[Federal Register Volume 63, Number 154 (Tuesday, August 11, 1998)]
[Proposed Rules]
[Pages 42940-42971]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-21234]
[[Page 42939]]
_______________________________________________________________________
Part III
National Indian Gaming Commission
_______________________________________________________________________
25 CFR Part 542
Minimum Internal Control Standards; Proposed Rule
Federal Register / Vol. 63, No. 154 / Tuesday, August 11, 1998 /
Proposed Rules
[[Page 42940]]
NATIONAL INDIAN GAMING COMMISSION
25 CFR Part 542
RIN 3141-AA11
Minimum Internal Control Standards
AGENCY: National Indian Gaming Commission.
ACTION: Proposed rule.
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SUMMARY: Tribal casino operations are subject to risk of loss because
of customer or employee access and potential access to cash and cash
equivalents within a casino. Furthermore, for table game operations,
individual transactions are not recorded as they occur and cash
receipts are not precisely known until they are removed from the drop
boxes and counted. In response to the inherent risks and the need for
effective controls in tribal gaming operations, the Commission
developed this rule to establish Minimum Internal Control Standards
(MICS).
DATES: Submit comments on or before September 10, 1998.
A public hearing will be held at 9 a.m., August 26, 1998.
Submit requests to present oral testimony on or before August 19,
1998.
ADDRESSES: Mail comments and requests to testify to Comments on
Proposed Rule on MICS, National Indian Gaming Commission, 1441 L St.,
NW, Suite 9100, Washington, D.C. 20005, Attn.: Mai Dinh. Comments and
requests may also be sent by facsimile to 202-632-7066. The hearing
will be held at Mystic Lake, 2400 Mystic Lake Boulevard, Prior Lake, MN
55372.
FOR FURTHER INFORMATION CONTACT: Mai Dinh, 202-632-7003.
SUPPLEMENTARY INFORMATION:
Background
The Commission believes that the development and maintenance of
strong internal controls are critical to the success of tribal casino
operations. Other jurisdictions in the United States that engage in
commercial gaming have established MICS for the gaming operations
within their jurisdiction. The Commission recognizes that many tribes
have established strong MICS for their gaming operation, in large part
due to the efforts of the National Indian Gaming Association and the
National Congress of American Indians. Some tribes, however, have not
established MICS or adequate MICS. Thus, the Commission concluded that,
to assure the integrity of Indian gaming, all tribes must establish
internal controls. Therefore, as the federal regulatory agency
responsible for oversight of Indian gaming, the Commission decided to
develop and promulgate regulations on MICS.
In an effort to include the public, especially those directly
involved in the industry, the Commission took steps to obtain input
from several sources. On March 5, 1998, the Commission published an
Advanced Notice of Proposed Rulemaking in the Federal Register
soliciting comments from the public concerning the MICS. The Commission
held a hearing on this subject in Portland, Oregon, on April 1, 1998.
The Commission also established an Advisory Committee comprised wholly
of elected tribal government officials or their designated tribal
employees. The Commission received several useful comments from these
sources which have been incorporated into this part.
Statutory Authority
25 U.S.C. 2702(2), 25 U.S.C. Sec. 2706(b)(10).
Public Comments and Comments From the Advisory Committee
The Commission received several written and oral comments from the
public, the hearing participants and the Advisory Committee. Several
commenters and members of the Advisory Committee questioned the
Commission's authority to promulgate this rule, especially as it
pertains to class III gaming. The Advisory Committee, however,
recognizes the need for stringent MICS.
The Commission believes that it has the authority to establish MICS
for both class II and class III gaming. The Indian Gaming Regulatory
Act granted broad authority to the Commission to ``promulgate
regulations and guidelines as it deems appropriate to implement the
provisions of this Act.'' 25 U.S.C. 2706(b)(10) (emphasis added). The
Commission has determined that it is appropriate and necessary to
promulgate regulations on MICS to implement one of the stated purposes
for IGRA which is ``to ensure that the Indian tribe is the primary
beneficiary of the gaming operation, and to assure that gaming is
conducted fairly and honestly by both the operator and players.'' See
id. at 2702(2). This authority is not limited to class II but also
extends to class III.
One commenter questioned the use of the Commission's MICS in
evaluating a tribe's petition for self-regulation for its class III
gaming operation. The commenter believes that the Commission should
compare a tribe's MICS to that of the Mississippi Band of Choctaw
Indian. It is premature to respond to that comment because the
Commission has not published a proposed rule concerning self-regulation
for class III gaming operations at this time.
One commenter suggested that the Commission engage in negotiated
rulemaking in developing and promulgating this rule. The Commission
determined that it did not have the resources necessary to undertake a
negotiated rulemaking process and that such a process would not allow
the promulgation of such regulations in a timely manner. The
Commission, however, recognizes the need for public participation,
especially tribal participation, in the development of this proposed
rule. For that reason, the Commission solicited comments through the
Advance Notice of Proposed Rulemaking and the hearing in Portland,
Oregon, prior to drafting this proposed rule. The Commission also
assembled an Advisory Committee comprised of tribal regulators and
gaming employees to assist in reviewing and editing the draft proposed
rule. The Commission also informally discussed the MICS with people in
the Indian gaming industry who are knowledgeable about this subject.
Public participation will continue through the comment period and a
second hearing that the Commission will be holding in Minneapolis in
August 1998.
Several commenters and members of the Advisory Committee expressed
concern that the Commission's MICS may conflict with MICS established
in a Tribal-State compact. Although the Commission does not anticipate
that there will be any direct conflicts between the Commission's MICS
and a Tribal-State compact MICS, the Commission recognizes that there
may be a possibility of that occurrence. Thus, in section 542.4, the
regulations state that in the event of a direct conflict, the Tribal-
State compact MICS would prevail. This section does not mean that if a
standard in this part is more stringent than the Tribal-State compact,
then the Tribal-State compact standard would apply. Rather, if one
standard is more stringent than another, the more stringent standard
would apply. An example of a direct conflict is if a Commission
standard mandates the internal audit department to perform a certain
function and a Tribal-State compact standard mandates that the external
auditor perform that same function, then the tribal MICS should mandate
that the external auditor will perform that function. An example of one
standard being more stringent than
[[Page 42941]]
another is if a Tribal-State compact standard requires two people to
perform a function and a Commission standard requires three people to
perform that same function, the tribal MICS should require that three
people perform that function.
Members of the Advisory Committee also expressed concern that the
promulgation of MICS may lead to an extension of state jurisdiction of
Indian gaming into areas where they currently do not have jurisdiction.
The Commission does not intend that these regulations grant or extend
to states any jurisdiction or power in class II and class III gaming in
any manner. Section 542.4 makes clear this intention.
Several commenters and members of the Advisory Committee suggested
that the Commission develop separate MICS for class II and class III
gaming. After careful consideration, the Commission decided that
separate MICS were unnecessary and may lead to confusion. The proposed
rule is organized by category of games such as bingo, keno, and table
games, and by operating departments such as cage and credit, and
auditing. The proposed rule, however, is not designed to classify the
games into class II or class III. Rather, the MICS address the control
issues related to the games. Thus, section 542.6 pertaining to pull
tabs may be applicable to class II or class III gaming operations
because pull tabs may be class II or class III depending on the nature
and circumstances of the game being played. The Commission believes
that the most effective method of tailoring the MICS for class II and/
or class III operations is through the tribal MICS as provided for in
section 542.3 of this part. Each tribe will adopt MICS which address
the games that their operations offer.
In its Advance Notice of Proposed Rulemaking, the Commission asked
for comments on tiering strategy. Several commenters suggested ways for
tiering including gross revenues, net revenues, types of games offered,
class of games offered, number of employees, square footage and
location of the gaming operation. One commenter suggested that there be
no tiering and that the MICS would apply to all gaming operations. The
Commission decided that, given the range of Indian gaming operations,
tiering was essential for the MICS to have the widest practical
application. The Commission chose to tier by gross revenues because
this approach appears to provide for the most universal application to
the largest number of operators and because operational complexity
tends to increase with increased levels of revenue. Also, in other MICS
that have a tiering approach such as Nevada's and the National Indian
Gaming Association's, gross revenue is the basis for the tiering.
The Commission established three tiers. Tier A gaming operations
are gaming operations with annual gross gaming revenues of no more than
$3 million. Tier B gaming operations are gaming operations with annual
gross gaming revenues of more than $3 million but not more than $10
million. Tier C gaming operations are gaming operations with annual
gross gaming revenues of more than $10 million.
The Advance Notice of Proposed Rulemaking asked the public to
comment on the deadline by which the tribes and the gaming operations
must comply with this part. The suggestions from the commenters ranged
from thirty days to two years. One commenter suggested that the
deadline should be determined on a case by case analysis. The
Commission decided that the tribes should establish the tribal MICS
within six months of the effective date of this rule. The tribes will
determine how long the gaming operation will have to come into
compliance with the tribal MICS. That time, however, cannot exceed six
months. A gaming operation must develop and implement an internal
control system with the specified time. The internal control system
must comply with the tribal MICS. In addition, the internal control
system should provide management with reasonable, but not absolute,
assurance that the assets are safeguarded against loss from
unauthorized use or disposition and that transactions are executed in
accordance with management's authorization and recorded properly to
permit the preparation of financial statements in accordance with
generally accepted accounting principles.
Drafting Information
In drafting this proposed rule, the Commission examined the overall
areas of casino control which include safeguarding assets, developing
reliable financial records, providing for tribe specific or general
authorization of transactions and authorization for access to assets.
Additional key components of casino control include comparison of
recorded accountability to actual assets at frequent intervals, proper
segregation of duties, timely correction of errors by competent
employees and adequate computer controls where automated systems are
used.
The controls take several forms, such as procedures which require
that documents be originated, checked and processed with proper
approvals. They also include physical safeguards, such as locked drop
buckets and table drop boxes, secured count rooms and funds transport
systems, equipment control, key controls, analysis of key statistical
measures and trends, and the usage of meter readings. Surveillance
systems and the organizational approach of people watching people are
also key aspects of a well-developed control system among other
factors.
In developing MICS, control standards in several existing gaming
jurisdictions were evaluated. In actual practice, control systems and
procedures vary from casino to casino and are typically developed based
on the unique operating environment of a particular tribal gaming
casino. For this reason, the Commission emphasizes that the MICS
establish internal standards for the control of a tribal casino
operation that are minimally required and at the same time provide
operating latitude which allows for individual casinos' operating
methods and control styles. For most tribal casino operations, actual
operating practices and control standards will and should exceed the
level of control established by this proposed rule.
The Commission realizes the possibility that some of the standards
in the proposed rule may be too burdensome for some of the smallest
gaming operations. To address this problem, the proposed rule includes
a provision permitting the Tier A gaming operations to request a
variance from a standard. The Commission, however, expects the gaming
operation to first attempt to comply with all of the standards before
seeking a variance. The Commission anticipates that it will grant a
variance only after careful consideration and in isolated instances.
The MICS are not designed to address each and every game operated
by tribal casinos. To provide MICS for all games would be nearly
impossible. As a result, MICS have been developed for broad gaming
categories such as table games and gaming machines. MICS have also been
developed for widely operated games such as bingo, keno and gaming
machines, as well as for key operating departments such as the cage and
credit. For other games it is left to the tribes to develop their own
specific controls.
The MICS are designed to permit and provide for controls in both
manual and computerized systems. For tribe-authorized computer
applications, alternative documentation and/or procedures which provide
at least the level of control described by these standards will be
acceptable.
[[Page 42942]]
Although most MICS contain currency transaction reporting
standards, the Commission did not include any standards in this area
because Indian gaming operations are already subject to the Bank
Secrecy Act and the implementing regulations found in 31 CFR Part 103.
This proposed rule references those regulations in section 542.3. The
tribes must establish currency transaction reporting standards within
their tribal MICS that are consistent with those regulations.
This proposed rule does not address the issue of classification of
games and should not be interpreted to do so. As previously noted
certain categories of games, pull-tabs for example, may be class II or
class III depending on the circumstances. The pull tab standards will
apply regardless of whether the game is class II or class III. If a
particular game exhibits the characteristics that would be subject to a
particular set of standards, then those standards apply regardless of
which class the game is.
Public Participation
The Commission encourages and welcomes public comments on this
proposed rule. The Commission will hold another hearing to discuss this
proposed rule in Minneapolis on August 26, 1998.
Regulatory Flexibility Act
This proposed rule will not have a significant economic impact on a
substantial number of small entities under the Regulatory Flexibility
Act, 5 U.S.C. 601 et seq. Because many tribes already have MICS that
are nearly as stringent, as stringent as or more stringent than those
required by this proposed rule, it will not impose substantive
requirements that could be deemed as impacts within the scope of the
Act.
Paperwork Reduction Act
The Commission is in the process of obtaining clearance from the
Office of Management and Budget (OMB) for the information collection
requirements contained in this proposed rule, as required by 44 U.S.C.
3501 et seq. The information required to be obtained and maintained is
identified in sections 542.5 to 542.17, and relates to the
documentation of activities in connection with the operation of gaming
operations. The information will be used to determine whether a gaming
operation is in compliance with minimum internal control standards.
Response is required to be in compliance with this proposed rule.
The Commission recognizes that many gaming operations have MICS
that are in compliance with this proposed rule or will require minimal
effort to come into compliance. In computing the reporting burden and
cost for this collection of information, the Commission factored this
fact into its estimates. Public reporting burden for this collection of
information is estimated to average 140 hours per gaming operation,
including the time for reviewing instructions, searching existing data
sources, gathering and maintaining the data needed, and completing and
reviewing the collection of information. The Commission estimates that
approximately 315 gaming operations will be affected by this proposed
rule, for an annual burden of 44,100 hours. The Commission further
estimates that the total annual cost to the regulated community will be
$4-4.5 million.
Send comments regarding this collection of information, including
suggestions for reducing the burden to both, Mai Dinh, National Indian
Gaming Commission, 1441 L Street N.W., Suite 9100, Washington, DC
20005; and to the Office of Information and Regulatory Affair, Office
of Management and Budget, Washington, DC 20503. The Office of
Management and Budget (OMB) has up to 60 days to approve or disapprove
the information collection, but may respond after 30 days; therefore
public comments should be submitted to OMB within 30 days in order to
assure their maximum consideration.
The Commission solicits public comment as to:
a. whether the collection of information is necessary for the
proper performance of the functions of the Commission, and whether the
information will have practical utility;
b. the accuracy of the Commission's estimate of the burden of the
collection of information, including the validity of the methodology
and assumptions used;
c. the quality, utility, and clarity of the information to be
collected; and
d. how to minimize the burden of the collection of information on
those who are to respond, including the use of appropriate automated
electronic, mechanical, or other forms of information technology.
______An agency may not conduct, and a person is not required to
respond to a collection of information unless it displays a currently
valid OMB control number.
National Environmental Policy Act
The Commission has determined that this proposed rule does not
constitute a major Federal action significantly affecting the quality
of the human environment and that no detailed statement is required
pursuant to the National Environment Policy Act of 1969.
Larry Rosenthal,
Chief of Staff, National Indian Gaming Commission.
List of Subjects in 25 CFR Part 542
Gambling, Indian-lands. Indian-tribal government, Reporting and
recordkeeping requirements.
For reasons stated in the preamble, the National Indian Gaming
Commission proposes to amend 25 CFR by adding a new part 542 as
follows:
PART 542--MINIMUM INTERNAL CONTROL STANDARDS
Sec.
542.1 What does this part cover?
542.2 What are the definitions for this part?
542.3 How do I comply with this part?
542.4 How do these regulations affect minimum internal control
standards established in a Tribal-State compact?
542.5 What are the minimum internal control standards for bingo?
542.6 What are the minimum internal control standards for pull
tabs?
542.7 What are the minimum internal control standards for card
games?
542.8 What are the minimum internal control standards for manual
keno?
542.9 What are the minimum internal control standards for
computerized keno?
542.10 What are the minimum internal control standards for pari-
mutuel wagering?
542.11 What are the minimum internal control standards for table
games?
542.12 What are the minimum internal control standards for gaming
machines?
542.13 What are the minimum internal control standards for cage and
credit?
542.14 What are the minimum internal control standards for internal
audit?
542.15 What are the minimum internal control standards for
surveillance?
542.16 What are the minimum internal control standards for
electronic data processing?
542.17 What are the minimum internal control standards for
complimentary services or items?
542.18 Who may apply for a variance and how do I apply for one?
542.19 Does this part apply to charitable bingo operations?
Authority: 25 U.S.C. 2702(2), 2706(b)(10).
Sec. 542.1 What does this part cover?
This part establishes the minimum internal control standards for
gaming operations on Indian land.
Sec. 542.2 What are the definitions for this part?
(a) The definitions in this section shall apply to all sections of
this part unless otherwise noted.
(b) Definitions.
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Accountability means all items of currency, chips, coins, tokens,
receivables, and customer deposits constituting the total amount for
which the bankroll custodian is responsible at a given time.
Accumulated credit payout means credit earned in a gaming machine
that is paid to a customer manually in lieu of a machine payout.
Actual hold percentage means the percentage calculated by dividing
the win by the drop or coin-in. Can be calculated for individual
tables, games, shifts, day and on a cumulative basis.
AICPA means the American Institute of Certified Public Accountants.
Bank or bankroll means the inventory of currency, coins, and chips
in the cage, pit area, and gaming machine booths and on the playing
tables. Used to make change, pay winning bets, and pay gaming machine
jackpots.
Betting station means the area designated in a race book that
accepts and pays wagers to bettors.
Betting ticket means a printed, serially numbered form used to
record the event upon which a wager is made, the amount and date of the
wager, and sometimes the line or spread (odds). Used to record bets on
sporting events.
Bill validator means a device that accepts and reads currency by
denomination in order to accurately register customer credits at a
gaming machine. Also referred to as a currency acceptor.
Bingo master card record means a record of all bingo cards
purchased and used in bingo games.
Boxman means the first-level supervisor who is responsible for
directly participating in and supervising the operation and conduct of
the craps game.
Breakage means the difference between actual bet amounts paid out
by a race track to bettors and amounts won due to bet payments being
rounded up or down. For example a winning bet that should pay $4.25 may
be actually paid at $4.20 due to rounding.
Cage means a secure work area within the gaming operation for
cashiers and a storage area for the gaming operation bankroll.
Cage accountability form means an itemized list of the components
that make up the cage accountability.
Cage credit means advances in the form of cash or gaming chips made
to customers at the cage. Documented by the players signing an IOU or a
marker similar to a counter check.
Cage marker forms means a document, usually signed by the customer
evidencing an extension of credit at the cage to the customer by the
gaming operation.
Calibration module means the section of a weigh scale used to set
the scale to a specific amount or number of coins to be counted.
Call bets means a wager made without money or chips, reserved for a
known patron and includes marked bets (which are supplemental bets made
during a hand of play). For the purpose of settling a call bet, a hand
of play in craps is defined as a natural winner (e.g. seven or eleven
on the come-out roll), a natural loser (e.g. a two, three or twelve on
the come-out roll), a seven-out, or the player making his point,
whichever comes first.
Card games means a game in which the gaming operation is not party
to wagers and from which the gaming operation receives compensation in
the form of a rake-off, a time buy-in, or other fee or payment from a
player for the privilege of playing.
Card room bank means the operating fund assigned to the card room
or main card room bank.
Cash-out ticket means an instrument of value generated by a gaming
machine representing credits owed to a customer at a specific gaming
machine. This instrument may be wagered at other machines by depositing
in the machine document acceptor.
Change ticket means an instrument of value automatically generated
when a cash-out ticket includes change that cannot be wagered on a
$1.00 and higher denomination machine. This instrument may be wagered
at a lower denomination machine by depositing in the machine document
acceptor.
Chip tray means container located on gaming tables where chips are
stored that are used in the game.
Chips mean money substitutes, in various denominations, issued by a
gaming establishment and used for wagering.
Coin in meter means the meter that displays the total amount
wagered in a gaming machine which includes coins-in and credits played.
Coin room inventory means coins and tokens stored in the coin room
that are generally used for gaming machine department operation.
Coin room vault means an area where coins and tokens used in the
gaming machine department operation are stored.
Complementaries or comps means promotional allowances to customers.
Count means the total funds counted for a particular game, coin-
operated gaming device, shift, or other period.
Count room means a room where the coin and cash drop from gaming
machines, table games or other games are transported to and counted.
Counter check means a form provided by the gaming operation for the
customer to use in lieu of a personal check.
Credit means the right granted by a gaming operation to a patron to
defer payment of debt or to incur debt and defer its payment.
Credit limit means the maximum dollar amount of credit assigned to
a customer by the gaming operation.
Credit slip means a form used to record either:
(1) The return of chips from a gaming table to the cage or
(2) The transfer of IOUs, markers, or negotiable checks from a
gaming table to a cage or bankroll.
Currency acceptor is the device that accepts and reads currency by
denomination in order to accurately register customer credits at a
gaming machine.
Currency acceptor drop means cash contained in currency acceptor
drop boxes.
Currency acceptor drop box means box attached to currency acceptors
used to contain currency received by currency acceptors.
Currency acceptor drop box release key means the key used to
release currency acceptor drop box from currency acceptor device.
Currency acceptor drop storage rack key means the key used to
release currency acceptor drop boxes from the storage rack.
Customer deposits means the amounts placed with a cage cashier by
customers for the customers' use at a future time.
Deal-in pull tabs games means the numerical sequence of all pull
tabs in a specific pull tab game that are sold or available for sale to
patrons.
Dealer/boxman means an employee who operates a game, individually
or as a part of a crew, administering house rules and making payoffs.
