Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 69847

Accomplishment Instructions of Boeing Alert 

Service Bulletin 747–21A2418, Revision 2, 

dated March 4, 2004; including Information 

Notice 747–21A2418 IN 01, dated March 11, 

2004. 

Corrective Actions 

(h) If any damage or discrepancy is found 

during any general visual inspection for 

damage required by paragraph (f) or (g) of 

this AD: Before further flight, perform a 

general visual inspection for damage of the 

primary and secondary fuel barriers of the 

center wing tank; structure adjacent to the 

discrepant TADD; and cables, cable pulleys, 

and raised cable seals in the over-wing area; 

do applicable repairs; and replace the 

damaged TADD with a new TADD having the 

same part number or a new, improved TADD 

having a part number listed in the ‘‘New 

TADD Part Number’’ or ‘‘New Sidewall Riser 

Duct Assy Part Number’’ column, as 

applicable, of the tables in Section 2.C.2. of 

the service bulletin. Do all of these actions 

in accordance with the Accomplishment 

Instructions of Boeing Alert Service Bulletin 

747–21A2418, Revision 2, dated March 4, 

2004; including Information Notice 747–

21A2418 IN 01, dated March 11, 2004. Then, 

repeat the test and inspection required by 

paragraph (f) of this AD at the times specified 

in Table 1 of this AD, except as provided by 

paragraphs (i) and (j) of this AD.

Note 3: Only new TADDs, not used ones, 

are acceptable as replacement parts, as 

specified in paragraph (h) of this AD.

(i) For any TADD, whether damaged or not, 

that is replaced with a new TADD having the 

same part number as the TADD being 

replaced: Within 21,200 flight hours after the 

TADD is replaced, do the test to detect hot 

air leaking from the replaced TADD, and 

within 27,000 flight hours after the TADD is 

replaced, do the general visual inspection for 

damage, as specified in paragraph (f) of this 

AD. Thereafter, repeat the test and inspection 

at the repetitive intervals specified in Table 

1 of this AD. 

Optional Terminating Action 

(j) For any TADD that is replaced with a 

new, improved TADD having a part number 

listed in the ‘‘New TADD Part Number’’ or 

‘‘New Sidewall Riser Duct Assy Part 

Number’’ column, as applicable, of the tables 

in Section 2.C.2. of Boeing Alert Service 

Bulletin 747–21A2418, Revision 2, dated 

March 4, 2004; including Information Notice 

747–21A2418 IN 01, dated March 11, 2004: 

The repetitive tests and inspections required 

by this AD are terminated for the TADD that 

is replaced with a new, improved TADD. 

Previously Accomplished Actions 

(k) Actions accomplished before the 

effective date of this AD in accordance with 

Boeing Alert Service Bulletin 747–21A2418, 

dated November 14, 2002; or Revision 1, 

dated October 16, 2003; are acceptable for 

compliance with the corresponding actions 

required by this AD. 

Alternative Methods of Compliance 

(AMOCs) 

(l) The Manager, Seattle Aircraft 

Certification Office (ACO), FAA, has the 

authority to approve AMOCs for this AD, if 

requested in accordance with the procedures 

found in 14 CFR 39.19.

Issued in Renton, Washington, on 

November 17, 2004. 

Ali Bahrami, 

Manager, Transport Airplane Directorate, 

Aircraft Certification Service.

[FR Doc. 04–26492 Filed 11–30–04; 8:45 am] 

BILLING CODE 4910–13–P

NATIONAL INDIAN GAMING 

COMMISSION 

25 CFR Part 542 

RIN 3141–AA27 

Minimum Internal Control Standards

AGENCY: National Indian Gaming 

Commission.

ACTION: Proposed rule revisions.

SUMMARY: In response to the inherent 

risks of gaming enterprises and the 

resulting need for effective internal 

controls in Tribal gaming operations, 

the National Indian Gaming 

Commission (Commission or NIGC) first 

developed Minimum Internal Control 

Standards (MICS) for Indian gaming in 

1999, and then later revised them in 

2002. The Commission recognized from 

the outset that periodic technical 

adjustments and revisions would be 

necessary in order to keep the MICS 

effective in protecting Tribal gaming 

assets and the interests of Tribal 

stakeholders and the gaming public. To 

that end, the following proposed rule 

revisions contain certain proposed 

corrections and revisions to the 

Commission’s existing MICS, which are 

necessary to correct erroneous citations 

or references in the MICS and to clarify, 

improve, and update other existing 

MICS provisions. The purpose of these 

proposed MICS revisions is to address 

apparent shortcomings in the MICS and 

various changes in Tribal gaming 

technology and methods. Public 

comment to these proposed MICS 

revisions will be received by the 

Commission for a period of forty-five 

(45) days after the date of their 

publication in the Federal Register. 

After consideration of all received 

comments, the Commission will make 

whatever changes to the proposed 

revisions that it deems appropriate and 

then promulgate and publish the final 

revisions to the Commission’s MICS 

Rule, 25 CFR part 542.

DATES: Submit comments on or before 

January 18, 2005.

ADDRESSES: Mail comments to 

‘‘Comments to First Proposed MICS 

Rule Revisions, National Indian Gaming 

Commission, 1441 L Street, NW., 

Washington, DC 20005, Attn: ViceChairman Nelson Westrin.’’ Comments 

may be transmitted by facsimile to ViceChairman Westrin at (202) 632–0045, 

but the original also must be submitted 

to the above address.

FOR FURTHER INFORMATION CONTACT:

Vice-Chairman Nelson Westrin, (202) 

632–7003 (not a toll-free number).

SUPPLEMENTARY INFORMATION: 

Background 

On January 5, 1999, the Commission 

first published its Minimum Internal 

Control Standards (MICS) as a Final 

Rule. As gaming Tribes and the 

Commission gained practical experience 

applying the MICS, it became apparent 

that some of the standards required 

clarification or modification to operate 

as the Commission had intended and to 

accommodate changes and advances 

that had occurred over the years in 

Tribal gaming technology and methods. 

Consequently, the Commission, working 

with an Advisory Committee composed 

of Commission and Tribal 

representatives, published the new final 

revised MICS rule on June 27, 2002. 

As the result of the practical 

experience of the Commission and 

Tribes working with the newly revised 

MICS, it has once again become 

apparent that additional corrections, 

clarifications, and modifications are 

needed to ensure that the MICS 

continue to operate as the Commission 

intended. To identify which of the 

current MICS need correction, 

clarification or modification, the 

Commission initially solicited input and 

guidance from NIGC employees, who 

have extensive gaming regulatory 

expertise and experience and work 

closely with Tribal gaming regulators in 

monitoring the implementation, 

operation, and effect of the MICS in 

Tribal gaming operations. The resulting 

input from NIGC staff convinced the 

Commission that the MICS require 

continuing review and prompt revision 

on an ongoing basis to keep them 

effective and up-to-date. To address this 

need, the Commission decided to 

establish a Standing MICS Advisory 

Committee to assist it in both 

identifying and developing necessary 

MICS revisions and revisions on an 

ongoing basis. 

In recognition of its government-togovernment relationship with Tribes 

and related commitment to meaningful 

Tribal consultation, the Commission 

requested gaming Tribes, in January 

2004, for nominations of Tribal 

representatives to serve on its Standing 

69848 Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 

MICS Advisory Committee. From the 

twenty-seven (27) Tribal nominations 

that it received, the Commission 

selected nine (9) Tribal representatives 

in March 2004 to serve on the 

Committee. The Commission’s Tribal 

Committee member selections were 

based on several factors, including the 

regulatory experience and background 

of the individuals nominated, the size(s) 

of their affiliated Tribal gaming 

operation(s), the types of games played 

at their affiliated Tribal gaming 

operation(s), and the areas of the 

country in which their affiliated Tribal 

gaming operation(s) are located. The 

selection process was very difficult, 

because numerous highly qualified 

Tribal representatives were nominated 

to serve on this important Committee. 

As expected, the benefit of including 

Tribal representatives on the 

Committee, who work daily with the 

MICS, has proved to be invaluable. 

Tribal representatives selected to 

serve on the Commission’s Standing 

MICS Advisory Committee are: Tracy 

Burris, Gaming Commissioner, 

Chickasaw Nation Gaming Commission, 

Chickasaw Nation of Okalahoma; Jack 

Crawford, Chairman, Umatilla Gaming 

Commission, Confederated Tribes of the 

Umatilla Indian Reservation; Patrick 

Darden, Executive Director, Chitimacha 

Gaming Commission, Chitimacha Indian 

Tribe of Louisiana; Mark N. Fox, 

Compliance Director, Four Bears Casino, 

Three Affiliated Tribes of the Fort 

Berthold Reservation; Sherrilyn Kie, 

Senior Internal Auditor, Pueblo of 

Laguna Gaming Authority, Pueblo of 

Laguna; Patrick Lambert, Executive 

Director, Eastern Band of Cherokee 

Gaming Commission, Eastern Band of 

Cherokee Indians; John Meskill, 

Director, Mohegan Tribal Gaming 

Commission, Mohegan Indian Tribe; 

Jerome Schultze, Executive Director, 

Morongo Gaming Agency, Morongo 

Band of Mission Indians; and Lorna 

Skenandore, Assistant Gaming Manager, 

Support Services, Oneida Bingo and 

Casino, formerly Gaming Compliance 

Manager, Oneida Gaming Commission, 

Oneida Tribe of Indians of Wisconsin. 

The Advisory Committee also includes 

the following Commission 

representatives: Philip N. Hogen, 

Chairman; Nelson Westrin, ViceChairman; Cloyce V. Choney, Associate 

Commissioner; Joe H. Smith, Acting 

Director of Audits; Ken Billingsley, 

Region III Director; Nicole Peveler, Field 

Auditor; Ron Ray, Field Investigator; 

and Sandra Ashton, Staff Attorney, 

Office of General Counsel. 

In the past, the MICS were 

comprehensively revised on a large 

wholesale basis. Such large-scale 

revisions proved to be difficult for 

Tribes to implement in a timely manner 

and unnecessarily disruptive to Tribal 

gaming operations. The purpose of the 

Commission’s Standing Committee is to 

conduct a continuing review of the 

operation and effectiveness of the 

existing MICS, in order to promptly 

identify and develop needed revisions 

of the MICS, on a manageable 

incremental basis, as they become 

necessary to revise and keep the MICS 

practical and effective. By making more 

manageable incremental changes to the 

MICS on an ongoing basis, the 

Commission hopes to be more prompt 

in developing needed revisions, while, 

at the same time, avoiding larger-scale 

MICS revisions which take longer to 

implement and can be unnecessarily 

disruptive to Tribal gaming operations. 

In accordance with this approach, the 

Commission has developed the 

following proposed MICS rule revisions, 

with the assistance of its Standing MICS 

Advisory Committee. In doing so, the 

Commission is carrying out its statutory 

mandate under the Indian Gaming 

Regulatory Act, 25 U.S.C. 2706(b)(10), to 

promulgate necessary and appropriate 

regulations to implement the provisions 

of the Act. In particular, the following 

proposed MICS rule revisions are 

intended to address Congress’ purpose 

and concern stated in Section 2702(2) of 

the Act, that the Act ‘‘provide a 

statutory basis for the regulation of 

gaming by an Indian tribe adequate to 

shield it from organized crime and other 

corrupting influences, to ensure the 

Indian tribe is the primary beneficiary of 

the gaming operation, and to ensure the 

gaming is conducted fairly and honestly 

by both the operator and the players.’’

The Commission, with the 

Committee’s assistance, identified three 

specific objectives for the following 

proposed MICS rule revisions: (1) To 

ensure that the MICS are reasonably 

comparable to the internal control 

standards of established gaming 

jurisdictions; (2) to ensure that the 

interests of the Tribal stakeholders are 

adequately safeguarded; and (3) to 

ensure that the interests of the gaming 

public are adequately protected.

The Advisory Committee initially met 

on April 8, 2004, and then again on 

October 21, 2004, to discuss the 

revisions set forth in the following 

proposed MICS rule revisions. The 

input received from the Committee 

Members has been invaluable to the 

Commission in its development of the 

following proposed MICS rule revisions. 

In accordance with the Commission’s 

established Government-to-Government 

Tribal Consultation Policy, the 

Commission provided a preliminary 

working draft of all of the proposed 

MICS rule revisions contained herein to 

gaming Tribes on June 22, 2004, for a 

thirty (30)-day informal review and 

comment period, before formulation of 

this proposed rule. In response to its 

requests for comments, the Commission 

received approximately fifty (50) 

comments from Commission and Tribal 

Advisory Committee members, 

individual Tribes, and other interested 

parties regarding the proposed 

revisions. A summary of these 

comments is presented below in the 

discussion of each proposed revision to 

which they relate. 

General Comments to Proposed MICS 

Revisions 

For reasons stated above in this 

preamble, the National Indian Gaming 

Commission proposes to revise the 

following specific sections of its MICS 

rule, 25 CFR part 542. The following 

discussion includes the Commission’s 

responses to general comments 

concerning the MICS and is followed by 

a discussion regarding each of the 

specifically proposed revisions, along 

with previously submitted informal 

comments to the proposed revisions and 

the Commission’s responses to those 

comments. As noted above, prior 

commenters include Commission and 

Tribal Advisory Committee members, 

gaming Tribes, and others. 

