department has not yet distributed monies to any Category 3 tribes

> Category 3 tribes in ongoing negotiations regarding formula for distributions

> 2 recommendations to the Department

Arizona Auditor General Making a positive difference by promoting better government
OTHER ISSUES IDENTIFIED

18 additional recommendations to Department

>» Lacked policies and procedures for some State information technology
(IT) security requirements

>» Lacked documentation to demonstrate qualification of horse racing
licensing applicants

> Has not developed a process to regularly evaluate appropriateness of
horse racing license and permit fees

>» Noncompliance in other sunset factor areas including rule adoption
and fulfilling public records requests

Arizona Auditor General Making a positive difference by promoting better government
OTHER ISSUES IDENTIFIED

1 additional Racing Commission recommendation

> Require staff to provide a written notice explaining to requestors the
reason for any delays in fulfilling a public records request

Arizona Auditor General Making a positive difference by promoting better government
OTHER ISSUES IDENTIFIED

4 additional recommendations to the Boxing and MMA
Commission

> Issued licenses to some applicants who did not demonstrate they met
all statutory and rule requirements in CY 2023

> Had not developed a process to regularly evaluate its licensing and
permit fees, nor regularly assessed the costs of regulatory activities

Arizona Auditor General Making a positive difference by promoting better government
ARIZONA

AuditorGeneral

Making a Positive Difference

Arizona Department of Gaming, Racing Commission, and
Boxing and MMA Commission

Performance Audit and Sunset Review

January 13, 2026
Liam VanPelt

WWia4iZyuZs

E ¢ \RIZONA.

= A wr) gee ae
ry: uditorGeneral

Arizona Department of Gaming, Racing
Commission, and Boxing and MMA Commission

Performance Audit and Sunset Review

January 13, 2026
Liam VanPelt

1

PRESENTATION OVERVIEW

» Key context

» Positive performance

» Problems identified

» Why the problems matter
» What led to the problems

» Key recommendations

» Additional information and issues

Arizona hodter Geren Making a positive Gitterence by promoting beter grveramont

2
KEY CONTEXT

Department history and purpose

» Department of Gaming established in 1995 to fulfill Tribal-State
Gaming Compact responsibilities

» Jackie Johnson serves as director

» Auditor General conducted Department's last sunset review in
2018

Arizona Audios General Making a positive ditference by promoting better government

Ww
Department's key responsibilities

» Regulating tribal gaming, event wagering and fantasy sports
contests, and horse racing

» Supporting education, prevention, and treatment efforts aimed at
reducing problem gambling

» Providing staff support to the Racing Commission and the
Boxing and MMA Commission

Artons hudites Gerona Making @ positive diMterence by promoting better government

1/1 Z2ILVLSN

KEY CONTEXT

Racing Commission history and responsibilities

» Racing Commission established in 1949 to regulate and
supervise horse racing and wagering in the State

» Racing Commission consists of 5 Governor-appointed members
» Racing Commission responsible for approving racetrack permits

» Auditor General last reviewed Racing Commission in 2007 and it
conducted a self-review in 2024

Artzona Aetitor Genes Making a positive diMerence by promoting beter goverameet

KEY CONTEXT

Boxing and MMA Commission history and responsibilities

» Boxing/MMA Commission established in 1958 and is responsible
for regulating and supervising all boxing, kickboxing, tough man,
and mixed martial arts events in Arizona

» Boxing/MMA Commission consists of 3 Governor-appointed
members

» Boxing/MMA Commission responsibilities including issuing
licenses to event promoters and participants

» Auditor General last reviewed Boxing/MMA Commission in 2000
and it conducted a self-review in 2017

Arizona Auditor General Making a positive difference by promoting better government

Wia2i4ZyuZa

POSITIVE PERFORMANCE

Department met requirements for some responsibilities

» Distributed more than $158 million in tribal contributions to
various State programs and funds in FY 2024, in accordance with
statute

» Issued event wagering operator licenses to qualified applicants

Arzons hodter General Makie 0 portive dilterence by promoting boner goverament

POSITIVE PERFORMANCE

Racing Commission met requirements for key statutory
responsibility

>» Commission conducted hearings related to and approved
application for renewal of commercial racetrack permit

» First hearing on permit application in July 2024

» Not granted due to necessary racetrack repairs and financial review

» Approved application in August 2025

Arizona Roster General Mating a positive GMerence by promoting beter governmect

PROBLEMS IDENTIFIED

Department did Department and Depariment and
not consistently Commissions did Boxing/MMA
obtain and review not comply with Commission
operators’ some conflict-of- lacked complaint
independent interest handling
audit reports requirements processes

Arizona Aoditer General Mating a poshtve ditter ence by promoting better government

KEY CONTEXT

Licensed event wagering and fantasy sports operators
statutorily required to pay privilege fees

» Event wagering and fantasy sports contest operators must pay
monthly fees to the Department for privilege of operating event
wagering or fantasy sports contests in the State

» Most privilege fee revenues are remitted to State General Fund

» Privilege fees for event wagering and fantasy sports operators
based on adjusted receipts or revenues

Arizona Auditor Generel Making 0 positive difference by promating better goveranent

1/1 ZILZVULZN

10

PROBLEM IDENTIFIED

Department did not consistently obtain and review
independent audit reports to ensure accuracy of
reported revenues and associated privilege fees

» Department policy requires staff to review operators’
independent audit reports to verify revenues and associated fee
amounts due

» In 2023, Department did not review audit reports for:
» 15 of 17 licensed event wagering operators
» All 10 licensed fantasy sports contest operators

Arizona Auditor General Making a positive ciitterence by promoting beter grvermmont

11

WHY THE PROBLEM MATTERS

Risks of not reviewing independent audit reports to
verify operators paid correct privilege fee amounts

» Failure to identify operator underpayments results in lost State
revenues

» Failure to identify operator overpayments could negatively
impact the operators’ revenues and profits

Arizona Auditor General Mating 3 positive citterence by promoting belter government

12

WHAT LED TO THIS PROBLEM

Department lacks accountability mechanisms for
ensuring it obtains and reviews audit reports

> Department lacked process to track receipt of and review
independent audit reports and:

» Follow up with operators or their independent auditors
» Take disciplinary action, such as issuing fines, to noncompliant operators

Arizona hodter Gerent Making » positive Gterence by promoting better government

WisisZyuZ

13

PROBLEMS IDENTIFIED

GC) gOp ©

Department did Department and Department and
not consistently Commissions did Boxing/MMA
obtain and review not comply with Commission
operators’ some conflict-of- lacked complaint
independent interest handling
audit reports requirements processes

Arizona Aodites General Mating a postive GMerence by promoting beter gaverament

14

PROBLEM AND WHY IT MATTERS

Failure to comply with conflict-of-interest requirements

> Department and commissions lacked comprehensive conflict-of-
interest policies and procedures

» Noncompliance with conflict-of-interest requirements increases
risk that substantial interests that might influence or affect official
conduct are not disclosed

Arizona Auditor General Mating a positive citer ence by promoting better government

15

PROBLEM IDENTIFIED

Department did Department and Department and
not consistently Commissions did Boxing/MMA
obtain and review not comply with Commission
operators’ some conflict-of- lacked complaint
independent interest handling
audit reports requirements processes

Asizona Auditor Generel Making @ positive dttercence by promoting better government

V1 ZIZVUZ

16

PROBLEM AND WHY IT MATTERS

Department and Boxing and MMA Commission lacked
processes for tracking and resolving all complaints

» Department unable to demonstrate if it timely and appropriately
investigated and resolved most complaints it received

» Both Department and Boxing and MMA Commission lacked
comprehensive processes for handling and resolving complaints

» Lack of comprehensive complaint-handling processes limits
ability to ensure complaints are timely investigated and resolved,
increasing risk to public welfare and safety