Deskman means a person who authorizes payment of winning tickets
and verifies pay-outs for keno games.
Document acceptor is the device integrated into each gaming machine
that reads bar codes on coupons and cash-out tickets.
Draw ticket means a blank keno ticket whose numbers are punched out
when balls are drawn for the game. Used to verify winning tickets.
Drop box means a locked container affixed to the gaming table into
which the drop is placed. The game type, table number, and shift are
indicated on the box.
Drop box contents keys means the key used to open drop boxes.
[[Page 42944]]
Drop box release keys means the key used to release drop boxes from
tables.
Drop box storage rack keys means the key used to release drop boxes
from the storage rack.
Drop bucket means a container located in the drop cabinet (or in a
secured portion of the gaming machine in coinless/cashless
configurations) for the purpose of collecting coins, tokens, cash-out
tickets and coupons from the gaming machine.
Drop cabinet is the wooden or metal base of the gaming machine
which contains the gaming machine drop bucket.
Drop in table games means the total amount of cash and chips
contained in the drop box, plus the amount of credit issued at the
table; drop in gaming machines means the total amount of money removed
from the drop bucket; Drop in coinless/cashless gaming machines means
the total amount of cash-out tickets and coupons removed from the drop
bucket.
EPROM means erasable programmable read-only memory.
Earned and unearned take means race bets taken on present and
future race events. Earned take means bets received on current or
present events. Unearned take means bets take on future race events.
Fill means a transaction whereby a supply of chips or coins and
tokens is transferred from a bankroll to a table or a coin-operated
gaming device.
Fill slip means a document evidencing a fill.
Flare means the information sheet provided by the manufacturer that
sets forth the rules at a particular game of breakopen tickets and that
is associated with a specific deal of breakopen tickets. The flare
shall contain the following information:
(1) Name of the game;
(2) Manufacturer name or manufacturer's logo;
(3) Ticket count;
(4) Prize structure, which shall include the number of winning
breakopen tickets by denomination, with their respective winning
symbols, numbers or both.
Floor pars means the sum of the theoretical hold percentages of all
machines within a gaming machine denomination weighted by the coin-in
contribution.
Future wagers means bets or races to be run in the future (e.g.,
Kentucky Derby).
Game openers and closers means the form used by gaming operation
supervisory personnel to document the inventory of chips on a table at
the beginning and ending of a shift.
Gaming machine means an electronic or electromechanical machine
which contains a microprocessor with random number generator capability
which allows a player to play games of chance, some of which may be
affected by skill, which machine is activated by the insertion of a
coin, token or currency, or by the use of a credit, and which awards
game credits, cash, tokens, or replays, or a written statement of the
player's accumulated credits, which written statements are redeemable
for cash.
Gaming machine analysis report means a report prepared that
compares theoretical to actual hold by gaming machine on a monthly or
other periodic basis.
Gaming machine bill-in meter means a meter included on a gaming
machine that accepts currency that tracks the number of bills put in
the machine.
Gaming machine booths and change banks means a booth or small cage
in the gaming machine area used to provide change to players, store
change aprons and extra coin, and account for jackpot and other
payouts.
Gaming machine count means the total amount of coins and tokens
removed from a gaming machine drop bucket or bag. The amount counted is
entered on the Gaming Machine Count Sheet and is considered the drop.
Also, the procedure of counting the coins and tokens or the process of
verifying gaming machine coin and token inventory.
Gaming machine count team means personnel that perform count of the
gaming machine drop.
Gaming machine credit-in meter means a meter that records the
amount wagered as a result of credits played.
Gaming machine drop cabinet means the stand that contains the drop
bucket.
Gaming machine fill means the coins placed in a hopper.
Gaming machine fill and payout sheet means a list of the gaming
machine fills and gaming machine payouts.
Gaming machine game mix means the type and number of games in a
multiple game machine.
Gaming machine hopper loads means coins or tokens stored within a
gaming machine used to make payments.
Gaming machine monitoring system means a system used by a gaming
operation to monitor gaming machine meter reading activity on an online
basis.
Gaming machine pay table means the reel strip combinations
illustrated on the face of the gaming machine that can provide payouts
of designated coin amounts.
Gaming machine weigh/count and wrap means the comparison of the
weighed gaming machine drop to counted and wrapped coin.
Gaming operation accounts receivable (gaming operation credit)
means credit extended to gaming operation patrons in the form of
markers, returned checks or other credit instruments that have not been
repaid.
Hard drop summary report means a report prepared that shows the
results of the gaming machine/drop weigh/count and wrap by
denomination.
Hold means the relationship of win to coin-in for gaming machines
and win to drop for table games.
Hub means the person or entity that is licensed to provide the
operator of a race book information related to horse racing which is
used to determine winners of races or payoffs on wagers accepted by the
race book.
Inside ticket means a keno ticket retained by the house, showing
the customers' selection of numbers and the amount wagered.
Internal audit means individuals who perform an audit function of a
gaming operation that are independent of the department subject to
audit. Independence is obtained through the organizational reporting
relationship as the department shall not report to management of the
gaming operation. Internal audit activities should be conducted in a
manner that permits objective evaluation of areas examined. Results of
audits are generally communicated to management. Audit exceptions
generally require follow-up. Internal audit personnel may provide audit
coverage to more than one operation within a tribes gaming operation
holdings.
Issue slip means a copy of a credit instrument that is retained for
numerical sequence control purposes.
Jackpot payout means the portion of a jackpot paid by gaming
machine personnel. The amount is usually determined as the difference
between the total posted jackpot amount and the coins paid out by the
machine. May also be the total amount of the jackpot.
Jackpot payout slip means a form on which the portion of a jackpot
paid by gaming machine personnel is recorded.
Keno locked box copy or restricted copy means copies of Keno
tickets that are created for written tickets that cannot be accessed by
Keno personnel.
Keno multi race ticket means a keno ticket that is played in
multiple games.
Keno outstations means areas other than the main keno area where
bets may be placed and tickets paid.
Lammer button means a type of chip that is placed on a gaming table
to indicate that the amount of chips designated thereon has been given
to the
[[Page 42945]]
customer for wagering on credit prior to completion of the credit
instrument.
Main card room bank means a fund of currency, coin, and chips used
primarily for poker and pan card game areas. Used to make even money
transfers between various games as needed. May be used similarly in
other areas of the gaming operation.
Marker means a document, usually signed by the customer, evidencing
an extension of credit to him by the gaming operation.
Marker credit play means that players are allowed to purchase chips
using credit in the form of a marker.
Marker inventory form means a form maintained at table games or in
the gaming operation pit that are used to track marker inventories at
the individual table or pit.
Marker issue slip means the copy of an original marker that is
inserted in the table drop box at the time credit is extended.
Marker payment slip means the copy of the original marker used to
document customer marker payment transactions. The payment slip is
inserted in the table drop box if the marker is paid in the pit or
attached to the original marker until the marker is paid.
Marker transfer form means a from used to document transfers of
markers from the pit to the cage.
Master credit record means a form to record the date, time, shift,
game, table, amount of credit given, and the signatures or initials of
the individuals extending the credit.
Master game program number means the game program number listed on
a gaming machine EPROM.
Master game report sheet means a form used to record, by shift and
day, each table games' winnings and losses. This form reflects the
opening and closing table inventories, the fills and credits, and the
drop and win.
Mechanical/coin counter means a device used to count coins that may
be used in a count room in lieu of a coin weigh scale.
Meter means an electronic (soft) or mechanical (hard) apparatus in
a gaming machine. May record the number of coins wagered, the number of
coins dropped, the number of times the handle was pulled, or the number
of coins paid out to winning players.
Metered count machine means a device used in a coin room to count
coins.
Multi-game machines means a gaming machine that includes more than
one type of game option.
Name credit instruments means personal checks, payroll checks,
counter checks, hold checks, travelers checks or other similar
instruments that are accepted in the pit as a form of credit issuance
to a player.
Order for credit means a form that is used to request the transfer
of chips from a table to the cage. The order precedes the actual
transfer transaction which is documented on a credit slip.
Outs means winning race book tickets that have not been paid at the
end of a shift.
Outside ticket means a keno ticket given to a customer as a
receipt, with the customer's selection of numbers and the amount
wagered marked on it.
Par percentage means the percentage of each dollar wagered that the
house wins (i.e., gaming operation advantage).
Par sheet means a specification sheet for a gaming machine that
provides machine hold percentage, model number, hit frequency, reel
combination, number of reels, number of coins that can be accepted and
reel strip listing.
Pari-mutuel book means a race book that accepts pari-mutuel wagers
on horse races.
Pari-mutuel wagering means a system of wagering on a race or
sport'ng event where the winners divide the total amount wagered, net
of commissions and operating expenses, proportionate to the individual
amount wagered.
Payment slip means that part of a marker form on which customer
payments are recorded.
Pit podium means stand located in the middle of the tables used as
a work space and record storage area for gaming operation supervisory
personnel.
Pit repayment means a customer's repayment of credit at a table.
Pit supervisor means the employee who supervises all games in a
pit.
Player tracking system means a system typically used in gaming
machine departments that can record the gaming machine play of
individual patrons.
Post time in horse racing means the time when the last horse has
entered the starting gate.
Primary and secondary jackpots means promotional pools offered at
certain card games that can be won in addition to the primary pot.
Progressive gaming machine means a gaming machine, with a payoff
indicator, in which the payoff increases as it is played (i.e.,
deferred payout). The payoff amount is accumulated, displayed on a
machine and will remain until a player lines up the jackpot symbols
that result in the progressive amount being paid.
Progressive jackpots means deferred payout.
Progressive table game means table games that offer progressive
jackpots.
Promotional payouts are generally personal property or awards given
to players by the gaming operation as an inducement to play. Promotions
vary but a promotion example might be a program developed where a
player receives a form of personal property based on the number of
games or sessions played.
Promotional progressive pots/pools means funds contributed to a
table game by and for the benefit of players. Funds are distributed to
players based on a predetermined event.
Proposition players means a person paid a fixed sum by the gaming
operation for the specific purpose of playing in a card game who uses
his own funds and who retains his winnings and absorbs his losses.
Rabbit ears means a device, generally V-shaped, that holds the
numbered balls selected during a keno or bingo game so that the numbers
are visible to players and employees.
Rake means a commission charged by the house for maintaining or
dealing a game such as poker.
Rake circle means the area of a table where rake is placed.
Random number generator means a device that generates numbers in
the absence of a pattern. May be used to determine numbers selected in
various games such as keno and bingo. Also commonly used in gaming
machines to generate game outcome.
Reel symbols means symbols listed on reel strips of gaming
machines.
Rim credit means extensions of credit that are not evidenced by the
immediate preparation of a marker and does not include call bets.
Runner means a gaming employee who transports chips/ cash to and
from a gaming table to a cashier.
Screen Automated Machine or SAM means an automated terminal used in
some race books to accept wagers. SAM's also pay winning tickets in the
form of a voucher which is redeemable for cash at the race book.
Shift means any time period designated by management up to 24
hours.
Shill or game starter means an employee financed by the house and
acting as a player for the purpose of starting or maintaining a
sufficient number of players in a game.
Short pay means a payoff from a coin-operated gaming device that is
less than the listed amount.
Sleeper means a winning keno ticket not presented for payment or a
winning bet left on the table through a player's forgetfulness.
Soft count means the count of the contents in a drop box.
[[Page 42946]]
Table bank par means the chip imprest amount that a table bank is
maintained at.
Table chip tray means a container used to hold coins and chips at a
gaming table.
Table games means games that are banked by the house or a pool
whereby the house or the pool pays all winning bets and collects from
all losing bets.
Table inventory means the total coins, chips, and markers at a
table.
Table opener and closer means the document where chips and funds
held at a table are recorded when a table inventory is taken. Also
known as table inventory form.
Take and total take means the amount of a bet or bets taken in by a
pari-mutuel race book.
Theoretical hold means the intended hold percentage or win of an
individual coin-operated gaming machine as computed by reference to its
payout schedule and reel strip settings.
Theoretical hold worksheet means a worksheet provided by the
manufacturer for all gaming machines which indicated the theoretical
percentages that the gaming machine should hold based on adequate
levels of coin-in. The worksheet also indicates the reel strip
settings, number of coins that may be played, the payout schedule, the
number of reels and other information descriptive of the particular
type of gaming machine.
Tier A means gaming operations with annual gross gaming revenue of
no more than $3 million.
Tier B means gaming operations with annual gross gaming revenue of
more than $3 million but not more than $10 million.
Tier C means gaming operations with annual gross gaming revenues of
more than $10 million.
Tokens means a coinlike money substitute, in various denominations,
used for gambling transactions.
Total take means the total amount of funds bet by a customer on a
specific race book ticket.
Vault means a secure area within the gaming operation where
currency, coins, and chips are stored.
Weigh count means the value of coins and currency counted by a
weigh machine.
Weigh scale calibration module means the device used to adjust a
coin weigh scale.
Weigh scale interface means a communication device between the
weigh scale used to calculate the amount of funds included in drop
buckets and the computer system used to record the weigh data.
Weigh tape means the tape where weighed coin is recorded.
Wide area progressive gaming machine means gaming machines that
make deferred payouts where individual machines are linked to machines
in other operations and all the machines affect the progressive amount.
As a coin is inserted into a single machine, the progressive meter on
all of the linked machines increases.
Win means the new win resulting from all gaming activities. Net win
results from deducting all gaming losses from all wins prior to
considering associated operating expenses.
Win to write hold percentage means bingo or Keno win divided by
write to determine hold percentage.
Wrap means the procedure of wrapping coins. May also refer to the
total amount or value of the wrapped coins.
Write means the total amount wagered in keno, bingo, and race and
sports book operations.
Writer means an employee who writes keno or race and sports book
tickets. A keno writer usually also makes payouts.
Writer machine means a locked device used to prepare keno or race
and sports book tickets.
Sec. 542.3 How do I comply with this part?
(a) Within six months of [EFFECTIVE DATE OF THE FINAL RULE], each
tribe or its designated tribal governmental body or agency shall
establish by regulation and implement tribal minimum internal control
standards which shall:
(1) Be at least as stringent as those set forth in this part;
(2) Contain standards for currency transaction reporting that
comply with 31 CFR part 103;
(3) Establish standards for new games which are not addressed in
this part; and
(4) Establish a deadline, which shall not exceed six months, by
which a gaming operation must come into compliance with the tribal
minimum internal control standards.
(b) Tribal regulations promulgated pursuant to this section shall
not be required to be submitted to the Commission pursuant to 25 CFR
522.3 (b).
(c) Each gaming operation shall develop and implement an internal
control system that, at a minimum, complies with the tribal minimum
internal control standards.
(d) The independent certified public accountant (CPA) shall
annually evaluate the internal control system of the gaming operation
and determine whether the system complies with the tribal minimum
internal control standards. The CPA shall prepare a report of the
findings for the tribe and management. A copy of the report shall be
submitted to the commission within 120 days of the gaming operation's
fiscal year end.
Sec. 542.4 How do these regulations affect minimum internal control
standards established in a Tribal-State compact?
(a) If an internal control standard or a requirement set forth in
this part is more stringent than an internal control standard
established in a Tribal-State compact, than the internal control
standard or requirement set forth in this part shall prevail.
(b) If there is a direct conflict between an internal control
standard established in a Tribal-State compact and a standard or
requirement set forth in this part, then the internal control standard
established in to a Tribal-State compact shall prevail.
(c) Nothing in this part shall grant or extend a state's
jurisdiction in class II or class III gaming.
Sec. 542.5 What are the minimum internal control standards for bingo?
(a) Game play standards. (1) The functions of seller and payout
verifier shall be segregated. Employees who sell cards on the floor
shall not verify payouts with cards in their possession. Floor clerks
who sell cards on the floor are permitted to announce the serial
numbers of winning cards.
(2) All sales of bingo cards shall be documented by recording at
least the following:
(i) Date;
(ii) Shift;
(iii) Session (if applicable);
(iv) Dollar amount;
(v) Signature or initials of at least one seller (if manually
documented); and
(vi) Signature or initials of person independent of seller who has
randomly verified the card sales (this requirement is not applicable to
locations with $1 million or less in annual write).
(3) The total write shall be computed and recorded by shift (and
session, if applicable).
(4) The gaming operation shall develop and comply with procedures
that insure the correct calling of numbers selected in the bingo game.
(5) Each ball shall be shown to a television camera immediately
before it is called so that it is individually displayed to all
patrons. For locations not equipped with cameras, each ball drawn shall
be shown to an independent patron.
(6) For all coverall games and other games offering a payout of
$1,200 or more, as the balls are called the numbers shall be
immediately recorded
[[Page 42947]]
by the caller and maintained for a minimum of 24 hours.
(7) Controls shall be present to assure that the numbered balls are
placed back into the selection device prior to calling the next game.
(8) The authenticity of each payout shall be verified by at least
two persons. A computerized card verifying system may function as the
second person verifying the payout if the card with the winning numbers
is displayed on a reader board.
(9) Payouts in excess of $1,200 shall require written approval, by
supervisory personnel independent of the transaction, that the bingo
card has been examined and verified to the bingo card record to ensure
that the ticket has not been altered.
(10) Total payout shall be computed and recorded by shift or
session, if applicable.
(b) If the gaming operation offers promotional payouts or awards,
the payout form/documentation shall include the following information:
(1) Date and time;
(2) Dollar amount of payout or description of personal property
(e.g., jacket, toaster, car, etc.);
(3) Type of promotion; and
(4) Signature of at least one employee authorizing and completing
the transaction.
(c) All funds used to operate the bingo department shall be
recorded on an accountability form. These funds shall be counted by at
least two persons and reconciled to the recorded amounts at the end of
each shift or session.
(d) Access and control of bingo equipment shall be restricted as
follows:
(1) Access to controlled bingo equipment (e.g., blower, balls in
play, and back-up balls) shall be restricted to authorized persons.
(2) Procedures shall be established to inspect new bingo balls put
into play as well as for those in use.
(3) Bingo equipment shall be maintained and checked for accuracy on
a periodic basis.
(4) The bingo card inventory shall be controlled so as to assure
the integrity of the cards being used as follows:
(i) Purchased paper shall be inventoried and secured by an
individual independent from the bingo sales;
(ii) The issue of paper to the cashiers shall be documented and
signed for by the inventory control department and cashier. The
document log shall include the numerical sequence of the bingo paper;
(iii) A copy of the bingo paper control log shall be given to the
bingo ball caller for purposes of determining if the winner purchased
the paper that was issued to the gaming operation that day;
(iv) At the end of each month an independent department shall
verify the accuracy of the ending balance in the bingo paper control by
counting the paper on-hand;
(v) Monthly the amount of paper sold from the bingo paper control
log shall be compared to the amount of revenue for reasonableness.
(e) Data concerning bingo shall be maintained as follows:
(1) Records shall be maintained which include win, write (card
sales), and a win-to-write hold percentage for:
(i) Each shift or each session;
(ii) Each day;
(iii) Month-to-date; and
(iv) Year-to-date or fiscal year-to-date.
(2) Non-bingo management shall review bingo statistical information
at least on a monthly basis and investigate any large or unusual
statistical fluctuations.
(3) Investigations shall be documented and maintained for
Commission inspection.
(f) If the gaming operation utilizes electronic equipment in
connection with the play of bingo, then the following standards shall
also apply:
(1) If the electronic equipment contains a bill acceptor, then
Sec. 542.12(g) shall apply.
(2) If the electronic equipment uses a bar code or microchip
reader, the reader shall be tested periodically by an entity
independent of Bingo personnel to determine that it is correctly
reading the bar code or the microchip.
(3) If the electronic equipment returns a voucher or a payment slip
to the player, then Sec. 542.12(u) (as applicable) shall apply.
(g) For any authorized computer applications, alternate
documentation and/or procedures which provide at least the level of
control described by the standards in paragraph (f) of this section
will be acceptable.
(h) Standards for linked electronic games. (1) Host requirements/
game information. (i) Providers of any linked electronic game(s) shall
maintain complete records of game data for a period of one (1) year
from the date the games are played (or a time frame established by the
Tribe). This data may be kept in an archived manner, provided the
information can be produced within 24 hours upon request. In any event,
game data for the preceding 72 hours shall be immediately accessible;
(ii) Data required to be maintained for each game played includes:
(A) Date and time game start and game end.
(B) Sales information by location.
(C) Money distribution by location.
(D) Refund totals by location.
(E) Cards-in-play count by location.
(F) Identification number of winning card(s).
(G) Ordered list of bingo balls drawn.
(H) Prize amounts at start and end of game.
(2) Host requirements/sales information.
(i) Providers of any linked electronic game(s) shall maintain
complete records of sales data for a period of one (1) year from the
date the games are played (or a time frame established by the Tribe).
This data may be kept in an archived manner, provided the information
can be produced within 24 hours upon request. In any event, sales data
for the preceding 10 days shall be immediately accessible. Summary
information must be accessible for at least 120 days.
(ii) Sales information required shall include:
(A) Daily sales totals by location.
(B) Commissions distribution summary by location.
(C) Game-by-game sales, prizes, refunds, by location.
(D) Daily network summary, by game by location.
(3) Remote host requirements. (i) Linked game providers shall
maintain online records at the remote host site for any game played.
These records shall remain online until the conclusion of the session
of which the game is a part. Following the conclusion of the session,
records may be archived, but in any event, must be retrievable in a
timely manner for at least 72 hours following the close of the session.
