98-21234. Minimum Internal Control Standards  

  • [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]
    
    
          
    
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    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
    
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    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
    
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    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.
    
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        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.
    
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        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.
    
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        (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
    
    
    

Document Information

Published:
08/11/1998
Department:
National Indian Gaming Commission
Entry Type:
Proposed Rule
Action:
Proposed rule.
Document Number:
98-21234
Dates:
Submit comments on or before September 10, 1998.
Pages:
42940-42971 (32 pages)
RINs:
3141-AA11: Minimum Internal Control Standards for Tribal Gaming Operations
RIN Links:
https://www.federalregister.gov/regulations/3141-AA11/minimum-internal-control-standards-for-tribal-gaming-operations
PDF File:
98-21234.pdf
CFR: (21)
25 CFR 542.12(g)
25 CFR 522.3
25 CFR 542.1
25 CFR 542.2
25 CFR 542.3
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