Arzona Auditor General Making a positive Gtterence by promoting beter government

17

RECOMMENDATIONS OVERVIEW

16 recommendations to Department, including:
» Obtain and review independent audit reports
» Develop and implement conflict-of-interest policies and procedures
» Establish comprehensive complaint-handling processes
5 recommendations to Racing Commission, including:
» Develop and implement conflict-of-interest policies and procedures
9 recommendations to Boxing and MMA Commission, including:
» Develop and implement conflict-of-interest policies and procedures
» Establish comprehensive complaint-handling processes

Arizona Avior Goneret Making 8 positive dittsronce by promoting better government

18
ae ae Se

ADDITIONAL INFORMATION

Tribal-State Gaming Compact Questions and Answers
» Information on the Compact’s development and requirements

>» Key changes to Compact negotiated between Governor's Office
and tribes in 2021

» New gaming categories

» Changes to the number of casinos allotted to certain tribes

Arizona Redites Gorent Making o positive GiMerence by promoting better government

19

ADDITIONAL INFORMATION

Tribal-State Gaming Compact Questions and Answers

» Compact Trust Fund established to mitigate impacts to certain
tribes from expanded gaming

» Department responsible for distributing monies to beneficiary
tribes consisting of:

» Category 2 tribes, which do not conduct gaming operations
» Category 3 tribes, which conduct gaming operations

Arzona Aoditer General Uating a positive Giterence by promoting bemer government

20

PROBLEM IDENTIFIED

Department has not timely made payments to some tribes

» Department distributed monies to 2 Category 2 tribes 5 months
late in FY 2024.

» Department has not yet distributed monies to any Category 3
tribes

» Category 3 tribes in ongoing negotiations regarding formula for
distributions

» 2recommendations to the Department

Arizona Acditet General Loving positive Gitterence by promotiog beter government

21
OTHER ISSUES IDENTIFIED

18 additional recommendations to Department

» Lacked policies and procedures for some State information
technology (IT) security requirements

» Lacked documentation to demonstrate qualification of horse
racing licensing applicants

» Has not developed a process to regularly evaluate
appropriateness of horse racing license and permit fees

» Noncompliance in other sunset factor areas including rule
adoption and fulfilling public records requests

Axtzona Auditor General Making a positive dittercnce by promoting beter govornmeet

VI 4ILULS

22

OTHER ISSUES IDENTIFIED

1 additional Racing Commission recommendation

» Require staff to provide a written notice explaining to requestors
the reason for any delays in fulfilling a public records request

Arizona haditet General Making a postive I Promoting Bomer ga

23

OTHER ISSUES IDENTIFIED

4 additional recommendations to the Boxing and MMA
Commission

» Issued licenses to some applicants who did not demonstrate
they met all statutory and rule requirements in CY 2023

» Had not developed a process to regularly evaluate its licensing
and permit fees, nor regularly assessed the costs of regulatory
activities

Arizona Auditor General Making a positive ditterence by promotiag belter government

24

{Arizona :
{AuditorGe

Neral 5

Arizona Department of Gaming, Racing
Commission, and Boxing and MMA Commission

Performance Audit and Sunset Review

January 13, 2026
Liam VanPelt

25

WV IL 4ILVUZN

o7~
DEPARTMENT OF

BE GAMING

Performance Audit and Sunset Review
Presentation to Committee of Reference

January 13, 2026

Arizona Department of Gaming
- Director Jackie Johnson

ATTACHMENT 5
Agency

Our North Star:

Overview

¢“ World-class gaming regulation
benefitting all of Arizona

Established by the Arizona State

Legislature in 1995. How We Achieve This:

118 FTE & $37.6M Budget | Fair and effective regulation
Collaboration and transparency

The Department is funded with tribal and intergovernmental

primarily through tribal gaming partners and industry

contributions, event wagering Bakcaolders

privilege fees, fantasy sports Education for consumers
privilege fees, and regulatory including how to access problem

assessments.
gambling support

rhe Department At-a-Glance

Tribal Gaming /
Tribal Casinos
Regulation of Tribal casinos
and gaming activities.

Division of

Problem Gambling Q
Initiatives and resources for
addressing problem gambling.

_ Horse Racing &
Pari-mutuel Wagering
Regulation of horse racing and

associated wagering. Includes
Arizona Racing Commission.

Event Wagering &
Fantasy Sports

Oversight of event wagering
and fantasy sports platforms.

Intelligence Unit - Illegal
Gaming Investigations
& Enforcement

Investigation and enforcement
against illegal gaming operations.

Unarmed Combat
Sports (Boxing/MMA)
Oversight of boxing and mixed

martial arts events. Includes
Arizona B/MMA Commission.

State of Gaming in AZ

“Page
Grand Canyon 2 6
National Park

Kelly Class III a
auarapasinian  NationalForest | Gaming Facilities

26 Class III gaming facilities
operated by 16 Tribes
23 retail EW facilities | 7
© 20 tribal facilities ey.
o 3sports team facilities Ze,

Page :
belie 2 3
~ National Perk

“Keliths Retail Event
MUALanAL INDIAN National Forest [Wagering Locations}
TReRVATION

SHoleaves

One Nat Forest

——e (a

14 licensed EW operators | > &: ag im | YO
. ons Aa anizongy TSE AUALApAl \nblan National Fost 1 Betting Facilities
o 7 tribal operators ? Son {ee

P e ~«RJe
a! ARIZONA Nott Format

o 7 sports team operators
14 licensed FS operators : OG
36 OTB facilities ko
1 live racetrack ,
4 advanced deposit wagering —-
providers

OL ORADO KIVER
ft RATIO!

Economic Impact of Gaming

AZ is 5th in Tribal Revenue Share
Nationwide

Cumulative financial impacts to Arizona:

e Tribal Casinos since 2004: $2.2 billion
to the state and $281 million to local

governments; a total of $2.5 billion
through 12/31/2025.

e Event Wagering & Fantasy Sports
since 2021: $162 million to the state

through 12/31/2025.

3
Fiscal Year 2025 & Where the Money Goes

Financial impacts to the state, cities, towns, and counties:

Tribal contributions in last fiscal year:
e $163 million to the state
@ $22 million to cities, towns, and counties

EWFS privilege fees in last fiscal year:
e $44 million to the state via EW privilege fees
e $1.5 million to the state via FS privilege fees

Where the money goes:
e Tribal contributions go to the Arizona Benefits Fund (88 percent) and Cities,

Towns, and Counties (12 percent)
e Privilege fees flow to the General Fund (90 percent) and Department

regulation (10 percent)

i

GAMING
Combating Illegal Gaming Operations

THE THREAT: COLLABORATION ENFORCEMENT
ILLEGAL GAMING & ACTION GOALS

Undermines : Works closely with Protecting the
consumer local, state, and public.
protections. federal law 5 ON
enforcement & + EE TY ie
KY _ integrity of
Arizona's regulated

Bypasses rN
regulatory \ prosecutors.

safeguards. —

Investigates and gaming markets.
Diverts revenue from “Mass EE aes | "| Ensuring a level

against illegal

operations. playing field for

compliant operators.

lawful operators and
public programs.

Oe rMeNy ox
GAMING
Consumer Protection &

Public Safety

Check Your Bet: statewide
initiative to combat illegal
gambling, connecting the
public with trusted resources
and information.

Too Young To Bet: new
statewide initiative to raise
awareness about the risks of
youth gambling and help
prevent early exposure fo
gambling.

So

Did you know?

The legal gambling age in Arizona is 21+

Many teens
still find ways

to gamble
despite age
restrictions.

GAMING
Serving Arizonans

Key milestones and wins include:

NVZ
Bed

Launched legal event wagering on September 9, 2021, just five months
after legalization, one of the fastest regulatory rollouts in the country.
The Departmeni’s Debt Set-Off Program intercepted $1.66 million in event
wagering/fantasy sports winnings on behalf of Arizona courts and other
state agencies since the beginning of its intergovernmental collaboration.
The Division of Problem Gambling funded $1.5 million in direct treatment
for problem gambling in FY25 and recently awarded the state’s first-ever
peer support program dedicated exclusively to problem gambling.

