RULES AND REGULATIONS

Title 58—RECREATION

PENNSYLVANIA GAMING CONTROL BOARD

[58 PA. CODE CH. 401a, 461a,
465a, 467a, 521 AND 525]

Accounting and Internal Controls; Commencement of Slot and Table Game Operations

[42 Pa.B. 2585]
[Saturday, May 12, 2012]

 The Pennsylvania Gaming Control Board (Board), under the 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, 1322, 13A02(1)—(6) and 13A25, amends Chapters 401a, 461a, 465a and 467a and rescinds §§ 521.3, 521.11 and 525.1—525.20 to read as set forth in Annex A.

Purpose of the Final-Form Rulemaking

 Under 4 Pa.C.S. § 13A03 (relating to temporary table game regulations), the Board adopted temporary regulations in Chapters 521 and 525. With this final-form rulemaking, the Board is rescinding temporary § 521.3 by amending Chapter 465a (relating to accounting and internal controls), rescinding temporary § 521.11 by amending Chapter 467a (relating to commencement of slot and table game operations) and rescinding temporary §§ 525.1—525.20 by amending Chapter 465a.

 This final-form rulemaking amends the internal control provisions and the provisions on the commencement of gaming operations so the current requirements for slot operations will also be applicable to table game operations. This final-form rulemaking also provides some clarity, deletes some filings and updates the regulations to reflect the Board's experience to date.

Explanation of Amendments to Chapters 401a, 461a, 465a and 467a

 Throughout this final-form rulemaking, the term ''table games'' has been added so that the requirements that were applicable to slot machine operations are now applicable to table game operations within the same licensed facility. The terms ''cashiers' cage'' and ''slot cage'' have been changed since there is not a separate slot cage or cashiers' cage but one cage or a main cage for facilities with satellite cages. Additionally, ''person'' has been changed to ''individual'' in many sections since ''person'' is a statutorily defined term that includes both individuals and entities.

 In § 401a.3 (relating to definitions), the definition of ''complimentary'' has been amended to include points awarded to patrons who are members of a slot machine licensee's player rewards program or credits for promotional slot play.

 The term ''certificate holder'' was added to § 401a.3 and is used throughout the regulations to refer to those slot machine licensees that have been awarded a certificate to operate table games at the licensed facility.

 The definition of ''gaming employee'' has been amended. Although the individuals listed in subparagraph (i)(P) of the definition are directors or department heads and were previously required to be licensed as key employees, these individuals are currently permitted as gaming employees.

 In § 461a.1 (relating to definitions), the definition of ''cash equivalents'' has been updated to reflect statutory amendments to 4 Pa.C.S. Part II (relating to gaming). The term ''count team'' has been added to this section. The count team includes those individuals who count the contents of slot cash storage boxes and table game drop boxes while the drop team consists of those individuals who pick up the boxes from the gaming floor. Adding this definition does not imply that two separate teams are required since at most facilities the drop team and the count team are comprised of the same individuals.

 The term ''gaming day'' was amended by deleting the reference to the central control computer system (CCS) since the CCS does not calculate gross table game revenue (GTGR). The definition of ''gaming voucher'' has been amended allowing noncashable credits to be used only on slot machines.

 In § 461a.12(g) (relating to progressive slot machines), RAM clear was added to the list of processes that require testing by the Bureau of Gaming Laboratory Operations. This was added because a RAM clear zeroes out meters which are used to calculate gross terminal revenue. A process that impacts meters requires testing by the Bureau of Gaming Laboratory Operations. Other examples of modifications that require lab testing were added to subsection (g). One of the references to the progressive jackpot was deleted as unnecessary language in subsection (i) and the cross reference was changed from subsection (j) to the proper subsection (k).

 In § 465a.2 (relating to internal control systems and audit protocols), slot machine applicants were deleted as they do not submit internal controls. Internal controls are submitted only by licensees prior to the commencement of slot or table game operations. Subsection (a)(8) was amended for clarity. In subsection (b), ''competent person'' was changed to ''delegated individual'' because this responsibility should be performed by someone who is authorized to sign on behalf of the chief executive officer or chief financial officer. The remaining changes to this section were made for clarity.

 In § 465a.5 (relating to annual audit; other reports; suspicious activity and currency transaction reporting), the type of financial reports in subsections (c), (e) and (f) are no longer required to be filed as part of the slot machine licensee's audited financial statements. The reference to subsection (e) has therefore been deleted from subsection (d). The remaining subsections were renumbered.

 In subsection (c), the time period to file the audited financial statements was extended from 60 days to 90 days in conformity with statutory amendments to 4 Pa.C.S. Part II.

 In § 465a.6(c)(3) (relating to retention, storage and destruction of books, records and documents), the retention period for voided gaming vouchers was reduced from 6 months to 30 days. Voided gaming voucher information can be obtained through the facility's computer system so retention of claimed gaming vouchers for 6 months is unnecessary. In subsection (c)(4), fully automated electronic gaming tables were added since both slot and fully automated machines accept gaming vouchers.

 Section 465a.7(a) (relating to complimentary services or items) has been amended to require Executive Director approval of the internal controls regarding authorization and issuance of complimentary services and items. Informal reviews of these internal controls developed by slot machine licensees to date have found that these internal controls, in some cases, are not adequate. Therefore, slot machine licensees will be required to submit their internal controls regarding complimentary items to the Board for review in the same manner as other internal controls.

 Additionally, the general language in subsection (a) concerning the specific employees to whom these internal controls will apply has been deleted and replaced with a new, more detailed provision in subsection (b)(3), which requires the slot machine licensee to develop a matrix which shows which employees (by job title) are authorized to issue complimentary services or items including cash and noncash reimbursements, which comps those employees are allowed to issue and at what value. These changes make clear which employees are authorized to issue complimentaries and strengthen the effectiveness of oversight on the issuance of complimentaries.

 Finally, subsection (e) has been amended so the required report will be submitted to the Bureau of Casino Compliance rather than the Bureau of Investigations and Enforcement.

 Section 465a.8 (relating to licensed facility) has been amended so the Bureau of Casino Compliance, not the Bureau of Gaming Operations, is responsible for inspecting and approving various aspects of the licensed facility prior to the commencement of gaming operations including audible alarms, signage and the suitability of the casino compliance office.

 Section 465a.9(a) (relating to surveillance system; surveillance department control; surveillance department restrictions) requires the Bureau of Casino Compliance, instead of the Bureau of Investigations and Enforcement, to review surveillance coverage. Subsection (c) was amended for clarity and to add the requirements for table game surveillance coverage. On table games that are not fully automated, operators are required to have a specific number of cameras, as specified in subsection (c)(2), depending on the table game type. Fully automated electronic gaming tables are required to have the same camera coverage as slot machines. Adequate surveillance coverage is necessary to detect and record cheating and theft, to reconstruct patron play in the event of a dispute or irregularity and for the protection of assets during the drop and count process.

 In subsection (e), the slot machine licensee is now required to continuously record the distribution, inspection and retrieval of cards, dice and tiles to and from the gaming pits. This is to ensure the integrity of the equipment used for play.

 Subsection (j) was updated to reflect the changes made to subsection (e). Operators will be required to retain for 30 days the surveillance recordings regarding the following: transactions conducted at the main cage or satellite cage; the count process; armored car collection and delivery; operations conducted at ATMs, coupon redemption units and jackpot payout machines; and entrances and exits. Only one retention period was extended from 7 days to 30 days and that was the counting of assets conducted in the count room. Based on the Board's experience to date, a 7-day retention period is not adequate to determine if theft or mishandling of funds in the count room was an isolated incident by one individual or a repeated course of conduct by many individuals. Subsection (m) was amended for clarity.

 Amendments to § 465a.11 (relating to slot machine licensee's organization; jobs compendium) add additional surveillance requirements regarding the operation of table games; require that the director of finance be responsible for the issuance of credit; require a certificate holder to have a table games department or a gaming department which includes both slot machine and table game operations; and update the assets that the finance department is now responsible for.

 Subsections (g)—(m) are added to require a licensee to submit a jobs compendium which includes organizational charts of each department or division and detailed job descriptions for each position. This information will be reviewed by Board staff to ensure that there is a proper segregation of duties, assets are protected and to verify proper licensing, permitting or registration of employees. This section also sets forth the process to be used to amend the jobs compendium and requires that an updated jobs compendium be filed annually. The jobs compendium submission requirement is consistent with 4 Pa.C.S. § 13A25(c) (relating to table game accounting controls and audit protocols).

 Section 465a.12 (relating to access badges and temporary access credentials) has been updated to require operators to provide an access matrix containing all restricted areas and the employees who have access to those areas. This is necessary to ensure that only those employees who are authorized to be in certain areas of the licensed facility, such as the cage or storage areas, have access to those areas.

 The cage characteristics in § 465a.15 (relating to cage characteristics) and the accounting controls for the cage in § 465a.16 (relating to accounting controls for the cage) have been updated to reflect the additional types of assets that the cage is responsible for with the addition of table games. In § 465a.15(b), the supervisor of the cage is no longer required to be licensed as a key employee but is permitted as a gaming employee. This was updated to reflect the statutory amendments to 4 Pa.C.S. Part II.