Records shall be accessible through some archived media for at least 90
days from the date of the game;
(ii) Game information required includes date and time of game start
and game end, sales totals, money distribution (prizes) totals, and
refund totals;
(iii) Sales information required includes cash register
reconciliations, detail and summary records for purchases, prizes,
refunds, credits, and game/sales balance for each session.
(i) Standards for player accounts (for proxy play and linked
electronic games). (1) Prior to participating in any game, players
shall be issued a unique player account number. The player account
number can be issued through the following means:
(i) Through the use of a point-of-sale (cash register device);
(ii) By assignment through an individual play station;
(iii) Through the incorporation of a ``player tracking'' media.
[[Page 42948]]
(2) Printed receipts issued in conjunction with any player account
should include a time/date stamp.
(3) All player transactions shall be maintained, chronologically by
account number, through electronic means on a data storage device.
These transaction records shall be maintained online throughout the
active game and for at least 24 hours before they can be stored on an
``off-line'' data storage media.
(4) The game software shall provide the ability to, upon request,
produce a printed account history, including all transactions, and a
printed game summary (total purchases, deposits, wins, debits, for any
account that has been active in the game during the preceding 24
hours).
(5) The game software shall provide a ``player account summary'' at
the end of every game. This summary shall list all accounts for which
there were any transactions during that game day and include total
purchases, total deposits, total credits (wins), total debits (cash-
outs) and an ending balance.
Sec. 542.6 What are the minimum internal control standards for pull
tabs?
(a) Standards for statistical reports. (1) Records shall be
maintained which include win, write (sales) and a win to write hold
percentage as compared to the theoretical hold percentage derived from
the flare for:
(i) Each shift;
(ii) Each day;
(iii) Month-to-date; and
(iv) Year-to-date or fiscal year-to-date as applicable.
(2) Non Pull Tab management independent of pull tab personnel shall
review statistical information at least on a monthly basis and shall
investigate any large or unusual statistical fluctuations. These
investigations shall be documented and maintained for inspection.
(3) Each month, the actual hold percentage shall be compared to the
theoretical hold percentage. Any significant variations shall be
investigated.
(b) Winning pull tabs shall be verified and paid as follows:
(1) Payouts in excess of a dollar amount determined by the tribe
shall be verified by at least two employees.
(2) Total payout shall be computed and recorded by shift.
(3) The winning Pull Tabs shall be voided so that they cannot be
presented for payment again.
(c) Personnel independent of Pull Tab management shall verify the
amount of winning Pull Tabs redeemed each day.
(d) Pull Tab inventory (including unused tickets) shall be
controlled, so as to assure the integrity of the Pull Tabs.
(1) Purchased pull tabs shall be inventoried and secured by an
individual independent from the pull tab sales.
(2) The issue of pull tabs to the cashier or sales location shall
be documented and signed for by the inventory control department and
the cashier or tribal official witnessing the fill. The document log
shall include the serial number of the pull tabs.
(3) A copy of the pull tab control log shall be given to the
redemption booth for purposes of determining if the winner purchased
the pull tab that was issued by the gaming operation.
(4) At the end of each month, an independent department shall
verify the accuracy of the ending balance in the pull tab control by
counting the pull tabs on hand.
(5) Monthly, a comparison shall be done, of the amount of pull tabs
sold from the pull tab control log to the amount of revenue recognized
for reasonableness.
(e) Access to Pull Tabs shall be restricted to authorized persons.
(f) Transfers of Pull Tabs from storage to the sale location shall
be secured and independently controlled.
(g) All funds used to operate the pull tabs game shall be recorded
on an accountability form.
(h) For any authorized computer application, alternate
documentation and/or procedures which provide at least the level of
control described by the standards in this section will be acceptable.
(i) If the gaming operation utilizes electronic equipment in
connection with the play of pull tabs, then the following standards
shall also apply:
(1) If the electronic equipment contains a bill acceptor, then
Sec. 542.12(g) shall apply.
(2) If the electronic equipment uses a bar code or microchip
reader, the reader shall be tested periodically to determine that it is
correctly reading the bar code or microchip.
(3) If the electronic equipment returns a voucher or a payment slip
to the player, then Sec. 542.12(u) (as applicable) shall apply.
Sec. 542.7 What are the minimum internal control standards for card
games?
(a) Standards for supervision. (1) Supervision shall be provided at
all times the card room is in operation by personnel with authority
equal to or greater than those being supervised.
(2) Transfers between table banks and the main card room bank (or
cage, if a main card room bank is not used) shall be authorized by a
supervisor and evidenced by the use of a lammer. (A lammer is not
required if the exchange of chips, tokens, and/or currency takes place
at the table.)
(3) Transfers from the main card room bank (or cage, if a main card
room bank is not used) to the table banks shall be verified by the card
room dealer and the runner.
(4) If applicable, transfers between the main card room bank and
the cage shall be properly authorized and documented.
(5) A rake shall be collected in accordance with the posted rules
unless authorized by a supervisor.
(b) Standards for drop and count. The procedures for the collection
of card games drop boxes and the count of the contents thereof shall
comply with the internal control standards applicable to the pit drop
boxes.
(c) Playing cards, both used and unused, shall be maintained in a
secure location to prevent unauthorized access and reduce the
possibility of tampering. Unused cards shall be maintained in a secure
location until marked or destroyed to prevent unauthorized access and
reduce the possibility of tampering. The tribe shall establish a
reasonable time period within which to mark and remove cards from play
which shall not exceed seven days. A card contact log shall be
maintained that documents when cards are received on site, distributed
to and returned from tables and removed from the gaming operation.
(d) Standards for reconciliation of card room bank. (1) The amount
of the main card room bank shall be counted, recorded, and reconciled
on at least a per shift basis.
(2) At least once per shift the table banks shall be counted,
recorded, and reconciled by a dealer (or other individual if the table
is closed) and a supervisor, and shall be attested to by their
signatures on the check-out form.
(e) Standards for shills and proposition players. (1) Issuance of
shill funds shall have the written approval of the supervisor.
(2) Shill returns shall be recorded and verified on the shill sign-
out form.
(3) The replenishment of shill funds shall be documented.
(f) Standards for promotional progressive pots and pools. (1) All
funds contributed by players into the pools shall be returned when won
in accordance with the posted rules with no commission or
administrative fee withheld.
(2) Rules governing promotional pools shall be posted, clearly
legible from each table, and designate:
(i) The amount of funds to be contributed from each pot;
[[Page 42949]]
(ii) What type of hand it takes to win the pool (e.g., what
constitutes a ``bad beat'');
(iii) How the promotional funds will be paid out;
(iv) How/when the contributed funds are added to the jackpots; and
(v) Amount/percentage of funds allocated to primary and secondary
jackpots, if applicable.
(3) Promotional pool contributions shall not be placed in or near
the rake circle, in the drop box, or commingled with gaming revenue
from card games or any other gambling game.
(4) Promotional funds removed from the card game shall be placed in
a locked container in plain view of the public.
(5) Persons authorized to transport the locked container shall be
precluded from having access to the contents keys.
(6) The contents key shall be maintained by a department
independent of the card room.
(7) At least once a day, the locked container shall be removed by
two individuals, one of whom is independent of the card games
department, and transported directly to the cage or other secure room
to be counted.
(8) If the funds are maintained in the cage, the contents shall be
counted, recorded, and verified prior to accepting the funds into cage
accountability.
(9) The amount of the jackpot shall be conspicuously displayed in
the card room. At least once a day the progressive sign or meter, if
applicable, shall be updated to reflect the current pool amount.
(10) At least once a day increases to the progressive sign/meter
shall be reconciled to the cash previously counted or received by the
cage.
(g) For any authorized computer applications, alternate
documentation and/or procedures which provide at least the level of
control described by the standards in this section will be acceptable.
Sec. 542.8 What are the minimum internal control standards for manual
keno?
(a) Physical controls over equipment. (1) The keno write and desk
area shall be restricted to specified personnel (desk area is
restricted to preclude writers from accessing inside tickets).
(2) Effective periodic maintenance shall be planned to service keno
equipment.
(3) Keno equipment maintenance shall be independent of the keno
function.
(4) Keno maintenance shall report irregularities to management
personnel independent of keno, either in writing or verbally.
(5) Keno balls in use shall be safeguarded to prevent tampering.
The gaming operation shall establish and comply with procedures for
inspecting new keno balls put into play as well as for those being
used.
(6) There shall be safeguards over electronic equipment to prevent
access and/or tampering.
(b) Game play standards. (1) The individual controlling inside
tickets shall:
(i) Be precluded from writing and making payouts, including during
the writer's break periods; or
(ii) Have all winning tickets written by him with payouts exceeding
$100.00 verified, regraded, and compared to the inside ticket by
another keno employee. Additionally, this individual writes tickets out
of his own predesignated writer's station and bank (unless a community
bank is used).
(2) At no time shall a keno game with annual write of greater than
or equal to $500,000 be operated by one person.
(3) Both inside and outside keno tickets shall be stamped with the
date, ticket sequence number, and game number (as applicable to the
system being used). The ticket shall indicate that it is multi-race (if
applicable).
(4) The game openers and closers shall be stamped with the date,
ticket sequence number, and game number. An alternative which provides
the same controls may be acceptable.
(5) Controls shall exist to ensure that inside tickets have been
received from outstations prior to calling of a game.
(6) Controls shall exist to prevent the writing and voiding of
tickets after a game has been closed and the number selection process
for the game has begun.
(7) A legible restricted copy of written keno tickets shall be
created (carbonized locked box copy, microfilm, videotape, etc.) for,
at a minimum, all winning tickets exceeding $30.00. If there are no
restricted copies of winning tickets of $30.00 or less, then the desk
person shall not write tickets.
(8) When it is necessary to void a ticket which contains the
sequence number, the ticket shall be designated as ``void'' and
initialed or signed by at least one person.
(c) Standards for number selection. (1) A camera shall be utilized
to film the following both prior to, and subsequent to, the calling of
a game:
(i) Empty rabbit ears;
(ii) Date and time;
(iii) Game number, and
(iv) Full rabbit ears.
(2) The picture of the rabbit ears on the camera shall provide a
legible identification of the numbers on the balls drawn.
(3) Keno personnel shall produce a draw ticket as numbers are
drawn, and such tickets contain the race number, numbers drawn, and
date. The draw ticket shall be verified to the balls drawn by a second
keno employee.
(4) A gaming operation shall establish and comply with procedures
which prevent unauthorized access to keno balls in play.
(5) Back-up keno ball inventories shall be secured in a manner to
prevent unauthorized access.
(6) A gaming operation shall establish effective procedures for
inspecting new keno balls put into play as well as for those in use.
(d) Winning tickets shall be verified and paid as follows:
(1) All winning tickets shall be compared with the draw ticket by
the writer before being paid, marked with evidence that the ticket was
``paid'' and marked with the amount of the payout.
(2) Payouts over a predetermined amount (not to exceed $30.00)
shall be verified by actual examination of the inside ticket.
(3) Wins over a specified dollar amount (not to exceed $10,000 for
locations with annual keno write in excess of $5,000,000 and $3,000 for
all other locations) shall also require the following:
(i) Approval of management personnel independent of the keno
department evidenced by their signature;
(ii) Examination of films of rabbit ears prior to and after the
game is called to determine that the same numbers called were not left
up from the prior game and to verify the accuracy of the draw ticket;
(iii) If necessary, film may be developed as soon as possible after
payouts;
(iv) Regrading of the inside ticket and comparison of both the
winning ticket presented for payment and the inside ticket to the
restricted copy (machine copy, microfilm, videotape, etc.);
(v) Procedures described in this paragraph shall be documented for
later verification and reconciliation by the keno audit process on a
ball check form.
(e) A cash summary report (count sheet) shall be prepared for the
end of every shift which includes:
(I) Computation of cash proceeds for the shift by bank (i.e.,
community bank or individual writer banks, whichever is applicable);
and
(i) Signatures in ink of two employees who have verified the cash
proceeds recorded in the above computation.
(f) Statistics shall be maintained as follows:
[[Page 42950]]
(1) Records shall be maintained which include (for each game) win,
write, and win-to-write hold percentage for:
(i) Each shift;
(ii) Each day;
(iii) Month-to-date; and
(iv) Calendar or fiscal year-to-date, as applicable.
(2) Non-keno management shall review keno statistical information
at least on a monthly basis and investigate any large or unusual
statistical fluctuations.
(3) Such investigations shall be documented and maintained.
(4) The accounting department or someone who is independent of the
keno writer and desk person, shall calculate and indicate in a summary
report the total ``write'' by game and shift, total ``payout'' by game
and shift, and the ``win/loss'' by game and shift.
(5) At a minimum, investigations shall be performed for statistical
percentage fluctuations from the base level for a month in excess of +/
-3%. The base level is defined as the gaming operations win percentage
for the previous business year or the previous 12 months.
(g) Key control standards. (1) Keys to locked box tickets shall be
maintained by a department independent of the keno function.
(2) The master panel, which safeguards the wiring that controls the
sequence of the game, shall be locked at all times to prevent
unauthorized access. Someone independent of the Keno department is
required to accompany such keys to the Keno area and observe repairs or
refills each time locked boxes are accessed.
(3) Master panel keys shall be maintained by a department
independent of the keno function.
(4) Microfilm machine keys shall be maintained by personnel who are
independent of the keno writer function.
(5) Someone independent of the keno writer function (e.g., a keno
supervisor who doesn't write or someone independent of keno) shall be
required to observe each time the microfilm machine is accessed by keno
personnel.
(6) Keno equipment discussed in this section shall always be locked
when not being accessed.
(7) All electrical connections shall be wired in such a manner so
as to prevent tampering.
(8) Duplicate keys to the above areas shall be maintained
independently of the keno department.
(h) Standards for keno audit. (1) The accounting department shall
perform the various audit functions of keno and shall include
verification on a sample basis at least once a week of the total
``write'' by writer and shift (from inside tickets for microfilm or
videotape system or from locked box copies for a writing machine
system), the total ``payout'' by writer and shift, and the ``win/loss''
by writer and shift.
(2) Audit procedures may be performed up to one month following the
transaction.
(3) Keno audit personnel shall foot write (either inside ticket or
restricted copy) and payouts (customer copy) to arrive at an audited
win/loss by shift.
(4) Keno audit personnel shall obtain an audited win/loss for each
bank (i.e., individual writer or community). The keno audit function is
independent of the keno department for the next five standards.
(5) The keno receipts (net cash proceeds) shall be compared with
the audited win/loss by keno audit personnel.
(6) Major cash variances (i.e., overages or shortages in excess of
$25.00) noted in the comparison in paragraph (h) (5) of this section
shall be investigated on a timely basis.
(7) On a sample basis (for at least one race per shift or ten races
per week) keno audit personnel shall perform the following, where
applicable:
(i) Regrade winning tickets utilizing the payout schedule and draw
tickets and compare winning tickets (inside and outside) to restricted
copies (locked box copy, developed microfilm, videotape, etc.) for 100%
of all winning tickets of $100.00 or greater and 25% of all winning
tickets under $100.00 for those races selected;
(ii) Either review sequential numbering on inside tickets
(microfilm and videotape systems) to ensure that tickets have not been
destroyed to alter the amount of write, or compute write from developed
film and compare to write computed from inside tickets;
(iii) Review restricted copies for blank tickets and proper voiding
of voids;
(iv) Ensure the majority of the races in the sample selected
contain payouts in excess of $100.00 but less than the amount
established for the independent verification required by paragraph (d)
(3) of this section.
(8) In addition to the audit procedures in paragraph (h) (7) of
this section, when a keno game is operated by one person:
(i) At least 25% of all other winning tickets shall be regraded;
(ii) At least 10% of all tickets shall be traced to the restricted
copy;
(iii) Film of rabbit ears shall be randomly compared to draw
tickets for at least 25% of the races;
(9) The keno audit function shall be independent of the keno shift
being audited when performing standards in paragraph (h) (7) (i), (ii),
and (iii) of this section.
(10) Draw tickets shall be compared to rabbit ears film for at
least five races per week with payouts which do not require draw ticket
verification independent of the keno department. (The draw information
may be compared to the rabbit ears at the time the balls are drawn
provided it is done without the knowledge of keno personnel and it is
subsequently compared to the keno draw ticket.)
(11) Documentation (e.g., logs, checklists, etc.) shall be
maintained which shall evidence the performance of all keno audit
procedures.
(12) Non-keno management shall review keno audit exceptions,
perform investigations into unresolved exceptions and document results.
(13) Copies of all Keno tickets and the video tape of the rabbit
ears shall be maintained for at least seven days.
(i) Standards for multi-race keno tickets. (1) Procedures are
established to notify keno personnel immediately of large multi-race
winners to ensure compliance with the standard in paragraph (d) (3) of
this section.
(2) Controls exist to ensure that keno personnel are aware of
multi-race tickets still in process at the end of a shift.
(j) For any authorized computer applications, alternate
documentation and/or procedures that are at least at the level of
control described by the standards in this section may be acceptable.
Sec. 542.9 What are the minimum internal control standards for
computerized keno?
(a) Game play standards. (1) The computerized customer ticket shall
include the date, game number, ticket sequence number, station number,
and conditioning (including multi-race if applicable).
(2) Concurrently with the generation of the ticket the information
on the ticket shall be recorded on a restricted transaction log or
computer storage media.
(3) Keno personnel shall be precluded from access to the restricted
transaction log or computer storage media.
(4) When it is necessary to void a ticket, the void information
shall be inputted in the computer and the computer shall document the
appropriate information pertaining to the voided wager (e.g., void slip
is issued or equivalent documentation is generated).
(5) Controls shall exist to prevent the writing and voiding of
tickets after a
[[Page 42951]]
game has been closed and after the number selection process for that
game has begun.
(6) The controls in effect for tickets prepared in outstations (if
applicable) shall be identical to those in effect for the primary keno
game.
(b) The following standards shall apply if a rabbit ear system is
utilized:
(1) A camera shall be utilized to film the following both prior to,
and subsequent to, the calling of a game:
(i) Empty rabbit ears;
(ii) Date and time;
(iii) Game number; and
(iv) Full rabbit ears.
(2) The film of the rabbit ears shall provide a legible
identification of the numbers on the balls drawn.
(3) Keno personnel shall immediately input the selected numbers in
the computer and the computer shall document the date, the game number,
the time the game was closed, and the numbers drawn.
(4) A gaming operation shall establish and comply with procedures
which prevent unauthorized access to keno balls in play.
(5) Back-up keno ball inventories shall be secured in a manner to
prevent unauthorized access.
(6) The gaming operation shall establish and comply with procedures
for inspecting new keno balls put into play as well as for those in
use.
(c) The following standards shall apply if a random number
generator is utilized:
(1) The random number generator shall be linked to the computer
system and shall directly relay the numbers selected into the computer
without manual input.
(2) Keno personnel shall be precluded from access to the random
number generator.
(d) Winning tickets shall be verified and paid as follows:
(1) The sequence number of tickets presented for payment shall be
inputted into the computer, and the payment amount generated by the
computer shall be given to the patron.
(2) A gaming operation shall establish and comply with procedures
to preclude payment on tickets previously presented for payment,
unclaimed winning tickets (sleepers) after a specified period of time,
voided tickets, and tickets which have not been issued yet.
(3) All payouts shall be supported by the customer (computer-
generated) copy of the winning ticket (payout amount is indicated on
the customer ticket or a payment slip is issued).
(4) A manual report or other documentation shall be produced and
maintained documenting any payments made on tickets which are not
authorized by the computer.
(5) Winning tickets over a specified dollar amount (not to exceed
$10,000 for locations with more than $5 million annual keno write and
$3,000 for all other locations) shall also require the following:
(i) Approval of management personnel independent of the keno
department, evidenced by their signature;
(ii) Review of the videotape or development of the film of the
rabbit ears to verify the legitimacy of the draw and the accuracy of
the draw ticket (for rabbit ear systems only);
(iii) Comparison of the winning customer copy to the computer
reports;
(iv) Regrading of the customer copy using the payout schedule and
draw information; and
(v) Documentation and maintenance of the procedures in this
paragraph.
(6) When the keno game is operated by one person, all winning
tickets in excess of an amount to be determined by management (not to
exceed $1,500) shall be reviewed and authorized by someone independent
of the keno department.
(e) Check out standards at the end of each keno shift. For each
writer station, a cash summary report (count sheet) shall be prepared
that includes:
(1) Computation of net cash proceeds for the shift and the cash
turned in; and
(2) Signatures of two employees who have verified the net cash
proceeds for the shift and the cash turned in.
(f) If a gaming operation offers promotional payouts and awards,
the payout form/documentation shall include the following information:
(1) Date and time;
(2) Dollar amount of payout or description of personal property
(e.g., jacket, toaster, car, etc.);
(3) Type of promotion; and
(4) Signature of at least one employee authorizing and completing
the transaction;
(g) Statistics shall be maintained as follows:
(1) Records shall be maintained which include win and write by
individual writer for each day.
(2) Records shall be maintained which include (for each licensed
game) win, write, and win-to-write hold percentage for:
(i) Each shift;
(ii) Each day;
(iii) Month-to-date; and
(iv) Year-to-date or fiscal year-to-date as applicable.
(3) Non-keno management independent from the keno personnel shall
review keno statistical data at least on a monthly basis and
investigate any large or unusual statistical variances.
(4) At a minimum, investigations shall be performed for statistical
percentage fluctuations from the base level for a month in excess of +/
-3%. The base level shall be defined as the gaming operation's win
percentage for the previous business year or the previous 12 months.
(5) Such investigations shall be documented and maintained.