Digital public service campaigns generated over 4 million digital
impressions in FY 2025, driving consumer awareness and knowledge of
responsible gambling and problem gambling.

GAMING
Department Audit Response & Progress

streamline the audit report process.

Recommendation 1: The Dept. has begun implementation of the
100%
O

and the implementation of a new system (Salesforce) to modernize and
Percent of recommendations

Recommendation 2-4: The Dept. has begun conducting a comprehensive
review of event wagering and fantasy sports operators’ independent audit
reports submitted since 2021. The Department will require corrective action
for any identified deficiencies, overpayments, or underpayments, and will
update internal policies, procedures, and staff training to support ongoing
compliance.

Finding #1: The Department did
not consistently obtain & review
EWFS operators’ third-party audit
reports

Recommendation 5-6: The Dept. has begun reviewing and revising
applicable policies and procedures related to the review of independent audit
reports for event wagering and fantasy sports operators. Revised policies will
be communicated to licensed operators, and agency staff will be trained to
support consistent and effective implementation.

Agrees to all recommendations
Has begun implementation of the

6 recommendations

I

GAMING
Department Audit Response & Progress

O handling as a strategic breakthrough project on our strategic plan. This
100%
Percent of recommendations

procedures, establishing complaint-tracking mechanisms to ensure timely
investigation and resolution, and making complaint-handling information
readily available on the Department’s website.

initiative includes developing and implementing comprehensive policies and
in progress

Recommendation 10: The Dept. has begun revising its complaint-tracking
processes to ensure Tribal Gaming Offices are notified within 48 hours of the

Finding #2: The Department lacks . ; : !
receipt or report of a complaint alleging Compact noncompliance.

a comprehensive complaint

handling processes

Recommendation 11: The Dept. has established processes and is updating
its electronic complaint-tracking system to ensure final letters are sent to
complainants within five days after completing an investigation, where an
investigation is warranted.

Agrees to all recommendations

Has begun implementation of the
6 recommendations

Recommendation 12: The Dept. has incorporated Ombudsman-requested
language into patron communications and developing policies and procedures
to ensure timely status updates to complainants and appropriate follow-up
with licensees that fail to take or respond to recommended corrective actions.

Department Audit Response & Progress

Recommendation 13 & 16: The Department has finalized a
conflict-of-interest policy and disclosure forms for Department staff, requiring
disclosures upon hire, annually, and when circumstances change, and has
provided Department-wide conflict-of-interest and procurement ethics training
in 2025. The next Department-wide annual training is scheduled for January
30th where staff will be required to complete the disclosure forms.

79%

Percent of recommendations
completed

Finding #3: Department, Racing

Commission, and Boxing and
MMA Commission did not comply
with some State conflict of
interest requirements.

Recommendation 14 & 15: The Department has created a separate file to
store staff disclosure forms, which is available for public inspection. The
Department has also created a process to review and remediate disclosed
conflicts.

Agrees to all recommendations
Has completed 3 of the 4

recommendations and the 4th is
in progress

Department of Gaming Sunset Factor Recommendations & Progress

Sunset Factor

2: The Department's effectiveness &
efficiency in fulfilling its key statutory
objectives & purposes.

4: The extent to which rules adopted
by the Department are consistent

with the legislative mandate.

5: The extent to which the Department
has provided appropriate public access
to records, meetings, & rulemakings,
including soliciting public input in
making rules & decisions.

Recommendations

Number
Completed

Details

Agrees to all recommendations.
Has begun implementation of all items.
Additional details on next slide.

Agrees to all recommendations.

The Dept. has begun its internal review of
the BMMA & Fantasy Sports rules and will
include rule changes to address the
requirements to the extent necessary.

Agrees to the recommendation.
The Dept. has completed implementation.

GAMING
In Detail: Sunset Factor 2 Highlights

The Department's effectiveness & efficiency in fulfilling its key statutory objectives & purposes.

Problem
Gambling

Ongoing:
developing a
time-bound plan
detailing outside
Evaluator
recommendations
and next steps

(only 1
recommendation
in this area)

Tribal Gaming

Completed:
Implemented

procedures for
reconciling Class III
net win reporting

Completed:
Compact

Compliance Review
changes: problem
gambling, game
machines, game
tables

Event Wagering &
Fantasy Sports

Completed:
Added

Ombudsmen’s
language for
emails with
complainants

Ongoing:
Developing

improvements
for timely status
updates on
investigations

Department-wide

Horse Racing _
Policies & Controls

Completed: Ongoing:
Incorporated Implementing
national complaint
infractions tracking system
database into
processes Ongoing:
Implementing
Drafted: drafted COI
Commission disclosure policy
specific COI and training
policies staff
Ongoing:

Implementing
COI items
Arizona Racing
Commission

Commission
Overview

The Arizona Racing Commission was
established by the legislature in 1949 to
provide for legal, regulated racing. In
2015, the legislature consolidated

Racing into the ADG.
approving or denying pern

The five Commissioners are: setting race dates.
e Kandace French Contreras (Chair) are Bowen
Tracy Olson (Vice Chair) PRoMnime nh Dy tee

@

e Chuck Coolidge
e Jay Zucker

e James Padish

Commissioners. They 5 serve a five year
term.

History of Racing in Arizona (in brief)

Year over year, the Racing Commission continues to meet in a public setting.
Commissioners vote on permitting and other matters as appropriate.

Beginning of legal and
regulatory structure

The Arizona Legislature
establishes the Arizona Racing
Commission.

Online pari-mutuel betting is
legalized

Governor Doug Ducey signs
legislation allowing online
pari-mutuel betting.

2025 - 2026

1949

Regulated horse racing begins Racing Season

Turf Paradise Race Track November through May —
opens for live horse racing in the 70th racing season.
Phoenix. Skyfall 7 is the permittee.
Safety and Leadership Highlights

Arizona recorded its lowest equine
fatality rate last season - its lowest since
the state began tracking these metrics.
With strong regulation and safety these
past few months, the Department is on

track to extend this achievement into 2026.

This season, the Department has a new
Racing Division Director - Shannon
Nelson, who is also continuing her ADG
role as Deputy Director of Regulation.

337

Pre-Race TC02 Tests

1,370

Post-Race Blood Tests

1,180

Post-Race Urine Tests

100%

Completion of Pre-Race Exams

94%

Completion of Post-Race Exams

93%

Review of Red Flag Horses
Resulting in
0.89

Fatalities Per 1,000 Starts
Racing Commission Audit Response & Progress

conflict-of-interest disclosure form and a Conflicts of Interest Policy which
4 0 Of includes Commission-specific requirements. Commissioners are required to
O complete disclosures upon appointment, annually, and when circumstances
: change. Commissioners will be receive annual training and complete the
Percent of recommendations Zeclocure Fomy.
completed

Finding #3: Department, Racing
Commission, and Boxing and
MMA Commission did not comply
with some State conflict of
interest requirements.

Recommendation 2: The Dept. has incorporated reminders into annual
conflict-of-interest training that Commissioners must fully disclose conflicts of
interest during public meetings.

Agrees to all recommendations Recommendation 3 & 4: The Department's Division of Racing has created a
Has completed 2 of 5 separate file to store Commissioner disclosure forms, which is available for
recommendations and has begun public inspection. The Conflicts of Interest Policy includes a process to review
implementation of the other 3 and remediate disclosed conflicts.

recommendations

GAMING
Sunset Factor 5 Recommendation & Progress

100%

Percent complete of recommendation

Sunset factor 5: The extent to which the
Racing Commission has provided appropriate
public access to records, meetings, and
rulemakings, including soliciting public input
in making rules and decisions.

