[ 58 PA. CODE CHS. 461a, 463a, 465a AND 467a ]
Slot Machine Testing and Control; Possession of Slot Machines; Accounting and Internal Controls; and Commencement of Slot Operations
[38 Pa.B. 3507]
[Saturday, June 28, 2008]
The Pennsylvania Gaming Control Board (Board), under its general authority in 4 Pa.C.S. § 1202(b)(30) (relating to general and specific powers) and the specific authority in 4 Pa.C.S. §§ 1207 and 1322 (relating to regulatory authority of the Board; and slot machine accounting controls and audits), proposes to amend Chapters 461a, 463a, 465a and 467a to read as set forth in Annex A.
Purpose of the Proposed Rulemaking
The proposed rulemaking adds new requirements to improve the Board's oversight of slot machine licensees to insure compliance with the Pennsylvania Race Horse Development and Gaming Act; clarifies various provisions in Chapters 461a and 465a (relating to slot machine testing and control; and accounting and internal controls); and revises existing requirements to provide slot machine licensees with some additional organizational and operating flexibility.
Explanation of Amendments to Chapters 461a, 463a, 465a and 467a
In Chapter 461a, definitions of the terms ''RAM'' and ''RAM clear'' have been added to § 461a.1 (relating to definitions). These terms are used in the new § 461a.27 (relating to RAM clear) which codifies the procedures that are currently being used by slot machine licensees when it is necessary to do a RAM clear on a malfunctioning slot machine.
In § 463a.2 (relating to transportation of slot machines into, within and out of this Commonwealth), the Bureau of Investigations and Enforcement (BIE) and the Office of Gaming Operations have been added to the Gaming Lab as recipients of notices concerning the movement of slot machines into, within or out of this Commonwealth. Providing this notice to BIE and the Office of Gaming Operations will assist them in carrying out their responsibilities related to the movement of slot machines.
Two new provisions have been added to § 465a.2 (relating to internal control systems and audit protocols). A new paragraph (7) has been added which requires slot machine licensees to include the procedures that the slot machine licensees will use to conduct promotions in the slot machine licensees' internal controls. This will allow the Board to determine that sufficient patron protections are included in each promotion without requiring slot machine licensee's to obtain separate approval for each promotion they desire to run. Additionally, a new paragraph (8) is being added which will require slot machine licensees to include the procedures they will use to maintain compliance with 4 Pa.C.S. § 1513 (relating to political influence) in their internal controls. This will allow the Board to ensure that all slot machine licensees have an effective program to prevent violations of 4 Pa.C.S. § 1513.
In § 465a.4 (relating to standard financial and statistical reports), the Board is adding a new reporting requirement. Slot machine licensees will be required to submit quarterly reports reconciling the tax amount invoiced by the Department of Revenue and the tax accrual determined by the slot machine licensee's revenue/income audit process. This report will be used by the Board to help evaluate the effectiveness and accuracy of the slot machine licensees' accounting operations.
In § 465a.8 (relating to licensed facility), the Board is proposing two changes. First, a new paragraph (7) is being added to subsection (d) requiring slot machine licensees to provide an area for the Central Control Computer System which must be equipped with an uninterruptible power supply. This requirement reflects what has been done at existing licensed facilities. Second, a new paragraph (8) is also being added to subsection (d) requiring slot machine licensees to provide signs for the Board office, the size, location and design of which must be approved by the Office of Gaming Operations. This will make it easier for patrons at a licensed facility to locate the Board's office.
In § 465a.9 (relating to surveillance system; surveillance department control; surveillance department restrictions), the references to ''cashiering location'' in subsection (e) have been replaced with ''cashiers' cage'' to make it clear that this requirement for surveillance only applies to the cashiers' cages and not to cashier locations in the retail or food and beverage areas.
In § 465a.11 (relating to slot machine licensee's organization), language has been added to allow a slot machine licensee to have an assistant chief executive officer who acts as the chief executive officer in the chief executive officer's absence and to whom any of the six required department supervisors may directly report. This will give slot machine licensees some additional organizational flexibility and reflects the organizational structure of one of the existing slot machine licensees.