(h) System Security Standards. (1) All keys (including duplicates)
to sensitive computer hardware in the keno area shall be maintained by
a department independent of the keno function.
(2) Someone independent of the keno department shall be required to
accompany such keys to the keno area and shall observe changes or
repairs each time the sensitive areas are accessed.
(I) A gaming operation shall comply with the following
documentation standards:
(1) Adequate documentation of all pertinent keno information shall
be generated by the computer system.
(2) This documentation shall be restricted to authorized personnel.
(3) The documentation shall include, at a minimum:
(i) Ticket information (as described in paragraph (a)(1) of this
section);
(ii) Payout information (date, time, ticket number, amount, etc.);
(iii) Game information (number, ball draw, time, etc.);
(iv) Daily recap information which includes:
(A) Write;
(B) Payouts; and
(C) Gross revenue (win);
(v) System exception information, including:
(A) Voids;
(B) Late pays; and
(C) Appropriate system parameter information (e.g., changes in pay
tables, ball draws, payouts over a predetermined amount, etc.); and
(vi) Personnel access listing which includes at least:
(A) Employee name;
(B) Employee identification number; and
(C) Listing of functions employee can perform or equivalent means
of identifying same.
(j) Keno audit standards. (1) The keno audit function shall be
independent of the keno department.
(2) At least annually, keno audit shall foot the write on the
restricted copy of the keno transaction report for a minimum of one
shift and compare the total to the total as documented by the computer.
[[Page 42952]]
(3) For at least one shift every other month keno audit shall
perform the following:
(i) Foot the customer copy of the payouts and trace the total to
the payout report; and
(ii) Regrade at least 1% of the winning tickets using the payout
schedule and draw ticket;
(4) Keno audit shall perform the following:
(i) For a minimum of five games per week, compare the videotape/
film of the rabbit ears to the computer transaction summary;
(ii) Compare net cash proceeds to the audited win/loss by shift and
investigate any large cash overages or shortages (i.e., in excess of
$25.00);
(iii) Review and regrade all winning tickets greater than or equal
to $1,500, including all forms which document that proper
authorizations and verifications were obtained and performed;
(iv) Review the documentation for payout adjustments made outside
the computer and investigate large and frequent payments;
(v) Review personnel access listing for inappropriate functions an
employee can perform;
(vi) Review system exception information on a daily basis for
propriety of transactions and unusual occurrences including changes to
the personnel access listing;
(vii) If a random number generator is used, then at least weekly
review the numerical frequency distribution for potential patterns; and
(viii) Investigate and document results of all noted improper
transactions or unusual occurrences.
(5) When the keno game is operated by one person:
(i) The customer copies of all winning tickets in excess of $100
and at least 5% of all other winning tickets shall be regraded and
traced to the computer payout report;
(ii) The videotape/film of rabbit ears shall be randomly compared
to the computer game information report for at least 10% of the games
during the shift;
(iii) Keno audit personnel shall review winning tickets for proper
authorization pursuant to paragraph (d) (6) of this section.
(6) In the event any person performs the writer and deskman
functions on the same shift, the procedures described in paragraphs
(j)(5)(i) and (ii) of this section (using the sample sizes indicated)
are performed on tickets written by that person.
(7) Documentation (e.g., a log, checklist, etc.) which evidences
the performance of all keno audit procedures shall be maintained.
(8) Non-keno management shall review keno audit exceptions, and
perform and document investigations into unresolved exceptions.
(9) When a multi-game ticket is part of the sample in Standards in
paragraphs (j)(3)(ii), (j)(5)(i) and (j)(6) of this section, the
procedures can be performed for 10 games or 10% of the games won,
whichever is greater.
(k) Access to the computer system shall be adequately restricted
(i.e., passwords are changed at least quarterly, access to computer
hardware is physically restricted, etc.).
(l) There shall be effective maintenance planned to service keno
equipment, including computer program updates, hardware servicing, and
keno ball selection equipment (e.g., service contract with lessor).
(m) Keno equipment maintenance (excluding keno balls) shall be
independent of the keno function.
(n) Keno maintenance shall report irregularities to management
personnel independent of keno.
(o) All documents, including computer storage media discussed in
this section shall be retained for five (5) years except for the
following which shall be retained for at least seven (7) days:
(1) Videotape of rabbit ears;
(2) All copies of winning keno tickets of less than $1,500.00; and
(3) The information required in paragraph (i)(3) of this section.
(p) Procedures shall be established to notify keno personnel
immediately of large multi-race winners to ensure compliance with
standards in paragraphs (d)(5)(i) through (v). Procedures shall be
established to ensure that keno personnel are aware of multi-race
tickets still in process at the end of a shift.
(q) For any authorized computer applications, alternate
documentation and/or procedures which provide at least the level of
control described by the standards in this section will be acceptable.
Sec. 542.10 What are the minimum internal control standards for pari-
mutuel wagering?
(a) Betting ticket and equipment standards. (1) All pari-mutuel
wagers shall be transacted through the pari-mutuel system. In case of
computer failure between the pari-mutuel book and the hub, no tickets
shall be manually written.
(2) Whenever a betting station is opened for wagering or turned
over to a new writer/cashier, the writer/cashier shall sign on and the
computer shall document gaming operation name, station number, the
writer/cashier identifier, and the date and time.
(3) A betting ticket shall consist of at least three parts:
(i) An original which shall be transacted and issued through a
printer and given to the patron;
(ii) A copy which shall be recorded concurrently with the
generation of the original ticket either on paper or other storage
media (e.g., tape or diskette);
(iii) A restricted copy which shall not be accessible to book
employees; and
(iv) For automated systems the second copy referred to in paragraph
(a)(3)(ii) and the restricted copy referred to in paragraph (a)(3)(iii)
may be retained within the automated system.
(4) Upon accepting a wager, the betting ticket which is created
shall contain the following:
(i) An alpha-numeric ticket number;
(ii) Gaming operation name and station number;
(iii) Race track, race number, horse identification or event
identification, as applicable;
(iv) Type of bet(s), each bet amount, total number of bets, and
total take; and
(v) Date and time.
(5) All tickets shall be considered final at post time.
(6) If a book voids a betting ticket written prior to post time;
(i) A void designation shall be immediately branded by the computer
on the ticket;
(ii) All voids shall be signed by the writer/cashier and the
supervisor at the time of the void; and
(iii) A ticket may be voided manually by inputting the ticket
sequence number and immediately writing/stamping a void designation on
the original ticket.
(7) Future wagers shall be accepted and processed in the same
manner as regular wagers.
(b) Payout standards. (1) Prior to making payment on a ticket the
writer/cashier shall input the ticket for verification and payment
authorization.
(2) The system shall brand the ticket with a paid designation, the
amount of payment and date, or if a writer/cashier manually inputs the
ticket sequence number into the computer, the writer/cashier shall
immediately date stamp and write/stamp a paid designation on the
patron's ticket.
(3) The computer shall be incapable of authorizing payment on a
ticket which has been previously paid, a voided ticket, a losing
ticket, or an unissued ticket.
(4) In case of computer failure, tickets may be paid. In those
instances where system failure has occurred and tickets are manually
paid, a log shall be maintained which includes:
[[Page 42953]]
(i) Date and time of system failure;
(ii) Reason for failure; and
(iii) Date and time system is restored.
(5) A log for all manually paid tickets shall be maintained which
shall include:
(i) An alpha-numeric ticket number;
(ii) Gaming operation name and station number;
(iii) Racetrack, race number has identification or event
identification, as applicable;
(iv) Type of bet(s), each bet amount, total number of bets and
total take;
(v) Date and time.
(6) All manually paid tickets shall be entered into the computer
system as soon as possible to verify the accuracy of the payout (this
does not apply to purged, unpaid winning tickets). All manually paid
tickets shall be regraded as part of the end-of-day audit process
should the computer system be inoperative.
(c) Checkout standards. (1) Whenever the betting station is closed
or the writer/cashier is replaced, the writer/cashier shall sign off
and the computer shall document the gaming operation name, station
number, the writer/cashier identifier, the date and time, and cash
balance.
(2) For each writer/cashier station a summary report shall be
completed at the conclusion of each shift including:
(i) Computation of cash turned in for the shift; and
(ii) Signatures of two employees who have verified the cash turned
in for the shift.
(d) Pari-mutuel book employees shall be prohibited from wagering on
race events while on duty, including during break periods and from
wagering on race events occurring while the employee is on duty.
(e) Computer reports standards. (1) Adequate documentation of all
pertinent pari-mutuel information shall be generated by the computer
system.
(2) This documentation shall be restricted to authorized personnel.
(3) The documentation shall be created daily and shall include, but
not limited to:
(i) Ticket/voucher number;
(ii) Date/time of transaction;
(iii) Type of wager;
(iv) Horse identification or event identification;
(v) Amount of wagers (by ticket, writer/SAM, track/event, and
total);
(vi) Amount of payouts (by ticket, writer/SAM, track/event, and
total);
(vii) Tickets refunded (by ticket, writer, track/event, and total);
(viii) Unpaid winners/vouchers (``outs'') (by ticket/voucher,
track/event, and total);
(ix) Voucher sales/payments (by ticket, writer/SAM, and track/
event);
(x) Voids (by ticket, writer, and total);
(xi) Future wagers (by ticket, date of event, total by day, and
total at the time of revenue recognition);
(xii) Results (winners and payout data);
(xiii) Breakage data (by race and track/event);
(xiv) Commission data (by race and track/event); and
(xv) Purged data (by ticket and total).
(4) The system shall generate the following reports:
(i) A daily reconciliation report that summarizes totals by track/
event, including write, the day's winning ticket total, total
commission and breakage due the gaming operation, and net funds
transferred to or from the gaming operation's bank account;
(ii) An exception report that contains a listing of all system
functions and overrides not involved in the actual writing or cashing
of tickets, including sign-on/off, voids, and manually input paid
tickets; and
(iii) A purged ticket report that contains a listing of ticket
numbers, description, ticket cost and value, and date purged.
(f) A gaming operation shall perform the following accounting and
auditing functions:
(1) The pari-mutuel audit shall be conducted by someone independent
of the race, sports, and pari-mutuel operations.
(2) Documentation shall be maintained evidencing the performance of
all pari-mutuel accounting and auditing procedures.
(3) An accounting employee shall examine the daily reconciliation
report, compare it to the revenue summary produced by the system, and
recalculate the net amount due to or from the systems operator. An
accounting employee shall reconcile transfers with the bank statements
on a monthly basis.
(4) The auditor shall verify daily cash turn-in by comparing actual
cash turned in to cash turn-in per pari-mutuel reports (Beginning
balance, (+) fills (draws), (+) net write (sold less voids), (-)
payouts (net of IRS withholding), (-) moneybacks (paids), (=) cash
turn-in.).
(5) For one track/event per day, the auditor shall verify
commissions per the daily reconciliation report by recalculating track/
event commissions.
(6) For the track/event selected above, the auditor shall verify
daily transfers due to/from the systems operator by recalculating the
deposits (Net sales, (+) negative breakage, (-) commissions, (-)
positive breakage, (-) accrual pays, (=) deposit).
(7) An accounting employee shall produce a gross revenue recap
report to calculate gross revenue on a daily and month-to-date basis,
including the following totals:
(i) Commission;
(ii) Positive breakage;
(iii) Negative breakage;
(iv) Track/event fees;
(v) Track/event fee rebates; and
(vi) Purged tickets.
(8) Track/event fees and track/event fee rebates shall be traced to
the invoices received from the systems operator.
(9) All winning tickets and vouchers from the SAM's shall be
removed on a daily basis by an accounting employee.
(10) SAM's winning tickets and vouchers shall be immediately
delivered to the accounting department.
(11) The auditor shall perform the following procedures:
(i) For one SAM per day, foot the winning tickets and vouchers
deposited and trace to the totals of SAM activity produced by the
system;
(ii) Foot the listing of cashed vouchers and trace to the totals
produced by the system;
(iii) Review all exceptions for propriety of transactions and
unusual occurrences;
(iv) Review all voids for propriety;
(v) For one day per week, verify the results as produced by the
system to the results provided by an independent source;
(vi) For one day per week, regrade 1% of paid (cashed) tickets to
ensure accuracy and propriety; and
(vii) When applicable, reconcile the daily totals of future tickets
written to the totals produced by the system for both unearned and
earned take, and review the reports to ascertain that future wagers are
properly included on the day of the event.
(12) At least annually the auditor shall perform the following:
(i) Foot the wagers for one day and trace to the total produced by
the system; and
(ii) Foot the customer copy of paid tickets for one day and trace
to the total produced by the system.
(13) At least one day per quarter, the auditor shall recalculate
and verify the change in the unpaid winners to the total purged
tickets.
(g) For any computer applications utilized, alternate documentation
and/or procedures which provide at least the level of control described
by the standards in this section will be acceptable.
[[Page 42954]]
Sec. 542.11 What are the minimum internal control standards for table
games?
(a) Where a standard in this section requires a minimum of three
employees to perform a function or be present during one, Tier A and B
gaming operations may require only two employees to be present.
(b) If a gaming operation allows marker credit play (exclusive of
rim credit and call bets), the following standards shall apply:
(1) A marker system shall allow for credit to be both issued and
repaid in the pit. A name credit system shall allow for the issuance of
credit without using markers.
(2) Prior to the issuance of gaming credit to a player, the
employee extending the credit shall contact the cashier or other
independent source to determine if the player's credit limit has been
properly established and there is sufficient remaining credit available
for the advance.
(3) Proper authorization of credit extension in excess of the
previously established limit shall be documented.
(4) The amount of credit extended shall be communicated to the cage
or another independent source and the amount documented within a
reasonable time subsequent to each issuance.
(5) The marker form shall be prepared in at least triplicate form
(triplicate form being defined as three parts performing the functions
delineated in the standard in paragraph (b) (6) of this section), with
a preprinted or concurrently-printed marker number, and utilized in
numerical sequence (This requirement shall not preclude the
distribution of batches of markers to various pits.).
(6) At least three parts of each separately numbered marker form
shall be utilized as follows:
(i) Original shall be maintained in the pit until settled or
transferred to the cage;
(ii) Payment slip shall be maintained in the pit until the marker
is settled or transferred to the cage. If paid in the pit, the slip
shall be inserted in the table drop box. If not paid, the slip shall be
transferred to the cage with the original;
(iii) Issue slip--shall be inserted into the appropriate table drop
box when credit is extended or when the player has signed the original.
(7) When marker documentation (e.g., issue slip and payment slip)
is inserted in the drop box, such action shall be performed by the
dealer at the table.
(8) A record shall be maintained which details the following (e.g.,
master credit record retained at the pit podium.):
(i) The signature or initials of the individual(s) approving the
extension of credit (unless such information is contained elsewhere for
each issuance);
(ii) The legible name of the individual receiving the credit;
(iii) The date and shift of granting the credit;
(iv) The table on which the credit was extended;
(v) The amount of credit issued;
(vi) The marker number;
(vii) The amount of credit remaining after each issuance or the
total credit available for all issuances;
(viii) The amount of payment received and nature of settlement
(e.g., credit slip number, cash, chips, etc.); and
(ix) The signature or initials of the individual receiving payment/
settlement.
(9) The forms required in paragraphs (b) (5), (6), and (8) of this
section shall be safeguarded, and adequate procedures shall be employed
to control the distribution, use, and access to these forms.
(10) All credit extensions shall be initially evidenced by lammer
buttons which shall be displayed on the table in public view and placed
there by supervisory personnel.
(11) Marker preparation shall be initiated and other records
updated within approximately one hand of play following the initial
issuance of credit to the player.
(12) Lammer buttons shall be removed only by the dealer employed at
the table upon completion of a marker transaction.
(13) The original marker shall contain at least the following
information: marker number, player's name and signature, date, and
amount of credit issued.
(14) The issue slip or stub shall include the same marker number as
the original, the table number, date and time of issuance, and amount
of credit issued. The issue slip or stub shall also include the
signature of the individual extending the credit, and the signature or
initials of the dealer at the applicable table, unless this information
is included on another document verifying the issued marker.
(15) The payment slip shall include the same marker number as the
original. When the marker is paid in full in the pit, it shall also
include the table number where paid, date and time of payment, nature
of settlement (cash, chips, etc.) and amount of payment. The payment
slip shall also include the signature of a pit supervisor acknowledging
payment, and the signature or initials of the dealer receiving payment,
unless this information is included on another document verifying the
payment of the marker.
(16) When partial payments are made in the pit, a new marker shall
be completed reflecting the remaining balance and the marker number of
the marker originally issued.
(17) When partial payments are made in the pit, the payment slip of
the marker which was originally issued shall be properly cross-
referenced to the new marker number, completed with all information
required by paragraph (b) (16) of this section, and inserted into the
drop box.
(18) The cashier's cage or another independent source shall be
notified when payments (full or partial) are made in the pit so that
cage records can be updated for such transactions. Notification shall
be made no later than when the patron's play is completed or at shift
end, whichever is earlier.
(19) The Tribe shall implement appropriate controls for purpose of
security and integrity. The Tribe shall establish and comply with
procedures for collecting and recording checks returned to the gaming
operation after deposit which include re-deposit procedures. These
procedures shall provide for notification of cage/credit departments
and custodianship of returned checks.
(20) All portions of markers, both issued and unissued, shall be
safeguarded and procedures shall be employed to control the
distribution, use and access to the forms.
(21) An investigation shall be performed to determine the cause and
responsibility for loss whenever marker forms, or any part thereof, are
missing. The result of the investigation shall be documented and
maintained for inspection.
(22) When markers are transferred to the cage, marker transfer
forms or marker credit slips (or similar documentation) shall be
utilized and such documents shall include, at a minimum, the date,
time, shift, marker number(s), table number(s), amount of each marker,
the total amount transferred, signature of pit supervisor releasing
instruments from the pit, and the signature of cashier verifying
receipt of instruments at the cage.
(23) All markers shall be transferred to the cage within 24 hours
of issuance.
(24) Markers shall be transported to the cashier's cage by an
individual who is independent of the marker issuance and payment
functions (pit clerks may perform this function).
(c) The following standards shall apply if personal checks or other
name
[[Page 42955]]
credit instruments are accepted in the pit:
(1) Prior to accepting a name credit instrument, the employee
extending the credit shall contact the cashier or another independent
source to determine if the player's credit limit has been properly
established and the remaining credit available is sufficient for the
advance.
(2) All name credit instruments shall be transferred to the
cashier's cage (utilizing a two-part order for credit) immediately
following the acceptance of the instrument and issuance of chips (If
name credit instruments are transported accompanied by a credit slip,
an order for credit is not required).
(3) The order for credit (if applicable) and the credit slip shall
include the patron's name, amount of the credit instrument, the date,
time, shift, table number, signature of pit supervisor releasing
instrument from pit, and the signature of cashier verifying receipt of
instrument at the cage.
(4) The procedures for transacting table credits at standards in
paragraphs (f)(16) through (f)(23) shall be strictly adhered to.
(5) The acceptance of payments in the pit for name credit
instruments shall be prohibited.
(d) The following standards shall apply if call bets are accepted
in the pit:
(1) A call bet shall be evidenced by the placement of a lammer
button, chips, or other identifiable designation in an amount equal to
that of the wager in a specific location on the table.
(2) The placement of the lammer button, chips, or other
identifiable designation shall be performed by supervisory/boxmen
personnel. The placement may be performed by a dealer only if the
supervisor physically observes and gives specific authorization.
(3) The call bet shall be settled at the end of each hand of play
by the preparation of a marker, repayment of the credit extended, or
the payoff of the winning wager. Call bets extending beyond one hand of
play shall be prohibited.
(4) The removal of the lammer button, chips, or other identifiable
designation shall be performed by the dealer/boxman upon completion of
the call bet transaction.
(e) The following standards shall apply if rim credit is extended
in the pit:
(1) Rim credit shall be evidenced by the issuance of chips to be
placed in a neutral zone on the table and then extended to the patron
for the patron to wager, or to the dealer to wager for the patron, and
by the placement of a lammer button or other identifiable designation
in an amount equal to that of the chips extended.
(2) Rim credit shall be recorded on player cards, or similarly used
documents, which shall be:
(i) Prenumbered or concurrently numbered and accounted for by a
department independent of the pit;
(ii) For all extensions and subsequent repayments, evidenced by the
initials or signatures of a supervisor and the dealer attesting to the
Validity of each credit extension and repayment;
(iii) An indication of the settlement method (e.g., serial number
of marker issued, chips, cash);
(iv) Settled no later than when the patron leaves the table at
which the card is prepared;
(v) Transferred to the accounting department on a daily basis;
(vi) Reconciled with other forms utilized to control the issuance
of pit credit (e.g., master credit records, table cards).
(f) If foreign currency is accepted in the pit, the following
standards shall apply:
(1) Foreign currency transactions shall be authorized by a pit
supervisor/boxman who completes a foreign currency exchange form prior
to the exchange for chips or tokens;
(2) Foreign currency exchange forms include the country of origin,
total face value, amount of chips/token extended (i.e., conversion
amount), signature of supervisor/boxman, and the dealer completing the
transaction;
(3) Foreign currency exchange forms and the foreign currency shall
be inserted in the drop box by the dealer.
(g) Fill and credit standards. (1) Fill slips and credit slips
shall be in at least triplicate form, in a continuous numerical series,
and prenumbered and concurrently numbered in a form utilizing the
alphabet and only in one series at a time. The alphabet need not be
used if the numerical series is not repeated during the business year.
(2) Unissued and issued fill/credit slips shall be safeguarded and
adequate procedures shall be employed in the distribution, use and
control of same. Personnel from the cashier or pit departments shall
have no access to the locked box copies of the fill, credit slips.
