[Federal Register Volume 73, Number 198 (Friday, October 10, 2008)]
[Rules and Regulations]
[Pages 60508-60535]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-23084]


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DEPARTMENT OF THE INTERIOR

National Indian Gaming Commission

25 CFR Part 547

RIN 3141-AA29


Technical Standards for Electronic, Computer, or Other 
Technologic Aids Used in the Play of Class II Games

AGENCY: National Indian Gaming Commission, Interior.

ACTION: Final rule.

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SUMMARY: The rule adds a new part to the Commission's regulations 
establishing technical standards for Class II games--bingo, lotto, 
other games similar to bingo, pull tabs, and ``instant bingo''--that 
are played using ``electronic, computer, or other technologic aids'' as 
parts of a Class II gaming system. The rule establishes a process for 
ensuring the integrity of such games and aids--examination by an 
independent testing laboratory and approval by the tribal gaming 
regulatory authority--before being made available to the public for 
play in a tribal gaming operation. The standards will assist tribal 
gaming regulatory authorities and operators in ensuring the integrity 
and security of Class II gaming and the accountability of Class II 
gaming revenue. The standards will also provide guidance to equipment 
manufacturers and distributors of Class II gaming systems.
    The rule does not attempt to distinguish Class II gaming from Class 
III gaming. Rather, the rule assumes that the games played on Class II 
gaming systems are, in fact, Class II.

DATES: Effective November 10, 2008.

FOR FURTHER INFORMATION CONTACT: Michael Gross, Associate General 
Counsel, General Law, Office of General Counsel, National Indian Gaming 
Commission, 1441 L St., NW., Suite 9100, Washington, DC 20005, 
telephone: 202.632.7003. This is not a toll-free call.

SUPPLEMENTARY INFORMATION:

Withdrawal of Classification Standards and Amendment to Definition of 
Facsimile

    The Commission has withdrawn the Classification standards it 
proposed on October 24, 2007. ``Classification Standards for Bingo, 
Lotto, Etc. as Class II Gaming When Played Through an Electronic Medium 
Using `Electronic Computer, or Other Technologic Aids.' '' 72 FR 60483. 
The Commission has also withdrawn the amendment to the definition of 
``electronic or electromechanical facsimile,'' also proposed on October 
24, 2007. ``Definition for Electronic or Electromechanical Facsimile.'' 
72 FR 60482. See the Commission's notices of withdrawal, published 
simultaneously.

Background

    The Indian Gaming Regulatory Act, 25 U.S.C. 2701-21 (``IGRA''), 
enacted by the Congress in 1988, establishes the National Indian Gaming 
Commission (``Commission'') and sets out a comprehensive framework for 
the regulation of gaming on Indian lands. IGRA establishes three 
classes of Indian gaming.
    ``Class I gaming'' means social games played solely for prizes of 
minimal value or traditional forms of Indian gaming played in 
connection with tribal ceremonies or celebrations. 25 U.S.C. 2703(6). 
Indian tribes regulate Class I gaming exclusively.
    ``Class II gaming'' means the game of chance commonly known as 
bingo, whether or not electronic, computer, or

[[Page 60509]]

other technologic aids are used in connection therewith, including, if 
played in the same location, pull-tabs, lotto, punch boards, tip jars, 
instant bingo, and other games similar to bingo, as well as various 
non-house-banked card games. 25 U.S.C. 2703(7)(A). Specifically 
excluded from Class II gaming are banking card games such as blackjack, 
electronic or electromechanical facsimiles of any game of chance, and 
slot machines of any kind. 25 U.S.C. 2703(7)(B). Indian tribes and the 
Commission share regulatory authority over Class II gaming. Indian 
tribes can engage in Class II gaming without any state involvement.
    ``Class III gaming'' includes all forms of gaming that are not 
Class I gaming or Class II gaming. 25 U.S.C. 2703(8). Class III gaming 
thus includes all other games of chance, including lotteries and most 
forms of casino gaming, such as slot machines, roulette, and banking 
card games like blackjack. Class III gaming may be conducted lawfully 
only if the tribe and the state in which the tribe is located enter 
into a tribal-state compact for such gaming. Alternatively, a tribe may 
operate Class III gaming under gaming procedures issued by the 
Secretary of the Interior. Indian tribes, states, and the Commission 
exercise regulatory authority over Class III gaming. In addition, the 
United States Department of Justice possesses exclusive criminal, and 
certain civil, jurisdiction over Class III gaming on Indian lands.
    The Commission has determined that it is in the best interests of 
Indian gaming to adopt technical standards that govern the 
implementation of electronic, computer, and other technologic aids used 
in the play of Class II games because no such standards currently 
exist. The rule seeks to provide a means for tribal gaming regulatory 
authorities and tribal operators to ensure that the integrity and 
security of Class II games played with the use of electronic, computer, 
or other technologic aids is maintained and that the games and aids are 
fully auditable, i.e., that they provide a means for the gaming 
authority and gaming operation to account for all gaming revenue. The 
rule also seeks to permit flexibility in the implementation of 
technology and to embrace the development of future technologies 
unforeseen and undeveloped.

Development of the Rule

    The development of the rule began formally with the March 31, 2004, 
appointment of an advisory committee comprised of tribal government 
representatives with substantial experience and expertise in gaming 
regulation and operations, the Commission, and Commission staff. 
Although the Commission initially intended to develop one set of 
regulations, this committee's work ultimately resulted in the 
Commission's publication of a proposed rule for Class II classification 
standards, 71 FR 30238 (May 25, 2006), and a separate proposed rule for 
Class II technical standards, 71 FR 46336 (August 11, 2006). A detailed 
history of the advisory committee's work on the technical standards to 
that point, its meetings, the Commission's consultations with Indian 
tribes, and the contributions and participation of the interested 
general public is published in the preamble to that proposed rule. 71 
FR 46336-46337 (August 11, 2006).
    The ultimate goal of that first proposed set of technical standards 
was as it is here--to ensure the security and integrity of Class II 
games played with technologic aids, to ensure the auditabilty of the 
gaming revenue that those games earn, and to account and allow for 
evolving and new technology.
    Given the importance of the regulations to the industry, the 
Commission, which had initially set a comment period of 45 days, 
reopened the comment period for an additional 76 days, from November 
15, 2006, through January 31, 2007. 71 FR 71115 (December 8, 2006); 71 
FR 76618 (December 21, 2006).
    Public comments made it clear to the Commission that the first set 
of proposed technical standards fell short of its goal of technological 
flexibility. In particular, commenters stated that the first set of 
proposed technical standards would mandate particular implementations 
of technology that were not practical or feasible. Commenters suggested 
that rather than prescribe particular implementations of technology, 
the standards should describe the regulatory outcomes that the 
Commission seeks to achieve and leave it to the industry to develop 
ways to meet those regulatory requirements.
    At a December 5, 2006, advisory committee meeting in Washington, 
DC, the tribal representatives to the advisory committee strongly 
agreed with this sentiment. The details of the solution, however, were 
not immediately apparent. Before providing further advice to the 
Commission, the tribal representatives on the committee wished to 
consult further with other tribal representative and regulators, and 
with industry representatives. They therefore suggested that they 
assemble a working group made up of representatives from the Class II 
gaming industry--tribal operators, tribal regulators, and manufacturers 
alike--to assist the advisory committee. The Commission agreed to allow 
the tribal representatives to work independently of the Commission to 
redraft the technical standards. Accordingly, the Commission withdrew 
the first proposed technical standards. 72 FR 7360 (February 15, 2007).
    The tribal representatives to the advisory committee formed a 
working group, which met at various times, in person and 
telephonically, from the end of 2006 through the middle of 2007 to 
draft this new set of technical standards. The Commission did not 
participate in the establishment of this working group or in most of 
its work. On some occasions, the tribal representatives invited the 
participation of Commission staff members to answer questions and to 
provide explanation about the Commission's regulatory goals. Commission 
staff participated in this capacity during in-person meetings on 
December 11-12, 2006, in Las Vegas, Nevada, and June 5, 2007, in 
Dallas, Texas.
    The full advisory committee, including the Commission, met to 
discuss drafts developed by the tribal representatives and the working 
group on February 22, 2007, in Albuquerque, New Mexico; April 26, 2007, 
in Seattle, Washington; and May 22, 2007, in Bloomington, Minnesota. 
All of these meetings were open to the interested public.
    The NIGC published its Government-to-Government Tribal Consultation 
Policy on March 24, 2004, 69 FR 16973. In that policy the Commission 
recognized the government-to-government relationship that exists 
between the NIGC and federally-recognized tribes and stated that the 
primary focus on the NIGC's consultation policies would involve 
consulting with individual tribes and their recognized governmental 
leaders. The Commission's consultation policy also calls for providing 
early notification to affected tribes of any regulatory policies prior 
to a final agency decision regarding their formulation or 
implementation.
    Accordingly, throughout this entire period, the Commission 
maintained a busy consultation schedule, consulting with tribal 
governments and gaming commissions, usually at gaming association 
meetings across the country but also at the Commission's Washington, 
DC, headquarters. From September 2005 through December 2007, and 
excluding consultations devoted solely to the Commission's Class II 
classification standards, the

[[Page 60510]]

Commission issued 751 invitations to tribes for consultation. These 
invitations resulted in consultations with 189 tribes or their gaming 
commissions. The tribes were invited to discuss the proposed technical 
standards, among other current issues.
    In addition, in July and August 2006, the Commission consulted with 
69 tribes and tribal gaming commissions in Washington, DC; Bloomington, 
Minnesota; Oklahoma City, Oklahoma; Tacoma, Washington; and Ontario 
California. These consultations were devoted primarily to discussing 
the proposed Classification standards. However, a few tribes took the 
opportunity to discuss the proposed technical standards as well.
    The Commission is immensely grateful to all who contributed to the 
technical standards: The tribes and gaming commissions who took the 
time and made the effort to consult; the tribal representatives on the 
advisory committee and the working group of tribal leaders, tribal 
regulators, and manufacturers; and all of the commenters who 
contributed their insight in comments. The proposed rule published in 
October 2007 was substantially adopted from the draft of descriptive 
technical standards that the tribal representatives on the advisory 
committee delivered to the Commission.
    There are some places where the Commission felt it could not accept 
the recommendations in the draft, and the October 2007 proposed rule 
contained some standards more stringent than the tribal representatives 
to the advisory committee would have preferred and some that the tribal 
representatives thought unnecessary. These differences are discussed in 
detail in the comment section, below.

Purpose and Scope

    Part 547 (``the Technical Standards'') applies to all Class II 
games played using electronic, computer, or other technologic aids, or 
modifications of such games and aids. Class II games played through 
such technologic aids are widely used in Indian gaming operations, yet 
no uniform standards exist to govern their construction, function, or 
implementation. The rule seeks to remedy that absence and create a 
regulatory structure under which tribal gaming regulatory authorities 
and tribal operators are able to ensure the integrity and security of 
Class II games played with the use of electronic, computer, or other 
technologic aids and of Class II gaming revenue.
    There is a great variety in the technologic aids used in the play 
of Class II games and, therefore, a great variety in the means used to 
play the games. An operation may, for example, play bingo using no aids 
at all. A caller may select numbers using ping pong balls taken from a 
hopper, and players purchase paper cards from an employee of the 
operation and mark them with an inked dauber. Alternatively, numbers 
may be selected randomly using an electronic random number generator, 
which in turn displays the selected number on a display board. Instead 
of paper, players may use electronic handheld devices to monitor and 
mark their cards. The handheld devices are purchased and have cards 
loaded on them at a point-of-sale retail terminal.
    Still again, bingo may be implemented wholly electronically on 
client-server architectures. A common arrangement, but by no means the 
only one possible, is to have client machines on the casino floor as 
electronic player stations. These display the cards, allow the player 
to cover numbers when drawn, and pay any prizes won. Credits may be 
placed on the electronic player station by inserting cash or 
electronically drawing down an account separately established. The 
server, usually located off the floor, draws random numbers and passes 
them along data communications lines to the client machines for game 
play.
    The challenge, then, for writing technical standards is to address 
all of the various ways that Class II games can be played. Central to 
the Technical Standards, therefore, is the definition of ``Class II 
gaming system,'' which refers to the collection of components used in 
the play of a Class II game: ``All components, whether or not 
technologic aids in electronic, computer, mechanical or other 
technologic form, that function together to aid the play of one or more 
Class II games, including accounting functions mandated by these 
regulations.'' The notion of the ``gaming system'' thus encompasses 
bingo played in all of the implementations described above.
    It is the ``gaming system'' that must meet the requirements of the 
Technical Standards. Like the gaming system itself, the Technical 
Standards are conceived generally so that they may be met by a gaming 
system, regardless of the particular components that may comprise it. 
For example, the Technical Standards do not refer to ``bill 
validators,'' electronic devices into which a patron may insert a bill 
in order to place credits on a gaming machine. Instead, the Technical 
Standards describe ``financial instrument acceptors'' and the standards 
they must meet. ``Financial instrument acceptor'' is broad enough in 
meaning to encompass not only a ``bill validator'' but also a cash 
drawer staffed by an employee of the gaming operation. The Technical 
Standards provide minimum standards for the security of the 
``acceptors'' and of the money or vouchers (generally, ``financial 
instruments'') they accept.
    In the past, when Class II gaming systems did not make use of as 
many sophisticated electronic components as they do now, there was less 
need for technical standards. Now that technology has come so far and 
been implemented in Class II gaming to such a great extent, playing a 
direct role in the outcome of Class II games, technical standards, 
independent laboratory analysis, and tribal gaming regulatory authority 
approval are essential parts of gaming regulation.
    However, because of the breadth of possible implementations for 
Class II gaming systems, the Technical Standards require that gaming 
equipment and software used with Class II gaming systems meet only 
those requirements that are applicable to the system as implemented. 
This is, in short, a rule of construction of common sense. For example, 
if a system takes only cash and lacks the ability to print or accept 
vouchers, then any standards that apply to vouchers do not apply.
    The Technical Standards are deliberately only minimum standards. 
Tribes and tribal gaming regulatory authorities may add any additional 
requirements, or more stringent requirements, needed to suit their 
particular circumstances.
    In order to ensure compliance, the Technical Standards borrow from 
the established practices of tribal, state, and provincial gaming 
jurisdictions across North America for handling other technologically 
sophisticated electronic gaming devices. The Technical Standards 
establish, as a necessary prerequisite to a gaming system being offered 
to the public for play, review of the system by a qualified, 
independent testing laboratory and approval by the tribal gaming 
regulatory authority.
    Under the Technical Standards, a tribe's gaming regulatory 
authority will require all Class II gaming systems, or modifications 
thereof, to be submitted to a testing laboratory for review and 
analysis. That submission includes a working prototype of the gaming 
system or modification, all pertinent software, and anything else the 
testing laboratory needs for its complete and thorough review. In turn, 
the laboratory will review whether the gaming system does or does not 
meet the requirements of the Technical Standards, as well as any 
additional requirements adopted by the

[[Page 60511]]

tribe's gaming regulatory authority. The laboratory will provide a 
written report of its analysis and conclusions to the tribal gaming 
regulatory authority to aid its approval or disapproval of the gaming 
system or modification. The tribal gaming regulatory authority will 
retain the report as long as the gaming system or modification in 
question remains available to the public for play. This process will 
help assure the integrity and security of Class II gaming technology.