Agrees to the recommendation and has
completed implementation of Recommendation 6

We continue to adhere to A.R.S. § 38-431.02,
Notice of Meetings, which requires public
bodies to properly inform and engage the
public:

(a) Conspicuously post a statement on their website stating where all
public notices of their meetings will be posted, including the physical
and electronic locations, and shall give additional public notice as is
reasonable and practicable as to all meetings.

(b) Post all public meeting notices on their website and give
additional public notice as is reasonable and practicable as to all
meetings.

Recommendation 6:

The Commission has updated and implemented its policies and
procedures to require staff to provide a written notice explaining
to requestors the reason(s) for any delay(s) in fulfilling a public
records request.

I

GAMING
Boxing & MMA
Commission

Commission
Overview

The Arizona Boxing & MMA (Mixed
Martial Arts) Commission is the public
body charged with regulating all
professional boxing and unarmed
combat sports. In 2015, it became part
of the Department.

The three Commissioners are:
e Scott Fletcher
e Ara Feinstein
e Xavier “Alex” Carpio

Key Statutory Responsibilities

> Regulating boxing contests,
toughman contests, and mixed martial
arts contests held in the State, including
supervising weigh-ins and assigning
referees.

> Granting licenses for all boxing,
tough man, and mixed martial arts
contests held in the State, including
fighters/participants, referees, judges,
inspectors, and physicians.

Appointment by Governor

> The Governor appoints
Commissioners. They serve a three year

term.
px 4

Highlights from Boxing & MMA fe

e Launched a baseline concussion testing protocol as a tool fF
to enhance safety for participants in unarmed combat YWa-S 9 me . aN
sports (FY 2025). =A 7 Wwe

e Successfully implemented Senate Bill 1679 (2024), helping = C =afis os
to modernize oversight and regulation, for example | adn Lag
consistent licensing periods (valid for a full year), which VU= Z O¢ .
improves compliance and reduces financial burdens for ey WN “.* ¢& i.
fighters, promoters, and organizers 4 ie - 4 7 gh

e Licensed 1,027 fighters, promoters, and event officials while all — 7 ” taf

holding 28 events including nine Arizona events televised
worldwide (FY 2025).

Boxing & MMA Commission Audit Response & Progress

90%

Percent of recommendations
completed

Recommendation 1 & 4: The Dept. has developed a Commission-specific
conflict-of-interest disclosure form and a Conflicts of Interest Policy which
includes Commission-specific requirements. Commissioners are required to
complete disclosures upon appointment, annually, and when circumstances
change. Commissioners will receive annual training and complete the
disclosure form.

Finding #3: Department, Racing
Commission, and Boxing and
MMA Commission did not comply
with some State conflict of
interest requirements.

Recommendation 2: The Department's Division of BMMA has created a
separate file to store Commissioner disclosure forms, which is available for
public inspection.

Recommendation 3: The Conflicts of Interest Policy includes a process to

Agrees to all recommendations 7 ; . .
g review and remediate disclosed conflicts.

Has completed 2 of the 4

recommendations and has begun
implementation of the other 2
recommendations

I

GAMING
Sunset Factor 2 Recommendations & Progress

The Commission's effectiveness & efficiency in fulfilling its key statutory objectives & purposes.

Recommendation 5

100% Complete

The Dept. has revised and
implemented standardized
licensing policies and
procedures to ensure all boxing
and MMA applicants meet
initial and renewal licensing
requirements, including
submitting a signed code of
conduct and fingerprints for
criminal history background
checks, prior to license
issuance.

Recommendation 6

In Progress

The Dept. is conducting a
review of boxing and MMA
licensing applicants approved
in calendar year 2025 to
determine whether any
applicants failed to meet all
licensing requirements and
will take corrective action,
including requiring criminal
history background checks,
where deficiencies are
identified.

Recommendation 7

100% Complete

The Dept. requires applicable
licensing applicants to
submit a signed code of
conduct and to track
fingerprint submissions to
ensure license applications
are not processed without all
Statutory and regulatory
requirements being met.

Recommendation 8

In Progress

The Department has begun
revising and implementing
policies and procedures for
periodically evaluating boxing and
MMA regulatory costs and fee
amounts, including developing a
cost methodology to assess fee
appropriateness and support
budgeting and financial planning.

I

GAMING
Sunset Factor 6 Recommendations & Progress

100% ~ OC &

Percent of recommendations Recommendation 9-13: The Department has begun implementing all

in progress complaint-handling recommendations for the Boxing & MMA Commission as
part of the Department-wide constituent inquiry and complaint-handling
breakthrough project.

Sunset factor 6: The extent to
which the Commission timely
investigated and resolved
complaints that are within its
jurisdiction.

This initiative will establish accessible complaint submission methods,
standardized documentation requirements, defined timelines for investigation
and resolution, required notifications to involved parties, and centralized
tracking and monitoring to ensure complaints within the Commission’s
jurisdiction are investigated and resolved in a timely and consistent manner.

Agrees to all recommendations
Has begun implementation of the eee
5 recommendations q@Pp

ic

aTMeNY

GAMING
DEPARTMENT OF

BE GAMING

Thank You

Find us online at gaming.az.gov
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-seventh Legislature - Second Regular Session

ROLL CALL VOTE
COMMITTEE ON Commerce BILLNO. Recommendation
DATE January 13, 2026 MOTION: Gaming,
A year
PASS AYE NAY PRESENT | ABSENT
Aguilar ut
Blackman VA
Carter N ol
Cavero of
Connolly Fa
Diaz “sf
Hendrix \/
Villegas “
Wilmeth 4
Way, Vice-Chairman Va
Weninger, Chairman gat
‘1 4 | ® 0.
APPROVED: Lane : EE SECRETARY

Vianna
“J JEFF WENINGER, Chairman
MICHAEL WAY, Vice-Chairman

ATTACHMENT. G
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-seventh Legislature - Second Regular Session

COMMITTEE ON

ROLL CALL VOTE

Commerce

BILLNO. Recommendation

DATE

January 13, 2026

MOTION:

Cont.

Bacens Comissier
Loy

PASS AYE NAY

PRESENT

ABSENT

Aguilar

Blackman

Carter N

Cavero

Connolly

Diaz

TSRENRABRS

Hendrix

Villegas

Wilmeth

Way, Vice-Chairman

Weninger, Chairman

APPROVED:

SKKK A

|

oe

Q

calgiie SECRETARY.

JEFF WENINGER, Chairman
MICHAEL WAY, Vice-Chairman

ATTACHMENT. I
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-seventh Legislature - Second Regular Session

ROLL CALL VOTE

COMMITTEE ON

BILENO. Recommendation

DATE January 13, 2026

Cont. Wy

MOTION: Boxing LinnA
Commesion
5
U

PRESENT | ABSENT

Aguilar

Blackman

Carter N

Cavero

Connolly

Diaz

Hendrix

Villegas

Wilmeth

Way, Vice-Chairman

Weninger, Chairman

KINISK SN BK ISN ININA

APPROVED:

l_——
—

& &

wi CabeZ

COMMITTEE SECRETARY

Y JEFF WENINGER, Chairman
MICHAEL WAY, Vice-Chairman

ATTACHMENT. &
rd

ARIZONA

AuditorGeneral

Making a Positive Difference

Arizona Barbering and Cosmetology Board

Performance Audit and Sunset Review

January 13, 2026
Katie Grzybowski

ATTACHMENT 5

PRESENTATION OVERVIEW

> Key context

> Board’s positive performance
> Problems identified

> Why the problems matter

> What led to the problems

> Key recommendations

Arizona Auditor General Making a positive difference by promoting better government
KEY CONTEXT

> Board established in 1929 to regulate barbering and cosmetology fields
in Arizona