Comments Questioning NIGC Authority 

To Promulgate MICS for Class III 

Gaming 

Many of the previous informal 

comments to the preliminary working 

draft of the proposed MICS revisions 

pertained to the Commission’s authority 

to promulgate rules governing the 

conduct of Class III gaming. Positions 

were expressed asserting that Congress 

intended the NIGC’s Class III gaming 

regulatory authority to be limited 

exclusively to the approval of tribal 

gaming ordinances and management 

contracts. Similar comments were 

received concerning the first proposed 

MICS back in 1999. The Commission, at 

that time, determined in its publication 

of the original MICS in 1999 that it 

possessed the statutory authority to 

promulgate Class III MICS. As stated in 

the preamble to those MICS: ‘‘The 

Commission believes that it does have 

the authority to promulgate this final 

rule. * * * [T]he Commission’s 

promulgation of MICS is consistent with 

its responsibilities as the Federal 

regulator of Indian gaming.’’ 64 FR 509 

(Jan. 5, 1999). The current Commission 

reaffirms that determination. The Indian 

Gaming Regulatory Act, which 

established the regulatory structure for 

Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 69849

all classes of Indian gaming, expressly 

provides that the Commission ‘‘shall 

promulgate such regulations as it deems 

appropriate to implement the provisions 

of (the Act)’’. 25 U.S.C. 2707(b)(10). 

Pursuant to this clearly stated statutory 

duty and authority under the Act, the 

Commission has determined that MICS 

are necessary and appropriate to 

implement and enforce the regulatory 

provisions of the Act governing the 

conduct of both Class II and Class III 

gaming and accomplish the purposes of 

the Act. 

The Commission believes that the 

importance of internal control systems 

in the casino operating environment 

cannot be overemphasized. While this is 

true of any industry, it is particularly 

true and relevant to the revenue 

generation processes of a gaming 

enterprise, which, because of the 

physical and technical aspects of the 

games and their operation and the 

randomness of game outcomes, makes 

exacting internal controls mandatory. 

The internal control systems are the 

primary management procedures used 

to protect the operational integrity of 

gambling games, account for and protect 

gaming assets and revenues, and assure 

the reliability of the financial statements 

for Class II and III gaming operations. 

Consequently, internal control systems 

are a vitally important part of properly 

regulated gaming. Internal control 

systems govern the gaming enterprise’s 

governing board, management, and 

other personnel who are responsible for 

providing reasonable assurance 

regarding the achievement of the 

enterprise’s objectives, which typically 

include operational integrity, 

effectiveness and efficiency, reliable 

financial statement reporting, and 

compliance with applicable laws and 

regulations. 

The Commission believes that strict 

regulations, such as the MICS, are not 

only appropriate but necessary for it to 

fulfill its responsibilities under the 

IGRA to establish necessary baseline, or 

minimum, Federal standards for all 

Tribal gaming operations on Indian 

lands. 25 U.S.C. 2702(3). Although the 

Commission recognizes that many 

Tribes had sophisticated internal 

control standards in place prior to the 

Commission’s original promulgation of 

its MICS, the Commission also 

continues to strongly believe that 

promulgation and revision of these 

standards is necessary and appropriate 

to effectively implement the provisions 

of the Indian Gaming Regulatory Act 

and, therefore, within the Commission’s 

clearly expressed statutory power and 

duty under Section 2706(b)(10) of the 

Act. 

Comments Recommending Voluntary 

Tribal Compliance With MICS 

Comments were also received 

suggesting that the NIGC should re-issue 

the MICS as a bulletin or guideline for 

Tribes to use voluntarily, at their 

discretion, in developing and 

implementing their own Tribal gaming 

ordinances and internal control 

standards. 

The Commission disagrees. The MICS 

are common in established gaming 

jurisdictions and, to be effective in 

establishing a minimum baseline for the 

internal operating procedures of Tribal 

gaming enterprises, the rule must be 

concise, explicit, and uniform for all 

Tribal gaming operations to which they 

apply. Furthermore, to nurture and 

promote public confidence in the 

integrity and regulation of Indian 

gaming and ensure its adequate 

regulation to protect Tribal gaming 

assets and the interests of Tribal 

stakeholders and the public, the 

Commission’s MICS regulations must be 

reasonably uniform in their 

implementation and application and 

regularly monitored and enforced by 

Tribal regulators and the NIGC to ensure 

Tribal compliance. 

Proposed New or Revised Definitions in 

Section 542.2 of the MICS 

The Commission proposes to add or 

revise definitions of the following four 

terms in section 542.2. A discussion of 

each proposed new or revised definition 

follows in alphabetical order. The text 

of the proposed new or revised 

definition is set forth following the 

conclusion of this preamble in which of 

all of the proposed revisions to the 

Commission’s MICS rule, 25 CFR part 

542, are discussed. 

‘‘Drop Period’’ 

This is a new definition. Several 

Tribal and Commission Committee 

members recommended that a definition 

of the term ‘‘drop period’’ be added to 

the current existing MICS definitions. In 

conjunction with other proposed 

revisions to the MICS which include 

this term, the NIGC has determined that 

to ensure that such revisions are clear 

and unambiguous, insertion of the 

definition of the term ‘‘drop period’’

into the MICS Definitions section 542.2 

is worthwhile. This definition was 

included in the preliminary working 

draft sent to Tribes for informal review 

and comment prior to formulation of the 

proposed new definition, and no 

comments were received objecting to 

the definition. 

‘‘Gaming Machine’’ 

The Commission proposes to revise 

the existing MICS definition of this term 

to more accurately define the scope of 

the referenced term, as it is used in the 

MICS. Commission and Committee 

members recommended that the existing 

definition for ‘‘gaming machine’’ be 

revised to cover central server based 

linked gaming machines or player 

stations that are being increasingly 

utilized in Indian gaming. Comments 

were subsequently received supporting 

the proposed revision to the gaming 

machine definition, which was set forth 

in the preliminary working draft sent to 

the Committee and Tribes prior to 

formulation of the proposed revised 

definition. Comments were also 

received suggesting that the definition 

should differentiate Class II and Class III 

gaming machines. Comments were also 

received suggesting that instead of 

attempting to list all the various cash 

equivalents a machine might accept, it 

would be better simply to refer to the 

items as cash, coin or cash equivalents.

The Commission disagrees with the 

comment that the definition should 

attempt to narrow or define the 

applicability of the definition based on 

game classification. The definition is 

intended to be broadly applied to all 

gaming machines that are not otherwise 

separately defined in the MICS, such as 

an electronic bingo machine. 

The Commission agrees with the 

suggestion that the term ‘‘cash 

equivalents’’ should be used in the 

definition. We believe the term is more 

representative of the various items that 

could be wagered, in addition to cash 

and coin. The following proposed 

revised definition of ‘‘gaming machine’’

has been modified accordingly to reflect 

this recommendation. 

‘‘Promotional Progressive Pots and/or 

Pools’’ 

The Commission proposes to revise 

the existing MICS definition of this term 

to more accurately define the 

applicability of the referenced term. 

Committee members recommended that 

the definition of ‘‘promotional 

progressive pots and/or pools’’ be 

revised to also apply to poker games. 

The proposed revision was included in 

the preliminary working draft sent to 

the Committee and Tribes for informal 

review and comment before the 

following proposed revised definition 

was formulated. Comments were 

subsequently received supporting the 

proposed revision since most 

progressive promotional pots are 

utilized in poker games. One commenter 

contended that the proposed revision to 

69850 Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 

the progressive promotional pots and/or 

pools definition would create a conflict 

with the definition of secondary 

jackpots. The Commission will further 

consider this comment and examine 

how the two referenced terms are used 

in the MICS. If necessary, we may 

consider in the future whether there is 

any contradiction between the two 

terms that requires modification of the 

definition of secondary jackpots. 

‘‘Series Number’’

This is a new definition. The 

referenced term is used in the current 

MICS but is not defined. Since it has 

been the frequent subject of inquiry 

regarding its meaning, the NIGC has 

determined that a definition of the term 

is warranted. Comments to the 

preliminary working draft were received 

from Committee members and Tribes 

uniformly supporting the addition of 

this proposed new definition to section 

542.2 of the MICS: 

Proposed Correction of Referencing and 

Citation Errors in Sections 542.7, 542.8, 

542.12, and 542.13 of the MICS 

The Commission identified and 

proposes to correct several referencing 

and citation errors in the current MICS. 

The sections where corrective revisions 

are proposed include the following: 

§§ 542.7(g)(1)(i), 542.8(h)(1)(i), 

542.12(i)(4), 542.12(k)(1)(v), 

542.12(k)(1)(ix), 542.12(k)(1)(xvii), and 

542.13(l)(4). 

Each of the referencing and citation 

corrections proposed above was set 

forth in the preliminary working draft 

provided to the Committee and Tribes 

for informal review and comment before 

this proposed rule was formulated. No 

comments were received objecting to 

the proposed corrections. 

Proposed Revisions to Section 542.13(h) 

Standards for Evaluating Theoretical 

and Actual Hold Percentages 

It is common practice in the gaming 

industry that gaming machine 

manufacturers provide gaming operators 

with a Pay Analysis Report (PAR) or 

PAR sheet for each gaming machine that 

they supply to the operator. The PAR 

sheet provides information regarding 

certain design specifications for the 

gaming machine, including the 

statistical theoretical percentage(s) that 

the gaming machine is designed to win 

or hold for the operator (house), based 

on an adequate level of wagering 

activity after payment of game winnings 

to players. A theoretical hold worksheet 

also accompanies the PAR sheet and 

provides additional theoretical hold 

information for the gaming machine, 

frequently including probability 

calculations of the machine’s theoretical 

hold percentages for different specified 

levels of coin-in wagering activity. The 

converse to a gaming machine’s 

theoretical hold percentage is its 

theoretical payback percentage, which is 

the percentage of total money wagered 

that the machine is designed to pay back 

to players as game winnings based on 

adequate levels of wagering activity. A 

gaming machine’s theoretical payback 

percentage can be calculated by 

deducting its specified theoretical hold 

percentage(s) from one. 

Periodic statistical tracking of actual 

gaming machine performance, by 

comparing each machine’s actual hold 

and payback percentages in relation to 

its theoretical hold and/or payback 

percentages, has become a necessary 

standard of management practice to 

ensure the integrity of gaming machine 

operations and safeguard related 

machine revenues and assets. To 

effectively monitor gaming machine 

operations for performance 

irregularities, whether due to machine 

defect, malfunction, embezzlement, 

cheating, or other improper tampering, 

gaming operators are required to 

periodically prepare a gaming machine 

analysis report that compares each 

machine’s actual hold percentages to its 

specified theoretical hold percentage(s), 

based on the levels of coin-in wagering 

activity for each reporting period. Any 

material deviations between the actual 

and theoretical hold percentages must 

be thoroughly investigated by gaming 

machine department management and 

other management personnel 

independent of the gaming operation’s 

gaming machine department. The 

ultimate objective of the gaming 

machine analysis report and 

investigative process is to ensure that 

any material uncharacteristic deviation 

between actual and theoretical hold is 

not due to machine defect, malfunction, 

embezzlement, cheating, or other 

improper tampering; but instead, a 

reasonably expected mathematical 

deviation based on the randomness of 

the machine’s game outcome selection 

mechanism and the number of game 

plays and outcomes analyzed. 

The standards set forth in section 

542.13(h) of the MICS are intended to 

provide a minimum benchmark for 

effective use of gaming machine 

performance analysis by Tribal gaming 

enterprises to safeguard the integrity of 

their gaming machine operations and 

related Tribal gaming assets. In 

establishing these standards, the 

Commission strives to keep them as 

practical and effective as possible for 

the diverse nature and scale of the 

Tribal gaming machine operations to 

which they apply. For that reason, the 

Commission proposes several revisions 

to section 542.13(h). 

Proposed Deletion of Subsection 

542.13(h)(2) 

The Commission’s proposed deletion 

of subsection 542.13(h)(2) will eliminate 

the current requirement that Tribal 

operators utilize a weighted average 

calculation to adjust and determine the 

appropriate theoretical hold percentages 

for periodic analysis of complex gaming 

machines (excluding multi-game multidenominational gaming machines), 

which have manufacturer’s PAR or 

theoretical hold worksheets that specify 

multiple theoretical hold or payback 

percentages, with or without a spread of 

more than 4% between their minimum 

and maximum specified theoretical 

hold/payback percentages. 

Although the manufacturer’s PAR 

sheets and theoretical hold worksheets 

for most gaming machines specify a 

single theoretical hold percentage, 

which can be reliably used for analysis 

of the machine’s actual performance, 

there are other more complex gaming 

machines (excluding multi-gaming and 

multi-denominational gaming 

machines) that have multiple specified 

theoretical hold percentages. Identifying 

the most reliable theoretical hold 

percentage to use for analysis of the 

performance of these more complex 

gaming machines can be very difficult 

and challenging, because the most 

appropriate theoretical hold percentage 

is so dependent upon the different 

amounts of permitted coin-in betting 

wagers (e.g. 1-coin, 2-coin, 3-coin, etc.) 

that players may actually decide to 

make during a given reporting period. 

The weighted average calculation, 

which is currently required by 

subsection 542.13(h)(2), essentially 

weighs the different permitted player 

wagering decisions, by multiplying the 

total amount wagered for each permitted 

coin-in wager amount times the 

specified theoretical hold percentage for 

that wager. Then the sum of the 

individual theoretical hold results for 

each permitted coin-in wager amount is 

divided by the total amount of coin-ins, 

to give a weighted average theoretical 

hold percentage for use in analyzing 

that gaming machine’s overall 

performance during the reporting 

period. 

