61172 Federal Register / Vol. 82, No. 247 / Wednesday, December 27, 2017 / Rules and Regulations 

NATIONAL INDIAN GAMING 

COMMISSION 

25 CFR Part 547 

RIN 3141–AA64 

Minimum Technical Standards for 

Class II Gaming Systems and 

Equipment 

AGENCY: National Indian Gaming 

Commission. 

ACTION: Final rule. 

SUMMARY: The National Indian Gaming 

Commission is amending its minimum 

technical standards for Class II gaming 

systems and equipment. The rule 

amends the regulations that describe 

how tribal governments, tribal gaming 

regulatory authorities, and tribal gaming 

operations comply with the minimum 

technical standards. 

DATES: Effective Date: January 26, 2018. 

FOR FURTHER INFORMATION CONTACT: 

Austin Badger, National Indian Gaming 

Commission; 1849 C Street NW, MS 

1621, Washington, DC 20240. 

Telephone: 202–632–7003. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Indian Gaming Regulatory Act 

(IGRA or Act), Public Law 100–497, 25 

U.S.C. 2701 et seq., was signed into law 

on October 17, 1988. The Act 

establishes the National Indian Gaming 

Commission (NIGC or Commission) and 

sets out a comprehensive framework for 

the regulation of gaming on Indian 

lands. On October 10, 2008, the NIGC 

published a final rule in the Federal 

Register establishing minimum 

technical standards for Class II gaming 

systems and equipment. 73 FR 60508. 

The minimum technical standards are 

designed to assist tribal gaming 

regulatory authorities (TGRAs) and 

operators with ensuring the integrity 

and security of Class II gaming, the 

accountability of Class II gaming 

revenue, and provide guidance to 

equipment manufacturers and 

distributors of Class II gaming systems. 

The minimum technical standards do 

not classify which games are Class II 

and which games are Class III. 

When implemented in 2008, the part 

547 minimum technical standards 

introduced several new requirements for 

Class II gaming systems designed to 

protect the security and integrity of 

Class II gaming systems and tribal 

operations. The Commission 

understood, however, that some existing 

Class II gaming systems might not meet 

all of the requirements of the minimum 

technical standards. Therefore, to avoid 

any potentially significant economic 

and practical consequences of requiring 

immediate compliance, the Commission 

implemented a five-year sunset 

provision which allowed eligible 

gaming systems manufactured before 

November 10, 2008 (2008 Systems) to 

remain on the gaming floor. The 

Commission believed that a five-year 

period was sufficient for market forces 

to move systems toward compliance 

with the standards applicable to systems 

manufactured on or after November 10, 

2008. 

On September 21, 2012, the NIGC 

published a final rule in the Federal 

Register which included an amendment 

delaying the sunset provision by an 

additional five years. 77 FR 58473. The 

Commission recognized that its prior 

analysis regarding the continued 

economic viability of 2008 Systems had 

proven to be mistaken. The NIGC had 

established the initial five-year period 

during a much stronger economy. Many 

tribal gaming operations set new 

priorities during the following economic 

downturn that required keeping a 2008 

System on the gaming floor for a longer 

period. Balancing the economic needs of 

the industry against a risk that 

potentially increases as technology 

advances and 2008 Systems remain 

static, the Commission determined that 

2008 Systems could continue to be 

offered for play until November 10, 

2018. 

Now, with the November 10, 2018, 

sunset for 2008 Systems approaching, 

the Commission has determined that it 

is in the best interest of Indian gaming 

to amend the regulations that describe 

how tribal governments, tribal gaming 

regulatory authorities, and tribal gaming 

operations comply with the minimum 

technical standards. The amendments 

include removal of the sunset provision, 

providing for additional annual review 

of 2008 Systems by TGRAs, and 

requiring all modifications of Class II 

gaming systems to be subject to a 

uniform independent laboratory testing 

and TGRA approval process. The 

Commission has determined that the 

amended rule continues to fulfill the 

rule’s ultimate goal of assisting tribes in 

ensuring the security and integrity of 

Class II games played with technologic 

aids, the auditability of the gaming 

revenue that those games earn, and 

accounting and allowing for evolving 

and new technology. 

II. Development of the Rule 

The development of the rule formally 

began with the Commission’s notice to 

tribal leaders by letter dated November 

22, 2016, of the topic’s inclusion in the 

Commission’s 2017 tribal consultation 

series. Thereafter, on March 23, 2017, in 

Tulsa, OK, and April 12, 2017, in San 

Diego, CA, the NIGC consulted on the 

2008 Systems and associated sunset 

provision of the minimum technical 

standards. The Commission also 

solicited written comments through 

May 31, 2017. In addition, NIGC staff 

attended meetings with the National 

Indian Gaming Association Class II 

Subcommittee, as well as other 

representatives from the gaming 

industry. The consultations and 

meetings, combined with the written 

comments, proved invaluable in the 

development of a discussion draft 

issued on June 14, 2017, which, among 

other proposed amendments, proposed 

removing the November 10, 2018, 

sunset for 2008 Systems. Additional 

written comments responsive to the 

discussion draft were solicited through 

July 15, 2017. 