> Separated into 2 Boards in 1935

> Consolidated into 1 Board effective January 2022
> Board consists of 9 Governor-appointed members
> Frank Migali serves as executive director

> Auditor General conducted sunset reviews of Arizona State Board of
Cosmetology in 2013 and Arizona State Board of Barbers in 2021

Arizona Auditor General Making a positive difference by promoting better government
KEY CONTEXT

Board’s key responsibilities

>» Issuing licenses and registrations

> Investigating complaints against licensees and registrants
> Disciplining licensees who violate statutes and rules

> Inspecting establishments and schools

> Providing information to the public about licensees and registrants

Arizona Auditor General Making a positive difference by promoting better government
OTHER ISSUES IDENTIFIED

Examples of deficiencies identified in the sunset review and 23
additional recommendations to the Board

> Did not provide statutorily required infection prevention, sanitation,
and law education to applicants or require that they complete it prior
to issuing licenses

> Lacked a quality control process to ensure staff evaluated and
appropriately approved only qualified applicants

> Did not include all elements required by its rules in its inspections of
schools and establishments

> Other issues with open meeting law, public records law, and conflict-of-
interest processes

Arizona Auditor General Making a positive difference by promoting better government
OTHER ISSUES IDENTIFIED

Statutory changes that could enable the Board to more
effectively fulfill its objective and purposes

> Statutory definition of aesthetics does not align with licensees’ training
or scope

> Board lacks authority to issue cease-and-desist orders to unlicensed
practitioners

> Statute lacks clarity on training requirements for eyelash technicians

Arizona Auditor General Making a positive difference by promoting better government
RECOMMENDATIONS OVERVIEW

2 recommendations to the Board, including:

> Follow its disciplinary guidelines policy to discipline licensees
consistently

> Develop and implement policies and procedures to document the
rationale for deviations from the policy

Arizona Auditor General Making a positive difference by promoting better government
WHAT LED TO THIS PROBLEM

> Board used discretion rather than following established policies in taking
actions against licensees

>» Board lacked a process for documenting reasons for taking actions
inconsistent with disciplinary guidelines

Arizona Auditor General Making a positive difference by promoting better government
WHY THE PROBLEM MATTERS

Board’s failure to take enforcement action against licensees for
violations consistent with its policy:

> Increases risk of public harm if licensees do not see discipline as a
deterrent or if consumers are perceived as unprotected

> Increases risk of allegations of unequal treatment of licensees

Arizona Auditor General Making a positive difference by promoting better government
EXAMPLES

Board took inconsistent enforcement actions among licensees
with similar violations and lacked documentation supporting its
determination of some enforcement actions

> Board imposed $500 civil penalty for 1 licensee but dismissed
complaints against 3 other licensees for operating without an

establishment license required by statute

> Board imposed $500 civil penalty for 2 licensees but issued a letter of
concern to 1 other licensee for possessing a prohibited hazardous

substance

Arizona Auditor General Making a positive difference by promoting better government
POSITIVE PERFORMANCE

> Timely issued licenses/registrations for applications auditors reviewed
from CY 2024

> Timely resolved complaints auditors reviewed

> Prescribed school curriculum requirements in accordance with statute

Arizona Auditor General Making a positive difference by promoting better government
KEY PROBLEM IDENTIFIED

Board failed to take enforcement action against licensees for
violations consistent with its policy

> Board policy outlines disciplinary actions it can take after substantiating
a licensee violation

>» Issue letter of concern or civil penalty

> Board issued inconsistent disciplinary actions among licensees with no
documented reasons for doing so

Arizona Auditor General Making a positive difference by promoting better government
PRIOR RECOMMENDATIONS

Board’s status in implementing 23 recommendations from our
2021 sunset review

Implementation status Number of recommendations
iv Implemented 8 recommendations
[v] Implemented in a different manner 2 recommendations

No longer applicable—superseded by new

A i
ar recommendation(s)

13 recommendations

Arizona Auditor General Making a positive difference by promoting better government
ARIZONA

AuditorGeneral

Making a Positive Difference

Arizona Barbering and Cosmetology Board

Performance Audit and Sunset Review

January 13, 2026
Katie Grzybowski

ARIZOANA

BARBERING & COSMETOLOGY
BOARD

Committee of Reference -

House Commerce
January 13, 2026

Mission, Vision

BCB MISSION

To protect the public's health and
safety, our agency will license qualified
schools, establishments, and
individuals, and ensure compliance
with state statutes and regulations.

BCB VISION

Provide quality and timely service through
world-class customer care.

Overview - Performance/Sunset Audit

e Conducted January - September 2025
e Audit Included:

o One Finding

= Two Recommendations

o 23 Recommendations

e BCB Agrees with the finding and recommendations and is committed to
implementation of all items.

e Taken action on most recommendations, with a plan for the remaining.

Implementation - Finding

e Finding:
o “Board failed to take enforcement action against licensees for violations consistent
with its policy, increasing the risk of harm to the public and unequal treatment of

licensees.”

e Recommendations:
0 “Board failed to take enforcement action against licensees for violations consistent

with its policy, increasing the risk of harm to the public and unequal treatment of
licensees.”
= Updated Board Disciplinary Parameters - Effective January 1, 2026
0 ©6“The Board will establish and implement written policies and procedures to document
all mitigating and aggravating factors that lead Board members to a deviation from

its disciplinary guidelines.”
= Established and Implemented Policy & Procedure - Effective November 21, 2025

is

Recommendation Implementation Timeline @

Go =

Today: Jan 31: June 30:
7 Recommendations +9 Recommendations +7 Recommendations
Implemented (In Progress, (In Progress,
74% Complete) 56% Complete)

i
2025 License Issuance Data
3 903 New Exam Applications Approved
9 eva Average Timeframe: 3 Business Days

New Reciprocity Applications Approved

i
2025 Customer Service Data

4] 23 Board staff handled
> | :

gay Average Wait Time

13 65 Board staff received
way % and responded to Emails

| = m e
gay Average Response Time: Four Business Days

i
2025 Compliance Data

Board staff inspected Establishments

| Average Satisfaction Rating: 86%

oOo

Seg ‘gees

we qo

, C
f

Appreciation & Acknowledgement

e The Auditors
e The Committee of Reference
e Arizona Barbering & Cosmetology Team

en ae A

\RIZONA,

-_{AuditorGeneral

Arizona Barbering and Cosmetology Board
Performance Audit and Sunset Review

January 13, 2026
Katie Grzybowski

PRESENTATION OVERVIEW

>» Key context

» Board's positive performance

» Problems identified

» Why the problems matter

» What led to the problems

>» Key recommendations

Arzore Auditor General Making a postive Giterence by promoting beter government

> Board established in 1929 to regulate barbering and cosmetology
fields in Arizona

» Separated into 2 Boards in 1935
» Consolidated into 1 Board effective January 2022
» Board consists of 9 Governor-appointed members

» Frank Migali serves as executive director

» Auditor General conducted sunset reviews of Arizona State Board
of Cosmetology in 2013 and Arizona State Board of Barbers in
2021

Afizona Aadiice Generel Mating a positive Gitter ence by promoting beter government

KEY CONTEXT

Board’s key responsibilities

» Issuing licenses and registrations

» Investigating complaints against licensees and registrants

» Disciplining licensees who violate statutes and rules

» Inspecting establishments and schools

» Providing information to the public about licensees and registrants

Arizona Auditor General Making a potitive diMference by promoting better government

WWiariavae'

POSITIVE PERFORMANCE

» Timely issued licenses/registrations for applications auditors
reviewed from CY 2024

» Timely resolved complaints auditors reviewed

» Prescribed school curriculum requirements in accordance with
statute

Arizona Ruditer General Making a powitive Gi'erence by promoting bower goveramont

KEY PROBLEM IDENTIFIED

Board failed to take enforcement action against
licensees for violations consistent with its policy

» Board policy outlines disciplinary actions it can take after
substantiating a licensee violation