Based on past MICS compliance 

audits and consultation with other 

gaming jurisdictions, the Commission 

has determined that the currently 

required weighted average calculation 

does not necessarily produce the most 

reliable adjusted theoretical hold 

percentage for analyzing the 

Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 69851

performance of complex gaming 

machines (other than multi-gaming and 

multi-denominational gaming 

machines) which have multiple 

specified theoretical hold percentages. 

Practical experience also demonstrates 

that this is also true regardless of 

whether the spread between the 

minimum and maximum specified 

theoretical hold percentages for such 

complex gaming machines exceeds 4%. 

Accordingly, the Commission proposes 

to delete subsection 542.13(h)(2) in its 

entirety.

In particular, the Commission has 

determined that, excluding multi-game 

and multi-denominational gaming 

machines, complex gaming machines 

with multiple specified theoretical hold 

percentages possess certain 

characteristics that generally result in 

most bettors making the maximum 

allowed coin-in wager. Typically, the 

pay tables for such machines provide for 

a disproportionately larger payout for 

maximum coin-in wagers. This 

naturally causes most players to bet the 

maximum allowable number of coins-in. 

Consequently, the weighted average 

calculation generally produces an 

adjusted theoretical hold percentage 

that is not significantly different than 

simply selecting the machine’s most 

conservative or smallest specified 

theoretical hold percentage. Therefore, 

it is proposed that the required 

weighted average calculations in 

subsection 542.13(h)(2) for complex 

gaming machines, other than multigame and multi-denomination gaming 

machines, be deleted regardless of the 

spread between the machines’ minimum 

and maximum specified multiple 

theoretical hold percentages. Although 

no longer required, circumstances may 

still dictate use of the weighted average 

calculation for such gaming machines, 

instead of simply selecting the most 

conservative or smallest specified 

theoretical hold percentage for the 

machine. In those circumstances, it will 

remain the responsibility of Tribal 

gaming management, subject to Tribal 

Gaming Regulatory Authority (TGRA) 

oversight, to utilize appropriate 

weighted average calculations to 

determine the proper adjusted 

theoretical hold percentages for accurate 

and reliable analysis of gaming machine 

performance. 

Proposed Revisions Renumbering 

Subsection 542.13(h)(4) as New 

Subsection 542.13(h)(2); Extending the 

Weighted Average Calculation 

Requirement to Both Multi-Game and 

Multi-Denomination Gaming Machines; 

and Deleting the 4% Theoretical 

Payback Spread Standard 

The Commission also proposes to 

revise subsection 542.13(h)(4) by 

renumbering it as the new subsection 

542.13(h)(2); extending the required use 

of weighted average calculations to 

determine the adjusted theoretical hold 

percentage for both multi-game and 

multi-denominational gaming machines; 

and deleting the 4% or greater spread 

criteria regarding the minimum and 

maximum specified theoretical payback 

percentage for such machines. While 

concluding that weighted average 

calculations need not be required for 

determining the most appropriate 

adjusted theoretical hold percentage for 

other complex gaming machines with 

multiple specified theoretical hold 

percentages, the Commission has 

determined that such calculations are 

essential for reliable analysis of the 

performance of multi-game and multidenominational gaming machines, 

regardless of whether the spread 

between their minimum and maximum 

specified theoretical hold percentages is 

more or less than 4%. Therefore, the 

Commission proposes to add multidenominational gaming machines to the 

weighted average calculation 

requirement in current subsection 

542.13(h)(4), and also to delete the 

current requirement that the spread 

between the minimum and maximum 

specified multiple theoretical hold 

percentages must exceed 4% before any 

weighted average calculations are 

required to determine the appropriate 

adjusted theoretical hold percentage for 

either multi-game or multidenominational gaming machines. In 

contrast to other complex gaming 

machines with multiple specified 

theoretical hold percentages, multigame and multi-denominational gaming 

machines do not possess common 

characteristics that result in reasonably 

predictable player decisions regarding 

the individual programmed games of the 

multi-game gaming machine they elect 

to play or the amount or denomination 

of their wager. Instead player wagering 

decisions can vary widely and player 

game/denomination selections are also 

highly unpredictable and often subject 

to the effects of intervening management 

decisions, such as the activation/

cancellation of game options, device 

location, gaming floor mix, and paytable 

alternatives. Thus, to effectively identify 

a reliable adjusted theoretical hold 

percentage for analysis of multi-game 

and multi-denominational gaming 

machine performance requires a 

weighted average calculation of player 

coins-in-wagering for each wager/game/

denomination paytable player option. 

Furthermore, it is the Commission’s 

considered judgment that such 

calculations are required and necessary 

regardless of whether the spread 

between the minimum and maximum 

specified multiple theoretical hold 

percentage for the multi-game and/or 

multi-denominational gaming machine 

exceeds 4%. 

Proposed Revisions Renumbering 

Subsection 542.13(h)(19) as New 

Subsection 542.13(h)(18) and Replacing 

the Six Month Play Threshold With a 

Threshold of at Least 100,000 Wagering 

Transactions for Required Investigation 

of Large Variances Between Actual and 

Theoretical Hold 

Based on past experience and 

interaction with Tribal gaming 

regulatory authorities, the Commission 

has determined that the current six (6) 

months play threshold in subsection 

542.13(h)(19) for determining when a 

gaming machine is required to be 

included in the gaming machine 

analysis report is not practical or 

appropriate. Consequently, to more 

accurately define when the comparison 

and investigation of large variances 

between actual and theoretical hold is 

required, the Commission proposes to 

revise subsection 542.13(h)(19) by 

renumbering it as subsection 

542.13(h)(18) and replacing the six (6) 

months play threshold with a play 

threshold of at least 100,000 wagering 

transactions. 

Proposed Revisions to Subsection 

542.13(m)(6) and (7) Accounting/Audit 

Standards for Gaming Machines 

In recognition of the varying 

processes that exist in the gaming 

industry relative to the time period 

between currency drops for gaming 

machines, the Commission has 

determined that the current standard in 

subsection 542.13(m)(6) requiring 

weekly comparison of the bill-in meter 

readings to the total bill acceptor drop 

is impractical and too inflexible. 

Accordingly, the Commission proposes 

to delete the currently required weekly 

comparison and replace it within an 

every ‘‘drop period’’ requirement. The 

term ‘‘drop period’’ is proposed to be 

defined in section 542.2 as the period of 

time between sequential drops. 

Furthermore, in consideration of the 

above proposed revision, the 

Commission also proposes to revise 

69852 Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 

subsection 542.13(m)(7) by deleting the 

current $200.00 threshold for required 

follow-up investigation of an unresolved 

variance between actual currency drop 

and bill-in meter reading and replacing 

it with a threshold amount that is ‘‘both 

more than $25.00 and at least 3 percent 

(3%) of the actual currency drop.’’

Comments Regarding Proposed Deletion 

of 4% Theoretical Payback Spread 

Standard and Elimination of the 

Weighted Average Calculation 

Requirements for Complex Gaming 

Machines, (Excluding Multi-Game or 

Multi-Denominational Gaming 

Machines), With Multiple Theoretical 

Hold Percentages 

Comments were received supporting 

the deletion of both standards, 

indicating that the process will 

potentially become simpler. Comment 

was received supporting the deletion of 

the standards and the willingness of the 

Commission to accept alternative 

methods of identifying the appropriate 

theoretical payback/hold percentage for 

the machines in question, which will 

often involve simply selecting the most 

conservative theoretical hold percentage 

within the range of acceptable 

parameters established by the game 

manufacturer. Such a procedure is 

founded upon the premise that patrons 

will generally opt for max coin bet. 

Comment was received objecting to the 

proposed striking of the weighted 

average calculation for complex gaming 

machines with a spread between 

theoretical payback percentages greater 

than 4%. It was noted that on-line 

computerized accounting systems for 

gaming machines capture the required 

data and facilitate the identification of 

an optimal theoretical payback/hold 

percentage for game analysis. 

Consequently, the commenter 

contended there is no compelling need 

to strike the standard. Comment was 

received questioning whether the 

standard requires the data to be 

collected by hard meter or whether soft 

meters are acceptable. 

The Commission concurs with the 

commenter that the selection of the 

most conservative hold percentage will 

generally produce a benchmark for 

analysis of complex gaming machines, 

other than multi-game and multidenominational machines, that will 

enable the gaming machine analysis 

report to be accurate and effective. 

However, should such a procedure not 

be reflective of the method of play of the 

gaming operation’s patrons, the 

weighted average calculation would 

become the desired alternative. By 

striking the standard, the Commission is 

deferring to the Tribal Gaming 

Regulatory Authority (TGRA) to ensure 

Tribal gaming management employs 

procedures appropriate to identify 

reliable theoretical payback/hold 

percentages for analyzing the 

performance of their complex gaming 

devices with multiple specified 

theoretical hold percentages (excluding 

multi-gaming and multi-denominational 

gaming machines). The Commission 

acknowledges that industry standard 

gaming machines and current 

technology on-line accounting systems 

greatly aid the process of collecting 

data. However, such on-line systems are 

not at this time required by the MICS for 

all gaming machines. Therefore, we do 

not agree that the striking of the 

standard lacks compelling justification.

The Commission refers the 

commenter to the MICS definitions 

regarding the question of whether hard 

or soft meters may be used to collect 

necessary game data and determine 

reliable theoretical payback/hold 

percentages for game performance 

analysis. In accordance with section 

542.2, the term ‘‘meter’’ is defined as 

either hard or soft. Consequently, to 

satisfy the standard, either method of 

collection is permissible. 

Comments Regarding Proposed 

Extension of Weighted Average 

Theoretical Hold Calculation and Other 

Multi-Game Gaming Machine Analysis 

Requirements to Multi-Denominational 

Machines 

Comments were received 

acknowledging the need to extend the 

scope of the standard to include multidenominational machines in addition to 

multi-game devices. Comment was 

received supporting the striking of the 

4% theoretical payback percentage 

spread criteria with regards to multigame and multi-denomination 

machines. The devices in question 

generally represent only a small portion 

of the typical gaming floor. Comment 

was received suggesting that, instead of 

quarterly meter reads, the meters could 

be read annually. Comment was also 

received questioning the need to make 

annual adjustments to the theoretical 

hold percentage for multi-game and 

multi-denomination devices, since the 

recalculation of the theoretical hold 

percentage results in only a nominal 

change. In addition, comment was also 

received regarding the task of 

calculating theoretical payback and hold 

percentages for multi-game machines 

that are also multi-denomination. The 

commenter questioned whether the 

necessary data could be extracted from 

such devices and, even if it could be 

obtained, the multi-tiered calculations 

would be exceedingly cumbersome. 

Finally, comment was received 

questioning whether the potential 

annual adjustment to theoretical hold 

required the gaming machine to be 

considered a new device for purposes of 

the gaming machine analysis report. 

The Commission does not concur 

with the commenter recommendation 

that collecting the meter data on an 

annual basis is acceptable. With regards 

to the collection of wagering data from 

multi-game and multi-denominational 

gaming machines, the more data 

collected the greater the confidence in 

the analysis of patron betting habits and, 

consequently, the more reliable the 

identification of a reliable theoretical 

hold percentage. Due to the changes in 

machine mix and location that 

frequently occur on the gaming floor, 

the Commission believes the subject 

data should be collected on a quarterly 

basis. The Commission does not agree 

with the comment that the annual 

review and adjustment of the previously 

determined theoretical hold percentage 

is of no value. We agree with the 

premise that, if the gaming floor 

remained unaltered from one year to the 

next, the betting habits of the patrons 

are likely to remain constant. However, 

changes to the gaming floor are typically 

frequent, as management attempts to 

generate the greatest return on the 

square footage allocated to the gaming 

machine department. Such 

modifications may involve additions 

and removals of devices, movement of 

machines on the gaming floor, 

activation/deactivation of various game 

options (such as bonusing), changing 

the mix of games offered or increasing 

or restricting the different 

denominations accepted. Each of these 

management decisions can impact the 

theoretical hold of the multi-game and 

multi-denominational gaming machines 

in question. We can certainly 

understand management electing not to 

make an adjustment to the theoretical 

hold when the amount of the 

adjustment will have no significant 

impact on the reliability of the gaming 

machine analysis reports. However, due 

to the volatility of the gaming floor and 

the potential effect such volatility can 

have on patron betting habits, we 

believe the annual testing of previously 

determined theoretical hold percentages 

to be a necessary management practice. 