The Commission subsequently 

published a proposed rule in the 

Federal Register on September 28, 2017. 

82 FR 45228. The proposed rule 

included several amendments to the 

discussion draft prompted by the 

Commission’s careful consideration of 

the substantive comments received 

through consultation and written 

submissions. The proposed rule 

included the Commission’s responses to 

comments received and invited 

interested parties to continue to 

participate in the rulemaking process by 

submitting comments and any 

supporting data responsive to the 

proposed rule to the Commission by 

November 13, 2017. The comments 

received throughout this process have 

proven invaluable to the Commission in 

developing this rule amending the 

minimum technical standards for Class 

II gaming systems and equipment. 

III. Review of Public Comments 

In response to the proposed rule the 

Commission received the following 

comments. 

Removal of the Sunset Provision 

Comment: Commenters 

overwhelmingly supported removal of 

the sunset provision. One commenter, 

however, suggested that the sunset 

provision should not be removed. 

Response: The following responses 

seek to address each of the substantive 

arguments raised by the commenter that 

suggested the sunset provision should 

not be removed. 

Comment: A commenter suggested 

that the public and tribes would be best 

served if all Class II gaming systems 

adhered to a uniform minimum 

standard. 


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Federal Register / Vol. 82, No. 247 / Wednesday, December 27, 2017 / Rules and Regulations 61173 

Response: The Commission 

acknowledges that the rule permits the 

continued existence of two sets of 

minimum standards for Class II gaming 

systems—one for 2008 Systems and one 

for systems manufactured after 

November 10, 2008. The Commission 

disagrees, however, that a uniform 

minimum standard is necessary to best 

serve the needs of the public and tribes. 

First and foremost, the Commission’s 

minimum technical standards are just 

that—minimums. The standards 

implemented by tribes applicable to 

gaming operations within their lands are 

not required nor intended to be uniform. 

Each tribe is empowered and 

encouraged to implement additional or 

more stringent tribal standards 

applicable to Class II gaming systems 

operating within their lands. IGRA and 

the Commission recognize that tribes 

have the primary responsibility for 

regulating Class II gaming within their 

lands. A stated purpose of IGRA is to 

promote tribal economic development, 

self-sufficiency, and self-government. 25 

U.S.C. 2702(1). The minimum technical 

standards are therefore designed to give 

TGRAs the primary role in approving 

Class II gaming systems and 

modifications. 

The Commission’s minimum 

technical standards represent the 

standards that, in the Commission’s 

judgment, are best able to assist TGRAs 

with ensuring the integrity and security 

of Class II gaming, ensuring the 

accountability of Class II gaming 

revenue, and providing guidance to 

equipment manufacturers and 

distributors of Class II gaming systems. 

Importantly, the minimum technical 

standards are one component of a 

regulatory framework that includes the 

Commission’s minimum internal 

control standards (MICS). 25 CFR part 

543. The Commission endeavored to 

place all minimum requirements for the 

design, construction, and 

implementation of Class II gaming 

systems into the minimum technical 

standards and all minimum 

requirements for the operation of such 

systems, and the authorization, 

recognition, and recordation of gaming 

and gaming-related transactions into the 

MICS. The MICS apply uniformly to the 

operation of all Class II gaming, 

irrespective of Class II gaming system 

manufacture date. 

The Commission’s minimum 

technical standards and MICS make 

meaningful the Commission’s 

monitoring, inspection, and 

examination authority. 25 U.S.C. 

2706(b). Without such minimums, the 

Commission would be required to 

independently evaluate, at significant 

expense, the technical standards and 

internal controls implemented by each 

tribe to determine whether each tribe’s 

technical standards and internal 

controls adequately protected the 

security and integrity of Indian gaming. 

With such minimums, the Commission 

can efficiently evaluate a tribal gaming 

operation by verifying that the operation 

adheres to standards and controls that 

meet or exceed Commission minimums. 

Thus, the Commission has long 

maintained that it has a regulatory 

interest in a uniform set of minimum 

standards—an interest that includes the 

efficient administration of its 

monitoring, inspection, and 

examination authority. 