(3) When a fill/credit slip is voided, the cashier shall clearly
mark ``void'' across the face of the original and first copy, the
cashier and one other person independent of the transactions shall sign
both the original and first copy, and shall submit them to the
accounting department for retention and accountability.
(4) Fill transactions shall be authorized by a pit supervisor prior
to the issuance of fill slips and transfer of chips, tokens, or
monetary equivalents. The fill request shall be communicated to the
cage where the fill slip is printed.
(5) At least three parts of each fill slip shall be utilized as
follows:
(i) One part shall be transported to the pit with the fill and,
after the appropriate signatures are obtained, deposited in table drop
box;
(ii) One part shall be retained in the cage for reconciliation of
cashier bank;
(iii) One part shall be retained intact by the locked machine in a
continuous unbroken form;
(6) For Tier C gaming operations, the part of the fill slip that is
placed in the drop box shall be of a different color for fills than for
credits, unless the type of transaction is clearly distinguishable in
another manner (the checking of a box on the form shall not be a
clearly distinguishable indicator).
(7) The table number, shift, and amount of fill by denomination and
in total shall be noted on all copies of the fill slip. The correct
date and time shall be indicated on at least two copies.
(8) All fills shall be carried from the cashier's cage by an
individual who is independent of the transaction.
(9) The fill slip shall be signed by at least the following
individuals (as an indication that each has counted the amount of the
fill and the amount agrees with the fill slip):
(i) Cashier who prepared the fill slip and issued the chips,
tokens, or monetary equivalent;
(ii) Runner who carried the chips, tokens, or monetary equivalents
from the cage to the pit;
(iii) Dealer who received the chips, tokens, or monetary
equivalents at the gaming table; and
(iv) Pit supervisor who supervised the fill transaction.
(10) Fills shall be either broken down or verified by the dealer in
public view before the dealer places the fill in the table tray.
(11) All fill slips requesting chips or money shall be prepared at
the time a fill is made.
(12) The original fill slip shall then be deposited into the drop
box on the table by the dealer, where it shall appear in the soft count
room with the cash receipts for the shift.
(13) When table credits are transacted, a two-part order for credit
shall be prepared by the pit supervisor for transferring chips, tokens
or monetary equivalents from the pit to the cashier area or other
secure area of accountability.
(14) The duplicate copy of an order for credit shall be retained in
the pit to check the credit slip for proper entries
[[Page 42956]]
and to document the total amount of chips, tokens, and monetary
equivalents removed from the table.
(15) At least three parts of each credit slip shall be utilized as
follows:
(i) One part shall be retained in the cage for reconciliation of
the cashier bank;
(ii) One part shall be transported to the pit by the runner who
brought the chips, tokens, markers, or monetary equivalents from the
pit to the cage, and after the appropriate signatures are obtained,
deposited in the table drop box;
(iii) One part shall be retained by the locked machine intact in a
continuous unbroken form.
(16) The table number, shift, and the amount of credit by
denomination and in total shall be noted on all copies of the credit
slip. The correct date and time shall be indicated on at least two
copies.
(17) Chips, tokens and/or monetary equivalents shall be removed
from the table tray by the dealer and shall be broken down or verified
by the dealer in public view prior to placing them in racks for
transfer to the cage.
(18) All chips, tokens, and monetary equivalents removed from the
tables and markers removed from the pit shall be carried to the
cashier's cage by an individual who is independent of the transaction.
(19) The credit slip shall be signed by at least the following
individuals (as an indication that each has counted or, in the case of
markers, reviewed the items transferred):
(i) Cashier who received the items transferred from the pit and
prepared the credit slip;
(ii) Runner who carried the items transferred from the pit to the
cage and returned to the pit with the credit slip;
(iii) Dealer who had custody of the items prior to transfer to the
cage; and
(iv) Pit supervisor who supervised the credit transaction.
(20) The credit slip shall be inserted in the drop box by the
dealer.
(21) Chips, tokens, or other monetary equivalents shall be
deposited on or removed from gaming tables only when accompanied by the
appropriate fill/credit or marker transfer forms.
(h) Drop procedures standards. (1) At the close of each shift:
(i) Each table's chip, token, coin, and marker inventory shall be
counted and recorded on a table inventory form; or
(ii) If the table banks are maintained on an imprest basis, a final
fill or credit shall be made to bring the bank back to par.
(2) If final fills are not made, beginning and ending inventories
shall be recorded on the master game sheet for shift win calculation
purposes.
(3) The accuracy of inventory forms prepared at shift end shall be
verified by the outgoing pit supervisor and a dealer, another pit
supervisor, or another supervisor from another gaming department.
Verifications shall be evidenced by signature on the inventory form.
(4) If inventory forms are placed in the drop box, such action
shall be performed by someone other than a pit supervisor.
(5) The setting out of empty drop boxes and the drop shall be a
continuous process.
(6) Procedures shall be developed and implemented to insure that
unauthorized access to empty drop boxes shall not occur from the time
the boxes leave the storage racks until they are placed on the tables.
(7) At the end of each shift:
(i) All locked drop boxes shall be removed from the tables by an
individual independent of the pit shift being dropped;
(ii) A separate drop box shall be placed on each table each shift
or a gaming operation operator may utilize a single drop box with
separate openings and compartments for each shift; and
(iii) Upon removal from the tables, drop boxes shall be placed on
the cart. The security team member stands guard over the cart at all
times. Upon completion of the drop, the cart shall be transported
directly to the count room or other secure place and locked in a secure
manner until the count takes place.
(8) If drop boxes are not placed on all tables, then the pit
department shall document which tables were open during the shift.
(9) Upon removal from tables, drop boxes shall be transported
directly to the count room or other secure place and locked in a secure
manner until the count takes place.
(10) The transporting of drop boxes shall be performed by a minimum
of two individuals, at least one of whom shall be independent of the
pit shift being dropped. This standard does not apply to Tier A gaming
operations.
(11) All drop boxes shall be posted with a number corresponding to
a permanent number on the gaming table and marked to indicate game,
table number and shift.
(i) Soft count standards. (1) If counts from various revenue
centers occur simultaneously in the count room, procedures shall be in
effect which prevent the commingling of funds from different revenue
centers.
(2) The soft count shall be performed by a minimum of three
employees. A second count shall be performed by an employee on the
count team who did not perform the initial count.
(3) At no time during the count shall there be fewer than three
employees in the count room until the monies have been accepted into
cage/vault accountability.
(4) Count team members shall be rotated on a routine basis
(rotation is such that the count team is not consistently the same
three individuals more than four days per week). This standard shall
not apply to Tier A gaming operations.
(5) The count team shall be independent of transactions being
reviewed and counted and the subsequent accountability of soft drop
proceeds. A dealer or a cage cashier may be used if this person is not
allowed to perform the recording function. An accounting representative
may be used if there is an independent audit of all soft count
documentation.
(6) The drop boxes shall be individually emptied and counted in
such a manner to prevent the commingling of funds between boxes until
the count of the box has been recorded.
(7) The count of each box shall be recorded in ink or other
permanent form of recordation.
(8) If currency counters shall be utilized and the count room table
shall be used only to empty boxes and sort/stack contents, a count team
member shall be able to observe the loading and unloading of all
currency at the currency counter, including rejected currency.
(9) Drop boxes, when empty, shall be shown to another member of the
count team, to another person who is observing the count, or to
recorded or live surveillance, provided the count is monitored in its
entirety by someone independent to the count.
(10) Original and first copies of fill/credit slips shall be
matched or otherwise reconciled by the count team to verify that the
total dollar amounts for the shift are identical. For Tier A or B
gaming operations, this function may be performed by the accounting
department.
(11) Orders for fill/credit (if applicable) shall be matched to the
fill/credit slips.
(12) Fills and credits shall be traced to or recorded on the count
sheet and examined for correctness.
(13) Pit marker issue and payment slips removed from the drop boxes
shall either be:
[[Page 42957]]
(i) Traced to or recorded on the count sheet by the count team; or
(ii) Totaled by shift and traced to the totals documented by the
computerized system. Accounting personnel shall verify the issue/
payment slip for each table is accurate.
(14) Foreign currency exchange forms removed from the drop boxes
shall be reviewed for the proper daily exchange rate and the conversion
amount shall be recomputed by the count team. Alternatively, this may
be performed by accounting/auditing employees.
(15) The opening/closing table and marker inventory forms (if
applicable) shall either be:
(i) Examined and traced to or recorded on the count sheet; or
(ii) If a computerized system is used, accounting personnel can
trace the opening/closing table and marker inventory forms (if
applicable) to the count sheet. Discrepancies shall be investigated
with the findings documented and maintained for inspection.
(16) Corrections to information originally recorded by the count
team on soft count documentation shall be made by crossing out the
error, entering the correct figure, and then obtaining the initials of
at least two count team members who verified the change.
(17) The count sheet shall be reconciled to the drop by a count
team member who shall not function as the sole recorder.
(18) All members of the count team shall attest by signature to
their participation in the games drop. The count team supervisor shall
attest to the accuracy of the games drop.
(19) All monies and monetary equivalents that were counted shall be
turned over to the cage or vault cashier (who shall be independent of
the count team) or to an authorized person independent of the revenue
generation and the count process for verification.
(20) The above mentioned individual shall certify by signature as
to the accuracy of the monies delivered and received.
(21) Access to stored drop boxes, full or empty, shall be
restricted to authorized members of the drop and count teams.
(22) Access to the count room during the count shall be restricted
to members of the drop and count teams, excluding authorized observers,
supervisors for resolution of problems, and authorized maintenance
personnel.
(23) The count sheet, with all supporting documents, shall be
promptly delivered to the accounting department by a count team member
or someone other than the cashier's department. Alternatively, it may
be adequately secured (e.g., locked container to which only accounting
personnel can gain access) until retrieved by the accounting
department.
(j) Key control standards. (1) The involvement of at least two
individuals independent of the cage department shall be required to
access stored empty drop boxes.
(2) Drop box release keys standards.
(i) The keys shall be maintained by a department independent of the
pit department;
(ii) Only the person authorized to remove drop boxes from the
tables shall be allowed access to the release keys; however, the count
team members may have access to the release keys during the soft count
in order to reset the drop boxes; and
(iii) Persons authorized to drop the table games drop boxes shall
be precluded from having access to drop box contents keys.
(3) Storage rack keys standards.
(i) Someone independent of the pit department shall be required to
accompany such keys and observe each time drop boxes are removed from
or placed in storage racks. This paragraph shall not apply to Tier A
and Tier B gaming operations;
(ii) Persons authorized to obtain drop box storage rack keys shall
be precluded from having access to drop box contents keys with the
exception of the count team.
(4) Drop box contents keys standards.
(i) The physical custody of the keys needed for accessing stored
full drop box contents shall require the involvement of persons from at
least two separate departments.
(ii) Access to the contents key at other than scheduled count times
shall require the involvement of at least three persons from separate
departments, including management, and the reason for access shall be
documented with the signatures of all participants and observers.
(iii) Only count team members shall be allowed access to drop box
content keys during the soft count process.
(5) At least three (two for three tables or less) count team
members are required to be present at the time count room and other
soft count keys are issued for the soft count.
(6) All duplicate keys shall be maintained in a manner which
provides the same degree of control over drop boxes as is required for
the original keys. Records shall be maintained for each key duplicated
which indicate the number of keys made and destroyed.
(7) Logs are maintained by the custodian of sensitive keys to
document authorization of personnel accessing keys.
(k) Table games computer generated documentation standards. (1) The
computer system shall be capable of generating adequate documentation
of all information recorded on the source documents and transaction
detail (e.g., fill/credit slips, markers, etc.).
(2) This documentation shall be restricted to authorized personnel.
(3) The documentation shall include, at a minimum, system exception
information (e.g., appropriate system parameter information,
corrections, voids, etc.).
(4) Personnel access listing which includes, at a minimum:
(i) Employee name;
(ii) Employee identification number (if applicable); and
(iii) Listing of functions employees can perform or equivalent
means of identifying the same.
(5) For any authorized computer applications utilized, alternate
documentation and/or procedures which provide at least the level of
control described by these standards will be acceptable.
(l) Playing cards and dice, not yet issued to the pit, shall be
maintained in a secure location to prevent unauthorized access and
reduce the possibility of tampering. Used cards and dice shall be
maintained in a secure location until ``marked'', ``scored'' or
``destroyed'' to prevent unauthorized access and reduce the possibility
of tampering. Used playing cards and dice shall be canceled or
destroyed in a timely manner not to exceed seven days.
(m) Pit supervisory personnel (with authority equal to or greater
than those being supervised) shall provide supervision of all table
games.
(n) Analysis of table game performance standards. (1) Records shall
be maintained by day and shift indicating any single-deck blackjack
games which were dealt for an entire shift.
(2) Records reflecting hold percentage by table and type of game
shall be maintained by shift, by day, cumulative month-to-date, and
cumulative year-to-date.
(3) This information shall be presented to and reviewed by
management independent of the pit department on at least a monthly
basis.
(4) The above referenced management shall investigate any unusual
fluctuations in hold percentage with pit supervisory personnel.
(5) The results of such investigations shall be documented in
writing and maintained.
(o) Table games accounting/auditing procedures.
[[Page 42958]]
(1) The accounting and auditing procedures shall be performed by
personnel who are independent of the transactions being audited/
accounted for.
(2) If a table game has the capability to determine drop (e.g.,
bill-in/coin-drop meters, bill validator, computerized record, etc.)
the dollar amount of the drop shall be reconciled to the actual drop by
shift.
(3) Accounting/auditing employees shall review exception reports
for all computerized table games systems at least monthly for propriety
of transactions and unusual occurrences.
(4) All noted improper transactions or unusual occurrences shall be
investigated with the results documented.
(5) Evidence of table games auditing procedures and any follow-up
performed shall be maintained and is available upon request by the
Commission.
(6) A daily recap shall be prepared for the day and month-to-date
which shall include the following information:
(i) Pit credit issues;
(ii) Pit credit payments in chips;
(iii) Pit credit payments in cash;
(iv) Drop;
(v) Win; and
(vi) Gross revenue.
(p) For any computer applications utilized, alternate documentation
and/or procedures which provide at least the level of control described
by these standards will be acceptable.
Sec. 542.12 What are the minimum internal control standards for gaming
machines?
(a) When a standard in this section requires a minimum of three
employees to perform a function or be present during one, Tier A and
Tier B gaming operation may require only two employees to be present.
(b) For this section only, credit or customer credit means a unit
of value equivalent to cash or cash equivalents deposited, wagered,
won, lost or redeemed by a patron.
(c) Coins shall include tokens.
(d) Coin drop standards.
(1) A minimum of three employees shall be involved in the removal
of the gaming machine drop, at least one of whom is independent of the
gaming machine department.
(2) Count room personnel shall not be allowed to exit or enter the
count room except for emergencies or scheduled breaks. At no time when
uncounted funds are present shall there be less than three (3) persons
in the count room.
(3) Each gaming operation shall maintain on file the time when the
drop buckets and bill acceptor canisters will be removed and the time
when the contents are to be counted.
(4) All drop buckets or canisters shall be removed only at the time
previously designated except for emergency drops.
(5) The gaming machine drop supervisor shall notify surveillance
when the drop is to begin in order that surveillance may monitor the
activities.
(6) Surveillance shall record in a proper log or journal in a
legible manner any exceptions or variations to established procedures
observed during the drop. Such log or journal shall be made available
for review upon request.
(7) Security shall be provided over the buckets removed from the
gaming machine drop cabinets prior to being transported to the count
room.
(8) As each machine is opened, the contents shall be tagged with
its respective machine number if the bucket is not permanently marked
with the machine number. The contents shall be transported directly to
the area designated for the counting of such monies. If more than one
trip is required to remove the contents of the machines, the filled
carts of coins shall be securely locked in the room designed for
counting. There shall be a locked covering on any carts in which the
drop route includes passage out of doors.
(9) Each drop bucket in use shall be:
(i) Housed in a locked compartment separate from any other
compartment of the gaming machine and keyed differently than other
gaming machine compartments; and
(ii) Identifiable to the gaming machine from which it is removed
(i.e., permanently marked with the gaming machine I.D. number, bar
coded labels, printed tags, etc.). If the gaming machine is identified
with a removable tag which is placed in the bucket, the tag shall be
placed on top of the bucket when it is collected.
(10) Each gaming machine shall have drop buckets into which tokens
that are retained by the gaming machine are collected. Drop bucket
contents shall not be used to make change or pay hand-paid payouts.
(11) The collection procedures may include procedures for dropping
gaming machines which have trays instead of drop buckets.
(e) Equipment standards. (1) A weigh scale calibration module shall
be secured so as to prevent unauthorized access (e.g., prenumbered
seal, lock and key, etc.).
(2) Someone independent of the cage, vault, gaming machine, and
count team functions shall be required to be present whenever the
calibration module is accessed.
(3) Such access shall be documented and maintained.
(4) A count team member shall prepare a hard drop summary report
showing the results of the weigh/count and wrap by denomination.
Discrepancies between the weigh/count and wrap shall be investigated
immediately and explained on the summary report.
(5) If a weigh scale interface is used, it shall be adequately
restricted so as to prevent unauthorized access (passwords, keys,
etc.).
(6) If the weigh scale has a zero adjustment mechanism, it shall be
physically limited to minor adjustments (e.g., weight of a bucket) or
physically situated such that any unnecessary adjustments to it during
the weigh process would be observed by other count team members.
(7) The weigh scale and weigh scale interface (if applicable) shall
be tested by someone who is independent of the cage, vault and gaming
machine departments and count team at least quarterly. At least semi-
annually, the above test is performed by internal audit in accordance
with the internal audit standards.
(8) During the gaming machine count, at least two employees shall
verify the accuracy of the weigh scale with varying weights or with
varying amounts of previously counted coin for each denomination to
ensure the scale is properly calibrated (varying weights/coin from drop
to drop is acceptable).
(9) The preceding weigh scale and weigh scale interface test
results shall be documented and maintained; the results shall be signed
by two count team members and the count team leader.
(10) If a mechanical coin counter is used (instead of a weigh
scale), the gaming operation shall establish and comply with procedures
that are equivalent to those described in paragraphs (c)(7), (c)(8),
and (c)(9) of this section.
(11) If a coin meter count machine is used, the count team member
shall record the machine number denomination and number of coins in ink
on a source document, unless the meter machine automatically records
such information.
(12) The weigh scale shall have a calibration module which shall be
locked and adjusted by the vendor. When the module is accessed, a
weight scale calibration module access log shall be completed.
(13) At least once per month, the weigh scale shall be tested, and
the test documented and signed by at least three (3) individuals,
including one individual independent of the count.
[[Page 42959]]
(f) Gaming machine count and wrap standards. (1) The weigh/count
shall be performed by a minimum of three employees.
(2) At no time during the weigh/count shall there be fewer than
three employees in the count room.
(3) The gaming machine count team shall be independent of the
gaming machine department and the subsequent accountability of gaming
machine count proceeds, unless they are non-supervisory gaming machine
employees and perform the laborer function only. (A non-supervisory
gaming machine employee is defined as a person below the level of
gaming machine shift supervisor.)
(4) The following functions shall be performed in the counting of
the gaming machine drop:
(i) Recorder function which involves the recording of the gaming
machine count;
(ii) Count team supervisor function which involves the control of
the gaming machine weigh and wrap process.
(5) The amount of the gaming machine drop from each machine shall
be recorded in ink on a gaming machine count document by the recorder
or mechanically printed by the weigh scale. If a weigh scale interface
is used, the gaming machine drop figures are transferred via direct
line or computer storage media.
(6) The recorder and at least one other count team member shall
sign the weigh tape and the gaming machine count document attesting to
the accuracy of the weigh/count.
(7) At least three employees who participate in the weigh/count
and/or wrap process shall sign the gaming machine count document or a
summary report to attest to their presence. If all other count team
members do not sign the gaming machine count document or a summary
report, they shall sign a supplemental document evidencing their
participation in the weigh/count and/or wrap.
(8) The coins shall be wrapped and reconciled in a manner which
precludes the commingling of gaming machine drop coin with coin (for
each denomination) from the next gaming machine drop.
(9) At least two employees shall be present throughout the wrapping
of the gaming machine drop.
(10) If the gaming machine count is conducted with a continuous
mechanical count meter which is not reset during the count and is
verified in writing by at least three employees at the start and end of
each nomination count, then one employee may perform the wrap.
(11) If the coins are not wrapped immediately after being weighed/
counted, they shall be secured and not commingled with other coins.
(12) The coins shall be wrapped immediately after being weighed or
counted. As the coin is being wrapped, it shall be maintained in such a
manner so as to be able to obtain an accurate count when the wrap is
completed. At the completion of the wrap, a count team member shall
independently count the wrap and reconcile it with the weigh/meter
count.
(13) If the coins are transported off the property, a second
(alternative) count procedure shall be performed before the coins leave
the property. Any variances shall be documented.
(14) Transfers out of the count room during the gaming machine
count and wrap process shall be strictly prohibited, or if transfers
are permitted during the count and wrap, each transfer shall be
recorded on a separate multi-part form with a preprinted or
concurrently-printed form number (used solely for gaming machine count
transfers) which shall be subsequently reconciled by the accounting
department to ensure the accuracy of the reconciled wrapped gaming
machine drop. If transfers are permitted, they must be counted and
signed for by at least two members of the count team and by someone
independent of the count team who is responsible for authorizing the
transfer.