 Section 465a.17 (relating to bill validators, slot cash storage boxes and table game drop boxes) has been updated to add table game drop boxes and key control requirements for those boxes. Since fully automated electronic gaming tables are equipped like a slot machine, the requirements for bill validators and key controls have been applied to fully automated electronic gaming tables in subsections (a)—(e). The requirements for table game drop boxes from a table game that is not a fully automated electronic gaming table have been added in subsections (f)—(j). These requirements are necessary to ensure the protection of the assets contained within those slot cash storage boxes and table game drop boxes.

 Section 465a.18 (relating to transportation of slot cash storage boxes and table game drop boxes to and from the gaming floor; storage) has been updated to add the requirements for the movement of table game drop boxes from the gaming floor. Table game drop boxes from fully automated electronic gaming tables may be collected at the same time as slot cash storage boxes. Table game drop boxes from live play tables are required to be collected daily, regardless of whether the table was open for play. Requiring the drop of an empty drop box on a table that was not open for play ensures that boxes are not missing and that all boxes containing funds were collected during a drop. Operators are required to file a schedule of which boxes are picked up daily, the route the drop team will take to and from the count room and which employees will have access to the keys to open the boxes. These are the requirements designed to protect the assets contained within the slot cash storage and table game drop boxes.

 Section 465a.19 (relating to acceptance of tips or gratuities from patrons) has been updated to reflect the statutory amendments to 4 Pa.C.S. § 13A02(6) (relating to regulatory authority). An operator is required to submit internal controls specifying its policy on tips and gratuities. The pooling of tips required under 4 Pa.C.S. Part II reduces the likelihood of diverting chips into an employee's tip box since all chips for banked dealers are required to be distributed pro rata among dealers. The Department of Revenue (Department) also has an interest in adequate tip procedures to ensure the proper reporting of income from employees, particularly dealers who derive a substantial portion of their pay through tips.

 In § 465a.20(b) (relating to personal check cashing), the provision prohibiting a licensee from cashing a check or multiple checks totaling $2,500 or more per day does not apply to checks written in conjunction with a credit transaction authorized under the credit provisions in Chapter 609a (relating to credit).

 Section 465a.22 (relating to cash equivalents) has been updated. When 4 Pa.C.S. Part II was amended, ''cash equivalent'' was defined to include chips or tokens as well as travelers checks, certified checks, money orders and personal checks. This section is applicable to checks and other types of cash equivalents but is not applicable to chips or tokens used for play at a gaming table. Subsection (a) was therefore added excluding gaming chips or plaques from the requirements on cash equivalents in this section.

 Section 465a.24 (relating to count room characteristics) was updated to reflect the additional types of drop boxes that the count room is responsible for with the addition of table games.

 In § 465a.25 (relating to counting and recording of slot cash storage boxes and table game drop boxes), the count process for the slot cash storage boxes and table game drop boxes has been updated. Although the amount of tax collected for the Commonwealth on slot revenue is based on the slot machine meters recorded by the Department's CCS, the revenue for table game play is based on the unrecorded funds in the table game drop boxes that are then counted and recorded by the count team. Additional safeguards are therefore necessary to ensure the accurate counting and recording of table game drop boxes.

 For clarity and to provide a logical flow of the count room process, the former provisions in § 465a.25 have been replaced. Operators are still required to submit internal controls, which were previously required in subsection (f), regarding the count process. Subsection (a) consolidates what must be in the internal controls. The workflow diagram in subsection (a)(1) is a new requirement which provides an overview of where cash, cash equivalents and equipment should be during every step of the counting process. Having the diagram makes it easier for casino compliance representatives and the surveillance department, which is required to record the count, to trace irregularities in the count process.

 The requirements in subsection (a)(2) regarding a description of all equipment and files used to conduct the count was moved from former subsection (g). Internal controls on the procedures the facility shall utilize to empty and count the contents of storage and drop boxes in subsection (a)(3) has been updated so the requirements for slot cash storage boxes are also applicable to table game drop boxes. Several of the provisions in subsection (a)(3) were moved from former subsections (b), (h) and (i).

 The required procedures in subsection (a)(4) and (5), regarding internal controls for scheduled breaks and the proper wearing of jumpsuits, are designed to protect the assets removed from slot cash storage boxes and table game drop boxes and to deter or minimize employee theft from the count room.

 Under subsection (b), operators shall file a schedule setting forth the times that the contents of the slot cash storage boxes and table game drop boxes will be counted. The Bureau of Casino Compliance is now required because the onsite casino compliance representatives observe the table game count which occurs immediately after the drop.

 Subsection (d) permits only the individuals necessary to conduct the count in the count room. Additionally, individuals participating in the count may not access areas that are unnecessary to the count process. Subsection (e) requires the presence of a casino compliance representative in the count room prior to the commencement of the count of table game drop boxes from table games that are not fully automated electronic gaming tables. The casino compliance representative presence is not required for the counting of table game drop boxes from fully automated electronic gaming tables because, like slot machines, the CCS, not the count, determines the revenue.

 Subsection (f) requires employees and the casino compliance representative observing the count to sign an attendance sheet. Subsection (g) describes the jumpsuit and which individuals are required to wear the jumpsuit during the count process. This was an existing requirement moved from the current subsection (c).

 Subsection (h), regarding the carrying of bags into the count room and the proper procedure for clearing the hands of individuals involved in the count process, was moved from former subsection (d). Subsection (i) was added permitting the doors of the count room to be opened for very limited purposes since the count room should be secure while assets are being counted. Requiring employees to clear their hands and having at least three employees in the count room during a count, as required in subsections (j) and (k), is intended to reduce the likelihood of employee theft or collusion.

 In accordance with subsection (m), operators are not required to collect slot cash storage boxes from all slot machines on the gaming floor every day. However, table game drop boxes from live table games are required to be collected daily. Subsection (n) also allows the main bank to buy the counted currency from slot cash storage boxes and table game drop boxes from fully automated electronic gaming tables together since, as previously mentioned, the CCS determines the revenue to tax.

 Additional requirements for the counting of table game drop boxes from tables that are not fully automated were added in subsection (o).

 Since the CCS is not involved in the counting of slot cash storage boxes or table game drop boxes from fully automated electronic gaming tables, former subsection (j), which required the presence of a casino compliance representative if the CCS was not online, was not moved into a new subsection. Instead, subsection (p) requires that if a problem occurs with the slot or table game count, the problem shall be brought to the attention of the casino compliance representative and a written report must be filed with the casino compliance representatives within 24 hours of the conclusion of the count.

 Operators may utilize, after submitting internal controls, an alternative procedure for the drop and count of Poker drop boxes. The count shall be conducted in the presence of the casino compliance representative by two employees of the finance department with no incompatible duties. This area is required to be under surveillance and in a segregated area of the Poker cage.

 The procedures required in § 465a.25 are necessary for the safeguarding of assets and to deter or minimize employee theft from the count room. Having standardized count room procedures ensures the consistent and accurate accounting of assets and revenue and makes it easier for the facility's surveillance department and the casino compliance representatives to detect and track irregularities in the count process.

 Section 465a.26 (relating to jackpot and credit meter payouts) has been amended to include fully automated electronic gaming tables which, like slot machines, have credit meters and jackpot payouts. Subsection (b) was updated to account for the different Federal tax reporting requirements for slot machines versus table games. A player who wins $1,200 or more on a single win at a slot machine is required to complete a W-2G for Federal tax reporting of gambling winnings. A slot machine is therefore programmed to lock out at $1,200. For table game play, a player must win $600 or more, not including the amount of the initial wager, and the odds have to be at least 300 to 1 before a W-2G is required to be completed. On the fully automated electronic gaming tables, only one optional side wager pays out at that amount and at those odds. The lock out amount on the fully automated electronic gaming tables has therefore been set at $5,000.

 In § 465a.29(a) (relating to automated teller machines), language has been added which prohibits the placement of ATMs that offer credit card advances on the gaming floor. This amendment is consistent with changes made to 4 Pa.C.S. § 13A27(a) (relating to other financial transactions), which prohibits the placement of credit card advance machines on the gaming floor.

 In § 465a.31(b) (relating to gaming day), unnecessary language has been deleted. In subsection (c), an operator is required to get the approval of the Board's Executive Director prior to changing the facility's hours of operation.

 Section 465a.32(1) (relating to signature) was amended to specify Board-issued credential number since not all employees are licensed.

 In consultation with the Department and the system operator, which is currently Gtech, § 465a.33 (relating to access to areas containing central control computer equipment) was amended. This section now requires a licensee to make arrangements with the Department and the system operator before accessing an area containing the CCS. The approval of the Board's casino compliance representatives is no longer required. The director of security was added in paragraph (3) because the director of security maintains the key to the area containing the CCS, which may be signed out to employees of the Department or the system operator only if the employee is on the authorized access list, which the director of security was previously not authorized to obtain.

 In § 465a.34(b)(4) (relating to automated gaming voucher and coupon redemption machine accounting controls), an incorrect cross reference was amended.