In 2008, 2012, and now, the 

Commission has sought to balance its 

interest in a uniform set of minimum 

standards against the economic impact 

of applying those standards to systems 

manufactured before the standards were 

in place. The Commission recognizes 

that despite being initially certified to a 

subset of the standards applicable to 

newer systems, 2008 Systems have 

continued to operate within the overall 

regulatory framework in a manner that 

protects the security and integrity of 

Indian gaming. The Commission credits 

tribes, TGRAs and manufacturers for, as 

the Commission acknowledged in 2012, 

the relatively few problems to the 

patron or the gaming operations 

attributable to 2008 Systems. In balance, 

the Commission has determined that the 

continued operation of 2008 Systems is 

in the best interest of Indian gaming 

provided that such systems are subject 

to additional annual review by TGRAs. 

The Commission is fully prepared, 

however, to revisit the minimum 

technical standards, including those 

applicable to 2008 Systems, if necessary 

to address any threat to the integrity of 

Class II gaming systems and equipment. 

Finally, the Commission 

acknowledges that it has previously 

expressed concern regarding risks that 

potentially increase as technology 

advances and 2008 Systems remain 

static. The Commission now recognizes, 

however, that 2008 Systems have 

generally not remained static, but 

instead have been modified over time in 

compliance with existing regulations. 

Repair and replacement of individual 

components of Class II gaming systems 

have been and continue to be permitted. 

Modification of components of 2008 

Systems also continue to be permitted 

provided the TGRA determines that the 

modification either maintains 

compliance with the requirements for 

2008 Systems or increases compliance 

with the requirements for newer 

systems. The rule seeks to continue to 

facilitate the on-going modification of 

2008 Systems as needed to respond to 

developments in technology with the 

goal of increased compliance with the 

requirements for newer systems. 

Comment: A commenter suggests that 

the economic needs of tribes considered 

by the Commission in 2008 and 2012 

are no longer applicable. 

Response: The Commission has 

determined that, while the significance 

of the economic factors considered by 

the Commission in 2008 and 2012 has 

decreased over time, economic factors 

remain applicable. As noted previously, 

2008 Systems have generally been 

modified over time towards increased 

compliance with the standards for 

newer systems. Thus, the economic 

impact of the sunset provision, if left in 

place, is the cost of the remaining 

modifications needed to bring the 

system into compliance with the 

standards for newer systems. The 

Commission notes that tribes, as the 

customers of Class II gaming systems 

and equipment, will ultimately incur 

those costs. 

The Commission also recognizes that 

the economic health of the Indian 

gaming industry as a whole, which 

includes both Class II and Class III 

gaming, is not representative of the 

economic health of individual Indian 

gaming operations that may be affected 

by the sunset provision. Indian gaming 

operations vary in size and measures of 

economic success. The Commission and 

staff engaged extensively with the tribal 

gaming industry on the continued use of 

2008 Systems and heard the costs of 

complying with the sunset provision 

would fall primarily on the tribes least 

able to afford it. Additionally, the 

Commission received many comments 

asserting that failing to remove the 

sunset provision would cause 

significant economic harm to tribes. 

Comment: A commenter suggests that 

removal of the sunset provision would 

have anti-competitive effects. The 

commenter suggests that manufacturers 

that maintain obsolete 2008 Systems are 

economically rewarded while new 

market entrants are punished. 

Response: The Commission notes that 

IGRA, as informed by consultation with 

tribes, forms the basis for all 

Commission regulations. Nevertheless, 

the Commission does not agree that 

removal of the sunset provision has a 

significant anti-competitive effect. 

Importantly, the rule brings parity to the 

independent testing laboratory 

requirements for 2008 Systems and 

newer systems. All modifications to a 

Class II gaming systems are now 

required to be tested against the 

standards for newer systems. And, 


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61174 Federal Register / Vol. 82, No. 247 / Wednesday, December 27, 2017 / Rules and Regulations 

while TGRAs retain the authority to 

approve a modification to a 2008 

System that maintains compliance with 

2008 System standards, 2008 Systems 

are also subject to an additional annual 

review which is not applicable to newer 

systems. 

In addition, the minimum technical 

standards are not intended to render any 

particular Class II gaming system 

technology ‘‘obsolete.’’ The minimum 

technical standards require the 

implementation of certain features 

which may be implemented by a wide 

array of technology. The minimum 

technical standards are intended to 

provide all manufacturers with the 

flexibility to implement technologies 

unforeseen and undeveloped when the 

rule was first promulgated. Importantly, 

the minimum technical standards allow 

Class II gaming systems to be modified 

over time as manufacturers innovate 

new implementations of the required 

features. Tribes and tribal gaming 

regulatory authorities may also add 

additional or more stringent 

requirements for manufacturers to 

implement. Finally, to the extent that a 

specific technical standard potentially 

impedes innovation, TGRAs and gaming 

operations are able to submit to the 

NIGC Chairman for approval an 

alternate minimum standard that 

accomplishes the same purpose. 

Comment: A commenter suggests that 

removal of the sunset provision 

transforms the rule into a major rule 

having an effect on the economy of $100 

million or more because the 2008 

System provisions were initially 

implemented to avoid up to $3.7 billion 

in lost revenue in the industry. 