» Issue letter of concern or civil penalty

» Board issued inconsistent disciplinary actions among licensees
with no documented reasons for doing so

Arizona Aocitor Gareral Making 8 positive Etterence by promoting better govermment

EXAMPLES

Board took inconsistent enforcement actions among
licensees with similar violations and lacked
documentation supporting its determination of some
enforcement actions

» Board imposed $500 civil penalty for 1 licensee but dismissed
complaints against 3 other licensees for operating without an
establishment license required by statute

» Board imposed $500 civil penalty for 2 licensees but issued a
letter of concern to 1 other licensee for possessing a prohibited
hazardous substance

Arzors hodtos Coren Making @ postive GMerence by promoting beter goverament

wie L4yue

WHY THE PROBLEM MATTERS

Board's failure to take enforcement action against
licensees for violations consistent with its policy:

» Increases risk of public harm if licensees do not see discipline as
a deterrent or if consumers are perceived as unprotected

» Increases risk of allegations of unequal treatment of licensees

Arizona Avditer Geoeret Making a positive Gilterence by promoting beter government

WHAT LED TO THIS PROBLEM

> Board used discretion rather than following established policies in
taking actions against licensees

» Board lacked a process for documenting reasons for taking
actions inconsistent with disciplinary guidelines

Arizona Avditot Geter al Mating a positive OMerence by promoting beter government

RECOMMENDATIONS OVERVIEW

2 recommendations to the Board, including:

» Follow its disciplinary guidelines policy to discipline licensees
consistently

» Develop and implement policies and procedures to document
the rationale for deviations from the policy

Arizona hacen Generel Making @ potitive dMereace by promoting better goverment

WWiaraua'

10

OTHER ISSUES IDENTIFIED

Examples of deficiencies identified in the sunset review

and 23 additional recommendations to the Board

» Did not provide statutorily required infection prevention,
sanitation, and law education to applicants or require that they
complete it prior to issuing licenses

» Lacked a quality contro! process to ensure staff evaluated and
appropriately approved only qualified applicants

» Did not include all elements required by its rules in its
inspections of schools and establishments

» Other issues with open meeting law, public records law, and
conflict-of-interest processes

Arizona Auditer Generel Mohing a preitive Oteresce by promoting beter Government

11

OTHER ISSUES IDENTIFIED

Statutory changes that could enable the Board to more
effectively fulfill its objective and purposes

» Statutory definition of aesthetics does not align with licensees’
training or scope

» Board lacks authority to issue cease-and-desist orders to
unlicensed practitioners

» Statute lacks clarity on training requirements for eyelash
technicians

Arizona Auditet General Mating a positive dtterence by promoting beiter government

12

Wwi2aziauda'

PRIOR RECOMMENDATIONS

Board’s status in implementing 23 recommendations
from our 2021 sunset review

Implementation status Number of recommendations

implemented 8 recommendations
implemented in a different manner 2 recommendations
No longer applicable—superseded by 134 tations

WS new recommendation(s)

Mating a positive ditference by promoting better goverament

Arizors Audios Geert

13

Arizona Barbering and Cosmetology Board
Performance Audit and Sunset Review

January 13, 2026
Katie Grzybowski

ARIZONA HOUSE OF REPRESENTATIVES
Fifty-seventh Legislature - First Regular Session

ROLL CALL VOTE

COMMITTEE ON Commerce BILL NO. Recommendition
DATE [-/4-9l, MOTION: Beard of Gar bers

$ Cos etolesy.
Cpnt-

PASS AYE NAY PRESENT | ABSENT

Aguilar ear

Blackman Y

Cavero Va
Connolly -"

Diaz Fe

Hendrix Y

Villegas Y

Wilmeth /

Way, Vice-Chairman ©

Weninger, Chairman “a

|O
WIT — Doro Balu?
Sof LIV

JEFF WENINGER, Chairman
MICHAEL WAY, Vice-Chairman

ATTACHMENT. | |
ARIZONA

AuditorGeneral

Making a Positive Difference

Arizona Sports and Tourism Authority

Performance Audit

January 13, 2026
Katie Grzybowski

ATTACHMENT Zo

PRESENTATION OVERVIEW

Key context
Authority’s positive performance

Problems identified

What led to the problems

>

>

>

>» Why the problems matter
>

> Key recommendations

a

Additional information and issues

Arizona Auditor General Making a positive difference by promoting better government
KEY CONTEXT

> Authority established in 2000 upon voter approval of Proposition 302
> Authority owns State Farm Stadium

> Authority is governed by a 9-member board of directors

> Tom Sadler serves as President/CEO

> Auditor General conducted prior performance audit in 2020

Arizona Auditor General Making a positive difference by promoting better government
KEY CONTEXT

Authority’s key responsibilities
> Maintaining, operating, and marketing State Farm Stadium
> Contracts with a facility manager to manage Stadium operations

> Receiving tourism and Stadium-related revenues
> Tourism revenues: Maricopa County hotel bed tax and rental car surcharge

> Stadium-related revenues: Income taxes paid by Cardinals organization and
employees and revenue generated by stadium events, including sales tax

> Distributing revenues according to statutory requirements

Arizona Auditor General Making a positive difference by promoting better government
REVENUE DISTRIBUTION PRIORITIES

Tourism revenues

Stadium-related revenues

v

Tourism promotion
Vv
Cactus League promotion
v
Youth and amateur sports
v

Authority operations (1st distribution)
Vv

Youth and amateur sports reserve
Ny

Authority operations (2nd distribution)

Arizona Auditor General

Vv

Stadium bond obligations (Principal and interest payments on debt)
v

Vv
Authority operations (includes reserves)

Making a positive difference by promoting better government
POSITIVE PERFORMANCE

> Authority has distributed nearly $1.2 billion in tourism and Stadium-
related revenues since 2000

>» Despite distribution errors identified in previous audits, Authority
accurately distributed tourism and Stadium-related revenues in FYs
2021 through 2025

Arizona Auditor General Making a positive difference by promoting better government
KEY PROBLEMS IDENTIFIED

Did not ensure

concessions and
event revenues It
received were
accurate

Arizona Auditor General

Did not comply
with some
conflict-of-interest
requirements

Making a positive difference by promoting better government
PROBLEM IDENTIFIED

Authority did not ensure Stadium concessions revenue and
event fees it received were accurate

>» Facility manager did not verify concessions revenue received by the
Authority was accurate, as contractually required

> Compliant with concessions agreement percentage of sales provision

>» Calculated using reliable information

> Authority did not review monthly event settlements, as required by its
policy, between July 2024 and May 2025

Arizona Auditor General Making a positive difference by promoting better government
WHY THE PROBLEM MATTERS

Authority may not have received all revenue it was entitled to

> Concession revenue received by the Authority may not reflect the
actual amounts due under contract

> The Authority increased the risk of over or underpaying event
promoters for Stadium events

> Past 5 years, Authority received approximately
> $18 million from concessions

> $229 million from events

Arizona Auditor General Making a positive difference by promoting better government
WHAT LED TO THIS PROBLEM

> Authority did not establish accountability mechanisms for facility
manager’s concessions management responsibilities

>» Authority assumed concessions revenues were accurate because:

> Concession contractor’s financials were independently audited

> The Cardinals—who were also entitled to a portion of concession revenues—
were likely monitoring distribution amounts

> Authority’s president/CEO did not ensure that staff complied with its
event settlement review policy

Arizona Auditor General Making a positive difference by promoting better government
KEY PROBLEMS IDENTIFIED

Did not ensure
concessions and
event fees it
received were
accurate

Arizona Auditor General

Did not comply
with some

conflict-of-interest
requirements

Making a positive difference by promoting better government
PROBLEM AND WHY IT MATTERS

Authority had not complied with some State conflict-of-interest
requirements, and processes were not fully aligned with
recommended practices