Five-Year Grandfather and Transition Period

    The Commission understands that existing Class II gaming systems 
likely do not meet all of the requirements of the Technical Standards. 
In order to avoid any potentially significant economic and practical 
consequences of requiring immediate compliance, the Technical Standards 
implement a five-year ``grandfather period'' for existing gaming 
systems.
    Existing gaming systems--those in play or manufactured by the 
effective date of the Technical Standards--may be grandfathered and 
exempt from compliance with the Technical Standards for five years if 
they are put through a similar review by a qualified independent 
testing laboratory and approved by a tribal gaming regulatory 
authority. Specifically, in order to be eligible for grandfathering, a 
gaming system must be submitted to a testing laboratory within 120 days 
of the Technical Standards' effective date. The testing laboratory must 
review the gaming system for compliance with a specific, minimum set of 
requirements--random number generation, minimum probabilities, no 
reflexive or secondary decision-making after random numbers are drawn, 
the inability to change bingo cards during the play of a game, and a 
mechanism for verifying game software.
    The laboratory must issue a report on these issues to the tribal 
gaming regulatory authority, which must make a finding that the gaming 
system qualifies for grandfather status. Once a gaming system is 
qualified, the manufacturer must label each player interface on the 
system with its date of manufacture and certify the same to the tribal 
gaming regulatory authority. This requirement effectively freezes the 
number of grandfathered interfaces in use.
    The 120-day requirement applies only to the submission of the 
gaming system for testing. There is no requirement in the technical 
standards that the testing laboratory test the system, or the tribal 
gaming regulatory authority approve it as a grandfathered system, 
within that time period. It is, nonetheless, in the interest of gaming 
operations for the testing laboratory to complete its evaluation and 
for the tribal gaming regulatory authority to issue its grandfather 
certifications as quickly as possible. The Technical Standards require 
both of those things to occur before a Class II gaming system is 
grandfathered and available to the public for play.
    All of this is not to say, however, that the Technical Standards 
require grandfathered gaming systems to remain entirely static. Tribal 
gaming regulatory authorities may permit modifications to gaming system 
software or hardware that increases compliance with the requirements of 
the Technical Standards, even if the modifications do not make the 
system wholly compliant. Tribal gaming regulatory authorities may also 
authorize modifications to gaming system software that do not detract 
from, compromise, or prejudice the proper functioning, security or 
integrity of the Class II gaming system and the system's overall 
compliance with the requirements of the Technical Standards. Changes 
such as new pay tables, new game themes, and new entertaining displays 
fall within this latter category.

Withdrawal of the Classification Standards

    Finally, the October 2007 proposed rule was not intended to stand 
alone. The advisory committee pointed out, and the Commission agreed, 
that many of the functions placed in the technical standards proposed 
on August 11, 2006, and subsequently withdrawn, were more properly 
characterized as minimum internal control standards. Accordingly, along 
with the proposed technical standards, the Commission published, as a 
separate proposed rule, a companion set of minimum internal control 
standards for the play of bingo and games similar to bingo. Those two 
proposed rules were to be applied in conjunction with proposed 
classification standards. The final Technical Standards are not so 
intertwined.
    The Commission has withdrawn the classification standards (see 
notice of withdrawal published simultaneously) and has removed all 
cross references from the Technical Standards to the classification 
standards. Compliance with the classification standards is not required 
for compliance with the Technical Standards.

Class II MICS

    Similarly, the Commission is adopting as 25 CFR part 543, the 
companion set of internal controls for bingo and games similar to 
bingo. The Commission has endeavored to place all requirements for the 
design, construction, and implementation of Class II gaming systems 
into the Technical Standards and all requirements for the operation of 
bingo gaming systems and the authorization, recognition, and 
recordation of gaming and gaming-related transactions into the MICS. In 
this sense, the two rules are independent of one another.
    Nevertheless, there are places where the two rules bump up against 
one another--for example, in circumstances where equipment must have 
certain features to allow the application of appropriate internal 
controls. In those cases, a cross reference from one set of regulations 
to the other is appropriate. Similarly, the grandfather provisions of 
Technical Standards cross reference the MICS in a few places where 
tribal gaming regulatory authorities may permit hardware and software 
changes to a grandfathered Class II gaming system when those changes 
will improve compliance with the Technical Standards or the MICS.

Regulatory Matters

Regulatory Flexibility Act

    The RFA generally requires an agency to prepare a regulatory 
flexibility analysis of any rule subject to notice and comment 
rulemaking requirements under the Administrative Procedure Act or any 
other statute, unless the agency certifies that the rule will not have 
a significant economic impact on a substantial number of small 
entities. Small entities include small businesses, small organizations, 
and small governmental jurisdictions.
    For purposes of assessing the impact of the Technical Standards on 
small entities, ``small entity'' is defined as: (1) A small business 
that meets the definition of a small business found in the Small 
Business Act and codified at 13 CFR 121.201; (2) a small governmental 
jurisdiction that is a government of a city, county, town, school 
district or special district with a population of less than 50,000; and 
(3) a small organization that is any not-for-profit enterprise that is 
independently owned and operated and is not dominant in its field.
    Indian tribes and tribal casinos do not meet this definition. 
Tribes are excluded from the governmental jurisdictions listed under 
(2), and tribally owned casinos are not ordinary commercial

[[Page 60512]]

activities but are tribal governmental operations.
    In determining whether a rule has a significant economic impact on 
a substantial number of small entities, the impact of concern is any 
significant adverse economic impact on small entities, because the 
primary purpose of the regulatory flexibility analyses is to identify 
and address regulatory alternatives ``which minimize any significant 
economic impact of the proposed rule on small entities.'' 5 U.S.C. 603 
and 604. Thus, an agency may certify that a rule will not have a 
significant economic impact on a substantial number of small entities 
if the rule relieves regulatory burden, or otherwise has a positive 
economic effect on all of the small entities subject to the rule.
    As a practical matter, the economic impacts of the Technical 
Standards will fall primarily upon the Indian tribes. The Technical 
Standards impose some direct costs upon gaming tribes--regulatory 
compliance costs, for example. In addition, as the ultimate customers, 
costs initially borne by testing laboratories and gaming manufacturers 
will be passed along. Accordingly, the Commission certifies that this 
action will not have a significant economic impact on a substantial 
number of small entities.

Small Business Regulatory Enforcement Fairness Act

    When the Technical Standards were proposed in October 2007, the 
Commission proceeded as if they were a major rule under 5 U.S.C. 804.2, 
the Small Business Regulatory Enforcement Fairness Act. The Commission 
did so because the status of the proposed technical standards, 
considered alone--apart from the classification standards (proposed 
part 546), the proposed amended definition of 25 CFR 502.8, and the 
proposed MICS (proposed part 543)--was unclear. The Commission had 
commissioned an economic impact study of the proposals taken together, 
and it made clear that the cost to the Indian gaming industry of 
complying with the combined proposed rules would have an annual effect 
on the economy of $100 million or more. Accordingly, the Commission 
treated the proposed technical standards as a major rule.
    In so proceeding, the Commission was required to undertake a cost-
benefit analysis, and, in doing so, evaluated the costs of each 
proposed rule individually. The Commission has found that the annual 
cost to the Indian gaming industry of the Technical Standards, 
considered alone, is $3.1 million dollars. The cost of the Technical 
Standards and the Class II MICS taken together is less than $10 million 
annually. Accordingly, the Technical Standards are not a major rule 
within the meaning of 5 U.S.C. 804.2, the Small Business Regulatory 
Enforcement Fairness Act.
    The Commission's cost-benefit analysis is available for review at 
the Commission's Web site, www.nigc.gov, or by request using the 
addresses or telephone numbers, above.

Unfunded Mandates Reform Act

    The Commission, as an independent regulatory agency within the 
Department of the Interior, is exempt from compliance with the Unfunded 
Mandates Reform Act. 2 U.S.C. 658(1); 1502(1).

Takings

    In accordance with Executive Order 12630, the Commission has 
determined that the Technical Standards do not have significant takings 
implications. A takings implication assessment is not required.

Civil Justice Reform

    In accordance with Executive Order 12988, the Commission's Office 
of General Counsel has determined that the Technical Standards 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 Technical Standards require information collection under the 
Paperwork Reduction Act of 1995, 44 U.S.C. 3501, et seq. The title, 
description, and respondent categories are discussed below, together 
with an estimate of the annual information collection burden.
    Title: Process for Certification of Electronic, Computer, or other 
Technologic Aids used in the play of Class II games and process for 
qualification of independent testing laboratories, proposed 25 CFR 
547.4.
    Summary and description of information collections: The Technical 
Standards establish a process for ensuring that Class II gaming systems 
have been reviewed and evaluated by a qualified, independent testing 
laboratory prior to their approval by a tribal gaming regulatory 
authority and their availability to the public for play. The process 
helps to ensure the proper functioning of the systems and the 
integrity, fairness, and auditability of games played.
    The process requires a tribe's gaming regulatory authority to 
require that all Class II gaming systems, or modifications thereto, be 
submitted to a qualified, independent testing laboratory for review and 
analysis. That submission includes a working prototype of the game and 
aid, all pertinent software, and complete documentation and 
descriptions of all functions and components. In turn, the laboratory 
will determine that the gaming system does or does not meet the 
requirements of the Technical Standards and any additional requirements 
adopted by the tribe's gaming regulatory authority. The laboratory will 
provide a written report of its analysis and conclusions to the tribal 
gaming regulatory authority, which in turn will approve or disapprove 
the system or modification. The tribal gaming regulatory authority will 
retain the laboratory report as long as the system or modification 
remains available to the public for play.
    This process is necessary to ensure the security and integrity of 
Class II gaming. Technical standards generally are a fundamental part 
of Class III gaming and of non-Indian, commercial casino gaming 
throughout North America. No uniform standards exist for Class II 
gaming, however. The implementation of such standards will assist 
tribal gaming regulators in ensuring that games are implemented fairly, 
that all gaming systems are secure and function properly, and that the 
tribes and operators are able to properly account for gaming revenue.
    The Technical Standards implement an analogous process for 
determining whether a Class II gaming system is eligible for the five-
year grandfather period. This process again requires a tribe's gaming 
regulatory authority to require that a Class II gaming system be 
submitted, within 120 days after the effective date, to a qualified, 
independent testing laboratory for review and analysis. The submission 
must include a working prototype of the game and aid, all pertinent 
software, and complete documentation and descriptions of all functions 
and components. In turn, the laboratory will determine that the gaming 
system does or does not meet a small set of specified requirements. The 
laboratory will provide a written report of its analysis and 
conclusions to the tribal gaming regulatory authority, which in turn 
will determine that the gaming system is or is not eligible for 
grandfather status. Upon a finding of eligibility, the tribal gaming 
regulatory authority will issue a certificate to that effect to the 
gaming system manufacturer and a description of the grandfathered game 
to the Commission.

[[Page 60513]]

    This process is necessary to ensure a certain minimum integrity and 
security for games while at the same time avoiding potentially 
significant economic and practical consequences of requiring immediate 
and complete compliance with the Technical Standards.
    Finally, the Technical Standards establish a process for testing 
laboratories to establish their eligibility to provide testing services 
to the tribal gaming regulatory authorities. The testing laboratories 
must submit to suitability determinations made by the tribes they 
serve, and these determinations include criminal background checks for 
the laboratories' principals. These determinations are made according 
to the same standards used to license the primary management officials 
and key employees of Indian gaming operations under the Indian Gaming 
Regulatory Act. All of this requires the submission by the laboratory 
of corporate financial information; qualifications of the engineering 
staff; information (and inspections) of the available engineering 
facilities, and personal information for principals, including tax 
returns, bankruptcies and law suits, work histories, and references.
    Given the essential role accorded to laboratories in ensuring the 
integrity, security, and auditability of Class II gaming systems, this 
process is essential to ensuring the competence, integrity, and 
independence of the testing laboratories and the suitability of their 
decision makers, i.e. to ensure that undesirable elements are kept out 
of gaming.
    Respondents: The respondents are independent testing laboratories, 
developers and manufacturers of Class II gaming systems, and Indian 
tribes. The Commission estimates that there are currently 20 such 
manufacturers, 5 such laboratories, and 226 gaming tribes. The 
frequency of responses to the information collection requirement will 
vary.
    Information Collection Burden: In order to qualify under the 
grandfather provisions of the Technical Standards, a gaming system must 
be submitted to a testing laboratory for review and analysis during the 
first 120 days after the effective date of the rule. The Commission 
estimates that there are approximately 25 Class II gaming systems in 
existence and that all will be submitted during this period.
    Following the initial 120-day period, the frequency of submissions 
of new gaming systems or of modifications to existing gaming systems 
will be entirely market driven. The Commission anticipates 
approximately a 20% turnover each year for the five-year grandfather 
period. Consequently, there should be approximately five submissions of 
new gaming systems each year.
    Submissions of modifications are, as a matter of course, a more 
common practice. Software in particular commonly goes through many 
iterations in development and continues to be improved and revised even 
after sale and placement on a gaming operation's floor. That said, the 
submission of modifications tends to be sporadic, with less frequent or 
occasional submissions punctuated by fairly steady periods of 
submissions when new systems or modifications are introduced. The 
Commission anticipates there will be approximately 300 submissions of 
modifications and thus 300 reports produced by testing laboratories 
each year following the 120-day period that begins on the effective 
date of the rule.
    The preparation and submission of supporting documentation by 
manufacturers or a tribal gaming operation (as opposed to gaming system 
hardware and software per se) is an information collection burden under 
the Paperwork Reduction Act, as is the preparation of reports by the 
testing laboratories or the preparation of a grandfather certificate 
and explanation of gaming system by a tribal gaming regulatory 
authority.
    It is the existing practice in the gaming industry, both Indian and 
non-Indian alike, for the game manufacturer to submit a gaming system 
to a testing laboratory for review and analysis. The Technical 
Standards leave open the possibility that a tribal gaming regulatory 
authority may require the management of a gaming operation to make a 
required submission. The Commission anticipates, however, that it will 
be the responsibility of the gaming system manufacturers to make the 
submissions to testing laboratories.
    The amount of documentation submitted by a manufacturer as part of 
a submission of a gaming system and the size of a laboratory report is 
a function of the complexity of the gaming system submitted for review. 
Submission for minor modifications to software or hardware already 
submitted and examined will be a matter of little time both for 
manufacturer and laboratory, while the submission and review of an 
entirely new game platform will be time consuming. The provision of a 
grandfather certificate and a description of a gaming system's 
component are small matters as that information can be taken directly 
from a testing laboratory's report.
    Accordingly, based upon the discussions with leading testing 
laboratories and with manufacturers for the Indian gaming and non-
Indian gaming markets, the Commission estimates that gathering and 
preparing documentation for a submission of a single, complete gaming 
system will require, on average, 8 hours for a manufacturer's employee. 
The Commission estimates that following examination and analysis, 
writing a report for a complete gaming system will require, on average, 
10 hours of a laboratory engineer's time. For the submission of 
modifications to a gaming system, the Commission estimates 4 hours for 
a manufacturer's employee. For the report on a modification, the 
Commission estimates 5 hours for a laboratory engineer.
    Thus, the information collection requirements will be a 200-hour 
burden on manufacturers industry-wide during the first 120 days after 
the Technical Standards become effective and a 1,200-hour burden 
industry-wide thereafter. The information collection requirements will 
be a 250-hour burden on laboratories for the grandfather submissions 
made during the first 120 days and a 1,500-hour burden thereafter.
    Next, the Commission anticipates that tribal gaming regulatory 
authorities will issue grandfather certificates to manufacturers and 
send a description of grandfathered systems to the Commission for all 
of the approximately 25 existing gaming systems. The preparation of 
these certificates and descriptions will be a small matter as all of 
the necessary information is contained in the testing laboratory 
reports and will take no more than 0.5 hours to prepare.
    Finally, the Technical Standards require tribal gaming regulatory 
authorities to maintain laboratory reports as long as the game system 
or modification at issue is available for play. This, however, is a 
ministerial function that involves little more than filing, and 
occasionally retrieving, the report. As this is already common practice 
among tribal gaming regulatory authorities, the Commission estimates 
that 0.1 hours per report will be dedicated to these tasks.
    The following table summarizes the annual hour burden:

[[Page 60514]]



 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 Collections,
                                                           Number of   Collections,    Hours per       Total        day 121      Hours per      Total
           Provision                   Respondents        respondents  1st 120 days   collection      annual     forward, per   collection      annual
                                                                                                       hours         annum                      hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
25 CFR 547.4..................  Laboratories............            5            25          10           250             300           5          1,500
25 CFR 547.4..................  Manufacturers...........           20            25           8           200             300           4          1,200
25 CFR 547.4..................  Tribal Gaming Operations          226             0           0             0               0           0              0
25 CFR........................  Tribal Gaming Regulatory          226            25            .5          12.5           300           0.1           30
                                 Authorities.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The Technical Standards require a determination of suitability for 
each of the approximately 5 testing laboratories. The information 
required can be substantial: Corporate financial information; 
qualifications of the engineering staff; information (and inspections) 
of the engineering facilities available; and personal information for 
principals, including tax returns, bankruptcies and lawsuits, work 
histories, and references.
    However, the 5 existing testing laboratories have already collected 
and provided this information--multiple times--in order to be licensed 
in tribal and non-tribal gaming jurisdictions nationwide. The 
Commission estimates that the re-submission of such information would 
take the necessary laboratory employees 20 hours to accomplish once. As 
the gaming tribes typically use only one gaming laboratory, the 
submission of suitability determinations to 226 tribal gaming 
regulatory authorities would total 4,520 hours.
    The Commission believes, however, that the hour burden is not 
likely to be nearly this high. Rather than require each tribal gaming 
regulatory authority to make a new suitability determination for each 
testing laboratory it uses, the Technical Standards permit a tribal 
gaming regulatory authority to rely upon a suitability determination 
already made by another gaming jurisdiction in the United States. The 
existing testing laboratories are already licensed or approved in 
numerous jurisdictions throughout the United States, and the Commission 
believes that approximately 90%--203 of 226--of the tribal gaming 
authorities will accept existing suitability determinations from other 
jurisdictions or will already have made one under their own vendor 
licensing programs. The submission by a testing lab of an existing 
suitability determination amounts to the writing of a letter. The 
Commission estimates that the submission of such letters will take the 
necessary laboratory employees 0.5 hours to accomplish once. As each of 
the gaming tribes typically uses only one gaming laboratory, the 
submission of suitability determinations to 203 tribal gaming 
authorities would total 101.5 hours. For the remaining 10% or 23 tribal 
gaming regulatory authorities, the submission burden on laboratories is 
20 hours per tribe or 460 hours.

Review of Public Comments Concerning Information Collections

    On February 19, 2008, the Office of Management and Budget (OMB) 
took action on the Commission's request for approval of the information 
collections in the Technical Standards and required the Commission to 
explain how it has ``maximized the practical utility of the collection 
and minimized the burden.'' OMB required as well that the Commission 
respond to public comment on the information collections.
    The Commission has maximized the utility of the information 
collections and minimized the burden on the industry by adopting 
industry-standard practices already required and in place across non-
tribal gaming throughout North America and already common in tribal 
gaming. In this way, the Technical Standards require little that is 
new.
    First and foremost, as stated above, the review of gaming systems 
by testing laboratories and their subsequent approval by tribal gaming 
regulatory authorities is essential to the integrity of Indian gaming. 
The process enables tribal gaming regulators to ensure that games are 
implemented fairly, that all gaming systems are secure and function 
properly, and that the tribes and operators are able to properly 
account for gaming revenue. This process and the information 
collections that it necessitates are already in place.
    Independent testing laboratories owe their very existence to the 
widespread use of this practice. They are, in essence, in the business 
of testing and examining gaming equipment against a set of regulatory 
standards and then issuing a report of their findings. They are, thus, 
already set up to comply with the information collections required by 
the Technical Standards. Likewise, gaming manufacturers are already in 
the business of submitting gaming equipment and software for laboratory 
review and are already set up to provide the information collections 
required here. What is more, many tribal gaming regulatory authorities 
already require manufacturers to submit gaming equipment and software 
to testing laboratories for review and already keep the resulting 
reports, just as a matter of sound regulatory practice. The Technical 
Standards merely make the requirement applicable nationwide.
    The Technical Standards reduce the information collection burden on 
tribes, manufacturers, and testing laboratories by rules of common 
sense and non-repetition. There are 226 gaming tribes, and 
manufacturers, of course, seek to sell gaming systems to as many tribes 
as possible. The Technical Standards do not require that a gaming 
system be resubmitted to a testing laboratory for each tribal gaming 
operation. Once a testing laboratory has issued a report for a given 
gaming system or modification, every tribal gaming regulatory authority 
may rely upon it. Further, the information collection burden 
surrounding the submission, review, and approval of gaming equipment 
and software is eased still further in that the Technical Standards 
permit electronic means of providing, receiving, and storing 
information at the convenience of all parties concerned.
    Second and finally, as stated above, the Technical Standards 
require testing laboratories to submit to suitability determinations by 
tribal gaming regulatory authorities. Again, assuring the competence, 
integrity, and independence of the testing laboratories and the 
suitability of their decision-makers is essential to the integrity of 
gaming. This information collection, though essential, has the 
potential to be burdensome. The Technical Standards reduce this burden 
as much as is practicable.
    Again, the Technical Standards piggy-back on processes already 
established.

[[Page 60515]]

The existing testing laboratories have already collected and provided 
the necessary information--multiple times--in order to be approved in 
tribal and non-tribal gaming jurisdictions nationwide. Similarly, the 
Technical Standards reduce unnecessary duplication. Testing 
Laboratories need not submit 226 separate suitability applications. 
Tribal gaming regulatory authorities are free to accept any suitability 
determination made by any state or tribal regulatory authority in the 
United States. Finally, electronic submission, receipt, and maintenance 
of this information collection is permitted.
    For all of these reasons, then, the Commission believes that the 
Technical Standards have maximized the practical utility of the 
information collections they require while at the same time minimizing 
the burden they place upon the industry.

Paperwork Reduction Act Comments

    Comment: One commenter stated that the Commission did not properly 
figure the burden upon tribes of the information collection burdens 
imposed by the Technical Standards. The Commission's focus was on the 
burdens on gaming laboratories, which are not burdened at all since 
their services are compensated.
    Response: The Commission disagrees. The Commission's cost estimates 
do, in fact, list the 226 tribal gaming operations and 226 tribal 
gaming regulatory authorities as respondents. The burden upon them is 
minimal, however. Though the tribal gaming regulatory authority or 
gaming operation may choose to submit a Class II gaming system to a 
testing laboratory for evaluation, the standard practice is to place 
that obligation on the manufacturers. They are the ones best situated 
to provide all necessary prototype hardware, software and documentation 
to the testing laboratories and to respond to testing laboratory 
concerns and inquiries. Indeed, manufacturers already have such systems 
set up for compliance with the regulatory requirements of commercial 
gaming jurisdictions. The emphasis on the information collection 
burdens is, therefore, properly on the manufacturers and the 
laboratories. The burden upon the tribes is minimal and involves 
retaining laboratory reports, a standard existing practice; identifying 
a finite number of grandfathered Class II gaming systems to the 
Commission; and suitability determinations of laboratory principals.
    Comment: A few commenters stated that because the Technical 
Standards will take effect ``all at once,'' the Commission 
underestimates the turnover rate of gaming systems and the associated 
paperwork burdens.
    Response: The Commission disagrees. The Technical Standards provide 
for a five-year grandfather period in which existing Class II gaming 
systems may be brought into compliance. The Commission believes that 
existing Class II systems will be brought closer to or into compliance 
due to regular upgrades, and the Technical Standards specifically allow 
for this possibility. 547.4(b)(4). The Commission further believes that 
many new, compliant systems will be brought to market over this period, 
as they have during other five-year periods. Neither market condition 
suggests an immediate turnover of existing gaming systems or that the 
Commission underestimated the paperwork burden associated with 
turnover.
    Comment: A few commenters stated that the Commission has failed to 
take any steps to minimize information collection burdens by providing 
for the use of automated information collection, maintenance or 
submission techniques.
    Response: The Commission disagrees. There is no limitation in the 
Technical Standards on the technology usable for information 
collections. Paperless submission, maintenance, and collection of 
information is perfectly acceptable.
    Comment: One commenter stated that the Commission underestimates 
the time it will take the testing laboratories to test Class II gaming 
systems for grandfather compliance, depending on whether the software 
random number generator has already been approved. The commenter 
therefore recommends revising upward the hours burden on the testing 
laboratories.
    Response: Whether or not the Commission underestimated the time 
laboratory testing may take, this is not an information burden placed 
upon the testing laboratories. The information burden refers to the 
time it will take the testing laboratory to write the reports of their 
findings and results. That time does not change, even if the time for 
testing does.

National Environmental Policy Act

    The Commission has determined that the Technical Standards 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.).

Review of Public Comments

    A number of commenters made miscellaneous editorial suggestions not 
intended to change the substance of the Technical Regulations but to 
improve sentence structure, correct grammar, preserve consistency of 
usage throughout the document, etc.
    Response: The Commission has accepted all such changes where they 
improve clarity and editorial consistency, and these are reflected 
throughout the final rule. Substantive changes are addressed in the 
responses to comments below.

General Comments

    Comment: A number of commenters objected to the adoption of the 
Technical Standards and request their withdrawal unless the Commission 
accept, without alteration, the draft of the Technical Standards 
provided to it by its tribal advisory committee. Based upon these 
differences, and the inability of the Commission to come to consensus 
with the advisory committee about them, others commenters asked that 
the Commission not proceed with the Technical Standards but return to 
the advisory committee for further drafting and for consultation with 
tribes.
    Response: As said above, the Commission greatly values and 
appreciates the work on the technical standards done by the tribal 
advisory committee and the working group of tribal leaders, tribal 
regulators, and manufacturers who advised them. During drafting, the 
Commission did state to the Committee members that their role was 
advisory and that the Commission could, as the final decision-maker, 
choose to depart from the draft provided. The Commission believes that 
this was appropriate insofar as this is consistent with its federal 
regulatory oversight mission. Nonetheless, most of what the Commission 
proposed as part 547 was taken verbatim from the draft that the 
advisory committee supplied.
    There were, of course, some departures from the advisory 
committee's draft, and the one that has received the most comments--all 
in opposition--is the requirement that compliance with the Technical 
Standards also requires compliance with the proposed part 546, 
classification standards. As the Commission has withdrawn the proposed 
classification standards (see notice of withdrawal published 
simultaneously), the Commission has removed all references to them.
    Nonetheless, the rule still departs from the recommended draft in a 
few

[[Page 60516]]

ways. The rule still requires a certain minimum probability, the recall 
of entertaining displays, and hardware compliance. As explained in 
detail below, the Commission believes that these requirements are 
appropriate. That said, in order to stay abreast of advances in 
technology, the Commission intends to regularly revisit its technical 
standards, and in doing so it will pay particular attention to these 
provisions that have caused such disagreement. In so doing, the 
Commission intends to consult further.
    Other departures from the advisory committee draft have been raised 
as comments, and the Commission's responses to those comments are also 
set out below.
    Comment: Several comments stated that the comment period was not 
long enough.
    Response: In the October 24, 2007 notice of proposed rulemaking, 
the Commission initially provided that the comment period would end on 
December 10, 2007, a period of 47 days. Because early comments 
requested additional time, the Commission extended the comment period 
until March 9, 2008, creating a total comment period of 138 days 
(including the date of publication). The Commission believes that this 
period was more than sufficient, given the extensive and thoughtful 
comments it received and that have informed this final rule.
    Comment: A number of commenters faulted the Commission's 
consultation with tribes about the Technical Standards. Some stated 
that the Commission's use of advisory committees was not a substitute 
for consultation. Others stated that the Commission did not consult, or 
consult sufficiently, on the Technical Standards, particularly after 
the advisory committee provided its final draft to the Commission.
    Response: The Commission stands by its record on consultation. The 
Commission does not believe that its use of the advisory committee was 
a substitute for consultation, and it has set out the details of its 
consultations above.
    As to the quality of consultation, some commenters fault the 
Commission for not allotting sufficient time for individual 
consultation sessions. The Commission understands and appreciates this 
concern. The Commission would point out, however, that it goes to great 
time and expense traveling to large regional and national gaming 
association meetings to make itself available for consultations, and 
this minimizes the burdens of time and expense for the tribes. The 
Commission would point out as well that with approximately 225 tribes 
engaged in gaming, balancing the time spent in consultations on the one 
hand with the Commission's other duties and obligations on the other is 
difficult. Further, the Commission believes that the criticism 
concerning the quality of consultation about the technical standards, 
however, is an unfair one, when only 25% of the tribes accepted 
invitations for consultation between September 2005 and December 2007 
and only a minority of those that accepted actually chose to discuss 
the Technical Standards.
    That said, the Commission recognizes that there are many views 
about what consultation is and how it may best be done. The Commission 
is not married to its consultation practices and has already begun a 
dialogue and collaboration with tribal leaders, through the National 
Congress of American Indians and the National Indian Gaming 
Association, about finding mutually satisfactory methods of 
consultation.
    Finally, the Commission would note that its extensive consultation 
was successful and resulted in significant changes to the Technical 
Standards--all for the better, the Commission believes. Most prominent 
among these was the Commission's decision to abandon its first proposed 
technical standards to begin the process of drafting technical 
standards over again from the beginning.
    Comment: A number of commenters suggested that the Technical 
Standards will, alone or in combination with the proposed 
Classification standards and MICS, have a devastating economic effect 
on Class II gaming, as demonstrated by the Commission's own economic 
impact study. These and other commenters felt that study is itself 
flawed, as it both improperly calculates some economic effects and 
ignores others, such as local effects and costs. In addition to the 
obvious direct economic consequences, a few commenters also saw a loss 
of negotiating power in future dealings with the states.
    Response: The Commission disagrees. The Commission does not see an 
economic collapse of Class II gaming as a result of the Technical 
Standards. There is no support for that proposition. While the economic 
impact study of Dr. Alan Meister of the Analysis Group does find that 
there will be costs to comply with the Technical Standards, the vast 
majority of the economic impact from the set of four regulations 
proposed in October 24, 2007, stems from the projected revenue loss and 
the compliance costs associated with the now-discarded classification 
standards. This is so, even assuming the calculation and under-counting 
criticisms of the study are in fact correct.
    Further, the Commission's cost-benefit analysis finds that the 
Technical Standards, considered independently, are not a major rule. 
They impose an annual cost of approximately $3 million--hardly an 
onerous cost when compared to the $25 billion in gross gaming revenue 
the industry earned in 2007. Taken together with the proposed Class II 
MICS, the annual costs are not much higher. Adoption of the Technical 
Standards, therefore, alone or with the MICS, will not imperil the 
viability of Class II gaming and will not impair the tribes' 
negotiating power in dealings with the states.
    Comment: One commenter felt that the Technical Standards will not 
work because they are built upon the mistaken assumption that Class II 
gaming is based upon gaming components.
    Response: The Commission disagrees. The Technical Standards do not 
assume that Class II gaming is based upon components. Central to the 
Technical Standards is the idea of the Class II gaming system, which 
allows the Technical Standards to address all of the various ways that 
Class II games can be played. The notion of the ``gaming system,'' for 
example, encompasses bingo whether it is played electronically on 
client-server architectures, with ping pong balls drawn from a hopper 
and cards marked by an electronic minder purchased at a point-of-sale 
retail station, or with some other system. Necessarily, then, the 
definition of system makes reference to ``components,'' for it is the 
unique collection of components that makes up a gaming system. It is, 
however, the system, and not individual components, that must comply 
with the requirements of the Technical Standards.
    Comment: A number of commenters suggested that the Commission's 
rule-making process was itself flawed, over and above any consideration 
of economic effect the Technical Standards might have. Some commenters 
felt that the Commission is not an independent regulatory agency and, 
as such, it has failed to comply with the requirements of Executive 
Orders 12875, 12866, and 13175 and the Unfunded Mandates Reform Act. 2 
U.S.C. 658(1); 1502(1). A few felt that the Commission has failed to 
comply with the Federal Advisory Committees Act (FACA) or the 
Government Performance and Results Act (GPRA). Others felt that the 
Commission should not have published