Response: The Commission has 

determined that the commenter’s 

assumptions are mistaken. The 

Commission found that the annual cost 

to the Indian gaming industry of the 

technical standards, considered alone, 

was $3.1 million in 2008. 73 FR 60508, 

60512. The figure cited by the 

commenter appears to have been 

inferred from a February 1, 2008 

economic impact study which 

considered not only the potential 

economic impact of minimum technical 

standards (part 547) but also of the 

MICS (part 543) and game classification 

standards (proposed but not adopted). 

The Commission has determined that 

there is no plausible basis for finding 

that the removal of the sunset provision 

from the minimum technical standards 

approximately ten years after the 

standards were first promulgated could 

have an effect on the economy of $100 

million or more. 

Comment: A commenter suggests that 

the 2008 System standards should meet 

the standards required for an alternate 

minimum standard for a newer system. 

Response: The Commission’s alternate 

minimum standard provisions recognize 

that there may be alternatives to the 

Commission’s minimum standards that 

will ‘‘achieve a level of security and 

integrity sufficient to accomplish the 

purpose of the standard it is to replace.’’ 

25 CFR 547.17(a)(1). The 2008 System 

provisions are specific to systems 

manufactured before November 10, 

2008. The alternate minimum standard 

provisions are equally applicable to 

2008 Systems and to newer systems. In 

other words, the 2008 Systems 

standards are the standards against 

which an alternate minimum standard 

for a 2008 System would be evaluated 

against. 

2008 Systems Annual Review 

Comment: Commenters suggest that 

the NIGC has provided no compelling 

reason to change the existing reporting 

requirements. Commenters suggest that 

it would be redundant to require annual 

re-review of testing laboratory reports 

which amounts to a restatement of 

certification opinions that have already 

been submitted to the NIGC. 

Response: The Commission does not 

believe that the annual review 

requirement is unnecessary. First, the 

Commission believes that removal of the 

sunset provision warrants annual 

review specific to 2008 Systems. The 

annual review requirement will ensure 

that 2008 Systems are adequately 

monitored and that 2008 Systems that 

meet the standards applicable to newer 

systems are identified by the TGRA and 

gaming operation. In addition, the 

annual review requirement requires the 

TGRA to identify the components of the 

2008 System that prevent the system 

from being approved as a newer system. 

The Commission believes this 

information will be useful to the 

Commission, TGRAs, and gaming 

operations in considering whether the 

applicable technical standards, in 

conjunction with applicable internal 

controls, continue to adequately protect 

the integrity and security of Class II 

gaming and accountability of Class II 

gaming revenue. 

Second, the Commission does not 

believe that the annual review 

requirement is redundant. Existing 2008 

System requirements require TGRAs to 

maintain records of all modifications so 

long as the Class II gaming system that 

is the subject of the modification 

remains available to the public for play. 

The rule adds as an additional 

requirement that TGRAs review the 

existing modification records annually 

to determine whether the 2008 Systems, 

as currently modified, may be approved 

pursuant to the provisions for newer 

systems. The required finding by the 

TGRA is based on its review of existing 

documentation and does not require 

TGRAs to obtain new testing laboratory 

reports. Components for which existing 

laboratory reports show that the 

component does not meet the standards 

for newer systems, as well as 

components for which laboratory 

reports have not been maintained, 

would be included in the required 

finding as components preventing 

approval of the system under the 

standards for newer systems. To further 

assist TGRAs in conducting the required 

review and developing the findings, the 

Commission intends to issue guidance 

specific to the annual review 

requirement for 2008 Systems. 

Testing Standards for All Modifications 

Comment: Commenters suggest the 

new requirement that modifications to 

2008 Systems be tested to the standards 

for newer systems is unnecessary and 

will only result in additional costs with 

no practical benefit. Commenters 

suggest that TGRAs should be able to 

determine whether to test a 

modification to the standards for newer 

systems or to 2008 System standards. 

Response: The Commission believes 

the new requirement appropriately 

balances laboratory testing requirements 

with TGRA approval requirements 

without imposing unreasonable costs. 

The rule requires the testing laboratory 

to test all modifications to the technical 

standards for newer systems. The rule 

recognizes the primary regulator status 

of the TGRA by providing that the 

TGRA is required to determine, among 

other requirements, whether the 

modification will maintain the system’s 

compliance or advance the system’s 

compliance with the standards for 

newer systems. Testing all 

modifications to the standards for newer 

systems therefore ensures that TGRAs 

are provided with the information 

needed to make such a determination. 

Records 

Comment: Commenters expressed 

reluctance to expose sensitive testing 

and compliance records to possible 

public disclosure. Commenters suggest 

that records only be available for review 

on site by NIGC staff or on a 

government-to-government basis. 