A new § 465a.33 (relating to access to areas containing Central Control Computer System equipment) has been proposed which specifies minimum requirements that must be included in a slot machine licensee's internal controls pertaining to access to areas containing Central Control Computer System equipment. These minimum requirements will insure that access to the Central Control Computer System equipment is limited to authorized personnel only.
In § 467a.1 (relating to gaming floor plan), the process for approving requests for changes to the gaming floor are being clarified and streamlined. Requests for changes to the square footage of, the number of slot machines on, or the relocation of more than 2% of the existing slot machines on the gaming floor will be required to be filed as a petition under § 493a.4 (relating to petitions generally) and approved by the Board. Other change requests can be submitted in writing to the Office of Gaming Operations and will be approved by the Executive Director. This should result in quicker approval of changes that do not involve changes in the square footage of, location of slot machines on, or the number of slot machines on the gaming floor.
Slot machine licensees will be required to develop and file new internal controls and comply with the other provisions of this proposed rulemaking. Additionally, manufacturers, manufacturer designees and suppliers will have to comply with the new notice requirement in § 463a.2.
Because most of the revisions in this rulemaking reflect current Department of Revenue and Board practice, there will be no significant costs or savings to the Department, the Board or other State agencies as a result of these revisions.
This proposed rulemaking will have no fiscal impact on political subdivisions of this Commonwealth.
Slot machine licensees will experience some costs to draft new internal controls, file the new quarterly reports required by § 465a.4(a) and obtain signs for the Board's offices at the licensed facilities. The Board estimates that these costs should not exceed $2,000 per slot machine licensee.
This proposed rulemaking will have no fiscal impact on the general public.
This proposed rulemaking will require slot machine licensees to draft and submit amendments to their internal controls, prepare and submit quarterly revenue reconciliation reports and provide notice to BIE and the Office of Gaming Operations, in addition to the Gaming Lab, when slot machines are to be moved.
The proposed rulemaking will become effective upon final-form publication in the Pennsylvania Bulletin.
Interested persons are invited to submit written comments, suggestions or objections regarding the proposed rulemaking, within 30 days after the date of publication in the Pennsylvania Bulletin to Paul Resch, Secretary, Pennsylvania Gaming Control Board, P. O. Box 69060, Harrisburg, PA 17106-9060, Attention: Public Comment on Regulation #125-88.
The contact person for questions about this proposed rulemaking is Richard Sandusky, Director of Regulatory Review at (717) 214-8111.
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on June 12, 2008, the Board submitted a copy of this proposed rulemaking and a copy of the Regulatory Analysis Form to the Independent Regulatory Review Commission (Commission) and to the Chairpersons of the House Gaming Oversight Committee and the Senate Community, Economic and Recreational Development Committee. A copy of this material is available to the public upon request.
Under section 5(g) of the act, the Commission may convey any comments, recommendations or objections to the proposed rulemaking within 30 days of the close of the public comment period. The comments, recommendations or objections must specify the regulatory review criteria which have not been met. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the rulemaking, by the Board, the General Assembly and the Governor of comments, recommendations or objections raised.
MARY DIGIACOMO COLINS,
Fiscal Note: 125-88. No fiscal impact; (8) recommends adoption.
TITLE 58. RECREATION
PART VII. GAMING CONTROL BOARD
Subpart E. SLOT MACHINES AND ASSOCIATED EQUIPMENT
CHAPTER 461a. SLOT MACHINE TESTING AND CONTROL
§ 461a.1. Definitions.
The following words and terms, when used in this subpart, have the following meanings, unless the context clearly indicates otherwise:
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RAM--Random access memory.
RAM clear--A process initiated by a service technician that results in the zeroing out of any meter information, configuration information or data stored in the slot machine's memory.
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§ 461a.27. RAM clear.
(a) When a slot machine licensee becomes aware of a nonresponsive slot machine and communication between the slot machine and the Central Control Computer System can not be reestablished, the slot machine licensee shall immediately notify the Department's operator of the Central Control Computer System and the casino enforcement agents at the licensed facility. The slot machine licensee may not do a RAM clear on the affected slot machine until a casino enforcement agent has recorded the information on the financial meters.