[[Page 60517]]

the proposed rules before the economic impact study was ready and 
should have considered other regulatory alternatives. Others still find 
that the regulations, if made final, would result in a regulatory 
taking, contrary to the Commission's finding in the proposed rule.
    Response: The Commission disagrees. Congress has made abundantly 
clear that it intended the Commission to be an independent regulatory 
agency and, as such, exempt from the requirements of these Executive 
Orders and the Unfunded Mandates Reform Act. The Senate report 
accompanying the passage of IGRA provides Congress's intention clearly 
and unambiguously: The bill ``established a National Indian Gaming 
Commission as an independent agency within the Department of 
Interior.'' S. Rep. No. 100-446, at 1 (1988). When it amended IGRA in 
2005, Congress reiterated its intention:

    Additionally, it is to be noted that the NIGC is an independent 
regulatory agency. This status has ramifications, including, that 
the agency is not governed by Executive Order 13175, which compels 
agencies other than independent regulatory agencies to consult 
tribal officials in the development of regulatory policies that have 
tribal implications. The Executive Order encourages independent 
agencies to observe its precepts, however, and the Committee notes 
with approval that the Commission, through its current consultation 
policy, has endeavored to do so.

S. Rep. No. 109-122 at 3 (2005).

    As to the publication of the economic analysis after publication of 
the rule, that, while not ideal, did not deprive the industry or the 
interested public of the benefit of the report, as the careful comments 
submitted about its methodological failings make clear. Likewise, the 
Commission has considered regulatory alternatives, not the least of 
which is its withdrawal of the proposed Classification standards.
    As to compliance with FACA, the Commission's advisory committees 
are exempt from the requirements of FACA because the non-Commission 
members were elected officials of tribal governments, or their 
authorized designees, acting in their official capacities. 41 CFR 102-
3.40(g).
    As to compliance with GPRA, the Commission agrees that Public Law 
109-221, the Native American Technical Corrections Act of 2006, 
provides that the NIGC shall be subject to the GPRA. On September 30, 
2007, the NIGC submitted a draft performance and accountability report 
with the Office of Management and Budget for review. The Commission is 
currently making revisions to its GPRA plan.
    Further, on September 18, 2008, the Commission released a draft 
five-year strategic plan to tribes, tribal trade associations, and 
Congress for comments. The strategic plan, like the performance plan, 
is required by GPRA.
    Finally, the comment about regulatory taking is premised upon the 
wholesale disappearance of the Class II gaming industry as a result of 
adoption of the Technical Standards. As the Commission said above, with 
the relatively small cost of the Technical Standards alone, or together 
with the MICS, there will be no complete destruction of Class II 
gaming. There will be no complete loss of the economically beneficial 
or productive use of tribes' Class II investments and, by definition, 
no regulatory taking. See, e.g., Lucas v. South Carolina Coastal 
Council, 505 U.S. 1003, 1015 (1992).
    Comment: A few commenters suggested that the Commission lacks the 
statutory authority to promulgate the Technical Standards, one 
analogizing the situation to that in Colorado Indian Tribes v. NIGC, 
466 F.3d 134 (DC Cir. 2006) (CRIT), where the DC Circuit ultimately 
found that the Commission lacked the authority to promulgate and 
enforce Class III minimum internal control standards.
    Response: The Commission disagrees. IGRA does give the Commission 
the authority to adopt the Technical Standards. Congress was expressly 
concerned that gaming under IGRA be ``conducted fairly and honestly by 
both the operator and players.'' 25 U.S.C. 2702(2). The Technical 
Standards are specifically designed to protect the integrity, fairness 
and safety of Class II gaming. Adopting the Technical Standards is 
consistent with the authority granted the Commission to monitor, 
inspect, and examine Class II gaming, 25 U.S.C. 2706 (b)(1)-(4), and to 
promulgate such regulations as it deems appropriate to implement the 
provisions of IGRA. 25 U.S.C. 2706(b)(10). The Commission disagrees 
with the commenter who drew the opposite conclusion.
    The Commission likewise believes that this reading distinguishes 
this circumstance from the CRIT case. There, the Court found that 
2706(b)(10) could not be a source of authority for Class III MICS 
because there are no applicable provisions in IGRA concerning day-to-
day Class III regulatory authority that the Commission could implement 
through rulemaking. Here, by contrast, the Commission is implementing 
its monitoring, inspecting, and examining authority over Class II 
gaming, specifically granted by IGRA in 25 U.S.C. 2706(b).
    In particular, the Technical Standards make meaningful the 
Commission's monitoring, inspection, and examination authority. As 
stated above, the Technical Standards do not, and are not designed to, 
prescribe the design or features of Class II gaming systems. To the 
contrary, the Technical Standards set out various minimum ways that 
gaming systems can meet IGRA's goal of ensuring that gaming is 
conducted fairly and honestly, both by operators and by the public, 25 
U.S.C. 2702(2), leaving specific implementations designed to meet those 
regulatory goals to the tribal gaming regulatory authorities and 
industry.
    For example, the Technical Standards require components that store 
financial instruments and that are not operated under the control of a 
gaming operation employee ``shall be located within a secure and locked 
area or in a locked cabinet or housing that is of a robust construction 
designed to resist determined illegal entry and to protect internal 
components.'' How exactly ``robust construction'' is to be implemented, 
the Technical Standards do not say, but the purpose of the standard is 
clear--assets held in gaming equipment are to be secure from theft and 
tampering.
    Similarly, the Technical Standards require that progressive awards 
on Class II gaming systems have a minimum chance of being hit of 1 in 
100,000,000. What precisely the chances of hitting the award are or 
should be, the Technical Standards do not say, leaving the matter 
instead to the tribal gaming regulatory authorities and the market. As 
stated below, the purpose of the minimum probability requirement is to 
ensure fairness in the play of Class II games by eliminating advertised 
awards that will never be hit because the chances of doing so are 
astronomically low.
    Before a Class II gaming system may be placed on the floor and 
offered to the public for play, it must be submitted to a independent 
gaming laboratory, which will test the system for compliance with the 
Technical Standards. The testing laboratory will then submit a report 
of its findings to the tribal gaming regulatory authority, which in 
turn will approve the system for play (or not). The tribal gaming 
regulatory authority will keep the testing laboratory's report and a 
record of its approval.
    It is this, then, that enables the Commission, through its 
monitoring, inspection and examination authority to ensure the security 
of Class II gaming systems and assets, to ensure the fairness of Class 
II games, and to ensure that tribes are the primary beneficiaries

[[Page 60518]]

of their gaming. 25 U.S.C. 2702(2). The Commission achieves these 
regulatory goals by monitoring, inspecting, and examining the gaming 
systems and the documentation of its compliance with the Technical 
Standards. Given all of this, the Commission disagrees with the 
commenter who concluded that it lacks the authority to promulgate the 
Technical Standards.
    Comment: A few commenters objected to the Technical Standards as 
encroaching too far into the primary authority and responsibility 
tribes have to regulate Class II gaming and overstepping the 
Commission's oversight regulatory role.
    Response: The Commission is keenly aware that the primary 
responsibility for regulating Class II gaming belongs to the tribes and 
has no desire to intrude upon it. The Commission is also aware of the 
substantial sums tribes spend upon regulation and the excellent job 
they do. The Commission does not believe that the Technical Standards 
improperly intrude upon the tribes' role as primary regulators. Rather, 
the Technical Standards have been drafted and redrafted to ensure that 
the tribes remain the primary regulators.
    The Technical Standards are designed to be minimum standards. They 
give the tribal gaming regulatory authorities the primary role in 
approving Class II gaming systems and modifications thereto. Indeed, 
the Commission plays no direct role under the Technical Standards save 
when a tribal gaming regulatory authority seeks a variance. Further, 
the Technical Standards specifically contemplate the primacy of the 
tribal gaming regulatory authorities insofar as they may, in their 
discretion, supplement the Technical Standards by adopting additional 
standards or standards more stringent than the minimum standards. Sec.  
547.5(a). The Commission therefore disagrees with the commenter who 
characterized the Technical Standards as directing a specific course of 
action and eliminating alternatives.
    The Commission also disagrees, as one commenter states, that 25 
U.S.C. 2701(5) demonstrates that the Commission has improperly 
encroached upon the tribes' authority: ``Indian tribes have the 
exclusive right to regulate gaming activity on Indian lands if the 
gaming activity is not specifically prohibited by Federal law and is 
conducted within a State which does not, as a matter of criminal law 
and public policy, prohibit such gaming activity.'' This Congressional 
finding does not mean that tribes may regulate Class II gaming to the 
exclusion of the Commission. Rather, this paragraph is merely a 
restatement of the holding in California v. Cabazon Band of Mission 
Indians, 480 U.S. 202 (1987). From that fundamental starting point, the 
regulatory structure established by IGRA, including the Commission's 
role in the regulation of Class II gaming, was built.
    Comment: One commenter stated that the Technical Standards do not 
recognize the regulatory authority and capability of tribes that have 
earned a Class II self-regulation certificate.
    Response: The Commission agrees that the Technical Standards do not 
explicitly refer to self-regulating tribes, but there is no intent to 
slight or to diminish the regulatory authority and capabilities of 
self-regulating tribes, which are evident to all by the fact of their 
self-regulation.
    As stated above, the Technical Standards are not intended to 
encroach on the regulatory authority of any tribal gaming regulatory 
authority. The Technical Standards adopt minimum standards and already-
existing best practices such as the testing of gaming equipment by 
testing laboratories. As such, they should impose only the most minimal 
new burdens on the self-regulating tribe.
    The most obvious is the procedure surrounding the testing and 
certification of grandfathered gaming systems. That, however, is matter 
of national uniformity. It allows the Commission both to ensure that 
all grandfathered, non-compliant Class II gaming systems across the 
nation meet certain minimal standards and to identify and track all of 
them.
    Though self-regulating tribes do have to follow Commission 
regulations, 25 CFR 518.4(a)(4), the Technical Standards do not change 
the applicability of IGRA's self-regulation provisions. Self-regulating 
tribes are still exempt from certain of the Commission's powers as 
delimited in 25 U.S.C. 2710(c)(5).
    Comment: One commenter suggested that the adoption of the Technical 
Standards is arbitrary and capricious primarily because the Technical 
Standards do not fix an identifiable problem or fill a regulatory void, 
because their onerous compliance obligations bear no reasonable 
relationship to the regulatory benefit that they will provide, and 
because the Commission has provided no rational basis for the 
standards.
    Response: The Commission disagrees. As a matter of regulatory best 
practices, all commercial gaming jurisdictions and many, if not most, 
tribal gaming jurisdictions require the testing of gaming equipment 
against technical standards and the subsequent approval of the relevant 
governmental authority. The Technical Standards are designed to 
uniformly implement a minimum set of these best practices across Indian 
gaming. That they are not so implemented now, and in some places 
technical standards are not implemented at all, is justification enough 
for their need. All of Indian gaming benefits when the nationwide 
gaming public may be assured of the integrity and fairness of Class II 
gaming, no matter where implemented. Accordingly, the Commission also 
disagrees with the commenters who suggested that the Technical 
Standards be issued not as regulations but as a non-binding bulletin.
    The Commission disagrees that this regulatory benefit is outweighed 
by onerous compliance obligations. To the contrary, the Commission 
believes that compliance with the Technical Standards is not onerous, 
financially or otherwise. While the economic impact study of Dr. Alan 
Meister of the Analysis Group does find that there will be costs to 
comply with the Technical Standards, the vast majority of the economic 
impact from the set of four regulations proposed in October 24, 2007, 
stems from the projected revenue loss and the compliance costs 
associated with the now-discarded classification standards. Again, the 
Commission's cost-benefit analysis finds that the Technical Standards, 
considered independently, are not a major rule. They impose an annual 
cost of approximately $3 million--hardly an onerous cost when compared 
to the $25 billion in gross gaming revenue the industry earned in 2007.
    Further, the general rule expressed in the Technical Standards is 
that laboratory review and tribal gaming regulatory authority approval 
is required before a Class II gaming system may be offered to the 
public for play. In establishing this procedure, the Technical 
Standards merely formalize the best practices that already exist both 
in tribal and non-tribal gaming jurisdictions alike. As such, the 
Commission does not believe that the testing procedure is onerous.
    Comment: One commenter stated that the Technical Standards will 
have a chilling effect upon Class II technology, limiting use to 
today's technology and inhibiting or prohibiting its development and 
advancement. IGRA, by contrast, states that the tribes are to have 
maximum flexibility in the use of technology.
    Response: The Commission disagrees. The Commission discarded the 
draft proposed technical standards published

[[Page 60519]]

in August 2006 for precisely this reason. The current proposed part 547 
was therefore specifically designed not to prescribe how equipment is 
to be built but to state the desired regulatory outcome, leaving it to 
the ingenuity of the industry to figure out compliant designs, whatever 
form the new technology may take.
    Comment: One commenter stated that the Technical Standards are 
improperly retroactive because the Commission lacks the authority under 
IGRA to promulgate retroactive regulations.
    Response: The Commission disagrees that the Technical Standards are 
retroactive. The Technical standards apply prospectively only and do 
not alter the legal consequences of actions completed before their 
effective date. The Technical Standards, in other words, attach no 
liability to any operation of any non-compliant Class II gaming systems 
that occurred prior to their effective date. Indeed, given the 
grandfather provisions in Sec.  547.4, they attach no liability to the 
operation of non-compliant systems for five years after the effective 
date either. As such, the Commission disagrees with the commenters who 
characterized the grandfather provisions as unreasonable.
    That said, the Technical standards can without question upset 
settled expectations based upon prior law and impose economic burdens 
on past conduct. Some tribes will have invested in Class II gaming 
systems that will have to be modified or replaced during the five-year 
grandfather period. This unsettling of expectations and the imposition 
of unexpected economic burdens in this way, however, does not make the 
Technical Standards retroactive. See Landgraf v. USI Film Products, 511 
U.S. 244, 269 n. 24 (1994) (``Even uncontroversially prospective 
statutes may unsettle expectations and impose burdens on past conduct: 
* * * a new law banning gambling harms the person who had begun to 
construct a casino before the law's enactment * * *.'')