Commenters request that the second and 

third sentence of paragraph (g) be 

removed. 

Response: The Commission believes 

that paragraph (g) appropriately 

describes the Commission’s obligations 

with regards to the inspection and 


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Federal Register / Vol. 82, No. 247 / Wednesday, December 27, 2017 / Rules and Regulations 61175 

release of records as set forth by IGRA, 

the Freedom of Information Act, 5 

U.S.C. 552, and the Privacy Act of 1974, 

5 U.S.C. 552a. The second sentence of 

paragraph (g), as limited by the third 

sentence, describes the Commission’s 

intended internal use of such 

information. 

Regulatory Matters 

Tribal Consultation 

The National Indian Gaming 

Commission is committed to fulfilling 

its tribal consultation obligations— 

whether directed by statute or 

administrative action such as Executive 

Order (EO) 13175 (Consultation and 

Coordination with Indian Tribal 

Governments)—by adhering to the 

consultation framework described in its 

Consultation Policy published July 15, 

2013. The NIGC’s consultation policy 

specifies that it will consult with tribes 

on Commission Action with Tribal 

Implications, which is defined as: Any 

Commission regulation, rulemaking, 

policy, guidance, legislative proposal, or 

operational activity that may have a 

substantial direct effect on an Indian 

tribe on matters including, but not 

limited to the ability of an Indian tribe 

to regulate its Indian gaming; an Indian 

Tribe’s formal relationship with the 

Commission; or the consideration of the 

Commission’s trust responsibilities to 

Indian tribes. As discussed above, the 

NIGC engaged in extensive consultation 

on this topic and received and 

considered comments in developing this 

rule. 

Regulatory Flexibility Act 

The rule will not have a significant 

impact on a substantial number of small 

entities as defined under the Regulatory 

Flexibility Act, 5 U.S.C. 601, et seq. 

Moreover, Indian Tribes are not 

considered to be small entities for the 

purposes of the Regulatory Flexibility 

Act. 

Small Business Regulatory Enforcement 

Fairness Act 

The rule is not a major rule under 5 

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

Regulatory Enforcement Fairness Act. 

The rule does not have an effect on the 

economy of $100 million or more. The 

rule will not cause a major increase in 

costs or prices for consumers, 

individual industries, Federal, State, 

local government agencies or geographic 

regions. Nor will the rule have a 

significant adverse effect on 

competition, employment, investment, 

productivity, innovation, or the ability 

of the enterprises, to compete with 

foreign based enterprises. 

Unfunded Mandates Reform Act 

The Commission, as an independent 

regulatory agency, is exempt from 

compliance with the Unfunded 

Mandates Reform Act, 2 U.S.C. 1502(1); 

2 U.S.C. 658(1). 

Takings 

In accordance with Executive Order 

12630, the Commission has determined 

that the rule does not have significant 

takings implications. A takings 

implication assessment is not required. 

Civil Justice Reform 

In accordance with Executive Order 

12988, the Commission has determined 

that the rule does not unduly burden the 

judicial system and meets the 

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

of the Order. 

National Environmental Policy Act 

The Commission has determined that 

the rule does not constitute a major 

federal action significantly affecting the 

quality of the human environment and 

that no detailed statement is required 

pursuant to the National Environmental 

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

seq. 

Paperwork Reduction Act 

The information collection 

requirements contained in this rule 

were previously approved by the Office 

of Management and Budget (OMB) as 

required by 44 U.S.C. 3501 et seq. and 

assigned OMB Control Number 3141– 

0007, which expired in August of 2011. 

The NIGC is in the process of reinstating 

that Control Number. 

List of Subjects in 25 CFR Part 547 

Gambling, Indian—lands, Indian— 

tribal government, Reporting and 

recordkeeping requirements. 

Therefore, for reasons stated in the 

preamble, 25 CFR part 547 is amended 

as follows: 

PART 547—MINIMUM TECHNICAL 

STANDARDS FOR CLASS II GAMING 

SYSTEMS AND EQUIPMENT 

■ 1. The authority citation for part 547 

continues to read as follows: 

Authority: 25 U.S.C. 2706(b). 

■ 2. Revise § 547.5 to read as follows: 

§ 547.5 How does a tribal government, 

TGRA, or tribal gaming operation comply 

with this part? 