(b) For planned RAM clears, the slot machine licensee shall provide notice to the Department's operator of the Central Control Computer System and the casino enforcement agents at the licensed facility at least 48 prior to the scheduled RAM clear. A second notice shall be provided to the Department's operator of the Central Control Computer System and the casino enforcement agents at the licensed facility immediately prior to actually conducting the RAM clear.
CHAPTER 463a. POSSESSION OF SLOT MACHINES
§ 463a.2. Transportation of slot machines into, within and out of this Commonwealth.
In furtherance of section 1511 of the act (relating to the declaration of exemption from Federal laws prohibiting slot machines), prior to the transport or movement of a slot machine into this Commonwealth, from one person authorized to possess slot machines under § 463a.1 (relating to possession of slot machines generally) to another person authorized within this Commonwealth or transport or movement out of this Commonwealth, the persons causing the slot machine to be transported or moved shall notify the Bureau of Gaming Laboratory Operations, BIE and the Office of Gaming Operations in writing or in an electronic format approved by the Board. The notice shall be submitted no later than the day the slot machine is transported and include the following information:
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CHAPTER 465a. ACCOUNTING AND INTERNAL CONTROLS
§ 465a.2. Internal control systems and audit protocols.
(a) An applicant for, or holder of, a slot machine license shall submit to the Board and the Department a written description of its initial system of administrative and accounting procedures, including its internal control systems and audit protocols (collectively referred to as its ''internal controls'') at least 90 days before gaming operations are to commence. A written system of internal controls must include:
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(7) Procedures governing the conduct of all gaming related promotions to be offered by the slot machine licensee.
(8) Procedures to ensure compliance with section 1513 of the act (relating to political influence):
(i) Prevent political contributions.
(ii) Provide annual certifications that the slot machine licensee has conducted a good faith investigation that has not revealed any violations to the Board and to the Department of State's Bureau of Commissions, Elections and Legislation.
(9) Other items the Board may request in writing to be included in the internal controls.
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§ 465a.4. Standard financial and statistical reports.
(a) [A] Within 30 days of the close of each calendar quarter, slot machine [licensee] licensees shall file [the following monthly reports of financial and statistical data:
(1) A balance sheet.
(2) A statement of revenues and expenses.
(3) A cash flow statement.
(4) A net income statement.
(5) Daily gross terminal revenues and taxes.
(6) A comparison of gross terminal revenues to projected gross terminal revenues] a report which includes a detailed reconciliation of the amount invoiced by the Department to the tax accrual determined by the slot machine licensee's revenue/income audit process. The reconciliation shall be determined by the slot machine licensee on no less than a weekly basis and the report must provide the date and the amount of any differences found during the reconciliation process. The reports shall be filed with the Board's Office of Gaming Operations and Financial Investigative Division and the Department's Bureau of Fiscal Management.
(b) The Board may prescribe standard reporting forms and corresponding filing instructions to be used by a slot machine licensee in filing the [monthly] reports referenced in subsection (a).
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§ 465a.8. Licensed facility.
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(d) Slot machine licensees shall, in accordance with section 1207(13) of the act (relating to regulatory authority of board), provide for and maintain onsite facilities for use by the Board, the Department and the Pennsylvania State Police for the purpose of carrying out their respective responsibilities (collectively referred to as the ''onsite facilities''). The onsite facilities must be located in the same building as [, and be located proximate to,] the gaming floor, in locations approved by the Office of Gaming Operations and include suitable office space, equipment, partitions and supplies to meet the continuing needs of the Board, the Department and the Pennsylvania State Police at the facility including the following:
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(7) An area for the operation and storage of the Central Control Computer System equipment which must be equipped with an uninterruptible power supply.
(8) Signs indicating the location of the Board's office. The size, location and design of the signs must be approved by the Office of Gaming Operations.
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§ 465a.9. Surveillance system; surveillance department control; surveillance department restrictions.
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(e) A slot machine licensee's surveillance system must [be required to] continuously record, during the times and in the manner indicated in this subsection, transmissions from cameras used to observe the following locations, persons, activities or transactions:
(1) Each transaction conducted [at a cashiering location, whether or not that cashiering location services patrons] on the gaming floor or at a cashiers' cage. Coverage of the transaction must include, but not be limited to, recording transmissions from cameras used to observe the face of each [person] patron transacting business at [each cashiering location] a cashiers' cage from the direction of the cashier.