>» Authority’s policies were missing key elements

> Authority did not provide conflict-of-interest training related to staff or
Board member roles and responsibilities

> Noncompliance with conflict-of-interest requirements increases risk

that substantial interests that might influence of affect official conduct
are not disclosed

Arizona Auditor General Making a positive difference by promoting better government
RECOMMENDATIONS OVERVIEW

10 recommendations to the Board, including:

> Verify concession revenues received for FYs 2021 through 2025 were
accurate

> Follow its facility management oversight procedures to ensure it
receives accurate event revenues

> Revise its conflict-of-interest policy to include all statutory
requirements

Arizona Auditor General Making a positive difference by promoting better government
ADDITIONAL INFORMATION

COVID-19 pandemic’s impact on Authority’s bond obligations
and Stadium-related revenues

> Authority was able to pay its Stadium bond obligations

> Used some monies in its reserves and a greater proportion of its Stadium-related
revenues to pay July and August 2020 bond obligations

> Stadium-related revenues increased year-over-year in FYs 2022 to 2025

> Revenue growth enabled the Authority to establish reserves

> FY 2025 exceeded required reserve amount by about $17.5 million

Arizona Auditor General Making a positive difference by promoting better government
ADDITIONAL INFORMATION

Tourism revenues were insufficient to meet all statutorily
required monthly distribution amounts

> Tourism revenues were insufficient to meet all statutorily required
monthly distribution amounts during most months of FY 2021

> No Cactus League promotion distributions from July 2020 to April 2021, resulting
in $7.1 million less than the statutorily required amount

> FYs 2022 to 2025 tourism distributions were $6.5 million less than
amounts outlined in statute

Arizona Auditor General Making a positive difference by promoting better government
ADDITIONAL INFORMATION

Authorized uses of monies that exceed statutorily required cash
reserves

> Operating and maintaining the Stadium
>» Repair, replacement, and removal of the Stadium

> Stadium bond obligations, enabling Authority to:

> Reduce amount of tourism revenues it distributes to bond obligations, thereby
allowing more tourism revenues for tourism promotion, Cactus League
promotion, and youth and amateur sports

Arizona Auditor General Making a positive difference by promoting better government
OTHER ISSUE IDENTIFIED

Authority lacks a plan for using cash reserves in excess of its
required reserve amounts

> Authority reported it will prioritize accumulating cash reserves instead
of using operating monies to pay for bond obligations

> Monies in excess of its minimum required reserve amounts are reportedly
necessary for future repair, replacement, and removal costs of the Stadium

> Authority lacks long-term projections of renovation needs or costs to
demonstrate the necessity for accumulating excess reserves

> 3 recommendations related to planning and policies for cash reserves

Arizona Auditor General Making a positive difference by promoting better government
ARIZONA

AuditorGeneral

Making a Positive Difference

Arizona Sports and Tourism Authority

Performance Audit

January 13, 2026
Katie Grzybowski

eek.

General

N/
U

Arizona Sports and Tourism Authority
Performance Audit

January 13, 2026
Katie Grzybowski

PRESENTATION OVERVIEW

» Key context

» Authority's positive performance
» Problems identified

>» Why the problems matter

» What led to the problems

>» Key recommendations

» Additional information and issues

Arizona Koster General Making a peritve Bitercece by promoting beter government

1/14/4020

» Authority established in 2000 upon voter approval of Proposition
302

» Authority owns State Farm Stadium
» Authority is governed by a 9-member board of directors
» Tom Sadler serves as President/CEO

» Auditor General conducted prior performance audit in 2020

Arizona Roditer General Mating 8 postive Giterence by promoting beter government

KEY CONTEXT

Authority’s key responsibilities
» Maintaining, operating, and marketing State Farm Stadium
» Contracts with a facility manager to manage Stadium operations
» Receiving tourism and Stadium-related revenues
» Tourism revenues: Maricopa County hotel bed tax and rental car surcharge
» Stadium-related revenues: Income taxes paid by Cardinals organization
pols employees and revenue generated by stadium events, including sales

» Distributing revenues according to statutory requirements

Arizona hodnos Generat Making @ positive dittereace by promoting better government

V1 ZILZULS

REVENUE DISTRIBUTION PRIORITIES

Stadium bond bligations (Principal and interest pay nt on debt)
Tourism promotion
Cactus League promotion
Youth and wien sports
Authority operations (1st distribution)
Youth and amateur sports reserve
Authority operati 18 (2nd distributi ) Authority op (includes reserves)
Arizona Auditor Goseral Making a positive ditterence by promoting beter government

POSITIVE PERFORMANCE

» Authority has distributed nearly $1.2 billion in tourism and
Stadium-related revenues since 2000

» Despite distribution errors identified in previous audits, Authority

accurately distributed tourism and Stadium-related revenues in
FYs 2021 through 2025

Arizona Awditer General Making a postive diterence by promoting beiter government

KEY PROBLEMS IDENTIFIED

Op ©)

Did not ensure Did not comply
concessions with some
and event conflict-of-
revenues it interest

requirements

received were
accurate

Arizons Aadtes Generl Making a postive GMerence by promating beter poverement

1/1241 ZuUe

PROBLEM IDENTIFIED

Authority did not ensure Stadium concessions revenue
and event fees it received were accurate

» Facility manager did not verify concessions revenue received by
the Authority was accurate, as contractually required

>» Compliant with concessions agreement percentage of sales provision
» Calculated using reliable information

» Authority did not review monthly event settlements, as required
by its policy, between July 2024 and May 2025

Avizona Avditer General Making a positive Gterence by promoting bemer government

WHY THE PROBLEM MATTERS

Authority may not have received all revenue it was
entitled to

» Concession revenue received by the Authority may not reflect
the actual amounts due under contract

» The Authority increased the risk of over or underpaying event
promoters for Stadium events

» Past 5 years, Authority received approximately
» $18 million from concessions
> $229 million from events

Arizona Roditer Geoeral Making a pottive citterence by promoting beter government

WHAT LED TO THIS PROBLEM

» Authority did not establish accountability mechanisms for facility
manager's concessions management responsibilities

» Concession contractor's financials were independently audited

» The Cardinals—who were also entitled to a portion of concession
revenues—were likely monitoring distribution amounts

» Authority's president/CEO did not ensure that staff complied with
its event settlement review policy

Arizona Audios General Making a positive differeace by promoting better government

VI ZIZVUZN

» Authority assumed concessions revenues were accurate because:

10

KEY PROBLEMS IDENTIFIED

GC) gO

Did not ensure Did not comply
concessions with some
and event fees it conflict-of-
received were interest
accurate requirements

Arzons Auditor General Making a positive OMerence by promoting beter government

11

PROBLEM AND WHY IT MATTERS

Authority had not complied with some State conflict-of-
interest requirements, and processes were not fully
aligned with recommended practices

» Authority's policies were missing key elements

» Authority did not provide conflict-of-interest training related to
staff or Board member roles and responsibilities

» Noncompliance with conflict-of-interest requirements increases
risk that substantial interests that might influence of affect official
conduct are not disclosed

Arizona hoditcre Genernt Making a postive ditterence by promoting better government

12

1/1Z4/L4VU2

RECOMMENDATIONS OVERVIEW

10 recommendations to the Board, including:

» Verify concession revenues received for FYs 2021 through 2025
were accurate

» Follow its facility management oversight procedures to ensure it
receives accurate event revenues

> Revise its conflict-of-interest policy to include all statutory
requirements

Arizons hotter Gener Making a positive dittereace by promoting beter governmect

13

ADDITIONAL INFORMATION

COVID-19 pandemic’s impact on Authority’s bond
obligations and Stadium-related revenues

» Authority was able to pay its Stadium bond obligations

» Used some monies in its reserves and a greater proportion of its
Stadium-related revenues to pay July and August 2020 bond obligations