The Commission appreciates the 

concern raised by a commenter 

regarding the process of determining a 

reliable theoretical hold percentage for 

multi-game devices that also accept 

multi-denomination wagers. The 

Commission acknowledges that the 

standard is intended to address either 

multi-game or multi-denomination but 

Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 69853

is awkward in its application with 

regards to devices that possess both 

characteristics. The standard would 

imply that a multi-tiered level of 

weighted average calculations would be 

required. That, for each denomination 

within each game, the corresponding 

theoretical hold would be weighted by 

patron selection and then the resulting 

game weighted average theoretical hold 

would be weighted by patron game 

selection. Although the exercise would 

certainly produce a theoretical hold 

percentage for use in the game analysis 

report possessing a high level of 

confidence, we question whether such 

an in depth examination of the various 

theoretical percentages, weighted by 

patron selection, is necessary to identify 

a reasonable benchmark to measure 

actual game performance. Generally 

speaking, we believe it would be 

acceptable to calculate a simple 

weighted average of the various 

denominational theoretical hold 

percentages contained within each 

game, and then use that average 

theoretical hold percentage in the 

weighted average calculation based on 

patron game selection. Furthermore, to 

make additional reductions in the 

number of calculations, management 

might consider grouping games with 

similar theoretical hold percentages, i.e.

those with a difference of less than 0.5 

percentage points. In summation, it is 

important not to lose sight of the 

ultimate objective of the standards 

relevant to the statistical tracking of 

gaming performance, which is to 

employ a process that is effective in 

identifying deviations of actual 

performance from the manufacturer’s 

specifications that warrant 

investigation. Such deviations may 

simply result from normal play, or be 

caused by gaming machine defect, 

malfunction, cheating, embezzlement, 

or other improper tampering. Relevant 

to this overall process is the fact that 

many frauds have occurred in Tribal 

gaming over the past few years 

involving false or fraudulent gaming 

machine payouts that could have been 

detected sooner, if the gaming operation 

had had an effective process for 

measuring the appropriateness of actual 

gaming machine performance. 

In response to the question raised by 

a commenter whether the annual 

adjustment to theoretical hold 

percentage requires a gaming machine 

to be given a new machine (asset) 

number for purposes of the gaming 

machine analysis report, the 

Commission refers the commenter to 

section 542.13(h)(16). That section 

explicitly exempts annual theoretical 

hold adjustments made in accordance 

with section 542.13(h)(2) from the 

general requirement that the adjusted 

machine be treated as a new machine. 

Consequently, creation of a new 

machine number is not required when 

such adjustments occur. 

Comments Regarding Proposed Deletion 

of ‘‘Six Month’’ Play Threshold and 

Addition of a ‘‘100,000 Wagering 

Transactions’’ Threshold for Required 

Analysis of Large Gaming Machine 

Variances Between Theoretical and 

Actual Hold 

Comment was received 

recommending that, instead of the 

Commission just striking the six (6) 

month play threshold from section 

542.13(h)(18), consideration should be 

given to replacing it with a threshold of 

100,000 wagering transactions, which 

should be sufficient to trigger a gaming 

machine’s required inclusion in the 

gaming machine analysis report. 

Comments were received strongly 

supporting the change from a specified 

time period to a fixed number of 

wagering transactions, to determine 

when a gaming machine should be 

included in the analysis of actual hold 

performance to theoretical hold. 

Comment was also received suggesting 

that the PAR sheets provide information 

more relevant to when a particular 

device has experienced sufficient play 

to be included in the gaming machine 

analysis process. Comment was also 

received suggesting that the 

recommended range of acceptable 

deviations from theoretical of +/¥3 

percentage points should be struck from 

the MICS. The commenter noted that it 

should be left up to the discretion of the 

TGRA as the primary gaming regulator 

to make the determination. Additional 

comment was also received 

recommending that it should also be left 

to the TGRA to determine when 

sufficient play exists to require the 

machine to be included in the gaming 

analysis report, since the performance of 

some devices should be examined prior 

to 100,000 wagering transactions, while 

others may require more play before any 

investigation of deviations between 

actual and theoretical performance is 

worthwhile. Finally, comment was 

received suggesting that a computerized 

application utilizing a volatility 

indexing mathematical program should 

be an acceptable alternative to the 

process required by the MICS. Such 

programs employ a mathematical 

formula that estimates the minimum 

and maximum ranges of acceptable 

theoretical payback/hold percentages for 

a given machine based on the following: 

(1) The theoretical payback/hold over 

the expected life of the machine; (2) the 

number of winning combinations; (3) 

the payback/hold for the winning 

combinations; and (4) the number of 

games played. In essence, the program 

considers the game characteristics and 

determines a tolerable range of accepted 

performance, which narrows as 

performance predictability increases. 

Typically predictability increases 

commensurate with increasing levels of 

wagering activity.

The Commission concurs with the 

commenter’s recommendation that the 

standard would be better served by 

replacing the specified time period with 

a minimum number of wagering 

transactions. The proposed revision to 

section 542.13(h)(18) has, accordingly, 

been modified to reflect that 

recommendation. The Commission also 

appreciates the suggestion made by the 

commenter that determining when 

sufficient data exists to perform the 

analysis of actual game performance 

should include consideration of the data 

contained within the PAR sheet. It is 

important to recognize that the 100,000 

wagering transaction standard 

establishes a minimum threshold for 

devices to be included in the required 

gaming machine analysis report; 

however, it is also well understood that 

the investigation of unacceptable 

deviations between actual and 

theoretical game performance is a 

complex process. To comment on how 

the Commission determined the 

proposed 100,000 wager transaction 

threshold, a random number generator 

(RNG) with a ten (10) million cycle will 

produce a range between minimum and 

maximum confidence factors of 

approximately three (3) percentage 

points, which we believe justifies an 

investigation of an unacceptable 

deviation, which industry practice 

would identify to be +/¥ 3 percentage 

points between actual hold and 

theoretical hold. However, the analyst 

should also consider the relevant PAR 

sheet in determining the extent to which 

follow-up analysis and investigation is 

warranted. For example, a multi-game 

device, particularly if it also accepts 

multi-denomination, may in fact need 

more than 100,000 wagering 

transactions before it is worthwhile to 

review past performance, i.e. look for an 

abnormally large payout within the 

audit period. With such a device, the 

analyst may determine that insufficient 

play has occurred to perform an in 

depth review of past performance and 

would merely document his/her 

determination. Within reason, we would 

not consider such a determination to be 

noncompliant with the standard. 

69854 Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 

The Commission does not agree with 

the commenter’s suggestion that the 

recommended acceptable deviation 

range of +/¥ 3 percentage points be 

struck from the MICS. We believe the 

recommended range represents industry 

practice and is a reasonable threshold to 

ensure that the gaming machine analysis 

process will be effective. The 

Commission also disagrees with the 

commenter’s recommendation that it 

should be left to the discretion of the 

TGRA to decide when a device must be 

included in the gaming machine 

analysis report. For the regulations 

governing the statistical tracking of 

gaming performance and the 

comparison of actual performance to the 

manufacturer’s theoretical performance 

specifications to be effective, the 

regulation must be precise and 

reasonably uniform in defining its 

applicability. However, we do 

acknowledge that the analysis of the 

data possesses an element of 

subjectivity, which in turn necessitates 

that the analyst have a professional level 

of expertise. Inclusion of a gaming 

machine in the required gaming analysis 

report does not necessarily dictate that 

an in depth investigation of all 

variances is warranted, but does require 

that the gaming performance analyst/

reviewer document the results of their 

determination. 

Finally, the Commission appreciates 

the suggestion by a commenter that a 

volatility indexing mathematical 

program may produce results as reliable 

as, or even more reliable, than the 

weighted average calculation required 

for multi-game and multidenominational gaming machines in the 

MICS. In response, it is noteworthy that 

at section 542.3(c), the TGRA is required 

to adopt regulations that provide a level 

of control that equals or exceeds the 

MICS. Although the rule does not 

condone the TGRA accepting 

management procedures that are in 

conflict with the MICS, it does not 

preclude acceptance of procedures or 

controls that are different and at least as 

stringent as those contained within the 

MICS. Furthermore, at section 542.13(b), 

computerized applications that provide 

at least the same level of control as the 

MICS are deemed to be acceptable 

under the current MICS. Based on the 

data provided by the commenter, it is 

the belief of the Commission that the 

noted mathematical formula would be 

an acceptable alternative procedure. 

However, it is incumbent upon 

management to adequately document 

the process and its effectiveness in 

providing the required level of control 

and reliability in analyzing game 

performance. 

Comments Regarding the Proposed 

Revision of Section 542.13(m)(6) To 

Require Comparison of Bill-In Meter 

Readings With Total Bill Acceptor Drop 

Amounts for Each Drop Period Instead 

of Weekly 

Comments were received concurring 

with the proposed revision. Comment 

was also received noting that the 

proposed standard is stricter, but also 

acknowledging that the impact on 

management’s gaming machine 

accounting/audit function should be 

nominal. Finally, comment was 

received supporting the proposed 

revision and noting that it should make 

the follow-up process less cumbersome. 

Comments Regarding the Proposed 

Revision of Section 542.13(m)(7) 

Requiring Follow-Up of Unresolved 

Variances Between the Currency Drop 

and Bill-In Meter Readings to Amounts 

Greater Than $25 and 3% Instead of 

$200.00 

Comment was received suggesting 

language in the initially proposed 

revision to clarify the applicability of 

$25 or 3%. Comment was received 

objecting to the revision because it 

would allow variances to go 

uninvestigated that should be subjected 

to review. Basically, the commenter 

contends that the rule is too liberal and 

results in the control being ineffective. 

Comment was received recommending 

the threshold be 5% and $25. 

The Commission accepts the 

commenter recommendation regarding 

more explicit language and has 

modified the proposed revision 

accordingly. The Commission 

understands the commenter concern for 

the rule becoming less stringent and 

possibly ineffective. However, the 

existing rule requires that a variance of 

$200 per machine per week must be 

investigated. Assuming the Tribal 

gaming operation performs a daily drop, 

the average variance threshold per day 

would be $28.57. Because the drop must 

exceed $833.33 before the 3% criteria 

becomes effective, for all practical 

purposes, the vast majority of variances 

will be subject to the $25 threshold. 

Consequently, we do not believe the 

revision will have a material impact on 

the effectiveness of the control. 

However, by changing the time frame 

from a week to a drop period, we 

believe the standard becomes more 

consistent with the workflows of the 

revenue audit process. The Commission 

does not concur with the 

recommendation that the threshold be 

increased to 5% or $25. With regards to 

drop amounts, the proposed rule results 

in the $25 threshold being applicable to 

drops of $25 to $833.33. The commenter 

recommendation would cause the $25 

threshold to be applicable to drops of 

$25 to $500, which would, in effect, 

result in a lessening of the control. We 

do not believe there is a compelling 

basis for making the recommended 

change.

Proposed Revisions to Subsection 

542.16(a)(1) General Controls for 

Gaming Hardware and Software 

Deletion of Requirement in Vendor 

Software/Hardware Agreements That 

Vendors Agree To Adhere to Related 

Tribal Internal Controls 

Since initial adoption, this standard 

has often been a troublesome 

requirement for management and Tribal 

gaming regulatory authorities to 

implement and enforce. The NIGC is not 

unsympathetic to the challenges created 

by the regulation when a vendor is 

uncooperative. Although not wishing to 

discourage Tribal regulators or gaming 

operators from striving to ensure that 

vendor products are compliant with all 

applicable Tribal laws and regulations, 

the NIGC does not believe such a 

control contained within the part 542 is 

appropriate as a minimum standard and 

proposes to delete and revise the 

Information Technology Section 

accordingly. 

Comment was received supporting 

deletion of the standard, but noting that 

management should continue to be held 

accountable by the TGRA to ensure that 

agreements/contracts are not entered 

into that would cause the gaming 

operation to be noncompliant with any 

Tribal, State or Federal laws or 

regulations. Furthermore, the TGRA 

should not hesitate to enact and enforce 

such regulations of their own specific to 

vendor contract requirements. Comment 

was also received supporting deletion of 

the standard because it creates an undue 

hardship on management in the 

negotiation of vendor agreements. 

Additional comment was received 

supporting the deletion of the standard 

because violations by vendors are often 

difficult and troublesome to enforce, 

which causes the regulation to be fairly 

meaningless. Other comment was 

received objecting to deletion of the 

standard because it provides an added 

level of protection for Tribes from 

unscrupulous vendors in their gaming 

enterprises. Additional comment was 

received from a TGRA noting that, 

notwithstanding deletion of the 

standard from the MICS, the Tribe 

intends to keep the control in their 

Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 69855

regulations, which is a Tribe’s right as 

primary regulator under IGRA. 

The Commission does not concur 

with the comments objecting to deletion 

of the standard. Although it could be 

argued that the Commission should 

exercise greater regulatory authority 

over gaming vendors to protect the 

integrity of Tribal gaming, we do not 

believe the standard in question 

represents an appropriate and effective 

vehicle for accomplishing that objective. 

Proposed Revisions to Section 542.18 

Regarding the Process for Commission 

Review and Determination of Tribal 

Requests for a Variance From the MICS 

in Their Tribal Internal Control 

Standards 

To more clearly describe the current 

variance process, the NIGC proposes to 

revise section 542.18 of the MICS. 

Specifically, the revisions are intended 

to more clearly describe the authority 

and duties of the Chairman, his/her 

designee, and the full Commission, and 

the appeal rights of the Tribal petitioner. 

The proposed revisions are also 

proposed to ensure that an adequate 

factual investigation and record is 

developed for administrative and 

judicial review of the merits of the 

Chairman’s decision on each variance 

request. 

Comment was received supporting the 

proposed revisions. Comment was also 

received supporting the revisions, 

except for that part that prohibits the 

implementation of a TGRA approved 

variance until after concurrence has 

been received from the Commission. 

Comment was received questioning 

whether the petitioner Tribe has the 

authority to extend stipulated time 

frames in the variance process. 