Comments Upon Sec.  547.3, Definitions

    Comment: One commenter suggested that the definitions in the 
Technical Standards should conform to the definitions in the companion 
MICS, Sec.  543.2, unless there is an appropriate reason for different 
terms.
    Response: The Commission agrees and, where possible, the Commission 
has used terms consistently in the two rules. It was, however, not 
always possible to do so as the two rules have different objectives. 
The Technical Standards are intended to define the technical 
specifications of Class II gaming systems, while the companion MICS are 
intended to set minimum standards, consistent with industry best 
practices, for the authorization, recognition, and recordation of 
gaming and gaming-related transactions. Consequently, users should be 
well aware of the definition section accompanying each rule.
    Comment: A number of commenters suggested broadening the definition 
of ``agent'' to include any person authorized by the gaming operation 
and the tribal gaming regulatory authority to undertake specified 
decisions, actions, or tasks, whether or not they are employees of the 
operation or licensed by the tribal gaming regulatory authority.
    Response: As the Commission understands the comment, the definition 
of ``agent'' is too restrictive and places unnecessary regulatory 
obstacles in the way of routine activities by requiring licensure when 
that is not always necessary. The Commission agrees.
    The Technical Standards use the term ``agent'' when prescribing 
security standards for financial instrument storage components, 
financial instrument acceptors, financial instrument dispensers, and 
components that determine game outcome. One standard applies when such 
components are operated under the direct control of an agent--e.g., a 
cash drawer--and another applies when such components are operated 
automatically, independently of such control--e.g., a bill acceptor. 
These individuals may or may not be key employees, and therefore IGRA 
may or may not require their licensure. Accordingly, the Commission 
believes that when such individuals are key employees they must be 
licensed, and when they are not key employees, their licensure is a 
matter left to the tribal gaming regulatory authorities.
    The Commission has edited the definition of ``agent'' in 
conformance with the comment to read, ``An employee or other person 
authorized by the gaming operation, as approved by the tribal gaming 
regulatory authority, designated for certain decisions, tasks and 
actions in the gaming operation.''
    Comment: One commenter suggested changing the proposed definitions 
of ``agent'' and ``employee'' to create a distinction between the two 
and using ``employee or agent'' throughout part 547, where the proposed 
text says only ``agent.'' An ``employee'' would mean an employee of a 
gaming operation licensed by the tribal gaming regulatory authority, 
and an ``agent'' would be a non-employee ``authorized by a gaming 
operation to make decisions for, or perform tasks or action on behalf 
of, the gaming operation.''
    Response: See response to previous comment.
    Comment: A number of commenters suggested restoring a definition of 
``promotional account'' to mean ``a file, record or other data 
structure that records transactions involving a patron or patrons that 
are not otherwise recorded in a patron deposit account.'' That 
definition was included in the draft provided to the Commission by its 
tribal advisory committee. Similarly, these commenters suggest 
restoring the reference to ``promotional account'' to the definition of 
``cashless transaction'' that the tribal advisory committee had 
provided.
    Response: The Commission disagrees. The Commission removed the term 
``promotional account'' from the Technical Standards' definitions 
because the term appears nowhere else in the text. Therefore the 
definition of the term is unnecessary.
    Comment: One commenter suggested for editorial consistency a change 
to the definition of Random Number Generator from that which produces 
``outputs that are effectively random'' to one that produces ``outputs 
that comply with the provisions of section 547.14.''
    Response: The Commission believes that the proposed definition is 
sufficiently clear and that adopting the suggested comment would create 
a peculiar and undesirable result: A random number generator that did 
not comply with the requirements of Sec.  547.14 would, by definition, 
not be a random number generator at all, as opposed to merely a non-
compliant one.

Comments Upon Sec.  547.4, Compliance

Section Title

    Comment: One commenter suggested that the title of this section 
should be changed from ``How do I comply with this part'' to ``How does 
a tribal government, tribal gaming regulatory authority, or tribal 
gaming operation comply with this part?'' These entities, rather than 
unspecified individuals, are the parties required to comply.
    Response: The Commission agrees and has adopted the change as 
suggested.

Section 547.4(a)(1)--Limited Immediate Compliance

    Comment: One commenter suggested edits that would specifically 
require the supplier or manufacturer to submit the Class II gaming 
system software to a testing laboratory for verification.
    Response: The Commission disagrees. The Commission recognizes that 
the

[[Page 60520]]

standard practice is for the manufacturer or supplier to make 
laboratory submissions, and nothing in the Technical Standards 
prohibits that. The Commission did not specify that it be the 
manufacturer or supplier who makes the submission so that the tribal 
gaming regulatory authority could choose whether this obligation should 
fall on the manufacturer or supplier, the gaming operation, or the 
tribal gaming regulatory authority itself.
    Comment: One commenter suggested that the submission be accompanied 
by ``any hardware, documentation or other information necessary to test 
such software.''
    Response: The Commission disagrees as the edit is unnecessary. 
Rather than attempt to specify everything that must be submitted, and 
perhaps omit something that might be necessary in individual or unusual 
cases, the Technical Standards attempt to leave what is required for 
testing to the testing laboratories themselves.

Section 547.4(a)(2)--Limited Immediate Compliance

    Comment: One commenter suggested that this paragraph setting out 
the requirement of limited immediate compliance appears to have omitted 
mention of Sec.  547.8(f), the requirement that there be some means of 
software signature verification for game software. It is included and 
required elsewhere in the section, e.g., in the requirements of the 
report that the testing laboratory must issue in Sec.  547.4(a)(4).
    Response: The Commission agrees and has corrected the omission.

Section 547.4(a)(4)--Limited Immediate Compliance

    Comment: One commenter suggested that the section does not, but 
should, address what happens when the gaming laboratory does not issue 
its report within 120 days after the effective date of part 547.
    Response: The comment makes clear that the section does not read in 
the way the Commission intended. The Commission did not intend to 
confine the entire limited immediate compliance process to the first 
120 days after the effective date. Rather, it intended to allow 
grandfathered systems to be certified as such no matter how long the 
lab process took, provided that the submission was made within the 
first 120 days after the effective date of part 547. The Commission has 
changed the wording in this paragraph to make this clear. It has 
removed the 120-day requirement language from 547.4(a) and placed it 
within 547.4(a)(1), thus making the time limit applicable only to the 
submission of the gaming system to the lab. Paragraph 547.4(a)(1) now 
reads: ``* * * Require that all Class II gaming system software that 
affects the play of the Class II game be submitted, together with the 
signature verification required by Sec.  547.8(f), to a testing 
laboratory recognized pursuant to paragraph (f) of this section, within 
120 days after the effective date of this part; * * *''
    That said, however, it is in the interest of gaming operations for 
the testing laboratory to complete its evaluation and for the tribal 
gaming regulatory authority to issue its grandfather certifications as 
quickly as possible. Section 547.4(b) requires both of those things to 
occur before a Class II gaming system is grandfathered and available 
for play under the Technical Standards.
    Comment: One commenter suggested that the submission process is 
unworkable in the circumstance where a tribe no longer has a 
relationship with the manufacturer(s) of its gaming systems.
    Response: The Commission disagrees. As stated above, there is no 
requirement that the manufacturer make the submission to the testing 
laboratory for grandfather review. The tribal gaming regulatory 
authority may require the operation to do so. In the alternative, if 
one tribe requires a manufacturer to submit a system to a lab, another 
tribe running that same gaming system may rely on the same laboratory 
report.
    Comment: One commenter suggested that the language of this 
paragraph be clarified to provide the tribal gaming regulatory 
authority 120 days to issue a certificate of grandfather status after 
receiving the testing laboratory's report.
    Response: Given the comment and resulting change above, the 
Commission believes that this change is unnecessary. The tribal gaming 
regulatory authority will issue a certificate of grandfather status as 
it deems appropriate.
    Comment: One commenter suggested that as drafted, Sec.  547(a)(4) 
does not make sufficiently clear that ``the testing laboratory only 
certifies that the submitted game software complies with the specified 
standards,'' while the tribal gaming regulatory authority certifies 
that the Class II gaming system is eligible for grandfather status.
    Response: The Commission disagrees. As an initial matter, the 
testing laboratory is not required to ``certify'' that game software 
meet any standards. Rather, it is required only to issue a report as to 
its findings. Beyond that, the Commission believes that the this 
paragraph, as proposed, makes the respective responsibilities of the 
testing laboratory and the tribal gaming regulatory authority clear. 
The Commission has, however, made a few minor editorial changes to 
ensure that clarity.

Section 547.4(b)(2) and Elsewhere, Compliance With Classification 
Standards

    Comment: For many and varied reasons, many commenters objected to 
requiring compliance with the Commission's proposed Classification 
regulations, proposed 25 CFR part 546, 72 FR 60483 (Oct. 24, 2007), as 
part of the Technical Standards. These commenters asked, therefore, 
that all such cross-references and cross-compliance requirements be 
deleted.
    Response: As the Commission has withdrawn the proposed 
classification standards (see notice of withdrawal published 
simultaneously), the Commission has removed all references to them.

Section 547.4(b)(4) and Elsewhere, Compliance With Class II MICS

    Comment: Many commenters objected to requiring compliance with the 
Commission's Class II Minimum Internal Control Standards as part of the 
Technical Standards, pointing out that the two sets of rules serve 
different purposes. Technical Standards contain, in essence, design 
standards to which laboratories can test before a gaming system goes 
into operation, while MICS contain operational standards that apply 
after gaming systems go into operation. Further, testable design 
standards should be placed in the Technical Standards, while 
operational standards belong in the Class II MICS and cross-references 
should be removed.
    Response: For the most part, the Commission agrees. However, the 
line between the two kinds of regulation is not impermeable. There are 
times when the means for complying with a particular internal control 
standard is built into a component of the Class II gaming system and 
can be tested by the testing laboratory. In those cases, a cross 
reference from one set of regulations to the other is appropriate. Such 
cross references therefore appear in Sec.  547.4(c), testing and 
approval of Class II gaming systems generally, and Sec.  547.4(d), 
emergency hardware and software changes, and require compliance with 
any testable standards in the MICS.
    Further, Sec. Sec.  547.5(b)(4)(i), (ii), and (iii)(B) all contain 
references to the Class II MICS. These paragraphs state that that among 
the permissible modifications of grandfathered Class II gaming systems 
are those that advance the system's overall compliance not only with 
the

[[Page 60521]]

Technical Standards but also with the MICS. These cross-references, 
insofar as they both advance regulatory compliance and maintain the 
economic viability of grandfathered gaming systems, will remain.

Section 547.4(b)--Grandfather Provisions

    Comment: One commenter suggested rewriting this paragraph to make 
clear that a Class II gaming system can qualify for grandfather status 
if it was placed in a tribal gaming facility by the effective date of 
the Technical Standards or was manufactured by that date.
    Response: The Commission believes that the commenter has correctly 
stated the intent of Sec.  547.4(b) and that the language of the 
proposed rule already stated this clearly.

Section 547.4(b), (c)(3)--Grandfather Clause, Duration

    Comment: A number of commenters suggested making player interfaces 
permanently exempt from the requirements of the Technical Standards. 
One commenter suggested that all existing Class II gaming technology be 
permanently exempt from the Technical Standards. To do otherwise, the 
commenters suggested, will have significant negative financial 
consequences for Indian gaming. Others, similarly, suggested that the 
grandfather period was too short because five years is not the proper 
measure of the useful life of a Class II gaming system. A few others 
suggested that the grandfather period was inadequate because there are 
no compliant systems on the market today.
    Response: The Commission does not agree that perpetually exempting 
player interfaces or all existing Class II technology from the 
Technical Standards is appropriate or that the five-year term is 
insufficient. While Dr. Meister's economic impact report does find that 
there will be costs to comply with the Technical Standards, the vast 
majority of the economic impact stems from the projected revenue loss 
and the compliance costs associated with the now-discarded 
classification standards. Again, the cost to the industry of complying 
with the Technical Standards is approximately $3 million annually.
    Further, there is a good regulatory reason for grandfathering 
existing hardware for only five years. By definition, grandfathered 
hardware is not compliant with all of the requirements of the technical 
standards. Perpetually grandfathering existing hardware will create a 
permanent class of non-compliant equipment. That is not consistent with 
the regulatory purpose of the technical standards, namely to ensure the 
integrity and security of Class II gaming systems and the 
accountability of Class II gaming revenue. What is more, the Commission 
believes that market forces will move equipment toward greater 
compliance and that if most current systems are not compliant, they are 
not far from compliant either. Thus, the Technical Standards 
specifically provide that tribal gaming regulatory authorities, in 
their discretion, may require or permit changes to grandfathered 
equipment that will bring the equipment into better (if still 
incomplete) compliance, or even complete compliance. 547.4(b)(4)(ii). 
Finally, as most systems in play today were put into play long before 
the effective date of the Technical Standards, they will have a useful 
life longer than five years, even if they are removed from play at the 
end of the grandfather period.

Section 547.4(d)--Emergency Hardware and Software Changes

    Comment: One commenter suggested that the use of the term ``game 
software'' in this paragraph is unnecessarily limiting. The section 
contemplates emergency changes necessary to correct problems 
``affecting the fairness, security, or integrity of a game or 
accounting system or any cashless system, or voucher system.'' However, 
the paragraph then only contemplates modified ``game software,'' which 
by definition excludes software for cashless systems or voucher 
systems. The commenter recommends changing ``game software'' to 
``software'' to accommodate emergency changes to these systems as well.
    Response: The Commission agrees and has made the suggested change.

Sec.  547.4(d)(2)(ii)--Emergency Hardware or Software Changes, 
Subsequent Submission to Testing Laboratory

    Comment: A number of commenters suggested changing the procedures 
applicable to emergency hardware of software changes to eliminate 
submission to a testing laboratory when the modifications would not 
affect the outcome of the game.
    Response: The Commission disagrees. The Technical Standards are an 
attempt to provide a regulatory means for assuring the integrity and 
security of Class II gaming. These ends are best met when all Class II 
gaming hardware and software, and all modifications to gaming hardware 
and software, are verified by an independent testing laboratory and 
subject to the supervision of a tribal gaming regulatory authority. 
Providing an exception to this verification and supervision does not 
serve this end. All modifications should be reviewed so that the 
integrity and security of Class II gaming systems are not inadvertently 
compromised.