(15) If the count room serves as a coin room and coin room
inventory is not secured so as to preclude access by the count team,
then the following two standards shall apply:
(i) At the commencement of the gaming machine count the following
requirements shall be met:
(A) The coin room inventory shall be counted by at least two
employees, one of whom is a member of the count team and the other is
independent of the weigh/count and wrap procedures;
(B) The count in paragraph (f)(15)(i)(A) shall be recorded on an
appropriate inventory form;
(ii) Upon completion of the wrap of the gaming machine drop:
(A) At least two members of the count team (wrap team),
independently from each other, shall count the ending coin room
inventory;
(B) The counts in paragraph (f) shall be recorded on a summary
report(s) which evidences the calculation of the final wrap by
subtracting the beginning inventory from the sum of the ending
inventory and transfers in and out of the coin room;
(C) The same count team members shall compare the calculated wrap
to the weigh/count, recording the comparison and noting any variances
on the summary report;
(D) A member of the cage/vault department shall count the ending
coin room inventory by denomination and shall reconcile it to the
beginning inventory, wrap, transfers and weigh/count; and
(E) At the conclusion of the reconciliation, at least two count/
wrap team members and the verifying employee shall sign the summary
report(s) attesting to its accuracy.
(16) For Tier A and B gaming operations the functions described in
paragraph (f)(15)(ii) (A) and (C) of this section may be performed by
only one count team member. That count team member must then sign the
summary report, along with the verifying employee, as required under
paragraph (f)(15)(ii)(E).
(17) If the count room is segregated from the coin room, or if the
coin room is used as a count room and the coin room inventory is
secured to preclude access by the count team, all of the following
requirements shall be completed, at the conclusion of the count:
(i) At least two members of the count/wrap team shall count the
final wrapped gaming machine drop independently from each other;
(ii) The counts shall be recorded on a summary report;
(iii) The same count team members (or the accounting department)
shall compare the final wrap to the weigh/count, recording the
comparison and noting any variances on the summary report;
(iv) A member of the cage/vault department shall count the wrapped
gaming machine drop by denomination and reconcile it to the weigh/
count;
(v) At the conclusion of the reconciliation, at least two count
team members and the cage/vault employee shall sign the summary report
attesting to its accuracy;
(vi) The wrapped coins (exclusive of proper transfers) shall be
transported to the cage, vault or coin vault after the reconciliation
of the weigh/count to the wrap;
(vii) Upon completion of the wrap of the slot drop, a count team
member shall prepare a hard drop summary report showing the results of
the weigh/count and wrap by denomination. Discrepancies between the
weigh/count and wrap shall be investigated immediately and explained on
a summary report.
[[Page 42960]]
(18) Large (by denomination, either $1,000 or 2% of the drop,
whichever is less) or unusual (e.g., zero for weigh count or patterned
for all counts) variances between the weigh/count and wrap shall be
investigated by management personnel independent of the gaming machine
department, count team and the cage/vault functions on a timely basis.
(19) The results of such investigation shall be documented and
maintained.
(20) All gaming machine count and wrap documentation, including any
applicable computer storage media, shall be immediately delivered to
the accounting department by other than the cashier's department.
Alternatively, it may be adequately secured (e.g., locked container to
which only accounting personnel can gain access) until retrieved by the
accounting department.
(21) A count team member shall transport the summary report and its
support documents to the accounting department immediately after the
cashier signs it.
(22) If applicable, the weight shall be converted to dollar amounts
prior to the reconciliation of the weigh to the wrap.
(23) A count team member shall test the metered count machine (if
used) prior to the actual count to ascertain if the metering device is
functioning properly with a predetermined number of coins for each
denomination.
(24) If a coin meter is used, a count team member shall convert the
coin count for each denomination into dollars and shall enter the
results on a summary sheet.
(25) As the coin is being wrapped, it shall be maintained in such a
manner so as to be able to obtain an accurate count when the wrap is
completed.
(26) Immediately upon receiving the funds, an independent person
shall count the gaming machine drop by denomination and shall sign the
count sheet attesting to the accuracy of the total and the
denominations of the funds received.
(27) A count team member shall transport the summary report and its
supporting documents to the accounting department immediately after the
verifier signs it.
(28) Machine hard or soft ``in-meter'' readings shall be recorded
at least monthly and retained at least seven years.
(29) Gaming machine analysis reports, which compare actual hold to
theoretical hold by gaming machine shall be prepared on at least a
monthly basis.
(30) Such reports shall provide all data on both month-to-date and
year-to-date bases.
(31) The gaming machine hopper loads and coin in the drop cabinet
shall be secured and accounted for during the removal and maintenance
of gaming machines.
(32) Cashier/change banks shall be counted and reconciled for each
shift.
(33) Corrections on gaming machine count documentation shall be
made by crossing out the error, entering the correct figure, and then
obtaining the initials of at least two count team employees. If a weigh
scale interface is used, corrections to gaming machine count data shall
be made using either of the following:
(i) Crossing out the error on the gaming machine document, entering
the correct figure, and then obtaining the initials of at least two
count team employees. If this procedure is used, an employee
independent of the gaming machine department and count team shall enter
the correct figure into the computer system prior to the generation of
related gaming machine reports; or
(ii) During the count process, correct the error in the computer
system and enter the passwords of at least two count team employees. If
this procedure is used, an exception report shall be generated by the
computer system identifying the gaming machine number, the error, the
correction and the count team employees testifying to the correction.
(g) Currency acceptor drop and count standards. (1) Tier A gaming
operations may be exempt from compliance with this section, if the
gaming operations develop and comply with procedures that shall protect
the integrity of the drop and count.
(2) The currency acceptor drop boxes shall be removed by an
employee independent of the gaming machine department, then transported
directly to the soft count room or other similarly restricted location
and locked in a secure manner until the count takes place.
(3) The transporting of currency acceptor drop boxes shall be
performed by a minimum of two employees, at least one of whom is
independent of the gaming machine department.
(4) The currency acceptor count shall be performed in a soft count
room or equivalently secure area with comparable controls.
(5) The currency acceptor count shall be performed by a minimum of
three employees.
(6) Currency acceptor count team members shall be rotated on a
routine basis.
(7) For Tier B gaming operation a minimum of two persons shall
perform the count provided the count is viewed either live or on
videotape within seven days by an employee independent of the count.
(8) The currency acceptor count team shall be independent of
transactions being reviewed and counted, and the subsequent
accountability of currency drop proceeds.
(9) A cage cashier may be used if this person is not allowed to
perform the recording function. An accounting representative may be
used if there is an independent audit of all currency acceptor count
documentation.
(10) The currency acceptor drop boxes shall be individually emptied
and counted in such a manner as to prevent the commingling of funds
between boxes until the count of the box has been recorded.
(11) The count of each box shall be recorded in ink or other
permanent form of recordation.
(12) If currency counters are utilized and the count room table is
used only to empty boxes and sort/stack contents, a count team member
shall be able to witness the loading and unloading of all currency at
the currency counter, including rejected currency.
(13) Drop boxes, when empty, shall be shown to another member of
the count team, to another person who is observing the count, or to
recorded or live surveillance, provided the count is monitored in its
entirety by someone independent of the count.
(14) Corrections to information originally recorded by the count
team on currency acceptor count documentation shall be made by crossing
out the error, entering the correct figure, and then obtaining the
initials of at least two count team members who verified the change.
(15) The count sheet shall be reconciled to the total drop by a
count team member who shall not function as the sole recorder.
(16) All members of the count team shall attest by signature to the
accuracy of the currency acceptor drop count. Three verifying
signatures on the count sheet shall be adequate if all additional count
team employees sign a supplemental document evidencing their
involvement in the count process.
(17) All monies that were counted shall be turned over to the cage
cashier (who is independent of the count team) or to an employee
independent of the revenue generation and the count process for
verification.
(18) The employee shall certify by signature as to the accuracy of
the currency delivered and received.
[[Page 42961]]
(19) Access to stored full drop boxes shall be restricted to
authorized members of the drop and count teams.
(20) Access to the count room shall be restricted to members of the
drop and count teams, excluding authorized observers, supervisors for
resolution of problems, and authorized maintenance personnel.
(21) The count sheet, with all supporting documents, shall be
promptly delivered to the accounting department by a count team member
or someone other than the cashiers department. Alternatively, it may be
adequately secured (e.g., locked container to which only accounting
personnel can gain access) until retrieved by the accounting
department.
(h) Jackpot payouts, gaming machines fills, short pays and
accumulated credit payouts standards. (1) For jackpot payouts and
gaming machine fills, documentation shall include the following
information on a three-part form:
(i) Date and time;
(ii) Machine number;
(iii) Dollar amount of cash payout or gaming machine fill (both
alpha and numeric), or description of personal property awarded; Alpha
is optional if another unalterable method is used for evidencing the
amount of the payout;
(iv) Game outcome (including reel symbols, card values and suits,
etc.) for jackpot payouts;
(v) Signatures of at least two employees verifying and witnessing
the payout or gaming machine fill, however, on graveyard shifts (eight-
hour maximum) payouts/fills less than $100 can be made without the
payout/fill being witnessed if the second person signing can reasonably
verify that a payout/fill is justified; and
(vi) Preprinted or concurrently-printed sequential number.
(2) Jackpot payouts over a predetermined amount shall require the
signature and verification of a supervisory or management employee
independent of the gaming machine department. This predetermined amount
shall be authorized by management, documented, and maintained.
(3) For short pays of $10.00 or more, the jackpot payout form
includes:
(i) Date and time;
(ii) Machine number;
(iii) Dollar amount of payout (both alpha and numeric);
(iv) Signatures of at least two employees verifying and witnessing
the payout.
(4) Short pays involving a single token in a denomination higher
than $10.00 may be handled without the documentation required in
paragraph (h) (3) of this section.
(5) Computerized jackpot/fill systems shall be restricted so as to
prevent unauthorized access and fraudulent payouts by one individual.
(6) Payout forms shall be controlled and routed in a manner that
precludes any one individual from producing a fraudulent payout by
forging signatures or by altering the amount paid out subsequent to the
payout and misappropriating the funds.
(i) If a gaming operation offers promotional payouts and awards,
the payout form/documentation includes the following information:
(1) Date and time;
(2) Machine number and denomination;
(3) Dollar amount of payout or description of personal property
(e.g., jacket, toaster, car, etc.);
(4) Type of promotion (e.g., double jackpots, four-of-a-kind bonus,
etc.); and
(5) Signature of at least one employee authorizing and completing
the transaction.
(j) Gaming machine department funds standards. (1) The gaming
machine booths and change banks, which are active during the shift,
shall be counted down and reconciled each shift utilizing appropriate
accountability documentation.
(2) The wrapping of loose gaming machine booth and cage cashier
coin shall be performed at a time or location that does not interfere
with the hard count/wrap process or the accountability of that process.
(3) A record shall be maintained evidencing the transfers of
unwrapped coin and is retained for at least 7 days.
(4) A record shall be maintained evidencing the transfers of
wrapped and unwrapped coins.
(k) EPROM standards. (1) At least annually, procedures shall be
performed to insure the integrity of a sample of gaming machine game
program EPROMs by personnel independent of the gaming operation or the
machines being tested.
(2) The EPROM compartment key shall be maintained in the cage.
Access to the EPROM compartment key shall require one key from security
and one key from the cage to open the key box which contains the EPROM
compartment key. An authorized Tribal official or designee shall be
present when the EPROM compartment key is accessed. A list of Tribal
officials and designees authorized to obtain the EPROM compartment key
shall be maintained in the cage;
(3) EPROM duplication standards.
(i) Procedures shall be developed and implemented for the
following:
(A) Removal of EPROMs from devices, the verification of the
existence of errors as applicable, and the correction via duplication
from the master game program EPROM;
(B) Copying one gaming device program to another approved program;
(C) Verification of duplicated EPROMs prior to being offered for
play;
(D) Destruction, as needed, of EPROMs with electrical failures;
(E) Securing the EPROM duplicator and master game EPROMs from
unrestricted access;
(ii) The master game program number, par percentage, and the pay
table shall be verified to the par sheet when initially received from
the manufacturer.
(iii) Gaming machines with potential jackpots in excess of $100,000
shall have the circuit boards locked or physically sealed. The lock or
seal shall necessitate the presence of an individual independent of the
gaming machine department to access the device game program EPROM. If a
seal is used to secure the board to the frame of the gaming device, it
shall be pre-numbered.
(iv) Records which document the procedures in paragraph (k)(3)(i)
of this section shall include the following information:
(A) Date;
(B) Machine number (source and destination);
(C) Manufacturer;
(D) Program number;
(E) Personnel involved;
(F) Reason for duplication;
(G) Disposition of any permanently removed EPROM;
(H) Seal numbers, if applicable, and;
(I) Approved testing lab approval numbers, if available.
(4) EPROMS returned to gaming devices shall be labeled and shall
include the date program number, information identical to that shown on
the manufacturer's label, and initials of the individual replacing the
EPROM.
(l) Standards for evaluating theoretical and actual hold
percentages. (1) Accurate and current theoretical hold worksheets shall
be maintained for each gaming machine.
(2) For those gaming machines or groups of identical machines
(excluding multi-game machines) with differences in theoretical payback
percentage exceeding a 4% spread between the minimum and maximum
theoretical payback, an employee or department independent from the
gaming machine department shall:
(i) On a quarterly basis, record the meters that contain the number
of plays by wager (i.e., one coin, two coins, etc.);
[[Page 42962]]
(ii) On an annual basis, calculate the theoretical hold percentage
based on the distribution of plays by wager type;
(iii) On an annual basis, adjust the machine(s) theoretical hold
percentage in the gaming machine statistical report to reflect this
revised percentage.
(3) For multi-game machines, an employee or department independent
of the gaming machine department shall:
(i) Weekly record the total coin-in meter;
(ii) Quarterly record the coin-in meters for each game contained in
the machine;
(iii) On an annual basis adjust the theoretical hold percentage to
a weighted average based upon the ratio of coin-in for each game.
(4) The adjusted theoretical hold percentage for multi-game
machines may be combined for machines with exactly the same game mix
throughout the year.
(5) The theoretical hold percentages used in the slot analysis
reports should be within the performance standards set by the
manufacturer.
(6) Records shall be maintained for each machine which indicate the
dates and type of changes made and the recalculation of theoretical
hold as a result of the changes.
(7) Records shall be maintained for each machine which indicate the
date the machine was placed into service, the date the machine was
removed from operation, the date the machine was placed back into
operation, and any changes in machine numbers and designations.
(8) All of the gaming machines shall contain functioning meters
which shall record coin-in or credit-in.
(9) All gaming machines with currency acceptors shall contain
functioning bill-in meters which record the dollar amounts or number of
bills accepted by denomination.
(10) Gaming machine in-meter readings shall be recorded at least
weekly (monthly for Tier A gaming operations) immediately prior to or
subsequent to a gaming machine drop. However, the time between readings
may extend beyond one week in order for a reading to coincide with the
end of an accounting period only if such extension is for no longer
than six days.
(11) The employee who records the in-meter reading shall either be
independent of the hard count team or shall be assigned on a rotating
basis, unless the in-meter readings are randomly verified quarterly for
all gaming machines and currency acceptors by someone other than the
regular in-meter reader.
(12) Upon receipt of the meter reading summary, the accounting
department shall review all meter readings for reasonableness using
pre-established parameters.
(13) Prior to final preparation of statistical reports, meter
readings which do not appear reasonable shall be reviewed with gaming
machine department employees, and exceptions documented, so that meters
can be repaired or clerical errors in the recording of meter readings
can be corrected.
(14) A report shall be produced at least monthly showing month-to-
date, year-to-date, and if practicable, life-to-date actual hold
percentage computations for individual machines and a comparison to
each machine's theoretical hold percentage previously discussed.
(15) Each change to a gaming machine's theoretical hold percentage,
including progressive percentage contributions, shall result in that
machine being treated as a new machine in the statistical reports
(i.e., not commingling various hold percentages).
(16) If promotional payouts and awards are included on the gaming
machine statistical reports, it shall be in a manner which prevents
distorting the actual hold percentages of the affected machines.
(17) A report shall be produced at least monthly showing year-to-
date combined gaming machine performance, by denomination. The report
shall include the following for each denomination:
(i) Floor par;
(ii) Combined actual hold percentage;
(iii) Percentage variance (b--a); and
(iv) Projected dollar variance (i.e., coin-in times the percentage
variance).
(18) The statistical reports shall be reviewed by both gaming
machine department management and management employees independent of
the gaming machine department on at least a monthly basis.
(19) Large variances between theoretical hold and actual hold shall
be investigated and resolved with the findings documented in a timely
manner.
(20) For purposes of analyzing large variances between actual hold
and theoretical hold percentages, information to create floor par
reports by machine type shall be maintained.
(21) Maintenance of the computerized gaming machine monitoring
system data files shall be performed by a department independent of the
gaming machine department. Alternatively, maintenance may be performed
by gaming machine supervisory employees if sufficient documentation is
generated and it is randomly verified on a monthly basis by employees
independent of the gaming machine department.
(22) Updates to the computerized gaming machine monitoring system
to reflect additions, deletions, or movements of gaming machines shall
be made at least weekly prior to in-meter readings and the weigh
process.
(m) Gaming machine hopper contents standards. (1) When machines are
temporarily removed from the floor, gaming machine drop and hopper
contents shall be protected to preclude the misappropriation of stored
funds.
(2) When machines are permanently removed from the floor, the
gaming machine drop and hopper contents shall be counted and recorded
by at least two employees with appropriate documentation being routed
to the accounting department for proper recording and accounting for
initial hopper loads.
(n) Gaming machine drop keys standards. (1) The physical custody of
the keys needed to access gaming machine coin drop cabinets, including
duplicates, shall require the involvement of two persons, one of whom
is independent of the gaming machine department.
(2) Gaming machine coin drop cabinet keys, including duplicates,
shall be maintained by a department independent of the gaming machine
department.
(3) Two employees (separate from key custodian) shall be required
to accompany such keys while checked out and observe each time gaming
machine drop cabinets are accessed, unless surveillance is notified
each time keys are checked out and surveillance observes the person
throughout the period the keys are checked out.
(o) Currency acceptor key control standards. (1) Tier A gaming
operation shall not be subject to the requirements of paragraph (o) of
this section, provided that the gaming operation develops and complies
with procedures that maintain adequate key control and restricts access
to the keys.
(2) The physical custody of the keys needed for accessing stored
full currency acceptor drop box contents shall require involvement of
persons from two separate departments.
(3) Only the employees authorized to remove the currency acceptor
drop boxes shall be allowed access to the release keys. For situations
that require access to the currency acceptor drop box at other than
scheduled drop time, the date, time, and signature of employee signing
out/in release key must be documented. The currency acceptor
[[Page 42963]]
drop box release keys are separately keyed from the currency acceptor
contents keys.
(4) The count team members may have access to the release keys
during the count only in order to reset the drop boxes if necessary.
(5) Employees authorized to drop the currency acceptor drop boxes
shall be precluded from having access to drop box contents keys.
(6) Someone independent of the gaming machine department shall be
required to accompany currency acceptor drop box storage rack keys and
observe each time drop boxes are removed from or placed in storage
racks;
(7) Employees authorized to obtain drop box storage rack keys shall
be precluded from having access to drop box contents keys (with the
exception of the count team);
(8) The physical custody of the keys needed for accessing currency
acceptor drop box contents shall require involvement of persons from
three separate departments. Access to the contents key at other than
scheduled count times shall require the involvement of at least three
employees from separate departments, including management. The reason
for access shall be documented with the signatures of all participants
and observers. Only the count team members shall be allowed access to
drop box contents.
(9) At least three count team members shall be required to be
present at the time currency acceptor count room keys and other count
keys are issued for the count.
(10) Duplicate keys shall be maintained in such a manner as to
provide the same degree of control over drop boxes as is required for
the original keys. Records shall be maintained for each key duplicated
which indicate the number of keys made and destroyed;
(p) Player tracking standards. (1) The player tracking system shall
be secured so as to prevent unauthorized access (e.g., changing
passwords at least quarterly and physical access to computer hardware,
etc.).
(2) The addition of points to members' accounts other than through
actual gaming machine play shall be sufficiently documented (including
substantiation of reasons for increases) and shall be authorized by a
department independent of the player tracking and gaming machines.
Alternatively, addition of points to members' accounts may be
authorized by gaming machine supervisory employees if sufficient
documentation is generated and it is randomly verified by employees
independent of the gaming machine department on a quarterly basis;
(3) Booth employees who redeem points for members shall not have
access to lost cards;
(4) Changes to the player tracking system parameters, such as point
structures and employee access, shall be performed by supervisory
employees independent of the gaming machine department. Alternatively,
changes to player tracking system parameters may be performed by gaming
machine supervisory employees if sufficient documentation is generated
and it is randomly verified by supervisory employees independent of the
gaming machine department on a monthly basis.
(5) All other changes to the player tracking system shall be
appropriately documented.
(q) Progressive gaming machines standards. (1) A meter that shows
the amount of the progressive jackpot shall be conspicuously displayed
at or near the machines to which the jackpot applies.
(i) At least once each day, each licensee shall record the amount
shown on each progressive jackpot meter at the licensee's establishment
except for those jackpots that can be paid directly from the machine's
hopper;
(ii) Explanations for meter reading decreases shall be maintained
with the progressive meter reading sheets, and where the payment of a
jackpot is the explanation for a decrease, the licensee shall record
the jackpot payout number on the sheet or have the number reasonably
available.
(iii) Each licensee shall record the base amount of each
progressive jackpot the licensee offers.