 The remaining sections in Chapter 465a are new provisions applicable to table game internal controls which were taken from the temporary regulations in Chapter 525.

 Section 465a.35 (relating to personnel assigned to the operation and conduct of table games) sets forth minimum staffing requirements for the operation and supervision of table games. The staffing levels in this section are not applicable to fully automated electronic gaming tables, which do not have a live dealer.

 Subsection (b) requires two dealers at a Baccarat table because the table seats up to 14 players and the players handle the cards. Craps requires three dealers, one dealer to handle the dice (stickperson) and one dealer to handle patron's wagers at each end of the craps table.

 While surveillance is recording activity on the gaming floor, adequate supervisory staff, which is specified in subsections (c), (e), (f) and (g), can detect and deter cheating and theft on the gaming floor and can alert surveillance to direct camera coverage to certain tables or individuals. On-the-floor staffing protects patrons, the integrity of gaming and the revenues to the facility and thus the Commonwealth.

 Although minimum staffing levels are specified, subsections (d) and (h) allow certificate holders additional operating flexibility. Subsection (d) permits the supervision of a greater number of table games per floorperson when electronic gaming tables that are not fully automated gaming tables are being used. Subsection (h) allows a certificate holder to file a written request with the Board's Executive Director to use a staffing plan that differs from what is required under this section. After reviewing the plan, the Executive Director will send a letter notifying the operator whether the plan has been approved, denied or conditioned.

 Section 465a.36 (relating to table inventories) contains security requirements associated with table inventories, articulates when gaming chips, coins and plaques may be added to or removed from a table inventory and specifies the information that must be included on Table Inventory Slips. Table Inventory Slips are necessary and important since the opening and closing inventory paperwork is used to calculate GTGR. For audit trail purposes, a Table Inventory Slip is required to be completed once each gaming day, regardless of whether the table was open for gaming, since table game drop boxes are collected each gaming day. Subsection (d) is a segregation of duties requirement which ensures asset protection.

 Section 465a.37 (relating to procedures for opening table games) addresses the procedures that shall be followed when a table is being opened for gaming. The dealer or floorperson assigned to the table shall count the table inventory and compare their count to the totals on the Table Inventory Slip included in the table inventory. If the totals agree, the dealer or boxperson and supervising floorperson shall sign the Table Inventory Slip and place it in the drop box at the gaming table. If there is a discrepancy, notice shall be made to the appropriate parties and a written report shall be prepared explaining the cause of the discrepancy. Opening inventory is an essential component in calculating GTGR.

 Section 465a.38 (relating to procedures for distributing value chips, coins and plaques to gaming tables) sets forth the procedures for adding value chips, coins or plaques to a gaming table to replenish the table inventory. A Fill Request Slip is completed specifying what value chips, coins or plaques are needed for the replenishment and that form is transported to the chip bank. The personnel in the chip bank will fill the request and complete a Fill Slip which is used to verify that the request has been completed and that the requested amount of value chips, coins or plaques are delivered to the gaming table. This section specifies the information and signatures that must be on the Fill Request Slip and Fill Slip and how the copies of these forms are to be distributed. For audit purposes, the Fill Slip is required to be a four-part form so accounting has a copy, the chip bank that fills the request has a copy of what left the chip bank, the security employee who accepted the chips from the chip bank and transported them to the floor has a copy and the table that added the chips to the inventory has a copy. Copies of Fill Request and Fill Slips are reconciled in accounting daily. Fills are also a component in calculating GTGR.

 Section 465a.39 (relating to procedures for removing value chips, coins and plaques from gaming tables) establishes the procedures to be used when excess value chips or plaques in a table inventory need to be sent back to the chip bank. Like the process for requesting fills, a Credit Request Slip is completed specifying which value chips, coins or plaques are being returned. Copies of Credit Request and Credit Slips are reconciled in accounting daily. Credits are also a component in calculating GTGR.

 Section 465a.40 (relating to procedures for accepting cash for gaming chips, plaques or electronic wagering credits at table games) outlines the procedures that a dealer or boxperson shall use when a patron asks to exchange cash for gaming chips or electronic credits. These procedures are designed to ensure that the process is captured by the surveillance department and to avoid errors or disputes associated with the exchange. The cash accepted and deposited in the drop box is collected and recorded daily and is a component in calculating GTGR.

 Section 465a.41 (relating to procedures for drops at open table games) establishes a procedure for recording the table inventory at a gaming table that is open when the drop occurs. The count of the table inventory just prior to the removal of the drop box is necessary so that the daily revenue for that gaming table can be calculated.

 Section 465a.42 (relating to procedures for closing table games) sets forth the procedures that shall be followed when a gaming table is being closed. The dealer or boxperson and the floorperson assigned to the gaming table are required to complete a Table Inventory Slip which will be used to calculate the gaming revenue from that table and to verify the contents of the table inventory when the table is reopened. Additionally, this section requires that the Table Inventory Slip be secured in a container which is attached to the table or returned to the cage.

 Section 465a.43 (relating to table inventories for Poker tables) allows certificate holders to use dealer impress table inventories for Poker tables. Dealers using an impress are responsible for their impress which must balance at the conclusion of the dealer's shift. If a dealer has an impressed inventory, the rake deposited in the drop box at Poker tables is the revenue for the table.

 Section 465a.44 (relating to table inventory counts on a per shift basis) gives certificate holders that use drop boxes that segregate the contents by shift the option of adopting procedures which would require the completion of a new Table Inventory Slip at the close of each shift in addition to the other times a Table Inventory Slip is required to be completed under this chapter.

 In § 467a.1 (relating to gaming floor plan), operators that have already submitted an initial gaming floor plan will no longer be required to submit large scale paper copies of revised gaming floor plans. Electronic submissions are preferred and will now be accepted provided that there is enough detail in the electronic submission to read the information when enlarged. Electronic submissions will now be accepted since floor plan changes to move slot machines or table games to other parts of the licensed facility do not typically necessitate fully renderings. The Board staff may request paper submissions, which may be necessary in cases of a facility expansion or a relocation of large banks of machines or gaming pits.

 In subsection (a)(3), language was changed which allowed underage individuals to traverse the gaming floor. These individuals may use areas adjacent to the gaming floor to access amenities, such as restaurants and shops, but may not be on or cross the gaming floor. Operators shall include underage pathways in the depictions of their floor plans as well as the designated smoking and nonsmoking areas.

 The Board, at its July 29, 2010, meeting, delegated authority to the Executive Director to approve certain table game floor plan changes that involve less than 10% of the certificate holder's approved table games. Section 467a.1(c) codifies that delegation of authority.

 Subsection (d) is amended to provide clarity to operators as to what information shall be submitted to the Board or Executive Director before the makeup or configuration of the gaming floor plan may be changed. Operators are now required to include in a petition or request the following: the table game and pit number or slot machine area affected; the type, location or number of slots or table games affected; and updates to staffing plans.

Comment and Response Summary

 The proposed rulemaking was published at 41 Pa.B. 2581 (May 21, 2011). During the comment period the Board received comments from Chester Downs and Marina, LLC (Harrah's), Mountainview Thoroughbred Racing Association (Hollywood), Sands Bethworks Gaming LLC (Sands) and joint comments from Greenwood Gaming and Entertainment/Downs Racing (Parx/Mohegan Sun), SugarHouse/Rivers and Global Cash Access/Western Money Systems (GCA/WMS). Additionally, on July 20, 2011, the Board received comments from the Independent Regulatory Review Commission (IRRC) on the proposed rulemaking.

§ 401a.3. Definitions

 The proposed definition of ''complementary'' excluded points that are awarded to patrons who are members of the licensee's player rewards program and credits for promotional slot play. Parx/Mohegan Sun commented that by deleting this provision from the definition of ''complementary,'' the Board was making an assessment regarding taxation.

 Complementary items do include player rewards points and promotional slots play. Deleting player rewards and free slots play from the definition of ''complimentary'' was intended to exclude the nondiscretionary awarding of these items from the internal control requirements in § 465a.7. The Board, however, was not making an assessment regarding taxation, which is determined through the Department's CCS. However, to avoid confusion, the definition of ''complimentary'' has been updated to include player reward points and promotional credits for slots play. The exclusion for internal controls on the nondiscretionary awarding of these items was added to § 465a.7(f).

 Complimentary items include promotional credits for slot play and personal property such as lodging, services, cash and noncash gifts. Personal property is not deductible from gross terminal or GTGR. Promotional slots play, however, is deducted from gross terminal revenue. For table games, the Board to date has not authorized the use of free table game play, which would impact GTGR.

 Gross terminal revenue is defined in 4 Pa.C.S. § 1103 (relating to definitions) and determined by the Department utilizing the CCS. GTGR is also defined in 4 Pa.C.S. § 1103 and the specific formula for determining GTGR is in § 601a.9 (relating to table game taxes and gross table game revenue).

§ 465a.7. Complimentary services or items

 Subsection (a) requires operators to develop, maintain and apply adequate internal controls over the authorization and issuance of complimentary services or items. This final-form rulemaking also requires operators to submit the internal controls for review and approval. Parx/Mohegan Sun stated that requiring operators to submit internal controls is unnecessary and places an additional burden on the operators.