Section 547.4(f)--Testing Laboratories, Generally

    Comment: One commenter suggested that it should be the Commission, 
rather than the tribal gaming regulatory authorities, that selects the 
testing laboratories used for testing under the Technical Standards. 
Doing so, the commenter reasons, would ensure the independence of the 
laboratories.
    Response: The Commission disagrees. The tribes have the primary 
responsibility for regulating gaming under IGRA, and the Technical 
Standards attempt to acknowledge this and place primary regulatory 
responsibility with tribal gaming regulatory authorities where it 
belongs. For example, part 547 provides minimum standards that tribal 
gaming regulatory authorities may supplement to suit their individual 
needs and standards; it places the responsibility for approving 
grandfathered gaming systems, and changes to those systems, with them; 
it places primary authority for approval of variances with them. As the 
tribal gaming regulatory authorities are already responsible under IGRA 
for licensing employees and management officials, and many are 
responsible under tribal law for licensing vendors, it is appropriate 
that they approve the use of testing laboratories as well. The 
Commission believes that the independence of the testing laboratories 
is assured by the limitation in Sec.  547.4(f)(1)(iii), which states 
that a testing laboratory owned by a tribe may not test games or gaming 
equipment for that tribe's gaming operations.
    Comment: A number of commenters objected to the role assigned to 
the independent testing laboratories by the Technical Standards. Some 
described the laboratories as ``unaccountable third parties;'' others 
described the verification process as ``outsourcing'' tribal 
sovereignty or letting the testing laboratories interpret IGRA and 
expressed concern about the process's complexity and cost.
    Response: The Commission disagrees. The general rule is that 
laboratory review and tribal gaming regulatory authority approval is 
required before a Class II gaming system may be offered to the public 
for play. In establishing this procedure, the Technical Standards 
merely formalize the best practices that already exist both in tribal 
and non-tribal gaming jurisdictions alike. As

[[Page 60522]]

such, the Commission does not believe that the testing procedure is 
either overly complex or overly expensive.
    Further, the testing laboratories are hardly unaccountable. The 
Technical Standards require the tribal gaming regulatory authorities to 
make suitability determinations for the principals of testing 
laboratories that they use, and the tribal gaming regulatory 
authorities may require that the laboratories be subject to whatever 
vendor licensing standards they feel appropriate. Further, the role of 
the testing laboratory is confined to providing an independent analysis 
of a particular gaming system's or modification's compliance with the 
technical standards. All questions of approval over gaming systems, 
grandfathering, changes to gaming systems, etc., belong not to the 
testing laboratory or the Commission but to the tribal gaming 
regulatory authority. As such, the Commission does not agree that there 
is an outsourcing of sovereignty.

Section 547.4(f)(1)(iii)--Testing Laboratories, Ownership

    Comment: A number of commenters strongly objected to a perceived 
discriminatory prohibition in the Technical Standards that would 
prohibit tribal ownership of a testing laboratory. Tribal governments, 
like state governments, should be allowed to own and operate testing 
laboratories.
    Response: The Commission agrees. Of course tribes can own and 
operate testing laboratories. There is not, and there has never been, 
any intent to make a blanket prohibition on tribal ownership or 
operation of testing laboratories. The Commission has reworded the 
proposed Sec.  547.4(f)(iii) to eliminate the possibility of such an 
interpretation. The paragraph now reads: ``A testing laboratory may 
provide the examination, testing, evaluating and reporting functions 
required by this section provided that: * * * [i]t is not owned or 
operated by the same tribe or tribal gaming regulatory authority for 
whom it is providing the testing, evaluating, and reporting functions 
required by this section.''
    The only restriction intended in this section is a narrow one: that 
a lab owned or operated by a tribe should not test games for that 
tribe's gaming operations. The restriction is intended as means to 
ensure the independence of the laboratory

Section 547.4(f)(1)(iv)(A)--Testing Laboratories, Suitability 
Determinations

    Comment: One commenter pointed out that there is a redundancy in 
making the principals of testing laboratories subject to suitability 
determinations no less stringent than those in 25 CFR 533.6(b)(1)(ii)-
(v) and in 25 CFR 533.6(c), because 533.6(b)(1)(v) and 533.6(c) contain 
the same standard, the former for Class II gaming management contracts 
and the latter for Class III gaming management contracts.
    Response: The Commission agrees and has removed the redundancy. The 
paragraph now reads, ``Makes a suitability determination of the testing 
laboratories no less stringent than that required by Sec. Sec.  
533.6(b)(1)(ii)-(v) of this chapter and based upon no less information 
than that required by Sec.  537.1 of this chapter * * *.''
    Comment: One commenter objected to the requirement that testing 
laboratories be subject to suitability determinations. The requirement, 
the commenter argued, acts as a barrier to entry to new tribally owned 
testing laboratories, which have not yet been subject to suitability 
determinations, and as a protectionist measure for the business of 
existing non-tribal testing laboratories, which have received such 
determinations.
    Response: The Commission believes that the measure is necessary. 
Positions directly responsible for the integrity of gaming in any 
gaming jurisdiction, tribal or commercial--are, or ought to be, subject 
to licensure or suitability determinations. The comment seeks, in 
effect, exemption from this sound regulatory principle on the ground of 
commercial disadvantage, real or perceived.

Comments on Sec.  547.5, Fairness Standards and Rules of General 
Application

Section 547.5(c)--Minimum Probability Standards

    Comment: A number of commenters suggested that the minimum 
probability standards of 1 in 50,000,000 for progressive prizes and 1 
in 25,000,000 for other prizes either be eliminated as contrary to IGRA 
or, if maintained, be lowered to match odds permitted by state 
lotteries, approximately 1 in 175,000,000, or Class III slot machines, 
1 in 400,000,000 or less.
    Response: The Commission disagrees that a minimum probability 
requirement is inconsistent with IGRA. As discussed in greater detail 
above, the Commission has the authority under IGRA to adopt minimum 
probability requirements for the same reason that it has the authority 
to adopt the Class II technical standards and Class II minimum internal 
control standards. Congress was expressly concerned that gaming under 
IGRA be ``conducted fairly and honestly by both the operator and 
players.'' 25 U.S.C. 2702(2). Both parts 543 and 547 are designed to 
protect the integrity of Class II gaming. The Technical Standards are 
intended to assure the fairness, integrity and safety of Class II games 
and equipment themselves, and the MICS are intended to assure the 
protection of tribal assets when the games and equipment are in 
operation in the gaming facility. Promulgating both of these sets of 
standards is consistent with the Commission's authority to monitor, 
inspect, and examine, Class II gaming, 25 U.S.C. 2706 (b)(1)-(4), and 
to promulgate such regulations as it deems appropriate to implement the 
provisions of IGRA. 25 U.S.C. 2706(b)(10).
    Section 547(c) embodies a general prohibition upon cheating or 
misleading players. It contains two specific rules that implement this 
general prohibition. One is a requirement that all prizes advertised be 
available to win, and the other, which is related, is the minimum 
probability requirement. Having a minimum probability requirement 
ensures that there are no prizes that are theoretically available but 
will never, as a practical matter, be won.
    For example, assume in a 75-ball bingo game the progressive prize 
is awarded when a unique 20-space pattern is hit on the first 20 
numbers drawn. The chances of that occurring are 1 in 
803,167,998,494,073,240. This is a prize that never will be hit. To put 
the number in perspective, it is not quite twice as many seconds as 
have elapsed since the Big Bang.
    Nevertheless, as the intention of the minimum probability 
requirement is to mark an outer bound within which wagers are fair, the 
Commission agrees that the proposed limits of 1 in 50 million for 
progressive awards and 1 in 25 million for other award is not low 
enough and is changing the requirement to 1 in 100 million for 
progressive awards and 1 in 50 million for other awards.
    These limits should provide an appropriate outer bound of fairness. 
For example, a progressive award with one chance to win in 100 million 
will hit, on average, one time every 100 million plays. If a system or 
systems linked to a common progressive award averages 250,000 plays a 
day, that works out to about 7.5 million plays per month, and it will 
take a little over one year, on average, to hit the award. The 
Commission believes that this sets an appropriate outer bound as 
players demand greater frequency in progressive awards than that.

[[Page 60523]]

Section 547.5(c)--Fairness Standards

    Comment: One commenter suggested that the requirements of this 
paragraph--that Class II gaming systems shall not cheat, mislead, or 
disadvantage patrons--are not design standards, cannot be tested by a 
testing laboratory, and should be deleted. If the Commission retains 
them, the commenter suggested that the paragraph read that no gaming 
system ``shall be designed to'' do these things. Finally, the commenter 
suggested that as a standard, ``disadvantaging'' a player is 
subjective, not testable, could be construed to require that players 
always get their money back, and is not required in any gaming 
jurisdiction.
    Response: The Commission disagrees in part and agrees in part. The 
word ``disadvantage'' adds nothing to the section an has been deleted. 
Other than this, however, the section remains as proposed. Simply put, 
gaming patrons should not be cheated or duped, unintentionally or 
intentionally.

Comments Upon Sec.  547.7, Minimum Hardware Standards

Section 547.7(b)--Printed Circuit Boards

    Comment: One commenter suggested striking the requirement that 
switches or jumpers on circuit boards that have the potential to affect 
the outcome or integrity of games, progressive awards, financial 
instruments, cashless transactions, voucher transactions, or accounting 
records be capable of being sealed. The commenter argued that the 
requirement is unnecessary and unduly burdensome.
    Response: The Commission disagrees. The paragraph does not mandate 
that such switches or jumpers actually be sealed. Rather, the paragraph 
only requires that the switches or jumpers be capable of being sealed 
in the event that the tribal gaming regulatory authority so requires.

Section 547.7(g)--Financial Instrument Storage Components, Security

    Comment: A number of commenters suggested that only those storage 
components not ``designed to be'' operated under the direct control of 
an employee be located in a secured cabinet. As written, this paragraph 
requires those components not actually so operated be located in a 
secured cabinet. Adding the words ``designed to be'' provides a 
standard to which a testing laboratory can test.
    Response: The Commission disagrees with the necessity of such a 
change. Of course a testing laboratory can only assess a prototype's 
design and cannot assess what happens once equipment is placed on the 
gaming floor. The Commission is confident, however, that in most cases, 
equipment will be tested and used according to its intended design. In 
particular, however, the proposed change could have the unintended 
effect of handicapping the regulator. If, for example, a component 
designed to be used by an individual--say a point-of-sale cash drawer--
could in practice be left alone without sufficient safeguard. Such a 
circumstance is undesirable and insecure but nevertheless compliant 
with the technical standards if they read as the commenters propose 
because the cash drawer was ``designed to be'' used under the control 
of an employee or agent.

Section 547.7(k)(2)--Door Access Detection, Sensors

    Comment: One commenter suggested that the standard for door sensor 
security was impossible to meet--``It shall not be possible to disable 
a door open sensor * * *''--and should be replaced with ``shall be 
secure against attempts to disable * * *''
    Response: On the basis of this comment, the Commission reviewed 
this paragraph and determined both that it was both unclear and 
redundant. The security of door open sensors and components within 
cabinets is already addressed elsewhere under paragraph (k). The 
Commission therefore deleted 547.7(k)(2) and renumbered the remainder 
of paragraph (k) accordingly.

Comments Upon Sec.  547.8, Minimum Software Standards

Section 547.8(a)(1)(ii)--Display of Game Results

    Comment: One commenter suggested that the requirement that a player 
interface display ``game results'' be clarified and read ``game results 
for the cards displayed on that player interface.'' This would remove 
any implication that all other players' results also have to be 
displayed.
    Response: The Commission disagrees and believes the standard as 
written is sufficiently clear. Current electronic game systems are 
designed to display each player's individual results, and nothing else 
is intended or should be read here.

Section 547.8(a)(2)(ii) and Elsewhere--Game Recall, Alternate, 
Entertaining Displays.

    Comment: A number of commenters objected to the requirement that 
game recall functions have to be able to recall not only the final 
results of the last game played but also any associated ``alternative'' 
display of results such as video reels that do not determine game 
outcome but are additional, separate, ways of displaying results for 
the player. The commenters contended that the Commission lacks the 
statutory authority to impose such a requirement. The commenters 
suggested as well that the requirement imbues alternative displays with 
legal significance that they do not have and that this can blur the 
line between Class II and Class III gaming. Finally, the commenters 
suggested that the requirement may work against its intended regulatory 
goal--to make easier the investigation and resolution of patron 
disputes--and give patrons legal rights based on the alternate displays 
that they otherwise would not have.
    Response: The Commission disagrees. As a preliminary matter, the 
Commission observes that a number of major gaming system manufacturers 
already provide this feature. Thus, as they do by requiring independent 
laboratory testing of gaming systems, the Technical Standards do no 
more than formalize existing best practices.
    The broad regulatory goal of the requirement is, as Congress 
stated, to ensure that gaming is ``conducted fairly and honestly by 
both the operator and players.'' 25 U.S.C. 2702(2). The requirement 
attempts to achieve this goal by creating a mechanism that gives tribal 
gaming regulatory authorities as much information as is possible when 
called upon to resolve patron disputes over the outcome of games. The 
investigating tribal gaming regulatory authority will have available to 
it both the results of the bingo game and of any entertaining display. 
Further, as this requirement formalizes existing practices, the 
Commission disagrees that it will inhibit, rather than make easier, the 
investigative job of the tribal gaming regulatory authority.
    Requiring recall of entertaining displays will not blur the 
necessary distinction between Class II and Class III gaming. Indeed, 
the presence or absence of entertaining displays in a Class II game 
does not affect the classification of the game at all. Drawing that 
line was the primary regulatory goal of the now-discarded 
Classification regulations. The Technical Standards do not attempt to 
draw such a line. Rather, they assume that such a line already exists. 
They are, by design, applicable only to Class II gaming and are 
specifically designed to be applicable only to Class II gaming. They 
are organized around the concept of the ``Class II gaming system'' 
central to Class II gaming.
    There is no intention by this requirement to give any legal

[[Page 60524]]

significance to entertaining displays. An entertaining display that 
malfunctions and appears to land on a winning combination when the 
game, in fact, was not won does not entitle a patron to any award, 
because prizes are determined only by bingo or the Class II game in 
question. 547.16(b)(1). Any malfunction, whether in a bingo game or in 
an entertaining display voids all prizes and plays. 547.16(b)(2). That 
said, to avoid any implication of legal significance in the term 
``alternate display,'' the Commission has changed the term to 
``entertaining display'' throughout.
    Finally, the Commission has the authority to promulgate the 
requirement here, just as it has the authority to promulgate the 
Technical Standards as a whole. As discussed in greater detail above, 
Congress was expressly concerned that gaming under IGRA be ``conducted 
fairly and honestly by both the operator and players.'' 25 U.S.C. 
2702(2). The Technical Standards are designed to protect the integrity 
of Class II gaming. The Technical Standards are intended to assure the 
fairness, integrity and safety of Class II games and equipment 
themselves. Promulgating the Technical Standards is consistent with the 
Commission's authority to monitor, inspect, and examine Class II 
gaming, 25 U.S.C. 2706 (b)(1)-(4), and to promulgate such regulations 
as it deems appropriate to implement the provisions of IGRA. 25 U.S.C. 
2706(b)(10).