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§ 465a.11. Slot machine licensee's organization.
(a) Slot machine licensees' systems of internal controls must, in accordance with section 1322 of the act (relating to slot machine accounting controls and audits) and § 465a.2 (relating to internal control systems and audit protocols), include organization charts depicting segregation of functions and responsibilities and descriptions of the duties and responsibilities for each position shown on each organization chart. Slot machine licensees shall be permitted, except as otherwise provided in this section, to tailor organizational structures to meet the needs or policies of a particular management philosophy. A slot machine licensee's organization charts must provide for:
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(5) A chief executive officer. For the purposes of this section, a ''chief executive officer'' means the person located at the licensed facility who is ultimately responsible for the daily conduct of the slot machine licensee's gaming business regardless of the form of business association of the slot machine licensee or applicant or the particular title which that person or any other person holds. A slot machine licensee's organization chart may also include an assistant chief executive officer who is responsible for the daily conduct of the slot machine licensee's gaming business during the chief executive officer's absence. However, the assistant chief executive officer may not be the supervisor of one of the department's required by subsection (b). Each supervisor of a department required by subsection (b) shall report directly to the chief executive officer or assistant chief executive officer of the slot machine licensee regarding administrative matters and daily operations. The slot machine licensee's organization charts must designate which positions, in the absence of the chief executive officer and the assistant chief executive officer, shall be designated as having responsibility for the daily conduct of the slot machine licensee's gaming business.
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§ 465a.33. Access to areas containing Central Control Computer System equipment.
(a) A slot machine licensee shall develop and submit to the Board and the Department, as part of the submission required under § 465a.2 (relating to internal control systems and audit protocols), procedures for safeguarding and limiting access to the Central Control Computer System (CCCS) equipment housed within the licensed facility. At a minimum, these procedures must include the following requirements:
(1) The area containing CCCS equipment must:
(i) Be secured with a manual key lock system.
(ii) Have a door, that when opened, audibly signals the surveillance monitoring room.
(iii) Have adequate surveillance camera coverage to record all activity in the area.
(2) All keys which access the area containing CCCS equipment shall be maintained by the slot machine licensee's security department. Access to the keys may only be authorized by the director of security or the security shift manager with notification to the surveillance monitoring room and the casino enforcement agents at the licensed facility.
(3) The slot machine licensee shall maintain an access log for the area containing CCCS equipment. The log shall be maintained in a book with bound numbered pages that cannot be readily removed and placed in close proximity to the CCCS equipment. Casino enforcement agents at the licensed facility may review the log upon request. The log shall be stored and retained in accordance with § 465a.6 (relating to retention, storage and destruction of books, records and documents). The following information shall be recorded in a log:
(i) The date and time of each entry and exit.
(ii) The name and Board-issued credential number of each person who initiates, performs or supervises the entry.
(iii) The purpose of entry.
(4) The slot machine licensee's security department shall maintain a list of employees who are authorized to have access to the area containing CCCS equipment. The list must be approved by the Department and made available to the casino enforcement agents at the licensed facility.
(5) Emergency access may only be granted with a security escort and notification to the Department, the Bureau and the casino enforcement agents at the licensed facility.
CHAPTER 467a. COMMENCEMENT OF SLOT OPERATIONS
§ 467a.1. Gaming floor plan.
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(c) [A slot machine licensee may not change or revise the square footage of its gaming floor or the number, configuration or location of slot machines on the floor plan approved under subsection (b) without prior written approval of the Board] Requests for changes to the square footage of the gaming floor, the number of slot machines on the floor plan approved under subsection (b) or the relocation of 2% or more of the slot machines on the floor plan approved under subsection (b) require Board approval and must be submitted to the Board as a petition under § 493a.4 (relating to petitions generally). Requests for other changes to the gaming floor must be submitted in writing to the Office of Gaming Operations and approved by the Board's Executive Director.
[Pa.B. Doc. No. 08-1198. Filed for public inspection June 27, 2008, 9:00 a.m.]
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