 As previously discussed, complimentary services and items include the awarding of free lodging, promotional credits for slot play, which impacts gross terminal revenue, and the awarding of cash or noncash gifts such as reimbursements for table game losses, which can be substantial. The Board believes that this is an area ripe with potential for abuse, the cumulative effect of which can impact the overall financial stability and integrity of the facility and the facility's ability to maintain a steady level of growth of revenue as required under 4 Pa.C.S. § 1313(e) (relating to slot machine license application financial fitness requirements).

 Board staff will review the internal controls to determine if the facility has proper oversight over who can give complimentary items, including the discretionary awarding of promotional slots play and cash comps. Operators, however, will not be required to submit internal controls for the nondiscretionary awarding of points or promotional play as these complimentary items are typically computer generated based on certain levels of play.

 Lastly, the Board doesn't believe it places an onerous burden on operators to now submit internal controls on complimentary items considering operators have been required to maintain internal controls on complementary items since the regulations on internal controls were adopted in 2008.

 Proposed subsection (a) also required Board approval of internal control submissions on complimentary items. SugarHouse/Rivers correctly commented that internal control submissions, other than the initial submissions, do not require approval of the Board but are submitted for review and subsequent approval by the Board's Executive Director. This subsection was therefore amended as suggested.

 Proposed subsection (b)(4) required submission of internal controls for audits conducted on complimentary items. Harrah's commented that accounting should be performing this function not internal audit. The Board agrees but has deleted this subsection in the final-form rulemaking.

§ 465a.9.  Surveillance system; surveillance department control; surveillance department restrictions.

 Proposed subsection (e)(10) required operators to install a camera at each automated gaming voucher, ticket redemption, jackpot payout and ATM. Hollywood, Sands, SugarHouse/Rivers, Parx/Mohegan, GCA/WMS commented that the expense for this requirement would be considerable, necessitate a redesign of the kiosks to accommodate the cameras and force the facilities to rely on an outside entity to maintain the functionality of the cameras within the units. IRRC asked the Board to explain the need for the additional requirement and provide a detailed fiscal analysis of the costs associated with this requirement.

 After Board staff discussed the concerns and the logistical issues with several of the commentators, the Board believes it is not necessary at this time to require cameras in ATMs, ticket redemption units and jackpot payout machines. The proposed requirement was therefore deleted from the final-form rulemaking.

§ 465a.11. Slot machine licensee's organization; jobs compendium

 Throughout this section, the Board refers to clandestine surveillance. IRRC requested that the Board clarify the term. The plain meaning for clandestine surveillance is surveillance that is hidden or concealed.

 Proposed subsection (b)(6) required that the employees responsible for the supervision and issuance of credit report directly to the director of finance. Harrah's requested that the word ''directly'' be removed. IRRC requested that the Board explain why it was necessary to limit the reporting directly to the director of finance.

 Credit limits require the approval of two employees of the certificate holder's finance department as specified in 4 Pa.C.S. § 13A27(d). Because two employees are required, the Board agrees that it is not necessary that they both report directly to the director of finance. Language was therefore amended so employees responsible for the issuance of credit are now required to be in a reporting line to the director of finance.

§ 465a.17. Bill validators, slot cash storage boxes and table game drop boxes

 Subsection (f) addresses the cash, cash equivalents and paperwork deposited into the table game drop boxes. Parx/Mohegan Sun commented that Match Play Coupons were included in the temporary regulation and should be included in this final-form rulemaking as items to be deposited into the boxes. IRRC requested an explanation for the variation between the temporary and final-form rulemakings.

 Match play coupons were added to temporary internal controls in §§ 525.21 and 525.22 (relating to Match Play Coupons; physical characteristics and issuance; and Match Play Coupon use) after the proposed rulemaking was published. Because Match Play Coupons are currently neither included nor deducted from GTGR but do impact the hold percentage and the amount of win on each table, the Board doesn't believe it would be appropriate to add Match Play Coupons to this final-form rulemaking without allowing comment from the Department, the Office of Budget, the House Gaming Oversight Committee, the Senate Community, Economic and Recreational Development Committee, IRRC or the industry.

 Match Play Coupons will be added to Chapter 465a in a future rulemaking and available for comment from interested parties. When that rulemaking is adopted as final, it will supersede the last two provisions of the temporary table game internal controls in §§ 521.21 and 521.22.

 To accommodate Match Play Coupons in the drop boxes, however, a generic provision ''other table game wagering instruments as approved by the Board'' was added in subsections (f)(4) and (g)(3). When the rulemaking on Match Play Coupons is proposed, the generic language will be replaced.

§ 465a.18—Transportation of slot cash storage boxes and table game drop boxes to and from the gaming floor; storage

 Subsection (d)(1) requires that drop boxes removed from a slot machine or table game be transported and secured in the count room by at least one security department employee and one finance department employee. Parx/Mohegan Sun commented that since the count team is not involved in the drop, that the finance department employee should be replaced with another security department employee or a table games employee.

 Parx/Mohegan Sun is correct that the Board does not require that the count team, as defined in § 461a.1, participate in the drop. However, the employees conducting the drop (defined as the drop team) consist of an employee from security and an employee from finance. This is a segregation of duties and a key control issue. The count room, drop boxes and the trolley are dual key controlled by finance, who is responsible for the safeguarding of assets of the licensee, and security. Two security department employees cannot have both keys to the trolley where drop boxes are placed when removed from the table or slot machine. Additionally, a table game or security employee may not access the count room to secure the trolley without a finance employee present. See also § 465a.24.

 It is therefore unclear how Parx/Mohegan Sun would like to store drop boxes in the trolley or move them into the count room or storage area without the participation of a finance department employee. If Parx/Mohegan Sun would like to utilize a different drop system, other than the delineated procedure, Parx/Mohegan Sun can submit a request with the Executive Director in accordance with § 465a.30 (relating to waiver of requirements) to waive the requirement explaining an alternative procedure that ensures the safeguarding of assets, segregation of duties between different departments and proper key control.

 Subsection (d)(3) requires emergency drop boxes to be transported from the gaming floor to the count room utilizing a trolley. Parx/Mohegan Sun requested that the Board delete the requirement. IRRC asked why a trolley was necessary.

 A trolley ensures the security of a drop box that is filled with cash as it is transported across the gaming floor. The currency in the table game drop box is unrecorded revenue until counted in the count room. Security and finance are both required because, as previously stated, trolleys, drop boxes and the count room are dual key controlled by finance and security. Additionally, the Board doesn't specify the size or shape of the trolley utilized for emergency drops. Most facilities utilize a small milk cart trolley for emergency drops.

§ 465a.19. Acceptance of tips or gratuities from patrons

 Subsection (a) prohibits employees in supervisory positions from accepting tips and gratuities. Parx/Mohegan Sun would like Poker supervisors to perform more customer service based functions and therefore believes Poker supervisors should be permitted to accept gratuities.

 Table game supervisors, whether on a banked or nonbanked table game, are there to provide oversight and ensure the fairness and integrity of the game. Allowing supervisors to also accept tips increases the potential for collusion between dealers, players and supervisors. Additionally, the Board is concerned that allowing supervisors to also accept tips will undermine dealer compensation reliant in large part on tips.

 Subsection (h) requires dealers to cash out their tip boxes at the end of each shift. Harrah's would like flexibility as to when dealers cash out such as the beginning of the next shift. IRRC requested that the Board explain the need for this provision.

 Requiring dealers to cash out at the end of their shift is a logical way to ensure the proper reporting of tips. The Board believes that there are too many operational unknowns with the revision to allow the unspecified time period Harrah's is requesting. If a facility is requesting to do something other than the end of the Poker dealer's shift, the facility can submit a request with the Executive Director to waive the requirement in accordance with § 465a.30 explaining the following: where tip boxes that haven't been cashed out will be stored; how the facility will ensure the proper recording per payroll period of the dealer's tips, particularly when dealers don't work every day; and how those procedures will ensure the proper reporting of income to the Internal Revenue Service (IRS) and the Department.

 Proposed subsection (i) required the facility to develop procedures for the reporting of dealer tips to the IRS. IRRC requested that the Board explain what types of procedures are to be included.

 This provision was amended and now requires that the operator simply specify what type of reporting they do to the IRS with respect to tips. Several facilities report all dealer tips while others have established tip agreements with the IRS.

§ 465a.23. Customer deposits

 Subsection (c)(2) required that customer deposits be withdrawn at the cage. Hollywood requested the flexibility to allow patrons to withdraw their deposits at a gaming table much like a Counter Check. The Board agrees and has added language to this final-form rulemaking.

§ 465a.30. Waiver of requirements

 Subsections (a), (b) and (b)(2) reference technical standards adopted by the Board and published in the Pennsylvania Bulletin. IRRC inquired why the publication information was deleted from the proposed rulemaking.

 After reviewing the reasons stated for including this language when the initial regulation was adopted as a final-form rulemaking, the Board agrees that the language should remain.