Section 547.8(b)(1)--Game Initiation and Play

    Comment: A number of commenters suggested that the prohibition that 
``there shall be no automatic or undisclosed changes of rule'' be 
amended to say that ``there shall be no undisclosed changes of rules.''
    Response: The Commission disagrees. The prohibition is to be read 
with the first sentence of the paragraph, ``[e]ach game played on the 
Class II gaming system shall follow and not deviate from a constant set 
of rules for each game provided to players. * * * There shall be no 
automatic or undisclosed changes of rules.'' The intention is to 
prohibit the use of games or systems that base the outcome of a 
particular play, or that adjust the overall return to the player, on 
the outcome of previous plays. The outcome of any one particular game 
played must be independent of the outcome of all other games played.
    This section is not intended to address, nor should it be construed 
to address, downloadable game software, which can occur automatically 
on a pre-programmed schedule. Downloadable games are governed by Sec.  
547.12.

Section 547.8(c)(2)--Audit Mode

    Comment: One commenter suggested defining what is meant by the 
requirement that audit mode be accessible by a ``secure method.''
    Response: The Commission agrees and has added descriptive language. 
The paragraph now reads, ``Audit mode shall be accessible by a secure 
method such as an employee PIN and key or other auditable access 
control.''

Section 547.8(b)(2) and Elsewhere--Applicability to Games Similar to 
Bingo

    Comment: A number of commenters requested that the Commission make 
part 547 applicable to bingo alone, rather than to games similar to 
bingo and other Class II games as well. Games similar to bingo may have 
individual considerations not addressed here and should be addressed in 
regulations designed specifically for them.
    Response: The Commission disagrees. While games similar to bingo 
are not bingo, they are substantially similar, by definition, and can 
be played on the same systems. Failure to include games similar to 
bingo has the potential to leave some systems uncovered by this part. 
To the extent that a requirement in the technical standards is 
obviously inapplicable to a system offering a ``game similar to 
bingo,'' then it does not apply. 547.5(b). To the extent that a 
requirement in the technical standards is ill fit to a ``game similar 
to bingo'' system, that can be managed through a variance, and part 547 
will remain applicable to all games played on Class II gaming systems.

Section 547.8(d)(4)(vii) and Elsewhere--Applicability to Pull Tabs

    Comment: A number of commenters requested that the Commission make 
part 547 applicable to bingo alone, rather than include pull tabs. Pull 
tabs may have individual considerations not addressed here and should 
be addressed in regulations designed specifically for them.
    Response: The Commission disagrees. Again, failure to include pull 
tabs has the potential to leave some Class II gaming systems uncovered 
by this part. To the extent that a requirement in the technical 
standards is obviously inapplicable to a system offering pull tabs, 
then it does not apply. 547.5(b). To the extent that a requirement in 
the technical standards is ill fit to a pull tabs system, that can be 
managed through a variance. Part 547 will remain applicable to all 
games played on Class II gaming systems.
    Section 547.8(d)(4)(vii)--Pull Tabs
    Comment: A number of commenters stated that for pull tabs, it is 
not possible to comply with all of the requirements of this section.
    Response: The Commission disagrees. The requirements of Sec.  
547.8(d)(4)(vii) are specific to systems running pull tabs games. If 
there are portions of Sec.  547.8 that are not obviously applicable to 
a Class II gaming system offering pull tabs, and if it is not possible 
to comply with some requirements because they are inapplicable, that is 
of no matter. The Technical Standards were specifically designed to be 
broadly and generally applicable to Class II gaming systems, no matter 
how any individual system implemented a particular game. Thus, bingo 
systems consisting of electronic client-server architectures and bingo 
systems involving a manual number draw and electronic bingo minders 
sold from a point-of-sale station are, for example, both within the 
ambit of the Technical Standards. Inevitably, there will be systems and 
situations where the Standards prescribe requirements that are simply 
inapplicable. When that is the case, the inapplicable standards are 
ignored, as the Technical Standards themselves instruct. Section 
547.5(b) requires that gaming systems meet only ``applicable 
requirements of this part.''

Comments Upon Sec.  547.9, Accounting

Section 547.9(a)--Required Accounting Data

    Comment: A number of commenters suggested that Class II gaming 
systems should track not only ``amount in'' and ``amount out,'' as 
those terms are described, but also ``Bingo Sales'' and ``Prize 
Payouts,'' terms used in the proposed minimum internal control 
standards of part 543.
    Response: The Commission disagrees. As the Technical Standards are 
designed to apply to Class II gaming systems essentially independent of 
what game is played on them, the more general terms ``amount in'' and 
``amount out'' are more appropriate. The Commission would prefer 
``Bingo sales'' and ``prize payouts'' only if it had decided to limit 
the application of the Technical Standards to bingo.
    Comment: A number of commenters suggested that the descriptions and 
requirements of ``amount in'' and ``amount out'' would be clearer if 
financial instruments accepted had to be tracked ``independently per 
financial instrument acceptor'' and financial instruments dispensed had 
to be tracked ``independently per financial instrument dispenser.''

[[Page 60525]]

    Response: The Commission agrees and has made the suggested change.

Comments Upon Sec.  547.11, Money and Credit Handling

Section 547.11(b)(5)(i)--Vouchers

    Comment: One commenter suggested that there is no need to require 
both a gaming operation name and its location on coupons and vouchers. 
Moreover, the meaning of ``location'' is unclear as a location may be 
identified any number of ways.
    Response: The Commission believes that the standard is appropriate 
as written. The purpose is to match vouchers and coupons to the gaming 
facility that issues and accepts them. Whether ``location'' is 
implemented as a city and state, as a street address, as a reservation, 
or as some combination of these is left up to the tribal gaming 
regulatory authority in its discretion.

Comments Upon Sec.  547.12, Software Downloads

    Comment: A number of commenters suggested that some of the 
requirements in these paragraphs are not testable design standards but 
are operational standards that belong in the Class II MICS. These 
include the requirements that downloads shall be conducted only ``as 
authorized'' and that ``the tribal gaming regulatory authority shall 
confirm verification'' of the download.
    Response: The Commission believes that these are some of the 
requirements that belong equally in the Technical Standards and MICS. 
To the extent that they appear in the Technical Standards, the 
requirements should be construed to mean that there must be some 
mechanism in the gaming system that will allow downloads to be 
authorized--e.g., password entry by an appropriate official--or to be 
confirmed--e.g. an audit trail reviewable by the tribal gaming 
regulatory authority. Accordingly, the Commission has amended the last 
sentence of Sec.  547.12(b) to read, ``Using any method it deems 
appropriate, the tribal gaming regulatory authority shall confirm the 
verification.'' The complementary MICS governing access to and 
authorizations for information technology is found in Sec.  543.16(a)-
(c), and complementary standards for access verification are found in 
Sec.  543.16(e).

Comments Upon Sec.  547.13, Program Storage Media

    Comment: One commenter suggested that write-protected hard disks be 
permitted using software write protection verifiable by testing labs, 
such as Microsoft Enhanced Write Filter.
    Response: The Commission agrees and has made the suggested change. 
The paragraph now reads, ``Write protected hard disks are permitted if 
the hardware means of enabling the write protect is easily viewable and 
can be sealed in place. Write protected hard disks are permitted using 
software write protection verifiable by a testing laboratory.''

Comments Upon Sec.  547.14, Random Number Generation

    Comment: One commenter suggested exempting bingo ball RNGs from the 
requirements of this section because broad tolerance levels in bingo 
balls manufacture create too great a variance in randomness. Testing 
bingo ball RNGs to the standards of this section is therefore not 
meaningful.
    Response: The Commission agrees. However, Sec.  547.14, by its 
terms, only applies to electronic RNGs. Bingo Ball RNGs are already 
exempt from the requirements of Sec.  547.14.

Comments Upon Sec.  547.15, Electronic Data Communications Between 
System Components

    Comment: One commenter suggested that the following should be 
deleted from Sec.  547.15(e) as untestable by a testing laboratory and 
more appropriately placed in the MICS: ``Remote communications shall 
only be allowed if authorized by the tribal gaming regulatory 
authority.''
    Response: The Commission believes that these are also requirements 
that belong equally in the Technical Standards and MICS. To the extent 
that they appear in the Technical Standards, the requirements should be 
construed to mean that there be some mechanism in the gaming system 
that will enable and disable remote communications. This will allow the 
tribal gaming regulatory authority to authorize and control remote 
communications. Complementary MICS governing remote access are found in 
Sec.  543.16(f).

Comments Upon Sec.  547.16--Game Artwork, Glass, Rules Etc.

    Comment: One commenter suggested revising the section heading to 
refer to ``information that must be made available to players.''
    Response: The Commission believes that the intent and meaning of 
this section is adequately described by the language of the proposed 
rule.

Comments Upon Sec.  547.17--Variances

    Comment: One commenter suggested that the heading in this section 
improperly refers to a ``gaming operation'' requesting a variance and 
that it properly should refer to a ``tribal gaming regulatory 
authority'' requesting a variance as that is the apparent intent of the 
section.
    Response: The Commission agrees and has made the suggested change.

Sec.  547.17(c)(6)--Appellate Procedure

    Comment: A number of commenters suggested that this paragraph be 
amended to automatically affirm the tribal gaming regulatory 
authority's determination if the Commission fails to make a decision on 
appeal within the time provided.
    Response: The Commission agrees in part and has made the suggested 
change. In addition, the Commission recognizes that in rare or unusual 
instances, circumstances may require more than 30 days to issue a 
decision. Therefore, the Commission has added a provision enabling it 
to extend the deadline for decision an additional 30 days, but only 
upon the consent of the appellant tribal gaming regulatory authority. 
This calendaring mechanism also appears in 25 CFR part 539 governing 
management contract appeals, and the Commission finds that it works 
well.

List of Subjects in 25 CFR Part 547

    Gambling, Indian--lands, Indian--tribal government, Reporting and 
recordkeeping requirements.

0
For the reasons set forth in the preamble, the Commission amends 25 CFR 
Chapter III by adding Part 547 to read as follows:

PART 547--MINIMUM TECHNICAL STANDARDS FOR GAMING EQUIPMENT USED 
WITH THE PLAY OF CLASS II GAMES

Sec.
547.1 What is the purpose of this part?
547.2 How do these regulations affect state jurisdiction?
547.3 What are the definitions for this part?
547.4 How does a tribal government, tribal gaming regulatory 
authority, or tribal gaming operation comply with this part?
547.5 What are the rules of interpretation and of general 
application for this part?
547.6 What are the minimum technical standards for enrolling and 
enabling Class II gaming system components?
547.7 What are the minimum technical hardware standards applicable 
to Class II gaming systems?
547.8 What are the minimum technical software standards applicable 
to Class II gaming systems?
547.9 What are the minimum technical standards for Class II gaming 
system accounting functions?
547.10 What are the minimum standards for Class II gaming system 
critical events?
547.11 What are the minimum technical standards for money and credit 
handling?

[[Page 60526]]

547.12 What are the minimum technical standards for downloading on a 
Class II gaming system?
547.13 What are the minimum technical standards for program storage 
media?
547.14 What are the minimum technical standards for electronic 
random number generation?
547.15 What are the minimum technical standards for electronic data 
communications between system components?
547.16 What are the minimum standards for game artwork, glass, and 
rules?
547.17 How does a tribal gaming regulatory authority apply for a 
variance from these standards?

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


Sec.  547.1  What is the purpose of this part?

    The Indian Gaming Regulatory Act, 25 U.S.C. 2703(7)(A)(i), permits 
the use of electronic, computer, or other technologic aids in 
connection with the play of Class II games. This part establishes the 
minimum technical standards governing the use of such aids.


Sec.  547.2  How do these regulations affect state jurisdiction?

    Nothing in this part shall be construed to grant to a state 
jurisdiction over Class II gaming or to extend a state's jurisdiction 
over Class III gaming.


Sec.  547.3  What are the definitions for this part?

    For the purposes of this part, the following definitions apply:
    Account access component. A component within a Class II gaming 
system that reads or recognizes account access media and gives a patron 
the ability to interact with his or her account.
    Account access medium. A magnetic stripe card or any other medium 
inserted into, or otherwise made to interact with, an account access 
component in order to give a patron the ability to interact with an 
account.
    Audit mode. The mode where it is possible to view Class II gaming 
system accounting functions, statistics, etc. and perform non-player-
related functions.
    Agent. An employee or other person authorized by the gaming 
operation, as approved by the tribal gaming regulatory authority, 
designated for certain decisions, tasks and actions in the gaming 
operation.
    Cancel credit. An action initiated by the Class II gaming system 
where some or all of a player's credits are removed by an attendant and 
paid to the player.
    Cashless system. A system that performs cashless transactions and 
maintains records of those cashless transactions.
    Cashless transaction. A movement of funds electronically from one 
component to another, often to or from a patron deposit account.
    CD-ROM. Compact Disc--Read Only Memory.
    Chairman. The Chairman of the National Indian Gaming Commission.
    Class II game. The same as ``class II gaming'' in 25 U.S.C. 
2703(7)(A).
    Class II gaming system. All components, whether or not technologic 
aids in electronic, computer, mechanical, or other technologic form, 
that function together to aid the play of one or more Class II games, 
including accounting functions mandated by these regulations.
    Commission. The National Indian Gaming Commission established by 
the Indian Gaming Regulatory Act, 25 U.S.C. 2701 et seq.
    Coupon. A financial instrument of fixed wagering value, usually 
paper, that can only be used to acquire non-cashable credits through 
interaction with a voucher system. This does not include instruments 
such as printed advertising material that cannot be validated directly 
by a voucher system.
    Critical memory. Memory locations storing data essential to the 
functionality of the Class II gaming system.
    DLL. A Dynamic-Link Library file.
    Download package. Approved data sent to a component of a Class II 
gaming system for such purposes as changing the component software.
    DVD. Digital Video Disk or Digital Versatile Disk.
    Electromagnetic interference. The physical characteristic of an 
electronic component to emit electronic noise either into free air, 
onto the power lines, or onto communication cables.
    Electrostatic discharge. A single-event, rapid transfer of 
electrostatic charge between two objects, usually resulting when two 
objects at different potentials come into direct contact with each 
other.
    EPROM. Erasable Programmable Read Only Memory--a storage area that 
may be filled with data and information, that once written is not 
modifiable, and that is retained even if there is no power applied to 
the machine.
    Fault. An event that when detected by a Class II gaming system 
causes a discontinuance of game play or other component functions.
    Financial instrument. Any tangible item of value tendered in Class 
II game play, including, but not limited to, bills, coins, vouchers and 
coupons.
    Financial instrument acceptor. Any component that accepts financial 
instruments.
    Financial instrument dispenser. Any component that dispenses 
financial instruments.
    Financial instrument storage component. Any component that stores 
financial instruments.
    Flash memory. Non-volatile memory that retains its data when the 
power is turned off and that can be electronically erased and 
reprogrammed without being removed from the circuit board.
    Game software. The operational program or programs that govern the 
play, display of results, and/or awarding of prizes or credits for 
Class II games.
    Gaming equipment. All electronic, electro-mechanical, mechanical, 
or other physical components utilized in the play of Class II games.
    Hardware. Gaming equipment.
    Interruption. Any form of mis-operation, component failure, or 
interference to the Class II gaming equipment.
    Modification. A revision to any hardware or software used in a 
Class II gaming system.
    Non-cashable credit. Credits given by an operator to a patron; 
placed on an Class II gaming system through a coupon, cashless 
transaction or other approved means; and capable of activating play but 
not being converted to cash.
    Patron deposit account. An account maintained on behalf of a 
patron, for the purpose of depositing and withdrawing cashable funds 
for the primary purpose of interacting with a gaming activity.
    Player interface. Any component or components of a Class II gaming 
system, including an electronic or technologic aid (not limited to 
terminals, player stations, handhelds, fixed units, etc.), that 
directly enables player interaction in a Class II game.
    Prize schedule. The set of prizes available to players for 
achieving pre-designated patterns in the Class II game.
    Program storage media. An electronic data storage component, such 
as a CD-ROM, EPROM, hard disk, or flash memory on which software is 
stored and from which software is read.
    Progressive prize. A prize that increases by a selectable or 
predefined amount based on play of a Class II game.
    Random number generator (RNG). A software module, hardware 
component or combination of these designed to produce outputs that are 
effectively random.
    Reflexive software. Any software that has the ability to manipulate 
and/or replace a randomly generated outcome for the purpose of changing 
the results of a Class II game.
    Removable/rewritable storage media. Program or data storage 
components