(2) The wide area progressive gaming machines system shall be
adequately restricted to prevent unauthorized access (e.g., changing
passwords at least quarterly, access to EPROMs, and physical access to
computer hardware, etc.).
(3) For the wide area progressive system, procedures shall be
developed, implemented, and documented for:
(i) Reconciliation of meters and jackpot payouts;
(ii) Collection/drop of gaming machine funds;
(iii) Jackpot verification and payment and billing to gaming
operations on pro-rata basis;
(iv) System maintenance;
(v) System accuracy; and
(vi) System security.
(4) Reports adequately documenting the procedures required in
paragraph (q) (3) of this section shall be generated and retained.
(r) Gaming machine accounting/auditing procedures standards. (1)
Gaming machine accounting/auditing procedures shall be performed by
employees who are independent of the transactions being reviewed.
(2) For computerized player tracking systems, an accounting/
auditing employee shall perform the following procedures at least one
day per month:
(i) Foot all jackpot and fill slips and trace totals to those
produced by the system; and
(ii) Review all slips written (from the restricted copy) for
continuous sequencing;
(iii) Foot all points-redeemed documentation and trace to the
system-generated totals;
(iv) Review all points-redeemed documentation for propriety.
(3) For computerized gaming machine monitoring systems, procedures
shall be performed at least monthly to verify that the system is
transmitting and receiving data from the gaming machines properly and
to verify the continuing accuracy of the coin-in meter readings as
recorded in the gaming machine statistical report.
(4) For weigh scale interface systems, for a least one drop period
per month accounting/auditing employees shall compare the weigh tape to
the system-generated weigh, as recorded in the gaming machine
statistical report, in total. Discrepancies shall be resolved prior to
generation/distribution of gaming machine reports.
(5) For each drop period, accounting/auditing personnel shall
compare the ``coin-to-drop'' meter reading to the actual drop amount.
Discrepancies should be resolved prior to generation/distribution of
slot statistical reports.
(6) Follow-up shall be performed for any one machine having an
unresolved variance between actual drop and coin-to-drop meter reading
in excess of 3%. The follow-up performed and results of the
investigation shall be documented and maintained.
(7) At least weekly, accounting/auditing employees shall compare
the bill-in meter reading to the total currency acceptor drop amount
for the week. Discrepancies shall be resolved prior to the generation/
distribution of gaming machine statistical reports.
(8) Follow-up shall be performed for any one machine having an
unresolved variance between actual drop and bill-in meter reading in
excess of 3%. The follow-up performed and results of the investigation
shall be documented and maintained.
(9) At least annually, accounting/auditing personnel shall randomly
verify that EPROM changes are properly reflected in the gaming machine
analysis reports.
[[Page 42964]]
(10) Accounting/auditing employees shall review exception reports
for all computerized gaming machine systems on a daily basis for
propriety of transactions and unusual occurrences.
(11) All gaming machine auditing procedures and any follow-up
performed shall be documented and maintained for inspection.
(s) For all computerized gaming machine systems, a personal access
listing shall be maintained which includes at a minimum:
(1) Employee name;
(2) Employee identification number (or equivalent); and
(3) Listing of functions employee can perform or equivalent means
of identifying same.
(t) For any computer applications utilized, alternate documentation
and/or procedures which provide at least the level of control described
by the standards in this section will be acceptable.
(u) For gaming machines that accept coins or currency and issue
cash-out tickets, the following standards shall apply:
(1) In addition to the applicable accounting and auditing standards
in paragraph (r) of this section, on a quarterly basis, the gaming
operation shall foot all jackpot cash-out tickets and trace totals to
those produced by the system.
(2) The customer may request a cash-out ticket from the gaming
machine which reflects all remaining credits. The cash-out ticket shall
be printed at the gaming machine by an internal document printer.
(3) The customer shall redeem the cash-out ticket at a change booth
or cashiers' cage. Once presented for redemption, the cashier shall:
(i) Scan the bar code via an optical reader or its equivalent; or
(ii) Input the cash-out ticket validation number into the computer.
(4) The information contained in paragraph (u)(3) of this section
shall be transmitted to the host computer. The host computer shall
verify the authenticity of the cash-out ticket and communicate directly
to the change booth or cashier cage terminal.
(5) If valid, the cashier pays the customer the appropriate amount
and the cash-out ticket is electronically noted ``paid'' in the system.
The ``paid'' cash-out ticket shall remain in the cashiers' bank for
reconciliation purposes.
(6) If invalid, the host computer shall notify the cashier that one
of the following conditions exists:
(i) Serial number cannot be found on file (stale date, forgery,
etc.);
(ii) Cash-out ticket has already been paid;
(iii) Amount of cash-out ticket differs from amount on file. The
cashier shall refuse payment to the customer and notify a supervisor of
the invalid condition. The supervisor shall resolve the dispute;
(7) If the coinless/cashless gaming machine system temporarily goes
down, cashiers may redeem cash-out tickets after recording the
following:
(i) Serial number of the cash-out ticket;
(ii) Date;
(iii) Dollar amount; and
(iv) Issuing gaming machine number.
(8) Cash-out tickets shall be validated as expeditiously as
possible when the coinless/cashless gaming machine system is restored.
(9) The gaming operation shall develop and implement procedures to
control cash-out ticket paper which shall include procedures which:
(i) Prevent the counterfeiting of cash-out ticket paper;
(ii) Adequately controls the inventory of the cash-out ticket
paper; and
(iii) Provide for the destruction of all unused cash-out ticket
paper.
(10) If the coinless/cashless gaming machine system is down for
more than four hours, the gaming operation shall promptly notify the
tribal council or its designated representative.
(11) These gaming machine systems shall comply with all other
standards (as applicable) in this section including:
(i) Standards for currency acceptor drop and count;
(ii) Standards for coin drop and count; and
(iii) Standards concerning EPROMS.
(v) If the gaming machine does not accept currency or coin and does
not return currency or coin, the following standard shall apply:
(1) For paragraph (v) of this section, the following definitions
shall apply:
(i) Bank Number means a unique number assigned to identify a
network of player terminals;
(ii) Terminal Number means a unique number assigned to identify a
single player terminal in the gaming operation;
(iii) PIN means personal identification number selected by player
and used to access player's account;
(iv) Machine Payout Form means a document used to log all
progressive jackpots and amounts won greater than $1,200.
(v) Adjustment Form means a document used to describe and identify
any change to player's account balance not generated directly by player
gaming activity;
(vi) A game Server means an electronic selection device, utilizing
a random number generator.
(2) Equipment.
(i) A central computer, with supporting hardware and software, to
coordinate network activities, provide system interface, and store and
manage a player/account database;
(ii) A network of contiguous player terminals with touch-screen or
button-controlled video monitors connected to an electronic selection
device and the central computer via a communications network;
(iii) One or more electronic selection devices, utilizing random
number generators, each of which selects any combination or
combinations of numbers, colors and/or symbols for a network of player
terminals.
(3) Player terminals standards.
(i) The player terminals are connected to a game server;
(ii) The game server shall generate and transmit to the bank of
player terminals a set of random numbers, colors and/or symbols at
regular intervals. The subsequent game results are determined at the
player terminal and the resulting information is transmitted to the
account server;
(iii) The game servers shall be housed in a game server room or
secure locked cabinet off the casino floor.
(4) Patron account maintenance standards.
(i) A central computer acting as an account server shall provide
customer account maintenance and the deposit/withdrawal function of
those account balances;
(ii) Patrons may access their accounts on the computer system by
means of a Player Identification Card at the player terminal. Each
player terminal may be equipped with a card reader and PIN (personal
identification number) pad or touch screen array for this purpose;
(iii) All communications between the player terminal and the
account server shall be encrypted for security reasons.
(5) Patron account generation standards.
(i) A computer file for each patron shall be prepared by a clerk,
with no incompatible functions, prior to the patron being issued a PIN
Card to be utilized for machine play. The patron shall select his/her
four digit PIN, known only to the patron, to be used in conjunction
with the PIN Card;
(ii) The clerk shall sign-on with a unique password to a terminal
equipped with peripherals required to input data from the Patron
Registration form. Passwords are issued and can only be changed by MIS
personnel at the discretion of the Department Director;
[[Page 42965]]
(iii) After entering a specified number of incorrect PIN entries at
the Cage or player terminal, the patron shall be directed to proceed to
the Gaming Machine Information Center to obtain a new PIN. If a patron
forgets, misplaces or requests a change to their four digit PIN, the
patron shall proceed to the Gaming Machine Information Center.
(6) Deposit of credits standards.
(i) The cashier shall sign-on with a unique password to a cashier
terminal equipped with peripherals required to complete the credit
transactions. Passwords are issued and can only be changed by MIS
personnel at the discretion of the Department Director;
(ii) The patron shall present cash, chips, coin or coupons along
with their PIN Card to a cashier to deposit Credits;
(iii) The cashier shall complete the transaction by utilizing a
card scanner which the cashier shall slide the patron's PIN Card
through;
(iv) The cashier shall accept the funds from the patron and enter
the appropriate amount on the cashier terminal;
(v) A multi-part Deposit Slip shall be generated by the point of
sale receipt printer. The cashier shall direct the patron to sign two
copies of the Deposit Slip receipt. The original of the signed Deposit
Slip shall be given to the patron. The first copy of the signed Deposit
Slip shall be secured in the cashier's cash drawer;
(vi) The cashier shall verify the patron's balance before
completing the transaction. The cashier shall secure the funds in their
cash drawer and return the PIN Card to the patron.
(7) Prize standards.
(i) Winners at the Gaming Machines may receive cash, prizes
redeemable for cash or merchandise, at the discretion of the Gaming
Operation;
(ii) If merchandise prizes are to be awarded, the specific type of
prize or prizes which may be won shall be disclosed to the player
before the game begins;
(iii) The patron shall maintain his/her PIN Card for an indefinite
period of time. Patrons shall not be required to redeem the balance in
their account immediately or at the end of their gaming trip which
creates a liability to the patron from the gaming operation.
(8) Payoff odds standards.
(i) Payoff odds shall be determined by the Gaming Operation and
approved by the tribe or tribal gaming commission;
(ii) The payoff odds for all winning combinations shall be
conspicuously posted on a sign or displayed on a designated screen of
the Player Terminal;
(iii) The Gaming Operation shall submit the pay rate, pay tables,
seed amounts (if applicable), machine entry procedures and
authorizations, the attendant jackpot payout key control procedures,
and machine entry key control procedures to the tribe or the tribe's
independent regulatory body.
(9) The Gaming operation shall determine the minimum and maximum
wagers. The amounts of such wagers shall be conspicuously posted on a
sign or displayed on a designated screen of the Player Terminal.
(10) Jackpot payout procedures.
(i) When any progressive jackpot or a payout of $1,200.00 or more
is won, the Player terminal shall lock-up preventing further play.
(ii) The player terminal shall indicate by light and sound that a
jackpot has been won.
(iii) An attendant shall go to the player terminal and obtain
suitable identification such as a driver's license.
(iv) An attendant shall complete the Machine Payout Form for all
winning jackpots of $1,200.00 or more. The Form shall include, at a
minimum, the following information:
(A) game number and type;
(B) bank location;
(C) account number of the player
(D) name of the player;
(E) terminal number the jackpot was won at;
(F) date, time, and shift;
(G) amount won;
(H) amount wagered;
(I) signature and badge number of the attendant verifying
surveillance was notified for jackpot winning of $5,000 or greater for
a single game; and
(J) signature and badge number of attendant attesting to
reactivation of the terminal.
(v) The attendant shall reactivate the machine upon completion of
the appropriate paperwork.
(11) Game rules for each game that is offered for use to patrons on
the Gaming Machines shall be described in a brochure available to
patrons.
(12) The patron shall present their PIN Card to a cashier to
withdraw their Credits. The cashier shall perform the following:
(i) Slide the PIN Card through the card scanner;
(ii) Request the patron to enter their PIN;
(iii) The cashier shall ascertain the amount the patron wishes to
withdraw and enter the amount into the computer;
(iv) A multi-part Withdrawal Slip shall be generated by the point
of sale receipt printer. The cashier shall direct the patron to sign
the original and one copy of the Withdrawal Slip;
(v) The cashier shall verify that the PIN Card and the patron match
by:
(A) Comparing the patron to image on the computer screen of
patron's picture ID or;
(B) Comparing the patron signature on the Withdrawal Slip to
signature on the computer screen.
(vi) The cashier shall verify the patron's balance before
completing the transaction. The cashier shall pay the patron the
appropriate amount, issue the patron the original Withdrawal Slip and
return the PIN Card to the patron;
(vii) The first copy of the Withdrawal Slip shall be placed in the
cash drawer. All account transactions shall be accurately tracked by
the account server computer system. The first copy of the Withdrawal
Slip shall be forwarded to the Accounting Department at the end of the
gaming day.
(viii) In the event the imaging function is temporarily disabled,
patrons shall be required to provide positive ID for cash withdrawal
transactions at the cashier stations.
Sec. 542.13 What are the minimum internal control standards for cage &
credit?
(a) The following standards shall apply if the gaming operation
authorizes and extends credit to patrons:
(1) At least the following information shall be recorded for
patrons who have credit limits or are issued credit (excluding personal
checks, payroll checks, cashier's checks and traveler's checks):
(i) Patron's name, current address, and signature;
(ii) Identification verifications;
(iii) Authorized credit limit;
(iv) Documentation of authorization by an individual designated by
management to approve credit limits; and
(v) Credit issuances and payments.
(2) Prior to extending credit, the patron's gaming operation credit
record and/or other documentation shall be examined to determine the
following:
(i) Properly authorized credit limit;
(ii) Whether remaining credit is sufficient to cover the credit
issuance; and
(iii) Identity of the patron (except for known patrons).
(3) Credit extensions over a specified dollar amount shall be
approved by personnel designated by management.
(4) Proper approval of credit extensions over 10 percent of the
previously established limit shall be documented.
(5) The job functions of credit approval (i.e., establishing the
patron's credit worthiness) and credit extension (i.e., monitoring
patron's credit
[[Page 42966]]
availability) shall be segregated for credit extensions to a single
patron of $10,000 or more per day (applies whether the credit is
extended in the pit or the cage).
(6) If cage credit is extended to a single patron in an amount
exceeding $2,500, applicable gaming personnel shall be notified on a
timely basis of the patrons playing on cage credit, the applicable
amount of credit issued, and the available balance.
(7) Cage marker forms shall be at least two parts (the original
marker and a payment slip), prenumbered by the printer or concurrently
numbered by the computerized system, and utilized in numerical
sequence.
(8) The completed original cage marker shall contain at least the
following information: marker number, player's name and signature, and
amount of credit issued (both alpha and numeric).
(9) The completed payment slip shall include the same marker number
as the original, date and time of payment, amount of payment, nature of
settlement (cash, chips, etc.), and signature of cashier receiving the
payment.
(10) If personal checks, cashier's checks, or payroll checks are
cashed the Tribe shall implement appropriate controls for purpose of
security and integrity. The Tribe shall establish and comply with
procedures for collecting and recording checks returned to the gaming
operation after deposit which include re-deposit procedures. These
procedures shall provide for notification of cage/credit departments
and custodianship of returned checks.
(11) Counter checks shall comply with the requirements of paragraph
(a) (10) of this section.
(12) When counter checks are issued, the following shall be
included on the check:
(i) The patron's name and signature;
(ii) The dollar amount of the counter check (both alpha and
numeric);
(iii) Date of issuance; and
(iv) Signature or initials of the individual approving the counter
check transaction.
(13) When travelers checks or other guaranteed drafts such as
cashier's checks are presented, the cashier shall comply with the
examination and documentation procedures as required by the Tribe.
(b) Payment standards.
(1) All payments received on outstanding credit instruments shall
be permanently recorded in the gaming operation's records.
(2) When partial payments are made on credit instruments, they
shall be evidenced by a multi-part receipt (or another equivalent
document) which contains:
(i) The same preprinted number on all copies;
(ii) Patron's name;
(iii) Date of payment;
(iv) Dollar amount of payment (or remaining balance if a new marker
is issued), and nature of settlement (cash, chips, etc.);
(v) Signature of employee receiving payment; and
(vi) Number of credit instrument on which partial payment is being
made.
(3) Unless account balances are routinely confirmed on a random
basis by the accounting or internal audit departments, or statements
are mailed by someone independent of the credit transactions and
collections thereon, and the department receiving payments cannot
access cash, then the following standards shall apply:
(i) The routing procedures for payments by mail require that they
are received by a department independent of credit instrument custody
and collection;
(ii) Such receipts by mail shall be documented on a listing
indicating the customer's name, amount of payment, nature of payment
(if other than a check), and date payment received;
(iii) The total amount of the listing of mail receipts shall be
reconciled with the total mail receipts recorded on the appropriate
accountability by the accounting department on a random basis (for at
least three days per month).
(c) Access to credit documentation shall be restricted as follows:
(1) The credit information shall be restricted to those positions
which require access and are so authorized by management;
(2) Outstanding credit instruments shall be restricted to persons
authorized by management; and
(3) Written-off credit instruments shall be further restricted to
individuals specified by management;
(d) Documentation shall be maintained as follows:
(1) All extensions of cage credit, pit credit transferred to the
cage and subsequent payments shall be documented on a credit instrument
control form.
(2) Records of all correspondence, transfers to and from outside
agencies, and other documents related to issued credit instruments
shall be maintained.
(e) Write-off and settlement standards.
(1) Written-off or settled credit instruments shall be authorized
in writing.
(2) Such authorizations shall be made by at least two management
officials, who are from departments independent of the credit
transaction.
(f) The use of collection agencies shall be governed by the
following standards:
(1) If outstanding credit instruments are transferred to collection
agencies, or other collection representatives, a copy of the credit
instrument and a receipt from the collection representative shall be
obtained and maintained until such time as the original credit
instrument is returned or payment is received.
(2) An individual independent of credit transactions and
collections shall periodically review the documents in paragraph (f)
(1) of this section.
(g) If a gaming operation permits a customer to deposit funds with
the gaming operation.
(1) The receipt or withdrawal of a customer deposit shall be
evidenced by at least a two-part document with one copy going to the
customer and one copy remaining in the cage file.
(2) The multi-part receipt shall contain the following information:
(i) Same receipt number on all copies;
(ii) Customer's name and signature;
(iii) Date of receipt and withdrawal;
(iv) Dollar amount of deposit/withdrawal; and
(v) Nature of deposit (cash, check, chips); however,
(vi) Provided all of the information in paragraph (g)(2) (i)
through (v) is available, the only required information for all copies
of the receipt is the receipt number.
(3) The gaming operation shall establish and comply with procedures
which:
(i) Maintain a detailed record by patron name and date of all funds
on deposit;
(ii) Maintain a current balance of all customer cash deposits which
are in the cage/vault inventory or accountability; and
(iii) Reconcile this current balance with the deposits and
withdrawals at least daily.
(4) The gaming operation shall describe the sequence of the
required signatures attesting to the accuracy of the information
contained on the customer deposit or withdrawal form ensuring that the
form is signed by the cashier.
(5) All customer deposits and withdrawal transactions at the cage
shall be recorded on a cage accountability form on a per-shift basis.
(6) Only cash, cash equivalents, chips and tokens shall be accepted
from customers for the purpose of a customer deposit.
(7) The Tribe shall establish and comply with procedures which
verify the patron's identity including photo identification.
(8) A file for patrons shall be prepared prior to acceptance of a
deposit.
[[Page 42967]]
(h) Cage and vault accountability standards. (1) All transactions
that flow through the cage shall be summarized on a cage accountability
form on a per shift basis.
(2) Increases and decreases to the cage inventory shall be
supported by documentation.
(3) The cage and vault (including coin rooms) inventories shall be
counted by the oncoming and outgoing cashiers. These employees shall
make individual counts for comparison of accuracy and maintenance of
individual accountability which shall be recorded at the end of each
shift during which activity took place. All discrepancies shall be
noted and investigated.
(4) All net changes in outstanding gaming operation accounts
receivables, including all returned checks, shall be summarized on a
cage accountability form or similar document on a per shift basis.
(5) The gaming operation cash-on hand shall include, but is not
limited to, the following components:
(i) Currency and coins;
(ii) House chips, including reserve chips;
(iii) Personal checks, cashier's checks and traveler's checks for
deposit;
(iv) Customer deposits;
(v) Chips on tables;
(vi) Hopper loads (coins put into machines when they are placed in
service); and
(vii) Fills and credits (these documents shall be treated as assets
and liabilities, respectively, of the cage during a business day. When
win or loss is recorded at the end of the business day, they are
removed from the accountability).
(6) The Tribe shall establish a minimum bankroll formula to ensure
the gaming operation maintains cash or cash equivalents (on hand and in
the bank, if readily accessible) in an amount sufficient to satisfy
obligations to the gaming operation's patrons as they are incurred.
(i) The Tribe shall establish and comply with procedures for the
receipt, inventory, storage, and destruction of gaming chips and
tokens.
(j) Any program for exchanges of coupons for chips and/or tokens or
other coupon program shall be approved by the Tribe prior to
implementation; if approved, the Tribe shall establish and comply with
procedures that account for and control of such programs.
(k) A gaming operation shall comply with the following accounting
standards:
(1) The cage accountability shall be reconciled to the general
ledger at least monthly.
(2) A trial balance of gaming operation accounts receivable,
including the name of the patron and current balance, shall be prepared
at least monthly for active, inactive, settled or written-off accounts.
The reconciliation and any follow-up performed shall be documented and
retained.