§ 465a.35. Personnel assigned to the operation and conduct of table games

 Regarding minimum staffing levels assigned to the conduct of table games and the request to modify or eliminate requirements all together, the Board believes it prudent to provide more certainty in the regulatory environment for the casinos and its own compliance agents to maintain a generally-applicable rule for minimum staffing for all casinos and to address individual modifications on an as-needed basis.

 The Board does not agree with Parx/Mohegan Sun that eliminating minimum staffing requirements for licensees and permitting licensees broad flexibility in the first instance without a general rule applicable to facilities is within the spirit of an oversight and supervisory environment dedicated to the prevention of fraud and the protection of the public. Based on the Board's experience to date, however, the Board is adopting several of the suggested revisions from Hollywood and Parx/Mohegan Sun.

 Subsections (a)(1) and (b)(1) require the use of a pit clerk. Hollywood recommends deleting both references and allowing operators the discretion to utilize pit clerks. The Board agrees and deleted the requirement. In most instances, the regulations already allow for specific functions to be performed by a pit clerk or a floorperson or above.

 Final-form subsection (b)(4) requires the use of one boxperson for each Craps table. Parx/Mohegan Sun believes that the requirement is inappropriate because a floorperson is also supervising Craps tables.

 The Board believes that the maintenance of a boxperson at each Craps table is important to assure the integrity of the game. The number of persons who can play Craps at one time, the complexity and number of bets placed, the throwing of the dice and distractions involved with the game all militate in favor of maintaining strict oversight and supervision which accompanies a boxperson being present during the game.

 If the Board eliminated the requirement for a boxperson, then a Craps table would not have ongoing supervision since one floorperson can supervise three tables. The Board therefore believes the requirement for one boxperson per Craps tables is appropriate. However, the Board does permit a licensee to submit an alternative minimum staffing plan should the configuration of the floor be such that game security can be properly monitored in an alternative fashion to the Executive Director's satisfaction.

 Subsection (c)(1) limits a floorperson from supervising more than four tables other than those specifically listed. Hollywood requested that the number be increased to six tables. The Board believes that this should be addressed in a request for an alternative staffing plan based on the configuration of each facility's gaming floor.

 Proposed subsection (c)(4) allowed a floorperson to supervise one Midibaccarat table and one table of any other banking table game except Baccarat, Craps, Mini-Craps and Pai Gow. Parx/Mohegan Sun asserts that one floorperson can adequately supervise one Midibaccarat table as well as one Pai Gow table. Based on the Board's experience to date, the Board agrees and amended the final-form rulemaking accordingly.

 Proposed subsection (c)(6) prevented a floorperson from supervising more than one Craps table and one table of another banking table game. Parx/Mohegan Sun believes that a floorperson can adequately supervise one Craps game and two other banking table games. The Board agrees and amended the final-form rulemaking accordingly.

 Proposed subsection (c)(10) allowed a floorperson to supervise one Pai Gow table and one table of any other banking table game except Baccarat, Midibaccarat, Craps and Mini-Craps. As stated regarding subsection (c)(4), Parx/Mohegan Sun asserts that one floorperson can adequately supervise one Midibaccarat table as well as one Pai Gow table. The Board agrees and amended the final-form rulemaking accordingly.

 Proposed subsection (e) specified that a pit manager may supervise up to six floorpersons. Parx/Mohegan Sun requested to increase the number to eight floorperson. The Board agrees and has amended the final-form rulemaking accordingly.

§ 465a.36. Table inventories

 Subsection (c) requires that a Table Inventory Slip be done at least once each gaming day on all tables in the licensed facility. Hollywood and Parx/Mohegan Sun believe that requiring a table inventory count be done daily, even if the table was not open for gaming, is inefficient and creates additional opportunity for fraud and errors. IRRC requested that the Board explain the need for the inventory to be counted each gaming day.

 This provision was added in consultation with the Department, the agency tasked with auditing revenue reported by the facility.

 The win on a slot machine and the taxes owed to the Commonwealth are determined through the Department's CCS and are not based on the cash counted from the slot cash storage boxes. Unlike slot machines, however, there is no similar system for calculating revenue on table games. Revenue, and thus the tax to the Commonwealth, is determined manually based on the cash in the table game drop boxes, fills and credits and the opening and closing inventory recorded on the Table Inventory Slip. To ensure the proper accounting and recording of table game revenue and the taxes to the Commonwealth, table game drop boxes, other than the fully automated tables, are required to be collected each gaming day.

 Pulling the boxes, even on tables that were closed, ensures that boxes are not missed or missing from the gaming floor. If a table is closed for more than 1 day, however, the drop box removed on each subsequent day will not contain a Table Inventory Slip. This creates a gap in the audit trail. The Table Inventory Slip, even on a table that was not open for gaming, provides documentation supporting that the box was in fact collected and it creates an accounting record that confirms that there was no activity on the table. If an inventory slip is not present, there is no audit trail to determine when the last play occurred on the table.

 Additionally, a daily table inventory provides a more timely verification that the closing and opening chip inventory is correct. If inventories are incorrect, they shall be investigated in accordance with § 465a.37(h), utilizing, among other things, surveillance coverage, which is retained for a period of only 7 days. The Board believes it is more economical to conduct an inventory daily rather than require longer surveillance retention periods.

 Lastly, if an operator would like to establish a different process that creates an adequate accounting record/audit trail, certifying that all boxes were collected and no gaming activity was in fact conducted on that table, the operator can submit a request with the Executive Director, in accordance with § 465a.30 detailing the procedure proposed.

§ 465a.37. Procedures for opening table games

 Subsection (h) requires the security department to investigate any discrepancy in the opening inventory greater than $10. Harrah's commented that surveillance should also be involved in the investigation. The Board agrees and added language to the final-form rulemaking.

§ 465a.38. Procedures for distributing value chips, coins and plaques to gaming tables

§ 465a.39. Procedures for removing value chips, coins and plaques from gaming tables.

 Hollywood provided several comments regarding the correct number of parts of forms and inconsistencies with the regulations between electronically generated fill and credit requests versus paper slips. IRRC requested that the Board clarify the requirements for fills and credits.

 The process in both of these related sections was updated for clarity, to reflect current practice and should address the concerns raised.

 Fill and Credit Request Slips are a two-part form or may be electronically generated. A Fill or Credit Slip is prepared in the chip bank and must contain an accounting copy (or unalterable stored data), a drop box copy, an acknowledgement copy and a chip bank copy. These copies are necessary to document the transfer of assets from the chip bank cashier to the security employee to the gaming table.

 At the conclusion of the gaming day, the copies of the slips that are retained by the chip bank cashier (Fill Request and Fill Slips and the Credit Request and Credit Slips) are forwarded to revenue audit for agreement with the accounting copies or stored data and the drop box copies that are removed during the count process. Accuracy in this process is vital as fills and credits are a component in calculating revenue to the facilities and thus the Commonwealth.

§ 467a.1. Gaming floor plan

 Proposed subsection (a)(2) required that the slot machine licensee submit gaming floor plans that are certified by an architect licensed to practice in this Commonwealth unless Board staff indicated otherwise. IRRC inquired under what circumstances the Board would allow deviation from the requirement.

 This provision was amended in the final-form rulemaking so only initial gaming floor plans and those plans submitted with a licensee's renewal application (every 3 years) shall be certified by an architect.

 Subsection (c) addresses the changes to the approved gaming floor plan that require Board approve or approval of the Executive Director. Hollywood requested to allow the casino compliance representative supervisor to approve table game changes that don't require a different footprint provided that 48 hours notice is given. Hollywood commented that it should have the capability to change the types of games offered without a lengthy approval process.

 Operators currently may change the types of table games offered by submitting a request with the Executive Director. Submissions to the Executive Director are typically approved in less than 3 days depending on the nature of the floor plan change. Additionally, amending the gaming floor plan may require altering the staffing levels and surveillance camera coverage at the table games, even if the footprint of the table remains the same, which requires a written request for Executive Director approval.

 The Board, however, is mindful of the operators' wish to have flexibility to respond to market demands. The Board has therefore amended this section so that more floor plan changes can be approved by the Executive Director rather than require petition, which takes several weeks before presentation to the Board. Net increases to gaming floor plans can now be approved by the Executive Director unless the revision will also increases the gaming floor by 10% or more (typically an expansion situation). Operators are still required to file a petition and present to the Board modifications to the gaming floor that will decrease the number of slot machines by more than 2% or the number of tables by more than 10%. This is still required to ensure that the decrease to tables or slots won't result in a decrease to revenues to the facility and thus the Commonwealth.

 Subsection (d) lists the information that an operator is required to submit when requesting to modify the gaming floor plan. SugarHouse/Rivers believes that only information in proposed subsection (d)(1), (4), (5) and (9) should be submitted to the Executive Director. The Board has adopted several of the suggested revisions. In subsection (d)(2), Board staff may still request that a complete floor plan be submitted which may be necessary after multiple floor plan changes have occurred. The Board, however, did amend the submission process so all floor plans should now be submitted electronically.

 Proposed subsection (d)(3) was replaced since the collection and distribution routes are submitted to the onsite casino compliance representatives and do not require approval of the Executive Director or the Board. The operators are required to submit with requests a gaming floor reconfiguration checklist, which was sent to each operator. This checklist aids the operator and Board staff in ensuring that all aspects of a floor plan change have been considered and addressed accurately.