(a) Gaming systems manufactured 

before November 10, 2008. (1) Any Class 

II gaming system manufactured before 

November 10, 2008, that is not 

compliant with paragraph (b) of this 

section may be made available for use 

at any tribal gaming operation if: 

(i) The Class II gaming system 

software that affects the play of the 

Class II game, together with the 

signature verification required by 

§ 547.8(f) was submitted to a testing 

laboratory within 120 days after 

November 10, 2008, or October 22, 

2012; 

(ii) The testing laboratory tested the 

submission to the standards established 

by § 547.8(b), § 547.8(f), and § 547.14; 

(iii) The testing laboratory provided 

the TGRA with a formal written report 

setting forth and certifying to the 

findings and conclusions of the test; 

(iv) The TGRA made a finding, in the 

form of a certificate provided to the 

supplier or manufacturer of the Class II 

gaming system, that the Class II gaming 

system is compliant with § 547.8(b), 

§ 547.8(f), and § 547.14; 

(v) The Class II gaming system is only 

used as approved by the TGRA and the 

TGRA transmitted its notice of that 

approval, identifying the Class II gaming 

system and its components, to the 

Commission; 

(vi) Remote communications with the 

Class II gaming system are only allowed 

if authorized by the TGRA; and 

(vii) Player interfaces of the Class II 

gaming system exhibit information 

consistent with § 547.7(d) and any other 

information required by the TGRA. 

(2) For so long as a Class II gaming 

system is made available for use at any 

tribal gaming operation pursuant to this 

paragraph (a) the TGRA shall: 

(i) Retain copies of the testing 

laboratory’s report, the TGRA’s 

compliance certificate, and the TGRA’s 

approval of the use of the Class II 

gaming system; 

(ii) Maintain records identifying the 

Class II gaming system and its current 

components; and 

(iii) Annually review the testing 

laboratory reports associated with the 

Class II gaming system and its current 

components to determine whether the 

Class II gaming system may be approved 

pursuant to paragraph (b)(1)(v) of this 

section. The TGRA shall make a finding 

identifying the Class II gaming systems 

reviewed, the Class II gaming systems 

subsequently approved pursuant to 

paragraph (b)(1)(v), and, for Class II 

gaming systems that cannot be approved 

pursuant to paragraph (b)(1)(v), the 

components of the Class II gaming 

system preventing such approval. 

(3) If the Class II gaming system is 

subsequently approved by the TGRA 

pursuant to paragraph (b)(1)(v) as 

compliant with paragraph (b) of this 

section, this paragraph (a) no longer 

applies. 


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61176 Federal Register / Vol. 82, No. 247 / Wednesday, December 27, 2017 / Rules and Regulations 

(b) Gaming system submission, 

testing, and approval—generally. (1) 

Except as provided in paragraph (a) of 

this section, a TGRA may not permit the 

use of any Class II gaming system in a 

tribal gaming operation unless: 

(i) The Class II gaming system has 

been submitted to a testing laboratory; 

(ii) The testing laboratory tests the 

submission to the standards established 

by: 

(A) This part; 

(B) Any applicable provisions of part 

543 of this chapter that are testable by 

the testing laboratory; and 

(C) The TGRA; 

(iii) The testing laboratory provides a 

formal written report to the party 

making the submission, setting forth 

and certifying its findings and 

conclusions, and noting compliance 

with any standard established by the 

TGRA pursuant to paragraph (b)(1)(ii)(C) 

of this section; 

(iv) The testing laboratory’s written 

report confirms that the operation of a 

player interface prototype has been 

certified that it will not be compromised 

or affected by electrostatic discharge, 

liquid spills, electromagnetic 

interference, or any other tests required 

by the TGRA; 

(v) Following receipt of the testing 

laboratory’s report, the TGRA makes a 

finding that the Class II gaming system 

conforms to the standards established 

by: 

(A) This part; 

(B) Any applicable provisions of part 

543 of this chapter that are testable by 

the testing laboratory; and 

(C) The TGRA. 

(2) For so long as a Class II gaming 

system is made available for use at any 

tribal gaming operation pursuant to this 

paragraph (b) the TGRA shall: 

(i) Retain a copy of the testing 

laboratory’s report; and 

(ii) Maintain records identifying the 

Class II gaming system and its current 

components. 

(c) Class II gaming system component 

repair, replacement, or modification. (1) 

As permitted by the TGRA, individual 

hardware or software components of a 

Class II gaming system may be repaired 

or replaced to ensure proper 

functioning, security, or integrity of the 

Class II gaming system. 

(2) A TGRA may not permit the 

modification of any Class II gaming 

system in a tribal gaming operation 

unless: 

(i) The Class II gaming system 

modification has been submitted to a 

testing laboratory; 

(ii) The testing laboratory tests the 

submission to the standards established 

by: 

(A) This part; 

(B) Any applicable provisions of part 

543 of this chapter that are testable by 

the testing laboratory; and 

(C) The TGRA; 

(iii) The testing laboratory provides a 

formal written report to the party 

making the submission, setting forth 

and certifying its findings and 

conclusions, and noting compliance 

with any standard established by the 

TGRA pursuant to paragraph (c)(2)(ii)(C) 

of this section; 

(iv) Following receipt of the testing 

laboratory’s report, the TGRA makes a 

finding that the: 

(A) The modification will maintain or 

advance the Class II gaming system’s 

compliance with this part and any 

applicable provisions of part 543 of this 

chapter; and 

(B) The modification will not detract 

from, compromise or prejudice the 

proper functioning, security, or integrity 

of the Class II gaming system; 

(3) If a TGRA authorizes a component 

modification under this paragraph, it 

must maintain a record of the 

modification and a copy of the testing 

laboratory report so long as the Class II 

gaming system that is the subject of the 

modification remains available to the 

public for play. 