(3) The trial balance of gaming operation accounts receivable shall
be reconciled to the general ledger each month. The reconciliation and
any follow-up performed shall be documented and retained.
(4) A trial balance of the gaming operations inactive or written-
off accounts receivable, including the name of patron and balance,
shall be prepared at least quarterly:
(5) On a monthly basis an evaluation of the collection percentage
of credit issued to identify unusual trends shall be performed.
(6) All cage and credit accounting procedures and any follow-up
performed shall be documented.
(l) An individual independent of the cage, credit, and collection
functions shall perform all of the following at least three times per
year:
(1) Ascertain compliance with credit limits and other established
credit issuance procedures;
(2) Randomly reconcile outstanding balances of both active and
inactive accounts on the accounts receivable listing to individual
credit records and physical instruments;
(3) Examine credit records to determine that appropriate collection
efforts are being made and payments are being properly recorded; and
(4) For a minimum of five (5) days per month, partial payment
receipts shall be subsequently reconciled to the total payments
recorded by the cage for the day and shall be numerically accounted
for.
(m) Computer applications utilized, alternate documentation and/or
procedures which provide at least the level of control described by the
standards in this section will be acceptable.
Sec. 542.14 What are the minimum internal control standards for
internal audit?
(a) Each gaming operation shall employ qualified internal auditing
personnel.
(1) Tier C gaming operations shall maintain a separate internal
audit department (whose primary function is performing internal audit
work and who is independent with respect to the departments subject to
audit).
(2) Tier A and B gaming operations shall either maintain a separate
internal audit department or designate personnel who are independent
with respect to the departments/procedures being examined to perform
internal audit work.
(3) The internal audit personnel shall report directly to the
tribe, the tribal gaming commission, audit committee or other entity
designated by the tribe.
(b) Documentation (e.g., checklists, programs, reports, etc.) shall
be prepared to evidence all internal audit work performed as it relates
to these requirements. The internal audit department operates with
audit programs which, at a minimum, address the MICS. Additionally, the
department properly documents the work performed, the conclusions
reached, and resolution of all exceptions.
(c) All material exceptions resulting from internal audit work
shall be investigated and resolved, with the results of such being
documented and retained for five years.
(d) The internal audit department shall report to management and
the Tribe or its designated tribal governmental body all instances of
non-compliance that come to its attention during the course of testing
compliance with the standards in this part. Management shall be
required to respond to internal audit findings stating corrective
measures to be taken to avoid recurrence of the audit exception. Such
management responses shall be included in the internal audit report
which will be delivered to the Tribe or its designated tribal
governmental body.
(e) The internal audit department shall perform audits of all major
areas of the gaming operation.
(1) The following are reviewed at least once during every six-month
period:
(i) Table games, including but not limited to, fill and credit
procedures, pit credit play procedures, rim credit procedures, soft
drop/count procedures and the subsequent transfer of funds, surprise
testing of count room currency counters, location and control over
sensitive keys, the tracing of source documents to summarized
documentation and accounting records, and reconciliation to restricted
copies;
(ii) Gaming machines, including but not limited to, jackpot payout
and slot fill procedures, slot drop/count and currency acceptor drop/
count and subsequent transfer of funds, surprise testing of weigh scale
and weigh scale interface, surprise testing of count room currency
counters, slot machine drop cabinet access, tracing of source documents
to summarized documentation and accounting records, reconciliation to
restricted copies, location and control over sensitive keys,
[[Page 42968]]
compliance with EPROM duplication procedures, and compliance with MICS
procedures for gaming machines that accept coins or currency and issue
cash-out tickets or gaming machines that do not accept currency or coin
and do not return currency or coin.
(2) The following are reviewed at least annually:
(i) Keno, including but not limited to, game write and payout
procedures, sensitive key location and control, and a review of keno
auditing procedures;
(ii) Card games, including but not limited to, card games
operation, monetary exchange procedures, shill transactions, and count
procedures;
(iii) Bingo, including but not limited to, bingo card control,
payout procedures, and cash reconciliation process;
(iv) Complimentary service or item, including but not limited to,
procedures where by complimentary service items are issued and
authorized;
(v) Cage and credit procedures including all cage, credit and
collection procedures, and the reconciliation of trial balances to
physical instruments on a sample basis. Cage accountability shall be
reconciled to the general ledger;
(vi) Pari-mutuel wagering, including write and payout procedures,
and pari-mutuel auditing procedures;
(vii) Electronic data processing functions, including review for
compliance with EDP standards.
(3) In addition to the observation and examinations performed under
paragraph (e) of this section, follow-up observations and examinations
shall be performed to verify that corrective action has been taken
regarding all instances of noncompliance cited by internal audit, the
independent accountant, and/or the Commission. The verification shall
be performed within six months following the date of notification.
(4) Whenever possible, internal audit observations shall be
performed on an unannounced basis (i.e., without the employees being
forewarned that their activities will be observed). Additionally, if
the independent accountant also performs the internal audit function,
the accountant shall perform separate observations of the table games/
gaming machine drops and counts to satisfy the internal audit
observation requirements and independent accountant tests of controls
as required by the AICPA Guide.
(f) Reports documenting audits performed shall be maintained and
made available to the Commission upon request. The audit reports shall
include the following information:
(1) Audit objectives;
(2) Audit procedures and scope;
(3) Findings and conclusions;
(4) Recommendations, if applicable; and
(5) Management's response.
(g) The internal audit department shall determine compliance with
procedures that verify receipt of goods and services of the gaming
operation resulting from purchasing contracts or commitments for
amounts in excess of $25,000 per annum.
Sec. 542.15 What are the minimum internal control standards for
surveillance?
(a) The surveillance system shall be maintained and operated from a
surveillance room and shall provide surveillance over gaming areas.
Tier A operations shall not be required to have a surveillance room if
the gaming operation maintains and operates an unmanned surveillance
system in a secured location whereby the areas under surveillance are
continually taped.
(b) The entrance to the surveillance room or secured location shall
be located so that it is not readily accessible by either gaming
operation employees who work primarily on the casino floor, or the
general public.
(c) Access to a surveillance room shall be limited to surveillance
personnel, key employees and other persons authorized in accordance
with the gaming operation policy. Authorized surveillance personnel
shall maintain sign-in logs of authorized persons entering the
surveillance room.
(d) Surveillance room equipment shall have total override
capability over all other satellite surveillance equipment located
outside the surveillance room.
(e) For all Tier B and C gaming operations, in the event of power
loss to the surveillance system, an auxiliary or backup power source
shall be available and capable of providing immediate restoration of
power to all elements of the surveillance system that enable
surveillance personnel to observe the table games remaining open for
play and all areas covered by dedicated cameras.
(f) The surveillance system shall include date and time generators
which possess the capability to display the date and time of recorded
events on video tape recordings. The displayed date and time shall not
significantly obstruct the recorded view.
(g) The surveillance room shall be staffed for all shifts and
activities by personnel trained in the use of the equipment, knowledge
of the games and house rules.
(h) Each video camera required by the standards in this section
shall be installed in a manner that will prevent it from being readily
obstructed, tampered with or disabled by patrons or employees.
(i) Each video camera required by the standards in this section
shall possess the capability of having its picture displayed on a video
monitor and recorded. The surveillance system shall include sufficient
numbers of monitors and recorders to simultaneously display and record
multiple gaming and count room activities, and record the views of all
dedicated cameras and motion activated dedicated cameras.
(j) Reasonable effort shall be made to repair each malfunction of
surveillance system equipment required by the standards in this section
within seventy-two (72) hours after the malfunction is discovered.
(k) In the event of a dedicated camera malfunction, the gaming
operation shall immediately provide alternative camera coverage or
other security measures, such as additional supervisory or security
personnel, to protect the subject activity.
(l) Each gaming machine offering a payout of more than $250,000
shall be monitored by dedicated camera(s) to provide coverage of:
(1) All patrons and employees at the gaming machine, and
(2) The face of the gaming machine, with sufficient clarity to
identify the payout line(s) of the gaming machine; however
(m) Notwithstanding paragraph (l) of this section, if the gaming
machine is a multi-game machine, the gaming operation with the approval
of the Tribe may develop and implement alternative procedures to verify
payouts.
(n) The surveillance system of all Tier B and C gaming operations
shall monitor and record a general overview of the activities occurring
in each gaming machine change booth.
(o) The surveillance system of gaming operations operating four (4)
or more table games shall provide at a minimum one pan-tilt-zoom camera
per two tables and surveillance must be capable of taping:
(1) With sufficient clarity to identify patrons and dealers; and
(2) With sufficient coverage and clarity to simultaneously view the
table bank and determine the configuration of wagers, card values and
game outcome.
(p) The surveillance system of gaming operations operating three
(3) or less table games shall:
(1) Comply with the requirements of paragraph (n) of this section;
or
(2) Have one (1) overhead camera at each table.
[[Page 42969]]
(q) All craps tables shall have two stationary cross view cameras
covering both ends of the table. All roulette areas shall have one
overhead stationary camera covering the roulette wheel and shall also
have one stationary overview of the play of the table. All big wheel
games shall have one stationary camera viewing the wheel.
(r) Each progressive table game with a potential progressive
jackpot of $25,000 or more shall be recorded and monitored by dedicated
cameras that provide coverage of:
(1) The table surface, sufficient that the card values and card
suits can be clearly identified; and
(2) An overall view of the entire table with sufficient clarity to
identify patrons and dealer; and
(3) A view of the progressive meter jackpot amount. If several
tables are linked to the same progressive jackpot meter, only one meter
need be recorded.
(s) The surveillance system shall possess the capability to monitor
the keno and bingo ball drawing device or random number generator,
which shall be recorded during the course of the draw by a dedicated
camera or automatically activated camera, with sufficient clarity to
identify the balls drawn or numbers selected.
(t) The surveillance system shall monitor and record general
activities in each keno game area, with sufficient clarity to identify
the employees performing the different functions.
(u) The surveillance system in the bingo game area shall monitor
and record the game board and the activities of the employees
responsible for drawing, calling and entering the balls drawn or
numbers selected.
(v) The surveillance system shall monitor and record general
activities in each race book, sports pool and pari-mutuel book ticket
writer and cashier area, with sufficient clarity to identify the
employees performing the different functions.
(w) The surveillance system shall monitor and record a general
overview of activities occurring in each cage and vault area, with
sufficient clarity to identify employees within the cage and patrons
and employees at the counter areas. Each cashier station shall be
equipped with one stationary overhead camera covering the transaction
area. The surveillance system shall be used as an overview for cash
transactions. This overview should include the customer, the employee
and the surrounding area. This standard is optional for Tier A gaming
operations.
(x) The cage or vault area in which fills and credits are
transacted shall be monitored and recorded by a dedicated camera or
motion activated dedicated camera that provides coverage with
sufficient clarity to identify the chip values and the amounts on the
fill and credit slips. Controls provided by a computerized fill and
credit system may be deemed an adequate alternative to viewing the fill
and credit slips.
(y) The surveillance system shall monitor and record all areas
where currency or coin may be stored or counted, including the soft and
hard count rooms, all doors to the soft and hard count rooms, all
scales and wrapping machines and all areas where uncounted currency and
coin may be stored during the drop and count process. Tier C gaming
operations shall also maintain audio capability of the soft count room.
The surveillance system shall provide for:
(1) Coverage of scales shall be sufficiently clear to view any
attempted manipulation of the recorded data.
(2) Monitoring and recording of the table games drop box storage
rack or area by either a dedicated camera or a motion-detector
activated camera.
(3) Monitoring and recording of all areas where coin may be stored
or counted, including the hard count room, all doors to the hard count
room, all scales and wrapping machines and all areas where uncounted
coin may be stored during the drop and count process.
(4) Monitoring and recording of soft count room, including all
doors to the room, all drop boxes, safes, and counting surfaces, and
all count team personnel. The counting surface area must be
continuously monitored by a dedicated camera during the soft count.
(5) Monitoring and recording of all areas where currency is sorted,
stacked, counted, verified or stored during the soft count process.
(z) All video recordings of coverage provided by the dedicated
cameras or motion-activated dedicated cameras required by the standards
in this section shall be retained for a minimum of seven days.
Recordings involving suspected or confirmed gaming crimes, unlawful
activity, or detentions and questioning by security personnel, must be
retained for a minimum of thirty (30) days. Recordings of all linked
systems (bingo, ball draws, gaming machines, etc.) shall be maintained
for at least 30 days.
(aa) Video recordings shall be provided to the Commission upon
request.
(bb) A video library log shall be maintained to demonstrate the
storage, identification and retention standards required in this
section have been complied with.
(cc) Each tribe shall maintain a log that documents each
malfunction and repair of the surveillance system (as defined in this
section). The log shall state the time, date and nature of each
malfunction, the efforts expended to repair the malfunction and the
date of each effort, the reasons for any delays in repairing the
malfunction, the date the malfunction is repaired and where applicable,
any alternative security measures that were taken.
(dd) Each gaming operation shall maintain a surveillance log of all
surveillance activities in the surveillance room. The log shall be
maintained by surveillance room personnel and shall be stored securely
within the surveillance department. At a minimum, the following
information shall be recorded in a surveillance log:
(1) Date and time each surveillance commenced;
(2) The name and license credential number of each person who
initiates, performs, or supervises the surveillance;
(3) Reason for surveillance, including the name, if known, alias or
description of each individual being monitored, and a brief description
of the activity in which the person being monitored is engaging;
(4) The times at which each video or audio tape recording is
commenced and terminated;
(5) The time at which each suspected criminal offense is observed,
along with a notation of the reading on the meter, counter or device
specified in paragraph (f) of this section that identifies the point on
the video tape at which such offense was recorded;
(6) Time of termination of surveillance;
(7) Summary of the results of the surveillance.
Sec. 542.16 What are the minimum internal control standards for
electronic data processing?
(a) General controls. (1) Management shall take an active role in
making sure physical and logical security measures are implemented,
maintained and adhered to by personnel to prevent unauthorized access
which could cause errors or compromise data or processing integrity.
(i) Management shall ensure that all vendor agreements/contracts
will contain language that requires the vendor to adhere to the tribal
and/or gaming operations minimum internal control standards.
(ii) Physical security measures shall exist over computer, computer
terminals and storage media to prevent irregularities and loss of
integrity of data and processing.
[[Page 42970]]
(iii) Access to systems software and application programs shall be
limited to authorized personnel.
(iv) Access to computer data shall be limited to authorized
personnel.
(v) Access to computer communications facilities or the computer
system or access to information transmissions shall be limited to
authorized personnel.
(vi) Standards in this paragraph (a)(1) shall be addressed in the
system of internal controls for each applicable department within the
gaming operation.
(2) The main computers (i.e., hardware, software and data files)
for each gaming application (e.g., keno, race and sports, gaming
machines, etc.) shall be in a secured area with access restricted to
authorized persons, including vendors.
(3) Access to computer operations shall be restricted to authorized
personnel to reduce the risk of loss of integrity of data or
processing.
(4) Incompatible duties shall be adequately segregated and
monitored to prevent error in general EDP/MIS procedures to go
undetected or fraud to be concealed.
(5) Gaming and food/beverage personnel shall be precluded from
having unrestricted access to the secured computer areas.
(6) The computer systems, including application software, shall be
secured through the use of passwords or other approved means.
Management personnel or persons independent of the department being
controlled shall assign and control access to system functions.
(7) Passwords shall be controlled as follows unless otherwise
addressed in the standards in this section.
(i) Each user shall have their own individual password; and
(ii) Passwords shall be changed at least quarterly with changes
documented.
(8) Adequate backup and recovery procedures shall be in place, and
if applicable, include:
(i) Daily backup of data files;
(ii) Backup of all programs;
(iii) Secured off-site storage of all backup data files and
programs, or other adequate protection; and
(iv) Recovery procedures which are tested at least annually with
documentation of results.
(9) Adequate system documentation shall be maintained, including
descriptions of hardware and software, operator manuals, etc.
(b) If a separate EDP department is maintained or if there are in-
house developed systems, the following standards shall apply:
(1) The EDP department shall be independent of the gaming areas
(e.g., cage, pit, count rooms, etc.). EDP/MIS procedures and controls
should be defined and responsibilities communicated.
(2) EDP department personnel shall be precluded from unauthorized
access to:
(i) Computers and terminals located in gaming areas;
(ii) Source documents; and
(iii) Live data files (not test data).
(3) EDP/MIS personnel shall be:
(i) Restricted from having access to cash or other liquid assets;
and
(ii) From initiating general or subsidiary ledger entries.
(4) Program changes for in-house developed systems should be
documented as follows:
(i) Requests for new programs or program changes shall be reviewed
by the EDP supervisor. Approvals to begin work on the program shall be
documented;
(ii) A written plan of implementation for new and modified programs
shall be maintained and include, at a minimum, the date the program is
to be placed into service, the nature of the change, a description of
procedures required in order to bring the new or modified program into
service (conversion or input of data, installation procedures, etc.),
and an indication of who is to perform all such procedures;
(iii) Testing of new and modified programs shall be performed and
documented prior to implementation;
(iv) A record of the final program or program changes, including
evidence of user acceptance, date in service, programmer, and reason
for changes, shall be documented and maintained.
(5) Computer security logs, if generated by the system, shall be
reviewed by EDP supervisory personnel for evidence of:
(i) Multiple attempts to log-on, or alternatively, the system shall
deny user access after three attempts to log-on;
(ii) Unauthorized changes to live data files; and
(iii) Any other unusual transactions.
(c) If remote dial-up to any associated equipment is allowed for
software support, the gaming operation shall maintain an access log
which includes:
(1) Name of employee authorizing modem access;
(2) Name of authorized programmer or manufacturer representative;
(3) Reason for modem access,
(4) Description of work performed, and
(5) Date, time, and duration of access.
(d) Documents may be scanned or directly stored to WORM (``Write
Once Read Many'') optical disk with the following conditions:
(1) The optical disk shall contain the exact duplicate of the
original document.
(2) All documents stored on optical disk shall be maintained with a
detailed index containing the gaming operation department and date.
This index shall be available upon request by the Commission.
(3) Upon request by Board agents, hardware (terminal, printer,
etc.) shall be provided in order to perform auditing procedures.
(4) Controls shall exist to ensure the accurate reproduction of
records, up to and including the printing of stored documents used for
auditing purposes.
(5) If source documents and summary reports are stored on re-
writeable optical disks, the disks may not be relied upon for the
performance of any audit procedures, and the original documents and
summary reports shall be retained.
Sec. 542.17 What are the minimum internal control standards for
complimentary services or items?
(a) Each gaming operation shall establish and comply with
procedures for the authorization and issuance of complimentary services
and items, including cash and noncash gifts. Such procedures shall
include, but shall not be limited to, the procedures by which the
gaming operation delegates to its employees the authority to approve
the issuance of complimentary services and items and the procedures by
which conditions or limits, if any, which may apply to such authority
are established and modified, including limits based on relationships
between the authorizer and recipient, and shall further include
effective provisions for audit purposes.
(b) At least weekly, accounting, MIS or alternative personnel that
cannot grant or receive complimentary privileges shall prepare reports
that include the following information:
(1) Name of patron who received the complimentary service or item
if the complimentary service or item exceeds $25.00;
(2) Name(s) of employee(s) who issued and/or authorized the
complimentary service or item;
(3) The actual cash value of the complimentary service or item;
(4) The type of complimentary service or item (i.e., food,
beverage, etc.); and
(5) Date the complimentary service or item was issued.
(c) The internal audit or accounting departments shall review the
reports required in paragraph (b) of this section at least weekly.
These reports shall be made available to the tribe, the tribe's
independent regulatory body, and the Commission upon request.
[[Page 42971]]
Sec. 542.18 Who may apply for a variance and how do I apply for one?
(a) For this section only, a variance means an internal control
standard that differs from and establishes a lesser degree of control
than an internal control standard in this part.
(b) A Tribe may apply for a variance in its tribal MICS for Tier A
operations if the Tribe has determined that:
(1) The gaming operation is unable to comply substantially with an
internal control standard in this part; and
(2) The gaming operation develops a variance that will achieve
adequate control for the standard which it seeks to replace.
(c) A Tribe seeking a variance shall submit to the Commission a
detailed report which shall include the following information:
(1) An explanation of why the gaming operation is unable to comply
substantially with the standard;
(2) A description of the proposed variance;
(3) An explanation of how the proposed variance achieves adequate
control; and
(4) Evidence that the Tribe or its independent regulatory body has
approved the variance.
(d) A Tier A gaming operation may apply for a variance if:
(1) The Tribe or its independent regulatory body has approved the
variance; and
(2) It complies with paragraphs (b) and (c) of this section.
(e) The Commission may grant the request for a variance upon its
sole discretion. Variance will not be granted routinely. The gaming
operation shall comply with standards at least as stringent as those
set forth in this part until such time as the Commission approves a
request for a variance.
Sec. 542.19 Does this part apply to charitable bingo operations?
(a) This part shall not apply to charitable bingo operations
provided that:
(1) All proceeds are for the benefit of a charitable organization;
(2) The Tribe permits the charitable organization to be exempt from
this part;
(3) The charitable bingo operation is operated wholly by the
charitable organization's employees or volunteers; and
(4) The annual gross gaming revenue of the charitable organization
does not exceed $50,000; and
(5) The Tribe establishes and the charitable bingo operation
complies with minimum standards which shall protect the integrity of
the game and safeguard the monies used in connection with the game.
(b) Nothing in this section shall exempt bingo operations conducted
by independent operators for the benefit of a charitable organization.
[FR Doc. 98-21234 Filed 8-7-98; 8:45 am]
BILLING CODE 7565-01-P