 Proposed subsection (d)(6) was deleted. Proposed subsection (d)(7) and (8) (final-form subsection (d)(6) and (7)) may be necessary to submit along with the floor plan changes because altering the gaming floor may impact minimum staffing levels and surveillance coverage. The Board, however, did add the qualifying language in final-form subsection (d)(6)—(8) as suggested by SugarHouse/Rivers.

Additional Revisions

 Throughout the final-form rulemaking, references to ''Board'' were amended to ''Board staff'' to reflect current practice. Additionally, a cross reference to approval procedures in § 601a.10 (relating to approval of table game layouts, signage and equipment) was added in several sections.

§ 465a.2. Internal control systems and audit protocols

 Subsection (a)(8) was amended for clarity and to include the requirement that operators submit an annual certification regarding political contributions to not only to the Board but also the Department of State's Bureau of Commissions, Elections and Legislation as required under 4 Pa.C.S. § 1513(b) (relating to political influence).

§ 465a.8. Licensed facility

 Subsection (d)(9) was added to the final-form rulemaking to require operators to provide current copies of operational blueprints and camera lists to the Bureau of Casino Compliance. This is necessary for investigative purposes of the Pennsylvania State Police and the onsite casino compliance representatives.

§ 465a.9. Surveillance system; surveillance department control; surveillance department restrictions

 In subsection (c)(1)(vi), the Board added Bad Beat or High Hand Jackpot Payout Boxes to the surveillance requirements. These boxes contain chips that fund additional payouts for patrons and should be monitored on the gaming floor in a similar manner as cash, cash equivalents and the drop boxes.

 In subsection (c)(6)(v), clause (B) was added requiring operators to have in their monitoring room a current copy of a complete camera list including camera numbers, the area under surveillance, the type of camera and the retention period for the camera. This is necessary when tracking patron and employee movements within the licensed facility. Operators should already have this information readily available to surveillance employees monitoring the licensed facility. Proposed clauses (B) and (C) were therefore renumbered.

 Due to the use of digital recording, the provision in subsection (k) regarding turning over copies of recordings back to the slot machine licensee was deleted as unnecessary.

§ 465a.14. Security department minimum staffing

 The Board amended subsection (b) to clarify that off-duty law enforcement officers may be employed by licensees provided that the officers are not furnishing security related services.

§ 465a.17. Bill validators, slot cash storage boxes and table game drop boxes

 Subsection (d) was amended to specify that the key control requirements in this subsection are applicable to table game drop boxes on fully automated electronic gaming tables. The key control requirements in subsection (d)(1) were updated to allow for the transfer of the keys maintained by the slots department to the finance department to conduct the drop.

 Subsection (h) was also amended to allow for the transfer of the key maintained by security to the count room supervisor immediately prior to the count for the purpose of resetting empty table game drop boxes.

§ 465a.18. Transportation of slot cash storage boxes and table game drop boxes to and from the gaming floor; storage

 Subsection (a)(3) now allows the operator to specify which table game drop boxes from fully automated electronic gaming tables are to be picked up each pick-up day. The Board previously required that these boxes be picked up and counted every day. These tables, however, are connected to the Department's CCS which determines the win and thus the tax to the Commonwealth based on the meters. Because the revenue and the tax is not determined based on the cash in the fully automated drop boxes, facilities are no longer required to collect and count these table game drop boxes daily. Subsections (b)(2) and (c) were also updated to reflect this change.

§ 465a.25. Counting and recording of slot cash storage boxes and table game drop boxes

 Subsection (m) was amended to address that table game drop boxes from fully automated tables may now be collected, counted and recorded each gaming day. For clarity, the Board added subsection (m)(1)—(3) which specifies which drop boxes have to be counted and recorded separately. In subsection (m)(1), operators now collect and count table game drop boxes from fully automated tables with the slot drop and count. That process is separate from the count for banking table games and the count for nonbanking games, which both require the presence of an onsite casino compliance representative.

 Subsection (q) allows operators to utilize an alternative procedure to drop and count table game drop boxes from nonbanking table games. Language in subsection (q)(1)(i) was deleted because the alternative procedure mentioned in this section is applicable only if the count of nonbanking drop boxes is not done inside the count room.

 Additionally, in consultation with the Department, this subsection has been amended to provide minimum guidelines for operators that conduct a count outside the count room. These provisions ensure proper segregation of duties among individuals participating in the count and provide safeguards over the assets of the count.

§ 465a.29. Automated teller machines

 Subsection (c) was added which allows operators to utilize ATM machines that are combined with automated gaming voucher or coupon redemption units provided that the units comply with the key control requirements in § 465a.34.

§ 465a.30. Waiver of requirements

 Subsection (a) provided that only the Board could waive a requirement to the internal controls. The Board, however, approves only the initial internal controls with amendments thereafter reviewed by Board staff and approved by the Executive Director. If a facility requests to utilize a different procedure than the procedure established in the regulations, the facility shall submit a request specifying how the different procedure will provide adequate safeguards over assets and the proper segregation of duties.

§ 465a.34. Automated gaming voucher and coupon redemption machine accounting controls.

 The key control requirements in this section were replaced and should provide greater flexibility to operators to select which machines to utilize in licensed facilities. Operators may now provide internal controls specifying which departments have access to keys provided that the key to the lock securing compartments containing currency has to be maintained and controlled by finance.

§ 467a.1. Gaming floor plan.

 In § 467a.1(a), the Board amended the submission and approval process for floor plans. In the proposed rulemaking, operators were required to submit initial and up-to-date floor plans once every 12 months. The initial and yearly submission was required to be a scaled paper rendering, certified by an architect. The Board no longer believes that it is necessary to submit the full floor plan yearly. Operators will now submit a full floor plan including the restricted areas once every 3 years at the time the operator submits its license renewal application.

 Revised floor plans submitted with petitions or requests to modify the gaming floor may now be submitted electronically (preferred method) and do not have to be certified by an architect. Proposed subsection (a)(1) and (2) was therefore deleted in the final-form rulemaking and the subsection was renumbered.

Affected Parties

 Slot machine licensees shall submit updated internal controls to reflect the amendments in this final-form rulemaking. Additionally, slot machine licensees that have not yet been issued a license as well as successful future applicants shall comply with the provisions in this final-form rulemaking.

 The Board will experience increased regulatory demands to review the revised internal controls that are submitted by the current operators.

Fiscal Impact

 Commonwealth. The Board will experience increased regulatory demands to review the new and revised internal controls submitted by the operators. These reviews will be conducted by existing Bureau of Gaming Operations staff so the Board does not expect that it will incur cost increases as a result of this final-form rulemaking.

 Political subdivisions. This final-form rulemaking will not have direct fiscal impact on political subdivisions of this Commonwealth.

 Private sector. The surveillance requirements in § 465a.9 will not impose additional costs on the current certificate holders since surveillance systems have already been updated prior to the commencement of table game operations. The operators did experience significant costs for the following: the installation of new cameras and other surveillance equipment; the reconfiguration of the gaming floor and positioning and repositioning of new and existing cameras; and the addition of new employees for their surveillance departments. The Board projected the costs regarding surveillance requirements to be in the $150,000 to $300,000 range depending on the type of equipment purchased, the size of the gaming floor and the types of table games installed.

 This final-form rulemaking combines into one chapter two separate internal controls sections on slot operations and table game operations. Before authorized to commence table game operations, the certificate holder was required to expand and revise the scope of its internal controls. The revised costs were estimated at between $20,000 and $50,000 depending on the scope of the revisions and if the revisions were prepared internally. Although operators will again have to submit updated internal controls, those internal controls combine the separate sections that, for the most part, should already be written.

 Certificate holders were also required to hire and train additional staff to operate table games. To satisfy the minimum staffing requirements in the temporary rulemaking, operators hired 12 key employees, 967 managers and supervisors, 3,264 dealers and 221 security guards. The cost for a gaming employee application is $350 while the cost for key employee licenses is $2,500. Although turnover in staff is expected, the Board does not have an estimate regarding the number of additional gaming and key employees an operator will be required to hire in the future to comply with the minimum staffing requirements in this final-form rulemaking.

 General public. This final-form rulemaking will not have fiscal impact on the general public.

Paperwork Requirements

 This final-form rulemaking requires operators to draft and submit revised internal controls. Several reports were deleted and are no longer required to be filed as part of the operator's annual audit. Additionally, with this final-form rulemaking, operators will no longer be required to submit large scale gaming floor plans with every petition to modify the gaming floor but may now submit an electronic version.

Effective Date

 The final-form rulemaking will become effective upon publication in the Pennsylvania Bulletin. However, operators will have 120 days from the date of publication to submit their updated internal controls.

Regulatory Review

 Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on May 3, 2011, the Board submitted a copy of the proposed rulemaking, published at 41 Pa.B. 2581, and a copy of the Regulatory Analysis Form to IRRC and to the House Gaming Oversight Committee and the Senate Community, Economic and Recreational Development Committee (Committees) for review and comment.