Additional comment was received 

questioning whether the thirty (30) day 

period associated with a review by 

NIGC staff of a resubmission was 

sufficient. Further comment was 

received questioning the potential result 

of a petitioner objecting to an extension 

of a stipulated time period requested by 

NIGC staff. Specifically, the concern is 

that refusal of such a request might 

result in summary denial of the variance 

request. Comment was also received 

questioning the need for extensions of 

the time frames provided. A commenter 

represented that the stipulated time 

periods should be sufficient. Finally, 

comment was received suggesting that 

the Commission should consider 

variance requests only after they have 

been approved by the TGRA. 

The Commission understands the 

commenter’s objection to deferring 

implementation of a TGRA approved 

variance until receipt of Commission 

concurrence; however, to preserve the 

integrity of the MICS, the regulatory 

body responsible for its enactment must 

have the latitude to prohibit the 

implementation of procedures deemed 

to be unacceptable and contrary to the 

NIGC’s MICS regulations. The 

Commission also recognizes that the 

variance concurrence process is one 

initiated by the petitioner. Therefore, 

the Commission would not be 

unreasonable in considering requests for 

additional time from the petitioner. It is 

noteworthy to such a position that the 

implementation of the proposed 

alternative procedure is precluded until 

after the Commission has concurred. 

The Commission acknowledges the 

concern expressed by a commenter 

regarding the time afforded NIGC staff to 

review a resubmission. Therefore, 

language has been added to enable staff 

to extend the period, subject to 

concurrence by the petitioner. The 

Commission understands the concern 

expressed by a commenter regarding a 

possible decision not to concur, if 

acceptance of an extension to a 

stipulated time period was not agreed. 

Certainly, the petitioner should be well 

aware that the investigation of pertinent 

facts and data associated with a variance 

request may take hours or many months, 

depending upon its complexity. 

Although requests for additional time 

should be reasonable and based on 

cause, the petitioner should also be well 

aware that the undue refusal to grant 

additional time may result in a 

determination different than that which 

would have otherwise been rendered, if 

the petitioners had agreed to the 

Chairman’s request for more adequate 

time to investigate and decide their 

variance request. Notwithstanding the 

question pertaining to extension of time 

frames, the petitioner’s right to appeal 

would continue to exist. 

The Commission disagrees with the 

commenter’s contention that time 

period extensions are not warranted. 

Although some variance requests can be 

readily addressed, particularly if the 

staff charged with performing the 

research has past experience with 

similar requests, most will involve 

extensive analysis. Seldom is a petition 

simply responded to. Instead, a filing 

will generally initiate a back and forth 

exchange with the petitioner as staff 

seeks additional information or 

clarifications regarding the requested 

variance. Alternative procedures 

involving new technology often involve 

travel by staff to consult with 

manufactures and other regulators or 

operators. Inherent to the analysis of a 

variance request is the identification of 

risk and evaluation of compensating 

controls. The time periods contained 

within the regulation will generally be 

appropriate for the more simple 

concurrence requests; however, 

complex requests will typically require 

one or more extensions of the allotted 

time frame. The Commission concurs 

with the commenter’s suggestion 

regarding consideration of variance 

requests only after they have been 

approved by the TGRA. In accordance 

with the proposed rule, a variance 

request received by the Commission 

lacking evidence of the TGRA approval 

would not be considered. Since such a 

submission would lack authority. 

Proposed Revisions To Add the 

Following New Sections to the MICS 

Establishing Minimum Standards for 

Computerized Key Security Systems 

Section 542.21(t)–(w) What are the 

minimum internal controls for drop and 

count for Tier A gaming operations? 

Section 542.31(t)–(w) What are the 

minimum internal controls for drop and 

count for Tier B gaming operations? 

Section 542.41(t)–(w) What are the 

minimum internal controls for drop and 

count for Tier C gaming operations? 

These are proposed new MICS 

sections. In recognition of an increasing 

number of gaming operations utilizing 

or considering the utilization of 

computerized key control systems, the 

NIGC has determined that regulations 

addressing such systems are warranted 

for Tier A, B, and C Tribal gaming 

operations. 

Comment was received supporting the 

proposed revisions noting that 

electronic key control systems are 

becoming more prevalent. Comment 

was also received supporting the 

determination by the Commission to 

adopt standards specifically covering 

the use of computerized key control 

systems in Tier A, B, and C gaming 

operations and not rely solely on the 

general MICS regulation covering 

computerized applications. Comment 

was also received supporting the new 

regulation and noting that the controls 

also provide for an audit function. 

Comment was received supporting the 

new regulation, but noting that the 

TGRA should also consider more 

stringent standards. Comment was 

received recommending that the 

auditing procedures, particularly the 

quarterly inventory of keys, be 

performed by accounting/auditing 

personnel independent of the key 

control process. Additional comment 

was received questioning the need for 

the regulations since most of the 

controls are already in the MICS. 

Comment was received recommending 

69856 Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 

that the regulation more clearly 

differentiate the function of key 

custodian from system administrator. 

Comment was also received questioning 

the need for three persons to be 

involved in accessing the manual 

override key to open the box to perform 

repairs. It was noted that the persons 

accessing the box would not have access 

to the slot drop and count keys. For the 

purpose of making repairs, only two 

persons should be required to gain 

access to the manual override key.

The Commission disagrees with the 

commenter questioning the need for the 

new regulations. Computerized key 

control systems have been the subject of 

several Tribal variance requests over the 

past few years. Therefore, the 

Commission believes it appropriate to 

establish minimum standards specific to 

such systems. The Commission concurs 

with the commenter recommendation 

that the auditing procedures be 

performed by accounting/auditing 

personnel independent of the key 

control process. The proposed 

regulation for all three tiers has been 

changed accordingly. The Commission 

also concurs with the commenter’s 

recommendation that the key custodian 

functions be more clearly defined and 

noted as being separate from those of 

the system administrator. Accordingly, 

the proposed revisions been modified in 

all three new sections to more clearly 

define separation of the two functions. 

The Commission also concurs with the 

commenter’s suggestion that only two 

people be required to access the manual 

override key to make repairs to the key 

control box. Such access would not 

include access to the coin drop and 

count keys. The proposed revisions 

have been modified to reflect the 

suggestion of the commenter in all three 

proposed new MICS sections. 

Regulatory Matters 

Regulatory Flexibility Act 

The Commission certifies that the 

proposed revisions to the Minimum 

Internal Control Standards contained 

within this regulation will not have a 

significant economic impact on small 

entities, 5 U.S.C. 605(b). The factual 

basis for this certification is as follows: 

Of the 330 Indian gaming operations 

across the country, approximately 93 of 

the operations have gross revenues of 

less than $5 million. Of these, 

approximately 39 operations have gross 

revenues of under $1 million. Since the 

proposed revisions will not apply to 

gaming operations with gross revenues 

under $1 million, only 39 small 

operations may be affected. While this 

is a substantial number, the Commission 

believes that the proposed revisions will 

not have a significant economic impact 

on these operations for several reasons. 

Even before implementation of the 

original MICS, Tribes had internal 

controls because they are essential to 

gaming operations in order to protect 

assets. The costs involved in 

implementing these controls are part of 

the regular business costs incurred by 

such an operation. The Commission 

believes that many Indian gaming 

operation internal control standards that 

are more stringent than those contained 

in these regulations. Further, these 

proposed rule revisions are technical 

and minor in nature. 

Under the proposed revisions, small 

gaming operations grossing under $1 

million are exempted from MICS 

compliance. Tier A facilities (those with 

gross revenues between $1 and $5 

million) are subject to the yearly 

requirement that independent certified 

public accountant testing occur. The 

purpose of this testing is to measure the 

gaming operation’s compliance with the 

tribe’s internal control standards. The 

cost of compliance with this 

requirement for small gaming operation 

is estimated at between $3,000 and 

$5,000. The cost of this report is 

minimal and does not create a 

significant economic effect on gaming 

operations. What little impact exists is 

further offset because other regulations 

require yearly independent financial 

audits that can be conducted at the same 

time. For these reasons, the Commission 

has concluded that the proposed rule 

revisions will not have a significant 

economic impact on those small entities 

subject to the rule. 

Small Business Regulatory Enforcement 

Fairness Act 

These following proposed revisions 

do not constitute a major rule under 5 

U.S.C. 804(2), the Small Business 

Regulatory Enforcement Fairness Act. 

The revisions will not have an annual 

effect on the economy of $100 million 

or more. The revisions also will not 

cause a major increase in costs or prices 

for consumers, individual industries, 

federal, state or local government 

agencies or geographic regions and does 

not have a significant adverse effect on 

competition, employment, investment, 

productivity, innovation, or the ability 

of U.S. based enterprises to compete 

with foreign-based enterprises. 

Unfunded Mandates Reform Act 

The Commission is an independent 

regulatory agency and, as such, is not 

subject to the Unfunded Mandates 

Reform Act. Even so, the Commission 

has determined that the proposed rule 

revisions do not impose an unfunded 

mandate on State, local, or Tribal 

governments, or on the private sector, of 

more than $100 million per year. Thus, 

this is not a ‘‘significant regulatory 

action’’ under the Unfunded Mandates 

Reform Act, 2 U.S.C. 1501 et seq.

The Commission has, however, 

determined that the proposed rule 

revisions may have a unique effect on 

Tribal governments, as they apply 

exclusively to Tribal governments, 

whenever they undertake the 

ownership, operation, regulation, or 

licensing of gaming facilities on Indian 

lands, as defined by the Indian Gaming 

Regulatory Act. Thus, in accordance 

with Section 203 of the Unfunded 

Mandates Reform Act, the Commission 

undertook several actions to provide 

Tribal governments with adequate 

notice, opportunity for ‘‘meaningful’’

consultation, input, and shared 

information, advice, and education 

regarding compliance. 

These actions included the formation 

of a Tribal Advisory Committee and the 

request for input from Tribal leaders. 

Section 204(b) of the Unfunded 

Mandates Reform Act exempts from the 

Federal Advisory Committee Act (5 

U.S.C. App.) meetings with Tribal 

elected officials (or their designees) for 

the purpose of exchanging views, 

information, and advice concerning the 

implementation of intergovernmental 

responsibilities or administration. In 

selecting Committee members, 

consideration was placed on the 

applicant’s experience in this area, as 

well as the size of the Tribe the nominee 

represented, geographic location of the 

gaming operation, and the size and type 

of gaming conducted. The Commission 

attempted to assemble a Committee that 

incorporates diversity and is 

representative of Tribal gaming 

interests. The Commission will meet 

with the Advisory Committee to discuss 

the public comments that are received 

as a result of the publication of the 

following proposed MICS rule revisions, 

and will consider all Tribal and public 

comments and Committee 

recommendations before formulating 

the final rule revisions. The 

Commission also plans to continue its 

policy of providing necessary technical 

assistance, information, and support to 

enable Tribes to implement and comply 

with the MICS as revised. 

The Commission also provided the 

proposed revisions to Tribal leaders for 

comment prior to publication of this 

proposed rule and considered these 

comments in formulating the proposed 

rule. 

Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 69857

Takings 

In accordance with Executive Order 

12630, the Commission has determined 

that the following proposed MICS rule 

revisions do not have significant takings 

implications. A takings implication 

assessment is not required. 

Civil Justice Reform 

In accordance with Executive Order 

12988, the Office of General Counsel has 

determined that the following proposed 

MICS rule revisions do not unduly 

burden the judicial system and meet the 

requirements of sections 3(a) and 3(b)(2) 

of the Order. 

Paperwork Reduction Act 

The following proposed MICS rule 

revisions require information collection 

under the Paperwork Reduction Act 44 

U.S.C. 3501 et seq., as did the rule it 

revises. There is no change to the 

paperwork requirements created by 

these proposed revisions. The 

Commission’s OMB Control Number for 

this regulation is 3141–0009. 

National Environmental Policy Act 

The Commission has determined that 

the following proposed MICS rule 

revisions do not constitute a major 

Federal action significantly affecting the 

quality of the human environment and 

that no detailed statement is required 

pursuant to the National Environmental 

Policy Act of 1969 (42 U.S.C. 4321 et 

seq).

List of Subjects in 25 CFR Part 542 

Accounting, Auditing, Gambling, 

Indian-lands, Indian-tribal government, 

Reporting and recordkeeping 

requirements.

Accordingly, for all of the reasons set 

forth in the foregoing preamble, the 

National Indian Gaming Commission 

proposes to amend 25 CFR part 542 as 

follows:

PART 542—MINIMUM INTERNAL 

CONTROL STANDARDS 

1. The authority citation for part 542 

continues to read as follows:

Authority: 25 U.S.C. 2701 et seq.

2. Section 542.2 is amended by 

adding in alphabetical order the 

definitions for ‘‘Drop Period’’ and 

‘‘Series number’’, and by revising the 

definitions for ‘‘Gaming Machine’’ and 

‘‘Promotional progressive pots and/or 

pools’’ to read as follows:

§ 542.2 What are the definitions for this 

part?

* * * * *

Drop period means the period of time 

that occurs between sequential drops.

* * * * *

Gaming machine means an electronic 

or electromechanical machine that 

allows a player to play games of chance, 

some of which may be affected by skill, 

which contains a microprocessor with 

random number generator capability for 

outcome selection or computer terminal 

that accesses an outcome that is 

subsequently and randomly selected in 

drawings that are electronically 

conducted by central computer or other 

such methods of chance selection, 

whether mechanical or electronic. The 

machine is activated by the insertion of 

cash or cash equivalents and which 

awards cash, cash equivalents, 

merchandise, or a written statement of 

the player’s accumulated credits, which 

written statements may be redeemable 

for cash.