(d) Emergency Class II gaming system 

component modifications. (1) A TGRA, 

in its discretion, may permit the 

modification of previously approved 

components to be made available for 

play without prior laboratory testing or 

review if the modified hardware or 

software is: 

(i) Necessary to correct a problem 

affecting the fairness, security, or 

integrity of a game or accounting system 

or any cashless system, or voucher 

system; or 

(ii) Unrelated to game play, an 

accounting system, a cashless system, or 

a voucher system. 

(2) If a TGRA authorizes modified 

components to be made available for 

play or use without prior testing 

laboratory review, the TGRA must 

thereafter require the hardware or 

software manufacturer to: 

(i) Immediately advise other users of 

the same components of the importance 

and availability of the update; 

(ii) Immediately submit the new or 

modified components to a testing 

laboratory for testing and verification of 

compliance with this part and any 

applicable provisions of part 543 of this 

chapter that are testable by the testing 

laboratory; and 

(iii) Immediately provide the TGRA 

with a software signature verification 

tool meeting the requirements of 

§ 547.8(f) for any new or modified 

software component. 

(3) If a TGRA authorizes a component 

modification under this paragraph, it 

must maintain a record of the 

modification and a copy of the testing 

laboratory report so long as the Class II 

gaming system that is the subject of the 

modification remains available to the 

public for play. 

(e) Compliance by charitable gaming 

operations. This part does not apply to 

charitable gaming operations, provided 

that: 

(1) The tribal government determines 

that the organization sponsoring the 

gaming operation is a charitable 

organization; 

(2) All proceeds of the charitable 

gaming operation are for the benefit of 

the charitable organization; 

(3) The TGRA permits the charitable 

organization to be exempt from this 

part; 

(4) The charitable gaming operation is 

operated wholly by the charitable 

organization’s employees or volunteers; 

and 

(5) The annual gross gaming revenue 

of the charitable gaming operation does 

not exceed $3,000,000. 

(f) Testing laboratories. (1) A testing 

laboratory may provide the 

examination, testing, evaluating and 

reporting functions required by this 

section provided that: 

(i) It demonstrates its integrity, 

independence and financial stability to 

the TGRA. 

(ii) It demonstrates its technical skill 

and capability to the TGRA. 

(iii) If the testing laboratory is owned 

or operated by, or affiliated with, a tribe, 

it must be independent from the 

manufacturer and gaming operator for 

whom it is providing the testing, 

evaluating, and reporting functions 

required by this section. 

(iv) The TGRA: 

(A) Makes a suitability determination 

of the testing laboratory based upon 

standards no less stringent than those 

set out in § 533.6(b)(1)(ii) through (v) of 

this chapter and based upon no less 

information than that required by 

§ 537.1 of this chapter, or 

(B) Accepts, in its discretion, a 

determination of suitability for the 

testing laboratory made by any other 

gaming regulatory authority in the 

United States. 

(v) After reviewing the suitability 

determination and the information 

provided by the testing laboratory, the 

TGRA determines that the testing 

laboratory is qualified to test and 

evaluate Class II gaming systems. 

(2) The TGRA must: 

(i) Maintain a record of all 

determinations made pursuant to 


daltland on DSKBBV9HB2PROD with RULES
Federal Register / Vol. 82, No. 247 / Wednesday, December 27, 2017 / Rules and Regulations 61177 

paragraphs (f)(1)(iii) and (f)(1)(iv) of this 

section for a minimum of three years. 

(ii) Place the testing laboratory under 

a continuing obligation to notify it of 

any adverse regulatory action in any 

jurisdiction where the testing laboratory 

conducts business. 

(iii) Require the testing laboratory to 

provide notice of any material changes 

to the information provided to the 

TGRA. 

(g) Records. Records required to be 

maintained under this section must be 

made available to the Commission upon 

request. The Commission may use the 

information derived therefrom for any 

lawful purpose including, without 

limitation, to monitor the use of Class II 

gaming systems, to assess the 

effectiveness of the standards required 

by this part, and to inform future 

amendments to this part. The 

Commission will only make available 

for public review records or portions of 

records subject to release under the 

Freedom of Information Act, 5 U.S.C. 