 Under section 5(c) of the Regulatory Review Act, IRRC and the House and Senate Committees were provided with copies of the comments received during the public comment period, as well as other documents when requested. In preparing the final-form rulemaking, the Board has considered all comments from IRRC, the House and Senate Committees and the public.

 Under section 5.1(j.2) of the Regulatory Review Act (71 P. S. § 745.5a(j.2)), on April 4, 2012, the final-form rulemaking was deemed approved by the House and Senate Committees. Under section 5.1(e) of the Regulatory Review Act, IRRC met on April 5, 2012, and approved the final-form rulemaking.

Findings

 The Board finds that:

 (1) Public notice of intention to adopt these amendments was given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations thereunder, 1 Pa. Code §§ 7.1 and 7.2.

 (2) The final-form rulemaking is necessary and appropriate for the administration and enforcement of 4 Pa.C.S. Part II.

Order

 The Board, acting under 4 Pa.C.S. Part II, orders that:

 (a) The regulations of the Board are amended by deleting §§ 521.3, 521.11 and 525.1—525.20, adding §§ 465a.35—465a.44 and amending §§ 401a.3, 461a.1, 461a.12, 465a.1—465a.3, 465a.5—465a.9, 465a.11, 465a.12, 465a.14—465a.26, 465a.29—465a.34, 467a.1 and 467a.2 to read as set forth in Annex A, with ellipses referring to the existing text of the regulations.

 (Editor's Note: Sections 521.1, 521.2 and 521.4—521.10 are being deleted in the final-form rulemaking published at 42 Pa.B. 2629 (May 12, 2012).)

 (b) The Chairperson of the Board shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.

 (c) This order shall take effect upon publication in the Pennsylvania Bulletin. Operators shall submit updated internal controls by September 10, 2012.

WILLIAM H. RYAN, Jr., 
Chairperson

 (Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 42 Pa.B. 2253 (April 21, 2012).)

 Fiscal Note: Fiscal Note 125-145 remains valid for the final adoption of the subject regulations.

Annex A

TITLE 58. RECREATION

PART VII. GAMING CONTROL BOARD

Subpart A. GENERAL PROVISIONS

CHAPTER 401a. PRELIMINARY PROVISIONS

§ 401a.3. Definitions.

 The following words and terms, when used in this part, have the following meanings, unless the context clearly indicates otherwise:

*  *  *  *  *

 Central control computer—A central site computer controlled by the Department and accessible by the Board to which all slot machines communicate for the purpose of auditing capacity, real-time information retrieval of the details of a financial event that occurs in the operation of a slot machine, including, coin in, coin out, ticket in, ticket out, jackpots, machine door openings and power failure, and remote machine activation and disabling of slot machines.

 Certificate holder—A slot machine licensee that was awarded a certificate to operate table games.

 Certified gaming service provider—A gaming service provider that holds a gaming provider certification.

*  *  *  *  *

 Complimentary—

 (i) Any lodging, service or item, including a cash or noncash gift, which is provided directly or indirectly to an individual at no cost or at a reduced cost which is not generally available to the public.

 (ii) The term includes lodging provided to an individual at a reduced price due to the anticipated or actual gaming activities of that individual. Group rates, including convention and government rates, shall be deemed generally available to the public.

 (iii) The term includes points that are awarded to patrons of a licensed facility who are members of the licensed facility's player rewards program and credits for promotional slots play.

*  *  *  *  *

 Gaming employee—

 (i) An employee of a slot machine licensee, including:

 (A) Cashiers.

 (B) Change personnel.

 (C) Count room personnel.

 (D) Slot attendants.

 (E) Dealers of croupiers.

 (F) Machine mechanics, computer machine technicians or table game device technicians.

 (G) Security personnel.

 (H) Surveillance personnel.

 (I) Personnel with SLOTS Link security administrator access and responsibilities.

 (J) Hosts or other individuals authorized to extend complimentary services, including employees performing functions similar to those performed by a gaming junket representative.

 (K) Promotional play supervisors, credit supervisors, pit supervisors, cashier supervisors, shift supervisors, table game managers and assistant managers and other supervisors and managers, except for those specifically identified in this part as key employees.

 (L) Boxpersons.

 (M) Floorpersons.

 (N) Personnel authorized to issue promotional play.

 (O) Personnel authorized to issue credit.

 (P) Directors of the following departments:

 (I) Food and beverage.

 (II) Facilities.

 (III) Construction.

 (ii) Employees of a licensed supplier, manufacturer, manufacturer designee, gaming service provider or gaming related gaming service provider whose duties are directly involved with the repair, service or distribution of slot machines, table game devices or associated equipment sold or provided to a licensed facility within this Commonwealth.

 (iii) Employees of a registered or certified gaming service provider, licensed manufacturer or manufacturer designee whose duties require the employee's presence on the gaming floor or in a restricted area of a licensed facility.

 (iv) Gaming junket representatives.

 (v) Other employees or individuals who the Board determines, after a review of the work being performed, require permits for the protection of the integrity of gaming.

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 Key employee—An individual who is:

 (i) Employed in a director or department head capacity and who is empowered to make discretionary decisions that regulate slot machine or table game operations in this Commonwealth, including the general manager and assistant manager of the licensed facility, director of slot operations, director of table games operations, director of cage operations, director of credit operations, director of surveillance, director of marketing, director of management information systems, director of security, director of human resources, comptroller and any employee who is not otherwise designated as a gaming employee and who supervises the operations of these departments or to whom these department directors or department heads report.

 (ii) Employed by a slot machine licensee, manufacturer licensee or supplier licensee whose duties affect or require contact with slot machines, slot monitoring systems, casino management systems, player tracking systems and wide-area progressive systems for use or play in this Commonwealth, whether or not the individual is assigned to gaming operations in this Commonwealth.

 (iii) A sales representative seeking to sell slot machines, table game devices and associated equipment for use in this Commonwealth on behalf of a licensed manufacturer, manufacturer designee or supplier.

 (iv) Employed in other positions which the Board will determine based on detailed analyses of the employee's duties or the job descriptions.

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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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 Cash equivalents—Instruments with a value equal to United States currency or coin including value chips and plaques, Counter Checks, personal checks, certified checks, cashier's checks, travelers' checks, money orders, gaming vouchers or other representations of value that the Board deems a cash equivalent.

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 Conversion—A change or alteration to a slot machine that does not affect the manner or mode of play or operation of the slot machine.

 Count team—The group of employees of a slot machine licensee who are responsible for counting the contents of slot cash storage boxes and table game drop boxes.

 Coupon—An instrument issued by a slot machine licensee under which cashable or noncashable slot machine credits are provided directly or indirectly to a patron with or without regard to the identity of the patron or the patron's level of gaming activity.

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 Drop team—The group of employees of a slot machine licensee who are responsible for collecting and transporting slot cash storage boxes and table game drop boxes.

 Educational institution—A facility that teaches and certifies students in slot machine design, operation, repair or servicing.

 External bonusing system—The collective hardware, software, communications technology and other ancillary equipment used in conjunction with slot machines to deliver randomly selected player incentives (bonus awards) to active slot machine players and to effect the accurate metering of the bonus award event on the slot machine.

 Fill—The distribution of gaming chips, coins and plaques to a gaming table to replenish the table inventory.

 Finance department—The department that is responsible for the management of the financial and accounting activities relating to slot machines and table games being utilized in a licensed facility.

 Gaming day—A period of time not to exceed 24 hours corresponding to the beginning and ending times of gaming activities for the purpose of accounting reports and determination of gross terminal and gross table game revenue.

 Gaming voucher—An instrument that upon insertion into a bill validator entitles the patron inserting the gaming voucher to cashable or noncashable credits on a slot machine and cashable credits on an electronic gaming table corresponding to the value printed on the gaming voucher. A gaming voucher that contains noncashable credits may be used only for the purpose of slot machine gaming.

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§ 461a.12. Progressive slot machines.

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 (g) A slot machine that offers either a new progressive jackpot or undergoes a modification or RAM clear of an existing progressive jackpot may not be made available for play by the public until the slot machine has been tested and certified by the Bureau of Gaming Laboratory Operations. For purposes of this subsection, a modification includes any change in the software, hardware, including controllers, and any associated equipment that relates to progressive functionality.

 (h) Progressive meters may not be turned back to a lesser amount unless one of the following occurs:

 (1) The amount indicated has been actually paid to a winning patron.

 (2) The progressive jackpot amount won by the patron has been recorded in accordance with a system of internal controls approved under § 465a.2 (relating to internal control systems and audit protocols).

 (3) The progressive jackpot has, upon Board approval, been transferred to another progressive slot machine or wide area progressive system in accordance with this subpart.

 (4) The change is necessitated by a slot machine or meter malfunction, in which case for progressive jackpots governed by subsection (b), an explanation shall be entered on the progressive slot summary required under this subpart and the Board shall be notified of the resetting in writing.

 (i) Once an amount appears on a progressive meter, the probability of hitting the combination that will award the progressive jackpot may not be decreased unless the progressive jackpot has been won by a patron, has been transferred to another progressive slot machine or wide area progressive system or has been removed in accordance with subsection (k).