* * * * *

Promotional progressive pots and/or 

pools means funds contributed to a table 

game or card game by and for the benefit 

of players. Funds are distributed to 

players based on a predetermined event.

* * * * *

Series number means the unique 

identifying number printed on each 

sheet of bingo paper that identifies the 

bingo paper as a series or packet. The 

series number is not the free space or 

center space number located on the 

bingo paper.

* * * * *

3. Amend § 542.7 by revising 

paragraph (g)(1)(i) to read as follows:

§ 542.7 What are the minimum internal 

control standards for bingo?

* * * * *

(g) * * * 

(1) * * * 

(i) If the electronic equipment 

contains a bill acceptor, then § 542.21(e) 

and (f), § 542.31(e) and (f), or § 542.41(e) 

and (f) (as applicable) shall apply.

* * * * *

4. Revise § 542.8 by revising 

paragraph (h)(1)(i) to read as follows:

§ 542.8 What are the minimum internal 

control standards for pull tabs?

* * * * *

(h) * * * 

(1) * * *

(i) If the electronic equipment 

contains a bill acceptor, then § 542.21(e) 

and (f), § 542.31(e) and (f), or § 542.41(e) 

and (f) (as applicable) shall apply.

* * * * *

5. Amend § 542.12 by revising 

paragraphs (i)(4) and (k)(l)(v), (ix), and 

(xvii) to read as follows:

§ 542.12 What are the minimum internal 

control standards for table games?

* * * * *

(i) * * * 

(4) The management in paragraph 

(i)(3) of this section shall investigate any 

unusual fluctuations in hold percentage 

with pit supervisory personnel.

* * * * *

(k) * * * 

(1) * * *

* * * * *

(v) The marker form shall be prepared 

in at least triplicate form (triplicate form 

being defined as three parts performing 

the functions delineated in the standard 

in paragraph (k)(1)(vi) of this section), 

with a preprinted or concurrentlyprinted marker number, and utilized in 

numerical sequence. (This requirement 

shall not preclude the distribution of 

batches of markers to various pits.)

* * * * *

(ix) The forms required in paragraphs 

(k)(1)(v), (vi), and (viii) of this section 

shall be safeguarded, and adequate 

procedures shall be employed to control 

the distribution, use, and access to these 

forms.

* * * * *

(xvii) When partial payments are 

made in the pit, the payment slip of the 

marker that was originally issued shall 

be properly cross-referenced to the new 

marker number, completed with all 

information required by paragraph 

(k)(1)(xv) of this section, and inserted 

into the drop box.

* * * * *

5. Amend § 542.13 by revising 

paragraph (h), (1)(4), and (m)(6) and (7) 

to read as follows:

§ 542.13 What are the minimum internal 

control standards for gaming machines?

* * * * *

(h) Standards for evaluating 

theoretical and actual hold percentages. 

(1) Accurate and current theoretical 

hold worksheets shall be maintained for 

each gaming machine. 

(2) For multi-game/multidenominational machines, an employee 

or department independent of the 

gaming machine department shall: 

(i) Weekly, record the total coin-in 

meter; 

(ii) Quarterly, record the coin-in 

meters for each paytable contained in 

the machine; and 

(iii) On an annual basis, adjust the 

theoretical hold percentage in the 

gaming machine statistical report to a 

weighted average based upon the ratio 

of coin-in for each game paytable. 

(3) For those gaming operations that 

are unable to perform the weighted 

average calculation as required by 

69858 Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 

paragraph (h)(2) of this section, the 

following procedures shall apply: 

(i) On at least an annual basis, 

calculate the actual hold percentage for 

each gaming machine; 

(ii) On at least an annual basis, adjust 

the theoretical hold percentage in the 

gaming machine statistical report for 

each gaming machine to the previously 

calculated actual hold percentage; and 

(iii) The adjusted theoretical hold 

percentage shall be within the spread 

between the minimum and maximum 

theoretical payback percentages. 

(4) The adjusted theoretical hold 

percentage for multi-game/multidenominational machines may be 

combined for machines with exactly the 

same game mix throughout the year. 

(5) The theoretical hold percentages 

used in the gaming machine analysis 

reports should be within the 

performance standards set by the 

manufacturer. 

(6) Records shall be maintained for 

each machine indicating the dates and 

type of changes made and the 

recalculation of theoretical hold as a 

result of the changes. 

(7) Records shall be maintained for 

each machine that indicate the date the 

machine was placed into service, the 

date the machine was removed from 

operation, the date the machine was 

placed back into operation, and any 

changes in machine numbers and 

designations. 

(8) All of the gaming machines shall 

contain functioning meters that shall 

record coin-in or credit-in, or on-line 

gaming machine monitoring system that 

captures similar data. 

(9) All gaming machines with bill 

acceptors shall contain functioning billin meters that record the dollar amounts 

or number of bills accepted by 

denomination. 

(10) Gaming machine in-meter 

readings shall be recorded at least 

weekly (monthly for Tier A and Tier B 

gaming operations) immediately prior to 

or subsequent to a gaming machine 

drop. On-line gaming machine 

monitoring systems can satisfy this 

requirement. However, the time 

between readings may extend beyond 

one week in order for a reading to 

coincide with the end of an accounting 

period only if such extension is for no 

longer than six (6) days. 

(11) The employee who records the 

in-meter reading shall either be 

independent of the hard count team or 

shall be assigned on a rotating basis, 

unless the in-meter readings are 

randomly verified quarterly for all 

gaming machines and bill acceptors by 

a person other than the regular in-meter 

reader. 

(12) Upon receipt of the meter reading 

summary, the accounting department 

shall review all meter readings for 

reasonableness using pre-established 

parameters. 

(13) Prior to final preparation of 

statistical reports, meter readings that 

do not appear reasonable shall be 

reviewed with gaming machine 

department employees or other 

appropriate designees, and exceptions 

documented, so that meters can be 

repaired or clerical errors in the 

recording of meter readings can be 

corrected. 

(14) A report shall be produced at 

least monthly showing month-to-date, 

year-to-date (previous twelve (12) 

months data preferred), and if 

practicable, life-to-date actual hold 

percentage computations for individual 

machines and a comparison to each 

machine’s theoretical hold percentage 

previously discussed. 

(15) Each change to a gaming 

machine’s theoretical hold percentage, 

including progressive percentage 

contributions, shall result in that 

machine being treated as a new machine 

in the statistical reports (i.e., not 

commingling various hold percentages), 

except for adjustments made in 

accordance with paragraph (h)(2) of this 

section. 

(16) If promotional payouts or awards 

are included on the gaming machine 

statistical reports, it shall be in a 

manner that prevents distorting the 

actual hold percentages of the affected 

machines. 

(17) The statistical reports shall be 

reviewed by both gaming machine 

department management and 

management employees independent of 

the gaming machine department on at 

least a monthly basis. 

(18) For those machines that have 

experienced at least 100,000 wagering 

transactions, large variances (three 

percent (3%) recommended) between 

theoretical hold and actual hold shall be 

investigated and resolved by a 

department independent of the gaming 

machine department with the findings 

documented and provided to the Tribal 

gaming regulatory authority upon 

request in a timely manner. 

(19) Maintenance of the on-line 

gaming machine monitoring system data 

files shall be performed by a department 

independent of the gaming machine 

department. Alternatively, maintenance 

may be performed by gaming machine 

supervisory employees if sufficient 

documentation is generated and it is 

randomly verified on a monthly basis by 

employees independent of the gaming 

machine department. 

(20) Updates to the on-line gaming 

machine monitoring system to reflect 

additions, deletions, or movements of 

gaming machines shall be made at least 

weekly prior to in-meter readings and 

the weigh process.

* * * * *

(l) * * *

(4) Reports, where applicable, 

adequately documenting the procedures 

required in paragraph (l)(3) of this 

section shall be generated and retained. 

(m) * * * 

(6) For each drop period, accounting/

auditing employees shall compare the 

bill-in meter reading to the total bill 

acceptor drop amount for the period. 

Discrepancies shall be resolved before 

the generation/distribution of gaming 

machine statistical reports. 

(7) Follow-up shall be performed for 

any one machine having an unresolved 

variance between actual currency drop 

and bill-in meter reading in excess of an 

amount that is both more than $25 and 

at least three percent (3%) of the actual 

currency drop. The follow-up performed 

and results of the investigation shall be 

documented, maintained for inspection, 

and provided to the Tribal gaming 

regulatory authority upon request.

* * * * *

6. Amend § 542.16 by revising 

paragraph (a)(1) introductory to read as 

follows:

§ 542.16 What are the minimum internal 

control standards for information 

technology? 

(a) * * * 

(1) Management shall take an active 

role in making sure that physical and 

logical security measures are 

implemented, maintained, and adhered 

to by personnel to prevent unauthorized 

access that could cause errors or 

compromise data or processing 

integrity.

* * * * *

7. Revise § 542.18 to read as follows:

§ 542.18 How does a gaming operation 

apply for a variance from the standards of 

the part? 

(a) Tribal gaming regulatory authority 

approval. (1) A Tribal gaming regulatory 

authority may approve a variance for a 

gaming operation if it has determined 

that the variance will achieve a level of 

control sufficient to accomplish the 

purpose of the standard it is to replace. 

(2) For each enumerated standard for 

which the Tribal gaming regulatory 

authority approves a variance, it shall 

submit to the Chairman of the NIGC, 

within thirty (30) days, a detailed 

report, which shall include the 

following: 

Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 69859

(i) A detailed description of the 

variance; 

(ii) An explanation of how the 

variance achieves a level of control 

sufficient to accomplish the purpose of 

the standard it is to replace; and 

(iii) Evidence that the Tribal gaming 

regulatory authority has approved the 

variance. 

(3) In the event that the Tribal gaming 

regulatory authority or the Tribe 

chooses to submit a variance request 

directly to the Chairman, it may do so 

without the approval requirement set 

forth in paragraph (a)(2)(iii) of this 

section and such request shall be 

deemed as having been approved by the 

Tribal gaming regulatory authority. 

(b) Review by the Chairman. (1) 

Following receipt of the variance 

approval, the Chairman or his or her 

designee shall have sixty (60) days to 

concur with or object to the approval of 

the variance. 

(2) Any objection raised by the 

Chairman shall be in the form of a 

written explanation based upon the 

following criteria: 

(i) There is no valid explanation of 

why the gaming operation should have 

received a variance approval from the 

Tribal gaming regulatory authority on 

the enumerated standard; or 

(ii) The variance as approved by the 

Tribal gaming regulatory authority does 

not provide a level of control sufficient 

to accomplish the purpose of the 

standard it is to replace. 

(3) If the Chairman fails to object in 

writing within sixty (60) days after the 

date of receipt of a complete 

submission, the variance shall be 

considered concurred with by the 

Chairman. 

(4) The 60-day deadline may be 

extended, provided such extension is 

mutually agreed upon by the Tribal 

gaming regulatory authority and the 

Chairman. 

(c) Curing Chairman’s objections. (1) 

Following an objection by the Chairman 

to the issuance of a variance, the Tribal 

gaming regulatory authority shall have 

the opportunity to cure any objections 

noted by the Chairman. 

(2) A Tribal gaming regulatory 

authority may cure the objections raised 

by the Chairman by: 

(i) Rescinding its initial approval of 

the variance; or 

(ii) Rescinding its initial approval, 

revising the variance, approving it, and 

re-submitting it to the Chairman. 

(3) Upon any re-submission of a 

variance approval, the Chairman shall 

have thirty (30) days to concur with or 

object to the re-submitted variance.

(4) If the Chairman fails to object in 

writing within thirty (30) days after the 

date of receipt of the re-submitted 

variance, the re-submitted variance shall 

be considered concurred with by the 

Chairman. 

(5) The thirty (30) day deadline may 

be extended, provided such extension is 

mutually agreed upon by the Tribal 

gaming regulatory authority and the 

Chairman. 

(d) Appeals. (1) Upon receipt of 

objections to a re-submission of a 

variance, the Tribal gaming regulatory 

authority shall be entitled to an appeal 

to the full Commission in accordance 

with the following process: 

(i) Within thirty (30) days of receiving 

an objection to a re-submission, the 

Tribal gaming regulatory authority shall 

file its notice of appeal. 

(ii) Failure to file an appeal within the 

time provided by this section shall 

result in a waiver of the opportunity for 

an appeal. 

(iii) An appeal under this section 

shall specify the reasons why the Tribal 

gaming regulatory authority believes the 

Chairman’s objections should be 

reviewed, and shall include supporting 

documentation, if any. 

(iv) The Tribal gaming regulatory 

authority shall be provided with any 

comments offered by the Chairman to 

the Commission on the substance of the 

appeal by the Tribal gaming regulatory 

authority and shall be offered the 

opportunity to respond to any such 

comments. 

(v) Within thirty (30) days after 

receipt of the appeal, the Commission 

shall render a decision based upon the 

criteria contained within paragraph 

(b)(2) of this section unless the Tribal 

gaming regulatory authority elects to 

wave the thirty (30) day requirement 

and to provide the Commission 

additional time, not to exceed an 

additional thirty (30) days, to render a 

decision. 

(vi) In the absence of a decision 

within the time provided, the Tribal 

gaming regulatory authority’s resubmission shall be considered 

concurred with by the Commission and 

become effective. 