» Stadium-related revenues increased year-over-year in FYs 2022
to 2025

>» Revenue growth enabled the Authority to establish reserves

» FY 2025 exceeded required reserve amount by about $17.5 million

Arizona Aoditor General Uaking a positive Gmerence by promoting better govecament

14

ADDITIONAL INFORMATION

Tourism revenues were insufficient to meet all
statutorily required monthly distribution amounts

» Tourism revenues were insufficient to meet all statutorily required
monthly distribution amounts during most months of FY 2021

» No Cactus League promotion distributions from July 2020 to April 2021,
resulting in $7.1 million less than the statutorily required amount

» FYs 2022 to 2025 tourism distributions were $6.5 million less
than amounts outlined in statute

Arizona heditee Generel Mating a positive ditterence by promoting better government

15
ADDITIONAL INFORMATION

Authorized uses of monies that exceed statutorily
required cash reserves

» Operating and maintaining the Stadium
» Repair, replacement, and removal of the Stadium
» Stadium bond obligations, enabling Authority to:
» Reduce amount of tourism revenues it distributes to bond obligations,

thereby allowing more tourism revenues for tourism promotion, Cactus
League promotion, and youth and amateur sports

Arizona Koditor General Making a positive dittereace by promoting better government

WL ZI ZZ

16

OTHER ISSUE IDENTIFIED

Authority lacks a plan for using cash reserves in excess
of its required reserve amounts

» Authority reported it will prioritize accumulating cash reserves
instead of using operating monies to pay for bond obligations

» Monies in excess of its minimum required reserve amounts are reportedly

necessary for future repair, replacement, and removal costs of the
Stadium

» Authority lacks long-term projections of renovation needs or costs to
demonstrate the necessity for accumulating excess reserves

» 3 recommendations related to planning and policies for cash
reserves

Ariceea Ae dhtet General Moking a positive G"erence by promoting beter govecement

17

ee

Arizona Sports and Tourism Authority
Performance Audit

January 13, 2026
Katie Grzybowski

= _

18

| 2s Peformance Rt )

a &
Fox

AZSTA’s Mission

Is to enhance our economy and our
community’s quality of life through the
development of professional and
amateur sports facilities, the attraction
of entertainment, sporting and business
events, and through tourism promotion.

ARIZONA SPORTS & TOURISM AUTHORITY

AZSTA was formed by voter approved Proposition 302 in November 2000.

Funding Responsibility

o Tourism Revenue o Repaying bonds for State Farm Stadium

© Facility Revenue o Funding Tourism in Maricopa County

o Funding construction/renovation for Cactus League
Spring Training Facilities

o Funding Youth and Amateur Sports Grants

© Owning and operating State Farm Stadium

AZSTA

ARIZONA SPORTS & TOURISM AUTHORITY

—————————_—s«E ee
Economic &
Community impact

ECONOMIC &

COMMUNI

O

IMPACT

State Farm Stadium has generated over $6
billion in economic impact in its first 18
years, numerous independent studies show

Awarded approximately 700 grants at nearly
$39 million to organizations promoting
youth and amateur sports in Maricopa
County

2023 Super Bowl: $1.3 billion

Source: ASU WP Carey School of Business study

2023 Cactus League: $710.2 million

Source: ASU WP Carey School of Business study

2024 NCAA Men’s Final Four: $429 million

Source: ASU WP Carey School of Business study

A of. nee Ta

_ NN SPORTS - bicacshmicwes sensibdarabeb

2025 Performance Audit

Findings & Recommendations

Finding 1

Authority did not ensure Stadium concessions or event fees it received were accurate, potentially
resulting in the Authority not receiving revenues it was entitled to.

Recommendation 1: Require the facility manager to verify concession revenues received in fiscal years
2021 through 2025 were accurate and complete.

Authority response: The Authority will determine best practices for requiring the facility manager to verify
concession revenues received in fiscal years 2021 through 2025, ensuring accuracy and completeness.

Recommendation 2: Develop and implement policies and procedures to oversee the facility manager to
ensure that amounts remitted from concession sales are consistent with its contractual arrangement.

Authority response: The Authority will develop and implement policies and procedures that will ensure the
facility manager is reviewing the amounts remitted from concession sales in alignment with the contractual

agreement.
Recommendation 3: Follow its policy to review event settlements monthly.

Authority response: The Authority will continue to follow its policy to review event settlements monthly and
review internal procedures for potential improvements.

SIZE TH

ARIZONA SPORTS & TOURISM AUTHORITY

Finding 1 (cont.)

Authority did not ensure Stadium concessions or event fees it received were accurate, potentially
resulting in the Authority not receiving revenues it was entitled to.

Recommendation 4: Conduct fiscal year 2025 event settlement reviews.

Authority response: The Authority is in the process of conducting the fiscal year 2025 event settlement
reviews and anticipates completion by the end of the calendar year.

Recommendation 5: Hire additional personnel in accordance with the Authority's budget to support the
CFO in fiscal responsibilities and help ensure settlement reviews are completed in a timely manner.

Authority response: The Authority will begin the process of hiring a part-time accounting clerk to support
the CFO in fiscal responsibilities such as ensuring settlement reviews are completed on time. Funding for
additional staff was approved by the Board of Directors in June 2025 for the FY2026 budget.

FIZ

ARIZONA SPORTS & TOURISM AUTHORITY
Finding 2

Authority did not comply with some State conflict-of-interest requirements or fully align its
processes with recommended practices, increasing the risk that employees and Board members
did not disclose substantial interests that might influence or could affect their official conduct.

Recommendation 6: Revise its policy to include all statutory requirements and recommended practices,
including but not limited to prohibitions of direct or indirect financial interests; procedures for reviewing

and remediating conflicts; requiring the minutes to reflect the reason for Board members abstaining from
voting; specifying roles and timelines for distributing, collecting, and reviewing conflict-of-interest disclosure
forms; outlining how conflicts will be addressed; maintaining a special file; and providing periodic training.

Authority response: Complete. The policy revision has been completed and was implemented by the Board
of Directors at the December 1, 2025 meeting.

Recommendation 7: Follow its policy to maintain a special file to memorialize disclosures of substantial
interest, as statutorily required.

Authority response: Complete. The required special file has been created by the Authority to memorialize
disclosures of substantial interest.

ZEST

ARIZONA SPORTS & TOURISM AUTHORITY

Finding 2 (cont.)

Authority did not comply with some State conflict-of-interest requirements or fully align its
processes with recommended practices, increasing the risk that employees and Board members
did not disclose substantial interests that might influence or could affect their official conduct.

Recommendation 8: Revise its conflict-of-interest disclosure form to comply with statute and
recommended practices, such as requiring an “affirmative no” or indication of potential conflict, affirmation
that no prohibited interests exist, and a completion date.

Authority response: Complete. The form was updated to include an “affirmative no” for each potential
conflict question and includes a secure digital signature stamp that will capture the date of completion.

Recommendation 9: After revising its conflict-of-interest disclosure form, obtain updated disclosure
forms from Board members and staff.

Authority response: Complete. The updated Disclosure form has been distributed to the Board members
and staff for completion.

—————————————————————————
Finding 2 (cont.)

Authority did not comply with some State conflict-of-interest requirements or fully align its
processes with recommended practices, increasing the risk that employees and Board members
did not disclose substantial interests that might influence or could affect their official conduct.

Recommendation 10: Continue to provide annual training on its conflict-of-interest requirements,
process, and disclosure form, including providing training to all Board members and staff on how the
State's conflict-of-interest requirements relate to their unique functions or responsibilities.

Authority response: Annual training will be provided at the final fiscal year Board of Directors meeting

to review the conflict-of-interest requirements, process, and reporting procedures. Following the
meeting, the Disclosure form will be distributed to all Board members and staff for completion.

ZEST

ARIZONA SPORTS & TOURISM AUTHORITY



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