552; the Privacy Act of 1974, 5 U.S.C. 

552a; or the Indian Gaming Regulatory 

Act, 25 U.S.C. 2716(a). 

Dated: December 19, 2017. 

Jonodev O. Chaudhuri, 

Chairman. 

Kathryn Isom-Clause, 

Vice Chair. 

E. Sequoyah Simermeyer, 

Associate Commissioner. 

[FR Doc. 2017–27945 Filed 12–26–17; 8:45 am] 

BILLING CODE 7565–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9825] 

RIN 1545–BJ08 

Treatment of Transactions in Which 

Federal Financial Assistance Is 

Provided; Correction 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations; correction. 

SUMMARY: This document contains 

corrections to final regulations (TD 

9825) that were published in the 

Federal Register on Thursday, October 

19, 2017. The final regulations are under 

section 597 of the Internal Revenue 

Code. These final regulations amend 

existing regulations that address the 

federal income tax treatment of 

transactions in which federal financial 

assistance is provided to banks and 

domestic building and loan 

associations, and they clarify the federal 

income tax consequences of those 

transactions to banks, domestic building 

and loan associations, and related 

parties. 

DATES: This correction is effective on 

December 27, 2017 and applicable on or 

after October 19, 2017. 

FOR FURTHER INFORMATION CONTACT: 

Russell G. Jones at (202) 317–5357, or 

Ken Cohen at (202) 317–5367 (not tollfree numbers). 

SUPPLEMENTARY INFORMATION: 

Background 

The final regulations (TD 9825) that 

are the subject of this correction are 

issued under section 597 of the Internal 

Revenue Code. 

Need for Correction 

As published, the final regulation (TD 

9825) contains errors that may prove to 

be misleading and are in need of 

clarification. 

Correction of Publication 

Accordingly, the final regulations (TD 

9825) that are the subject of FR Doc. 

2017–21129 appearing on page 48618 in 

the Federal Register of Thursday, 

October 19, 2017, are corrected as 

follows: 

On page 48619, in the second column, 

in the preamble, under the caption 

‘‘Special Analyses’’, in the fifth line, the 

language ‘‘Executive Order 13653. 

Therefore, a’’ is corrected to read 

‘‘Executive Order 13563. Therefore, a’’. 

Martin V. Franks, 

Chief, Publications and Regulations Branch, 

Legal Processing Division, Associate Chief 

Counsel (Procedure and Administration). 

[FR Doc. 2017–27863 Filed 12–26–17; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9825] 

RIN 1545–BJ08 

Treatment of Transactions in Which 

Federal Financial Assistance Is 

Provided; Correction 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Correcting amendment. 

SUMMARY: This document contains 

corrections to final regulations (TD 

9825) that were published in the 

Federal Register on Thursday, October 

19, 2017. The final regulations are under 

section 597 of the Internal Revenue 

Code. These final regulations amend 

existing regulations that address the 

federal income tax treatment of 

transactions in which federal financial 

assistance is provided to banks and 

domestic building and loan 

associations, and they clarify the federal 

income tax consequences of those 

transactions to banks, domestic building 

and loan associations, and related 

parties. 

DATES: This correction is effective on 

December 27, 2017 and is applicable on 

or after October 19, 2017. 

FOR FURTHER INFORMATION CONTACT: 

Russell G. Jones at (202) 317–5357, or 

Ken Cohen at (202) 317–5367 (not tollfree numbers). 

SUPPLEMENTARY INFORMATION: 

Background 

The final regulations (TD 9825) that 

are the subject of this correction are 

issued under section 597 of the Internal 

Revenue Code. 

Need for Correction 

As published, the final regulations 

(TD 9825) contain errors that may prove 

to be misleading and are in need of 

clarification. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Correction of Publication 

Accordingly, 26 CFR part 1 is 

corrected by making the following 

correcting amendments: 

PART 1—INCOME TAXES 

■ Paragraph 1. The authority citation 

for part 1 continues to read in part as 

follows: 

Authority: 26 U.S.C. 7805 * * * 

■ Par. 2. Section 1.597–5 is amended 

by revising the seventh and eighth 

sentences of paragraph (f), Example 4, 

and by revising the first and second 

sentences of paragraph (f), Example 5 

(ii), to read as follows: 

§ 1.597–5 Taxable Transfers. 

* * * * * 

(f) * * * 

Example 4. * * * The fair market value 

of the loans is their Expected Value, $800,000 

(the sum of the $500,000 Third-Party Price 

and the $300,000 that the Agency would pay 

if N sold the loans for $500,000). The fair 

market value of each foreclosed property is 

its Expected Value, $80,000 (the sum of the 

$50,000 Third-Party Price and the $30,000 

that the Agency would pay if N sold the 


daltland on DSKBBV9HB2PROD with RULES