(2) The Tribal gaming regulatory 

authority may appeal the Chairman’s 

objection to the approval of a variance 

to the full Commission without 

resubmitting the variance by filling a 

notice of appeal with the full 

Commission within thirty (30) days of 

the Chairman’s objection and complying 

with the procedures described in 

paragraph (d)(1) of this section. 

(e) Effective date of variance. The 

gaming operation shall comply with 

standards that achieve a level of control 

sufficient to accomplish the purpose of 

the standard it is to replace until such 

time as the Commission objects to the 

Tribal gaming regulatory authority’s 

approval of a variance as provided in 

paragraph (b) of this section. 

Concurrence in a variance by the 

Chairman or Commission is 

discretionary and variances will not be 

granted routinely. The gaming operation 

shall comply with standards at least as 

stringent as those set forth in this part 

until such time as the Chairman or 

Commission concurs with the Tribal 

gaming regulatory authority’s approval 

of a variance. 

8. Amend § 542.21 by adding 

paragraphs (t), (u), (v), and (w) to read 

as follows:

§ 542.21 What are the minimum internal 

controls for drop and count for Tier A 

gaming operations?

* * * * *

(t) Gaming machine computerized key 

security systems. (1) Computerized key 

security systems which restrict access to 

the gaming machine drop and count 

keys through the use of passwords, keys 

or other means, other than a key 

custodian, must provide the same 

degree of control as indicated in the 

aforementioned key control standards; 

refer to paragraphs (l), (o), (q) and (s) of 

this section. Note: This standard does 

not apply to the system administrator. 

The system administrator is defined in 

paragraph (t)(2)(i) of this section. 

(2) For computerized key security 

systems, the following additional 

gaming machine key control procedures 

apply: 

(i) Management personnel 

independent of the gaming machine 

department assign and control user 

access to keys in the computerized key 

security system (i.e., system 

administrator) to ensure that gaming 

machine drop and count keys are 

restricted to authorized employees. 

(ii) In the event of an emergency or 

the key box is inoperable, access to the 

emergency manual key(s) (a.k.a. 

override key), used to access the box 

containing the gaming machine drop 

and count keys, requires the physical 

involvement of at least three persons 

from separate departments, including 

management. The date, time, and reason 

for access, must be documented with 

the signatures of all participating 

employees signing out/in the emergency 

manual key(s). 

(iii) The custody of the keys issued 

pursuant to paragraph (t)(2)(ii) of this 

section requires the presence of two 

persons from separate departments from 

the time of their issuance until the time 

of their return. 

(iv) Routine physical maintenance 

that requires accessing the emergency 

69860 Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 

manual key(s) (override key) and does 

not involve the accessing of the gaming 

machine drop and count keys, only 

requires the presence of two persons 

from separate departments. The date, 

time and reason for access must be 

documented with the signatures of all 

participating employees signing out/in 

the emergency manual key(s). 

(3) For computerized key security 

systems controlling access to gaming 

machine drop and count keys, 

accounting/audit personnel, 

independent of the system 

administrator, will perform the 

following procedures: 

(i) Daily, review the report generated 

by the computerized key security 

system indicating the transactions 

performed by the individual(s) that 

adds, deletes, and changes user’s access 

within the system (i.e., system 

administrator). Determine whether the 

transactions completed by the system 

administrator provide an adequate 

control over the access to the gaming 

machine drop and count keys. Also, 

determine whether any gaming machine 

drop and count key(s) removed or 

returned to the key cabinet by the 

system administrator was properly 

authorized. 

(ii) For at least one day each month, 

review the report generated by the 

computerized key security system 

indicating all transactions performed to 

determine whether any unusual gaming 

machine drop and count key removals 

or key returns occurred. 

(iii) At least quarterly, review a 

sample of users that are assigned access 

to the gaming machine drop and count 

keys to determine that their access to 

the assigned keys is adequate relative to 

their job position. 

(iv) All noted improper transactions 

or unusual occurrences are investigated 

with the results documented. 

(4) Quarterly, an inventory of all 

count room, drop box release, storage 

rack and contents keys is performed, 

and reconciled to records of keys made, 

issued, and destroyed. Investigations are 

performed for all keys unaccounted for, 

with the investigation being 

documented. 

(u) Table games computerized key 

security systems. (1) Computerized key 

security systems which restrict access to 

the table game drop and count keys 

through the use of passwords, keys or 

other means, other than a key custodian, 

must provide the same degree of control 

as indicated in the aforementioned key 

control standards; refer to paragraphs 

(m), (n), (p) and (r) of this section. Note: 

This standard does not apply to the 

system administrator. The system 

administrator is defined in paragraph 

(u)(2)(ii) of this section. 

(2) For computerized key security 

systems, the following additional table 

game key control procedures apply: 

(i) Management personnel 

independent of the table game 

department assign and control user 

access to keys in the computerized key 

security system (i.e., system 

administrator) to ensure that table game 

drop and count keys are restricted to 

authorized employees. 

(ii) In the event of an emergency or 

the key box is inoperable, access to the 

emergency manual key(s) (a.k.a. 

override key), used to access the box 

containing the table game drop and 

count keys, requires the physical 

involvement of at least three persons 

from separate departments, including 

management. The date, time, and reason 

for access, must be documented with 

the signatures of all participating 

employees signing out/in the emergency 

manual key(s).

(iii) The custody of the keys issued 

pursuant to paragraph (u)(2)(ii) of this 

section requires the presence of two 

persons from separate departments from 

the time of their issuance until the time 

of their return. 

(iv) Routine physical maintenance 

that requires accessing the emergency 

manual key(s) (override key) and does 

not involve the accessing of the table 

games drop and count keys, only 

requires the presence of two persons 

from separate departments. The date, 

time and reason for access must be 

documented with the signatures of all 

participating employees signing out/in 

the emergency manual key(s). 

(3) For computerized key security 

systems controlling access to table 

games drop and count keys, accounting/

audit personnel, independent of the 

system administrator, will perform the 

following procedures: 

(i) Daily, review the report generated 

by the computerized key security 

system indicating the transactions 

performed by the individual(s) that 

adds, deletes, and changes user’s access 

within the system (i.e., system 

administrator). Determine whether the 

transactions completed by the system 

administrator provide an adequate 

control over the access to the table 

games drop and count keys. Also, 

determine whether any table games 

drop and count key(s) removed or 

returned to the key cabinet by the 

system administrator was properly 

authorized. 

(ii) For at least one day each month, 

review the report generated by the 

computerized key security system 

indicating all transactions performed to 

determine whether any unusual table 

games drop and count key removals or 

key returns occurred. 

(iii) At least quarterly, review a 

sample of users that are assigned access 

to the table games drop and count keys 

to determine that their access to the 

assigned keys is adequate relative to 

their job position. 

(iv) All noted improper transactions 

or unusual occurrences are investigated 

with the results documented. 

(4) Quarterly, an inventory of all 

count room, table game drop box 

release, storage rack and contents keys 

is performed, and reconciled to records 

of keys made, issued, and destroyed. 

Investigations are performed for all keys 

unaccounted for, with the investigations 

being documented. 

(v) Emergency drop procedures.

Emergency drop procedures shall be 

developed by the Tribal gaming 

regulatory authority, or the gaming 

operation as approved by the Tribal 

gaming regulatory authority. 

(w) Equipment standards for gaming 

machine count. (1) A weigh scale 

calibration module shall be secured so 

as to prevent unauthorized access (e.g., 

prenumbered seal, lock and key, etc.). 

(2) A person independent of the cage, 

vault, gaming machine, and count team 

functions shall be required to be present 

whenever the calibration module is 

accessed. Such access shall be 

documented and maintained. 

(3) If a weigh scale interface is used, 

it shall be adequately restricted so as to 

prevent unauthorized access 

(passwords, keys, etc.). 

(4) If the weigh scale has a zero 

adjustment mechanism, it shall be 

physically limited to minor adjustments 

(e.g., weight of a bucket) or physically 

situated such that any unnecessary 

adjustments to it during the weigh 

process would be observed by other 

count team members. 

(5) The weigh scale and weigh scale 

interface (if applicable) shall be tested 

by a person or persons independent of 

the cage, vault, and gaming machine 

departments and count team at least 

quarterly. At least annually, this test 

shall be performed by internal audit in 

accordance with the internal audit 

standards. The result of these tests shall 

be documented and signed by the 

person or persons performing the test. 

(6) Prior to the gaming machine count, 

at least two employees shall verify the 

accuracy of the weigh scale with varying 

weights or with varying amounts of 

previously counted coin for each 

denomination to ensure the scale is 

properly calibrated (varying weights/

coin from drop to drop is acceptable). 

Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 69861

(7) If a mechanical coin counter is 

used (instead of a weigh scale), the 

Tribal gaming regulatory authority, or 

the gaming operation as approved by the 

Tribal gaming regulatory authority, shall 

establish and the gaming operation shall 

comply, with procedures that are 

equivalent to those described in 

paragraphs (u)(4), (u)(5), and (u)(6) of 

this section. 

(8) If a coin meter count machine is 

used, the count team member shall 

record the machine number 

denomination and number of coins in 

ink on a source document, unless the 

meter machine automatically records 

such information. 

(i) A count team member shall test the 

coin meter count machine prior to the 

actual count to ascertain if the metering 

device is functioning properly with a 

predetermined number of coins for each 

denomination. 

(ii) [Reserved]

9. Amend § 542.31 by adding 

paragraphs (t), (u), (v), and (w) to read 

as follows:

§ 542.31 What are the minimum internal 

controls for drop and count Tier B gaming 

operations?

* * * * *

(t) Gaming machine computerized key 

security systems. (1) Computerized key 

security systems which restrict access to 

the gaming machine drop and count 

keys through the use of passwords, keys 

or other means, other than a key 

custodian, must provide the same 

degree of control as indicated in the 

aforementioned key control standards; 

refer to paragraphs (l), (o), (q) and (s) of 

this section. Note: This standard does 

not apply to the system administrator. 

The system administrator is defined in 

paragraph (t)(2)(i) of this section. 

(2) For computerized key security 

systems, the following additional 

gaming machine key control procedures 

apply: 

(i) Management personnel 

independent of the gaming machine 

department assign and control user 

access to keys in the computerized key 

security system (i.e., system 

administrator) to ensure that gaming 

machine drop and count keys are 

restricted to authorized employees. 

(ii) In the event of an emergency or 

the key box is inoperable, access to the 

emergency manual key(s) (a.k.a.

override key), used to access the box 

containing the gaming machine drop 

and count keys, requires the physical 

involvement of at least three persons 

from separate departments, including 

management. The date, time, and reason 

for access, must be documented with 

the signatures of all participating 

employees signing out/in the emergency 

manual key(s). 

(iii) The custody of the keys issued 

pursuant to paragraph (t)(2)(ii) of this 

section, requires the presence of two 

persons from separate departments from 

the time of their issuance until the time 

of their return. 

(iv) Routine physical maintenance 

that requires accessing the emergency 

manual key(s) (override key) and does 

not involve the accessing of the gaming 

machine drop and count keys, only 

requires the presence of two persons 

from separate departments. The date, 

time and reason for access must be 

documented with the signatures of all 

participating employees signing out/in 

the emergency manual key(s). 

(3) For computerized key security 

systems controlling access to gaming 

machine drop and count keys, 

accounting/audit personnel, 

independent of the system 

administrator, will perform the 

following procedures: 

(i) Daily, review the report generated 

by the computerized key security 

system indicating the transactions 

performed by the individual(s) that 

adds, deletes, and changes user’s access 

within the system (i.e., system 

administrator). Determine whether the 

transactions completed by the system 

administrator provide an adequate 

control over the access to the gaming 

machine drop and count keys. Also, 

determine whether any gaming machine 

drop and count key(s) removed or 

returned to the key cabinet by the 

system administrator was properly 

authorized. 

(ii) For at least one day each month, 

review the report generated by the 

computerized key security system 

indicating all transactions performed to 

determine whether any unusual gaming 

machine drop and count key removals 

or key returns occurred. 

(iii) At least quarterly, review a 

sample of users that are assigned access 

to the gaming machine drop and count 

keys to determine that their access to 

the assigned keys is adequate relative to 

their job position. 

(iv) All noted improper transactions 

or unusual occurrences are investigated 

with the results documented. 

(4) Quarterly, an inventory of all 

count room, drop box release, storage 

rack and contents keys is performed, 

and reconciled to records of keys made, 

issued, and destroyed. Investigations are 

performed for all keys unaccounted for, 

with the investigation being 

documented. 

(u) Table games computerized key 

security systems. (1) Computerized key 

security systems which restrict access to 

the table game drop and count keys 

through the use of passwords, keys or 

other means, other than a key custodian, 

must provide the same degree of control 

as indicated in the aforementioned key 

control standards; refer to paragraphs 

(m), (n), (p) and (r) of this section. Note: 

This standard does not apply to the 

system administrator. The system 

administrator is defined in paragraph 

(u)(2)(ii) of this section. 

(2) For computerized key security 

systems, the following additional table 

game key control procedures apply: 

(i) Management personnel 

independent of the table game 

department assign and control user 

access to keys in the computerized key 

security system (i.e., system 

administrator) to ensure that table game 

drop and count keys are restricted to 

authorized employees. 