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CHAPTER 465a. ACCOUNTING AND INTERNAL CONTROLS

§ 465a.1. Accounting records.

 (a) A slot machine licensee shall maintain complete, accurate and legible records of all transactions pertaining to the revenues and expenses of each licensed facility.

 (b) General accounting records shall be maintained on a double entry system of accounting with transactions recorded on a basis consistent with generally accepted accounting principles in the United States. Detailed, supporting and subsidiary records sufficient to meet the requirements of subsection (c) shall also be maintained in accordance with the requirements of this chapter.

 (c) The detailed, supporting and subsidiary records include:

 (1) Records pertaining to revenue that is taxable or subject to taxation under the act.

 (2) Records pertaining to the financial statements and all transactions impacting the financial statements of the slot machine licensee including contracts or agreements with licensed manufacturers, suppliers, gaming junket enterprises, certified and registered gaming service providers, contractors, consultants, management companies, attorneys and law firms, accountants and accounting firms, insurance companies and financial institutions, including statements and reconciliations related thereto.

 (3) Records that identify the handle, payout, actual win amounts and percentages, theoretical win amounts and percentages, and differences between theoretical and actual win amounts and percentages, for each slot machine and table game on a week-to-date, month-to-date and year-to-date basis.

 (4) Records documenting the costs of complimentary services and items as defined in § 401a.3 (relating to definitions).

 (5) Records of loans and other amounts payable by the slot machine licensee.

 (6) Records of investments, advances, loan and receivable balances due to the slot machine licensee.

 (7) Records created in connection with the system of internal controls submitted to the Board under § 465a.2 (relating to internal control systems and audit protocols).

 (8) Records of returned checks.

§ 465a.2. Internal control systems and audit protocols.

 (a) A slot machine licensee 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 slot or table game operations are to commence. A written system of internal controls must include:

 (1) Records of direct and indirect ownership in the slot machine licensee, its affiliates, intermediaries, subsidiaries or holding companies.

 (2) Organization charts depicting segregation of functions and responsibilities in accordance with § 465a.11 (relating to slot machine licensee's organization; jobs compendium).

 (3) A description of the duties and responsibilities of each licensed or permitted position shown on the organization charts and their respective lines of authority in accordance with § 465a.11.

 (4) A detailed narrative description of the administrative and accounting procedures designed to satisfy the requirements of this subpart.

 (5) A record retention policy in accordance with § 465a.6 (relating to retention, storage and destruction of books, records and documents).

 (6) Procedures to ensure that assets are safeguarded, and counted in conformance with effective count procedures.

 (7) Procedures governing the conduct of all gaming related promotions to be offered by the slot machine licensee.

 (8) Policies to prevent political contributions in accordance with section 1513 of the act (relating to political influence) and an annual certification to the Board and the Department of State's Bureau of Commissions, Elections and Legislation that the slot machine licensee has conducted a good faith investigation that has not revealed any violations of section 1513 of the act.

 (9) Procedures to ensure that the slot machine licensee's employees comply with Chapter 435a (relating to employees).

 (10) Other items the Board may request in writing to be included in the internal controls.

 (b) A submission must be accompanied by the following:

 (1) An attestation by the chief executive officer or other delegated individual with a direct reporting relationship to the chief executive officer attesting that the officer believes, in good faith, that the submitted internal controls conform to the requirements of the act and this subpart.

 (2) An attestation by the chief financial officer or other delegated individual with a direct reporting relationship to the chief financial officer attesting that the officer believes, in good faith, that the submitted internal controls are designed to provide reasonable assurance that the financial reporting conforms to generally accepted accounting principles in the United States and complies with applicable laws and regulations, including the act and this subpart.

 (c) The initial submission must also be accompanied by a report from an independent registered public accounting firm licensed to practice in this Commonwealth. The report should express an opinion as to the effectiveness of the design of the submitted system of internal controls over financial reporting and should further express an opinion as to whether the submitted system of internal controls materially deviates from the requirements of applicable laws and regulations, including the act and this subpart.

 (d) A submission by a slot machine licensee must include, at a minimum, the following:

 (1) Administrative controls which include the procedures and records that relate to the decision making processes leading to management's authorization of transactions.

 (2) Accounting controls that safeguard assets and revenues and ensure the reliability of financial records. The accounting controls must be designed to provide reasonable assurance that:

 (i) Transactions or financial events which occur in the operation of a slot machine or table game are executed in accordance with management's general and specific authorization.

 (ii) Transactions or financial events which occur in the operation of a slot machine or table game are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles in the United States, the act and this subpart.

 (iii) Transactions or financial events which occur in the operation of a slot machine or table game are recorded in a manner which provides reliable records, accounts and reports, including the recording of cash and evidences of indebtedness, for use in the preparation of reports to the Board related to slot machines or table games.

 (iv) Transactions or financial events which occur in the operation of a slot machine or table game are recorded to ensure accountability for assets and to permit the proper and timely reporting of gross terminal and gross table game revenue, fees and taxes.

 (v) Access to assets is permitted only in accordance with management's general and specific authorization.

 (vi) The recorded accountability for assets is compared with existing physical assets at reasonable intervals and that appropriate action is taken with respect to any discrepancies.

 (3) Procedures and controls for ensuring, in accordance with section 1323 of the act (relating to central control computer system), that each slot machine and fully automated electronic gaming table directly provides and communicates all required activities and financial details to the central control computer system as set by the Board.

 (4) Procedures and controls for ensuring that all functions, duties and responsibilities are segregated and performed in accordance with sound financial practices by qualified personnel.

 (5) Procedures and controls for ensuring, through the use of surveillance and security departments, that the licensed facility is secure during normal operations and during any emergencies due to malfunctioning equipment, loss of power, natural disaster or any other cause.

 (e) The Board, in consultation with the Department, will review each initial submission made under subsection (a) and determine whether it conforms to the requirements of the act and this subpart and provides adequate and effective controls to insure the integrity of the operation of slot machines and table games at a licensed facility. If the Board determines that the submission is deficient in any area, the Board will provide written notice of the deficiency to the slot machine licensee and allow the slot machine licensee to submit a revision to its submission. A slot machine licensee is prohibited from commencing slot or table game operations until its system of internal controls is approved by the Board.

 (f) If a slot machine licensee intends to make a change or amendment to its system of internal controls, it shall submit the change or amendment electronically to the Bureau of Gaming Operations using the Amendment and Waiver Request Form posted on the Board's web site at www.pgcb.pa.gov. A request for a change or amendment must include electronic copies of the attestations required under subsection (b)(1) and (2). The slot machine licensee shall also submit a written copy of the change or amendment and the required attestations to the Department. The slot machine licensee may implement the change or amendment on the 30th calendar day following the filing of a complete submission unless the slot machine licensee receives written notice tolling the change or amendment in accordance with subsection (g).

 (g) If during the 30-day review period in subsection (f), the Bureau of Gaming Operations preliminarily determines that a procedure in a submission contains an insufficiency likely to negatively affect the integrity of slot or table game operations or the control of gross terminal or gross table game revenue, the Bureau of Gaming Operations, by written notice to the slot machine licensee, will:

 (1) Specify the nature of the insufficiency and, when possible, an acceptable alternative procedure.

 (2) Direct that the 30 calendar day review period in subsection (f) be tolled and that any internal controls at issue not be implemented until approved under subsection (i).

 (h) Examples of submissions that may contain an insufficiency likely to negatively affect the integrity of slot or table game operations or the control of gross terminal or gross table game revenue may include the following:

 (1) Submissions that fail to provide an audit trail sufficient to permit the review of gaming operations or the reconstruction of gross terminal or gross table game revenue transactions.

 (2) Submissions that fail to provide for the segregation of incompatible functions so that no employee is in a position to both commit an error or perpetrate a fraud and to conceal the error or fraud in the normal course of the employee's duties.

 (3) Submissions that do not include forms or other materials referenced in the submission or required under the act or this part.

 (4) Submissions that would implement operations or accounting procedures not authorized by the act or this part.

 (5) Submissions that are dependent upon the use of equipment or related devices or software not approved by the Board or Board staff, unless the submissions are required as part of an authorized test of the equipment or related device or software.

 (i) When a change or amendment has been tolled under subsection (g), the slot machine licensee may submit a revised change or amendment within 30 days of receipt of the written notice from the Bureau of Gaming Operations. The slot machine licensee may implement the revised change or amendment upon receipt of written notice of approval from the Board's Executive Director or on the 30th calendar day following the filing of the revision unless the slot machine licensee receives written notice tolling the change or amendment in accordance with subsection (g) or written notice from the Board's Executive Director rejecting the change or amendment.

 (j) A current version of the internal controls of a slot machine licensee shall be maintained in or made available in electronic form through secure computer access to the accounting and surveillance departments of the slot machine licensee and the Board's onsite facilities required under § 465a.8 (relating to licensed facility). The slot machine licensee shall also maintain a copy, either in paper or electronic form, of any superseded internal control procedures for a minimum of 5 years. The original signed two attestations required under subsection (b)(1) and (2) shall also be maintained for a minimum of 5 years. Each page of the internal controls must indicate the date on which it was approved by the Board.

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