(ii) In the event of an emergency or 

the key box is inoperable, access to the 

emergency manual key(s) (a.k.a.

override key), used to access the box 

containing the table game drop and 

count keys, requires the physical 

involvement of at least three persons 

from separate departments, including 

management. The date, time, and reason 

for access, must be documented with 

the signatures of all participating 

employees signing out/in the emergency 

manual key(s). 

(iii) The custody of the keys issued 

pursuant to paragraph (u)(2)(ii) of this 

section, requires the presence of two 

persons from separate departments from 

the time of their issuance until the time 

of their return. 

(iv) Routine physical maintenance 

that requires accessing the emergency 

manual key(s) (override key) and does 

not involve the accessing of the table 

games drop and count keys, only 

requires the presence of two persons 

from separate departments. The date, 

time and reason for access must be 

documented with the signatures of all 

participating employees signing out/in 

the emergency manual key(s). 

(3) For computerized key security 

systems controlling access to table 

games drop and count keys, accounting/

audit personnel, independent of the 

system administrator, will perform the 

following procedures: 

(i) Daily, review the report generated 

by the computerized key security 

system indicating the transactions 

performed by the individual(s) that 

adds, deletes, and changes user’s access 

within the system (i.e., system 

administrator). Determine whether the 

transactions completed by the system 

administrator provide an adequate 

control over the access to the table 

games drop and count keys. Also, 

69862 Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 

determine whether any table games 

drop and count key(s) removed or 

returned to the key cabinet by the 

system administrator was properly 

authorized. 

(ii) For at least one day each month, 

review the report generated by the 

computerized key security system 

indicating all transactions performed to 

determine whether any unusual table 

games drop and count key removals or 

key returns occurred. 

(iii) At least quarterly, review a 

sample of users that are assigned access 

to the table games drop and count keys 

to determine that their access to the 

assigned keys is adequate relative to 

their job position. 

(iv) All noted improper transactions 

or unusual occurrences are investigated 

with the results documented. 

(4) Quarterly, an inventory of all 

count room, table game drop box 

release, storage rack and contents keys 

is performed, and reconciled to records 

of keys made, issued, and destroyed. 

Investigations are performed for all keys 

unaccounted for, with the investigations 

being documented. 

(v) Emergency drop procedures.

Emergency drop procedures shall be 

developed by the Tribal gaming 

regulatory authority, or the gaming 

operation as approved by the Tribal 

gaming regulatory authority. 

(w) Equipment standards for gaming 

machine count. (1) A weigh scale 

calibration module shall be secured so 

as to prevent unauthorized access (e.g., 

prenumbered seal, lock and key, etc.). 

(2) A person independent of the cage, 

vault, gaming machine, and count team 

functions shall be required to be present 

whenever the calibration module is 

accessed. Such access shall be 

documented and maintained.

(3) If a weigh scale interface is used, 

it shall be adequately restricted so as to 

prevent unauthorized access 

(passwords, keys, etc.). 

(4) If the weigh scale has a zero 

adjustment mechanism, it shall be 

physically limited to minor adjustments 

(e.g., weight of a bucket) or physically 

situated such that any unnecessary 

adjustments to it during the weigh 

process would be observed by other 

count team members. 

(5) The weigh scale and weigh scale 

interface (if applicable) shall be tested 

by a person or persons independent of 

the cage, vault, and gaming machine 

departments and count team at least 

quarterly. At least annually, this test 

shall be performed by internal audit in 

accordance with the internal audit 

standards. The result of these tests shall 

be documented and signed by the 

person or persons performing the test. 

(6) Prior to the gaming machine count, 

at least two employees shall verify the 

accuracy of the weigh scale with varying 

weights or with varying amounts of 

previously counted coin for each 

denomination to ensure the scale is 

properly calibrated (varying weights/

coin from drop to drop is acceptable). 

(7) If a mechanical coin counter is 

used (instead of a weigh scale), the 

Tribal gaming regulatory authority, or 

the gaming operation as approved by the 

Tribal gaming regulatory authority, shall 

establish and the gaming operation shall 

comply, with procedures that are 

equivalent to those described in 

paragraphs (u)(4), (u)(5), and (u)(6) of 

this section. 

(8) If a coin meter count machine is 

used, the count team member shall 

record the machine number 

denomination and number of coins in 

ink on a source document, unless the 

meter machine automatically records 

such information. 

(i) A count team member shall test the 

coin meter count machine prior to the 

actual count to ascertain if the metering 

device is functioning properly with a 

predetermined number of coins for each 

denomination. 

(ii) [Reserved] 

10. Amend § 542.41 by adding 

paragraphs (t), (u), (v), and (w) to read 

as follows:

§ 542.41 What are the minimum internal 

controls for drop and count for Tier C 

gaming operations?

* * * * *

(t) Gaming machine computerized key 

security systems. (1) Computerized key 

security systems which restrict access to 

the gaming machine drop and count 

keys through the use of passwords, keys 

or other means, other than a key 

custodian, must provide the same 

degree of control as indicated in the 

aforementioned key control standards; 

refer to paragraphs (l), (o), (q) and (s) of 

this section. Note: This standard does 

not apply to the system administrator. 

The system administrator is defined in 

paragraph (t)(2)(i) of this section. 

(2) For computerized key security 

systems, the following additional 

gaming machine key control procedures 

apply: 

(i) Management personnel 

independent of the gaming machine 

department assign and control user 

access to keys in the computerized key 

security system (i.e., system 

administrator) to ensure that gaming 

machine drop and count keys are 

restricted to authorized employees. 

(ii) In the event of an emergency or 

the key box is inoperable, access to the 

emergency manual key(s) (a.k.a.

override key), used to access the box 

containing the gaming machine drop 

and count keys, requires the physical 

involvement of at least three persons 

from separate departments, including 

management. The date, time, and reason 

for access, must be documented with 

the signatures of all participating 

employees signing out/in the emergency 

manual key(s). 

(iii) The custody of the keys issued 

pursuant to paragraph (t)(2)(ii) of this 

section requires the presence of two 

persons from separate departments from 

the time of their issuance until the time 

of their return. 

(iv) Routine physical maintenance 

that requires accessing the emergency 

manual key(s) (override key) and does 

not involve the accessing of the gaming 

machine drop and count keys, only 

requires the presence of two persons 

from separate departments. The date, 

time and reason for access must be 

documented with the signatures of all 

participating employees signing out/in 

the emergency manual key(s). 

(3) For computerized key security 

systems controlling access to gaming 

machine drop and count keys, 

accounting/audit personnel, 

independent of the system 

administrator, will perform the 

following procedures: 

(i) Daily, review the report generated 

by the computerized key security 

system indicating the transactions 

performed by the individual(s) that 

adds, deletes, and changes user’s access 

within the system (i.e., system 

administrator). Determine whether the 

transactions completed by the system 

administrator provide an adequate 

control over the access to the gaming 

machine drop and count keys. Also, 

determine whether any gaming machine 

drop and count key(s) removed or 

returned to the key cabinet by the 

system administrator was properly 

authorized.

(ii) For at least one day each month, 

review the report generated by the 

computerized key security system 

indicating all transactions performed to 

determine whether any unusual gaming 

machine drop and count key removals 

or key returns occurred. 

(iii) At least quarterly, review a 

sample of users that are assigned access 

to the gaming machine drop and count 

keys to determine that their access to 

the assigned keys is adequate relative to 

their job position. 

(iv) All noted improper transactions 

or unusual occurrences are investigated 

with the results documented. 

(4) Quarterly, an inventory of all 

count room, drop box release, storage 

rack and contents keys is performed, 

Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 69863

and reconciled to records of keys made, 

issued, and destroyed. Investigations are 

performed for all keys unaccounted for, 

with the investigation being 

documented. 

(u) Table games computerized key 

security systems. (1) Computerized key 

security systems which restrict access to 

the table game drop and count keys 

through the use of passwords, keys or 

other means, other than a key custodian, 

must provide the same degree of control 

as indicated in the aforementioned key 

control standards; refer to paragraphs 

(m), (n), (p) and (r) of this section. Note: 

This standard does not apply to the 

system administrator. The system 

administrator is defined in paragraph 

(u)(2)(ii) of this section. 

(2) For computerized key security 

systems, the following additional table 

game key control procedures apply: 

(i) Management personnel 

independent of the table game 

department assign and control user 

access to keys in the computerized key 

security system (i.e., system 

administrator) to ensure that table game 

drop and count keys are restricted to 

authorized employees. 

(ii) In the event of an emergency or 

the key box is inoperable, access to the 

emergency manual key(s) (a.k.a. 

override key), used to access the box 

containing the table game drop and 

count keys, requires the physical 

involvement of at least three persons 

from separate departments, including 

management. The date, time, and reason 

for access, must be documented with 

the signatures of all participating 

employees signing out/in the emergency 

manual key(s). 

(iii) The custody of the keys issued 

pursuant to paragraph (u)(2)(ii) of this 

section requires the presence of two 

persons from separate departments from 

the time of their issuance until the time 

of their return. 

(iv) Routine physical maintenance 

that requires accessing the emergency 

manual key(s) (override key) and does 

not involve the accessing of the table 

games drop and count keys, only 

requires the presence of two persons 

from separate departments. The date, 

time and reason for access must be 

documented with the signatures of all 

participating employees signing out/in 

the emergency manual key(s). 

(3) For computerized key security 

systems controlling access to table 

games drop and count keys, accounting/

audit personnel, independent of the 

system administrator, will perform the 

following procedures: 

(i) Daily, review the report generated 

by the computerized key security 

system indicating the transactions 

performed by the individual(s) that 

adds, deletes, and changes user’s access 

within the system (i.e., system 

administrator). Determine whether the 

transactions completed by the system 

administrator provide an adequate 

control over the access to the table 

games drop and count keys. Also, 

determine whether any table games 

drop and count key(s) removed or 

returned to the key cabinet by the 

system administrator was properly 

authorized. 

(ii) For at least one day each month, 

review the report generated by the 

computerized key security system 

indicating all transactions performed to 

determine whether any unusual table 

games drop and count key removals or 

key returns occurred. 

(iii) At least quarterly, review a 

sample of users that are assigned access 

to the table games drop and count keys 

to determine that their access to the 

assigned keys is adequate relative to 

their job position. 

(iv) All noted improper transactions 

or unusual occurrences are investigated 

with the results documented. 

(4) Quarterly, an inventory of all 

count room, table game drop box 

release, storage rack and contents keys 

is performed, and reconciled to records 

of keys made, issued, and destroyed. 

Investigations are performed for all keys 

unaccounted for, with the investigations 

being documented. 

(v) Emergency drop procedures.

Emergency drop procedures shall be 

developed by the Tribal gaming 

regulatory authority, or the gaming 

operation as approved by the Tribal 

gaming regulatory authority. 

(w) Equipment standards for gaming 

machine count. (1) A weigh scale 

calibration module shall be secured so 

as to prevent unauthorized access (e.g.,

prenumbered seal, lock and key, etc.). 

(2) A person independent of the cage, 

vault, gaming machine, and count team 

functions shall be required to be present 

whenever the calibration module is 

accessed. Such access shall be 

documented and maintained. 

(3) If a weigh scale interface is used, 

it shall be adequately restricted so as to 

prevent unauthorized access 

(passwords, keys, etc.). 

(4) If the weigh scale has a zero 

adjustment mechanism, it shall be 

physically limited to minor adjustments 

(e.g., weight of a bucket) or physically 

situated such that any unnecessary 

adjustments to it during the weigh 

process would be observed by other 

count team members. 

(5) The weigh scale and weigh scale 

interface (if applicable) shall be tested 

by a person or persons independent of 

the cage, vault, and gaming machine 

departments and count team at least 

quarterly. At least annually, this test 

shall be performed by internal audit in 

accordance with the internal audit 

standards. The result of these tests shall 

be documented and signed by the 

person or persons performing the test. 

(6) Prior to the gaming machine count, 

at least two employees shall verify the 

accuracy of the weigh scale with varying 

weights or with varying amounts of 

previously counted coin for each 

denomination to ensure the scale is 

properly calibrated (varying weights/

coin from drop to drop is acceptable). 

(7) If a mechanical coin counter is 

used (instead of a weigh scale), the 

Tribal gaming regulatory authority, or 

the gaming operation as approved by the 

Tribal gaming regulatory authority, shall 

establish and the gaming operation shall 

comply, with procedures that are 

equivalent to those described in 

paragraphs (u)(4), (u)(5), and (u)(6) of 

this section. 

(8) If a coin meter count machine is 

used, the count team member shall 

record the machine number 

denomination and number of coins in 

ink on a source document, unless the 

meter machine automatically records 

such information. 

(i) A count team member shall test the 

coin meter count machine prior to the 

actual count to ascertain if the metering 

device is functioning properly with a 

predetermined number of coins for each 

denomination. 

(ii) [Reserved]

Signed in Washington, DC, this 19th day of 

November, 2004. 

Philip N. Hogen, 

Chairman. 

Nelson Westrin, 

Vice-Chairman. 

Cloyce Choney, 

Commissioner.

[FR Doc. 04–26041 Filed 11–30–04; 8:45 am] 

BILLING CODE 7565–01–P

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52

[R10–OAR–2004–OR–0001; FRL–7839–4] 

Approval and Promulgation of Air 

Quality Implementation Plans; Oregon; 

Removal of Perchloroethylene Dry 

Cleaning Systems Rules

AGENCY: Environmental Protection 

Agency (EPA).

ACTION: Proposed rule.