[[Page 60527]]

that can be removed from gaming equipment and be written to, or 
rewritten by, the gaming equipment or by other equipment designed for 
that purpose.
    Server. A computer that controls one or more applications or 
environments within a Class II gaming system.
    Test/diagnostics mode. A mode on a component that allows various 
tests to be performed on the Class II gaming system hardware and 
software.
    Testing laboratory. An organization recognized by a tribal gaming 
regulatory authority pursuant to Sec.  547.4(f).
    Tribal gaming regulatory authority. The entity authorized by tribal 
law to regulate gaming conducted pursuant to the Indian Gaming 
Regulatory Act.
    Voucher. A financial instrument of fixed wagering value, usually 
paper, that can only be used to acquire an equivalent value of cashable 
credits or cash through interaction with a voucher system.
    Voucher system. A component of the Class II gaming system or an 
external system that securely maintains records of vouchers and 
coupons; validates payment of vouchers; records successful or failed 
payments of vouchers and coupons; and controls the purging of expired 
vouchers and coupons.


Sec.  547.4  How does a tribal government, tribal gaming regulatory 
authority, or tribal gaming operation comply with this part?

    (a) Limited immediate compliance. A tribal gaming regulatory 
authority shall:
    (1) Require that all Class II gaming system software that affects 
the play of the Class II game be submitted, together with the signature 
verification required by Sec.  547.8(f), to a testing laboratory 
recognized pursuant to paragraph (f) of this section within 120 days 
after November 10, 2008;
    (2) Require that the testing laboratory test the submission to the 
standards established by Sec.  547.8(b), Sec.  547.8(f), Sec.  547.14, 
the minimum probability standards of Sec.  547.5(c), and to any 
additional technical standards adopted by the tribal gaming regulatory 
authority;
    (3) Require that the testing laboratory provide the tribal gaming 
regulatory authority with a formal written report setting forth and 
certifying to the findings and conclusions of the test;
    (4) Make 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 qualifies for grandfather status under the provisions 
of this section, but only upon receipt of a testing laboratory's report 
that the Class II gaming system is compliant with Sec.  547.8(b), Sec.  
547.8(f), the minimum probability standards of Sec.  547.5(c), Sec.  
547.14, and any other technical standards adopted by the tribal gaming 
regulatory authority. If the tribal gaming regulatory authority does 
not issue the certificate, or if the testing laboratory finds that the 
Class II gaming system is not compliant with Sec.  547.8(b), Sec.  
547.8(f), the minimum probability standards of Sec.  547.5(c), Sec.  
547.14, or any other technical standards adopted by the tribal gaming 
regulatory authority, then the gaming system shall immediately be 
removed from play and not be utilized.
    (5) Retain a copy of any testing laboratory's report so long as the 
Class II gaming system that is the subject of the report remains 
available to the public for play;
    (6) Retain a copy of any certificate of grandfather status so long 
as the Class II gaming system that is the subject of the certificate 
remains available to the public for play; and
    (7) Require the supplier of any player interface to designate with 
a permanently affixed label each player interface with an identifying 
number and the date of manufacture or a statement that the date of 
manufacture was on or before the effective date of this part. The 
tribal gaming regulatory authority shall also require the supplier to 
provide a written declaration or affidavit affirming that the date of 
manufacture was on or before November 10, 2008.
    (b) Grandfather provisions. All Class II gaming systems 
manufactured or placed in a tribal facility on or before the effective 
date of this part and certified pursuant to paragraph (a) of this 
section are grandfathered Class II gaming systems for which the 
following provisions apply:
    (1) Grandfathered Class II gaming systems may continue in operation 
for a period of five years from November 10, 2008.
    (2) Grandfathered Class II gaming system shall be available for use 
at any tribal gaming facility subject to approval by the tribal gaming 
regulatory authority, which shall transmit its notice of that approval, 
identifying the grandfathered Class II gaming system and its 
components, to the Commission.
    (3) As permitted by the tribal gaming regulatory authority, 
individual hardware or software components of a grandfathered Class II 
gaming system may be repaired or replaced to ensure proper functioning, 
security, or integrity of the grandfathered Class II gaming system.
    (4) All modifications that affect the play of a grandfathered Class 
II gaming system must be approved pursuant to paragraph (c) of this 
section, except for the following:
    (i) Any software modifications that the tribal gaming regulatory 
authority finds will maintain or advance the system's overall 
compliance with this part or any applicable provisions of parts 542 and 
543 of this chapter, after receiving a new testing laboratory report 
that the modifications are compliant with the standards established by 
Sec.  547.8(b), the minimum probability requirements of Sec.  547.5(c), 
Sec.  547.14, and any other standards adopted by the tribal gaming 
regulatory authority;
    (ii) Any hardware modifications that the tribal gaming regulatory 
authority finds will maintain or advance the system's overall 
compliance with this part or any applicable provisions of parts 542 and 
543 of this chapter; and
    (iii) Any other modification to the software of a grandfathered 
Class II gaming system that the tribal gaming regulatory authority 
finds will not detract from, compromise or prejudice:
    (A) The proper functioning, security, or integrity of the Class II 
gaming system, and
    (B) The gaming system's overall compliance with the requirements of 
this part or any applicable provisions of parts 542 and 543 of this 
chapter.
    (iv) No such modification may be implemented without the approval 
of the tribal gaming regulatory authority. The tribal gaming regulatory 
authority shall maintain a record of the modification so long as the 
Class II gaming system that is the subject of the modification remains 
available to the public for play and shall make the record available to 
the Commission upon request. 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).
    (c) Submission, testing, and approval--generally. Except as 
provided in paragraphs (b) and (d) of this section, no tribal gaming 
regulatory authority shall permit in a tribal gaming operation the use 
of any Class II gaming system, or any associated cashless system or 
voucher system or any modification thereto, unless:
    (1) The Class II gaming system, cashless system, voucher payment 
system, or modification has been submitted to a testing laboratory;
    (2) The testing laboratory tests the submission to the standards 
established by:
    (i) This part;

[[Page 60528]]

    (ii) Any applicable provisions of parts 542 and 543 of this chapter 
that are testable by the testing laboratory; and
    (iii) The tribal gaming regulatory authority;
    (3) The testing laboratory provides a formal written report to the 
party making the submission, setting forth and certifying to its 
findings and conclusions; and
    (4)(i) Following receipt of the testing laboratory's report, the 
tribal gaming regulatory authority makes a finding that the Class II 
gaming system, cashless system, or voucher system conforms to the 
standards established by:
    (A) This part;
    (B) Any applicable provisions of parts 542 and 543 of this chapter 
that are testable by the testing laboratory; and
    (C) The tribal gaming regulatory authority.
    (ii) The tribal gaming regulatory authority shall retain a copy of 
the testing laboratory's report so long as the Class II gaming system, 
cashless system, voucher system, or modification thereto that is the 
subject of the report remains available to the public for play in its 
gaming operation.
    (d) Emergency hardware and software modifications. (1) A tribal 
gaming regulatory authority, in its discretion, may permit modified 
hardware or software 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 tribal gaming regulatory authority authorizes new or 
modified software or hardware to be made available for play or use 
without prior testing laboratory review, the tribal gaming regulatory 
authority shall thereafter require the hardware or software 
manufacturer to:
    (i) Immediately advise other users of the same hardware or software 
of the importance and availability of the update;
    (ii) Immediately submit the new or modified hardware or software to 
a testing laboratory for testing and verification of compliance with 
this part and any applicable provisions of parts 542 and 543 of this 
chapter that are testable by the testing laboratory; and
    (iii) Immediately provide the tribal gaming regulatory authority 
with a software signature verification tool meeting the requirements of 
Sec.  547.8(f) for any new or modified software.
    (3) If a tribal gaming regulatory authority authorizes a software 
or hardware modification under this paragraph, it shall 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 and shall make 
the record available to the Commission upon request. 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).
    (e) Compliance by charitable gaming operations. This part shall 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 tribal gaming regulatory authority 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 $1,000,000.
    (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 tribal gaming regulatory authority.
    (ii) It demonstrates its technical skill and capability to the 
tribal gaming regulatory authority.
    (iii) It is not owned or operated by the same tribe or tribal 
gaming regulatory authority for whom it is providing the testing, 
evaluating, and reporting functions required by this section.
    (iv) The tribal gaming regulatory authority:
    (A) Makes a suitability determination of the testing laboratory 
based upon standards no less stringent than those set out in Sec. Sec.  
533.6(b)(1)(ii) through (v) of this chapter and based upon no less 
information than that required by Sec.  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 tribal gaming 
regulatory authority determines that the testing laboratory is 
qualified to test and evaluate Class II gaming systems.
    (2) The tribal gaming regulatory authority shall:
    (i) Maintain a record of all determinations made pursuant to 
paragraphs (f)(1)(iv) and (f)(1)(v) of this section for a minimum of 
three years and shall make the records available to the Commission upon 
request. 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).
    (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 tribal gaming 
regulatory authority.


Sec.  547.5  What are the rules of interpretation and of general 
application for this part?

    (a) Minimum standards. A tribal gaming regulatory authority may 
establish and implement additional technical standards that are as 
stringent as, or more stringent than, those set out in this part.
    (b) Only applicable standards apply. Gaming equipment and software 
used with Class II gaming systems shall meet all applicable 
requirements of this part. For example, if a Class II gaming system 
lacks the ability to print or accept vouchers, then any standards that 
govern vouchers do not apply.
    (c) Fairness. No Class II gaming system shall cheat or mislead 
users. All prizes advertised shall be available to win. No progressive 
prize shall have a probability of winning less than 1 in 100,000,000. 
No other prize shall have a probability of winning less than 1 in 
50,000,000.
    (d) Approved equipment and software only. All gaming equipment and 
software used with Class II gaming systems shall be identical in all 
respects to a prototype reviewed and tested by a testing laboratory and 
approved for use by the tribal gaming regulatory authority pursuant to 
Sec.  547.4(a) through (c). Unapproved software shall not be loaded 
onto or stored on any program

[[Page 60529]]

storage medium used in a Class II gaming system, except as provided in 
Sec.  547.4(d).
    (e) Proper functioning. All gaming equipment and software used with 
Class II gaming systems shall perform according to the manufacturer's 
design and operating specifications.
    (f) No Limitation of Technology. This part should not be 
interpreted to limit the use of technology or to preclude the use of 
technology not specifically referenced.
    (g) Severability. If any provision of this part is declared invalid 
by a court of competent jurisdiction, such decision shall not affect 
the remainder of this part.


Sec.  547.6  What are the minimum technical standards for enrolling and 
enabling Class II gaming system components?

    (a) General requirements. Class II gaming systems shall provide a 
method to:
    (1) Enroll and unenroll system components;
    (2) Enable and disable specific system components.
    (b) Specific requirements. Class II gaming systems shall:
    (1) Ensure that only enrolled and enabled system components 
participate in gaming; and
    (2) Ensure that the default condition for components shall be 
unenrolled and disabled.


Sec.  547.7  What are the minimum technical hardware standards 
applicable to Class II gaming systems?

    (a) General requirements. (1) The Class II gaming system shall 
operate in compliance with applicable regulations of the Federal 
Communications Commission.
    (2) Prior to approval by the tribal gaming regulatory authority 
pursuant to Sec.  547.4(c), the Class II gaming system shall have 
obtained from Underwriters' Laboratories, or its equivalent, relevant 
certification(s) required for equipment of its type, including but not 
limited to certifications for liquid spills, electromagnetic 
interference, etc.
    (b) Printed circuit boards. (1) Printed circuit boards that have 
the potential to affect the outcome or integrity of the game, and are 
specially manufactured or proprietary and not off-the-shelf, shall 
display a unique identifier such as a part number and/or revision 
number, which shall be updated to reflect new revisions or 
modifications of the board.
    (2) Switches or jumpers on all circuit boards that have the 
potential to affect the outcome or integrity of any game, progressive 
award, financial instrument, cashless transaction, voucher transaction, 
or accounting records shall be capable of being sealed.
    (c) Electrostatic discharge. Class II gaming system components 
accessible to the public shall be constructed so that they exhibit 
immunity to human body electrostatic discharges on areas exposed to 
contact. Static discharges of <plus-minus>15 kV for air discharges and 
<plus-minus>7.5 kV for contact discharges may not cause damage, or 
inhibit operation or integrity of the Class II gaming system.
    (d) Physical enclosures. Physical enclosures shall be of a robust 
construction designed to resist determined illegal entry. All 
protuberances and attachments such as buttons, identification plates, 
and labels shall be sufficiently robust to avoid unauthorized removal.
    (e) Player interface. The player interface shall include a method 
or means to:
    (1) Display information to a player; and
    (2) Allow the player to interact with the Class II gaming system.
    (f) Account access components. A Class II gaming system component 
that reads account access media shall be located within a secure, 
locked or tamper-evident area or in a cabinet or housing that is of a 
robust construction designed to resist determined illegal entry and to 
protect internal components. In addition, the account access component:
    (1) Shall be constructed so that physical tampering leaves evidence 
of such tampering; and
    (2) Shall provide a method to enable the Class II gaming system to 
interpret and act upon valid or invalid input or error condition.
    (g) Financial instrument storage components. Any Class II gaming 
system components that store financial instruments and that are not 
operated under the direct control of a gaming operation employee or 
agent shall be located within a secure and locked area or in a locked 
cabinet or housing that is of a robust construction designed to resist 
determined illegal entry and to protect internal components.
    (h) Financial instrument acceptors. (1) Any Class II gaming system 
components that handle financial instruments and that are not operated 
under the direct control of an agent shall:
    (i) Be located within a secure, locked and tamper-evident area or 
in a locked cabinet or housing that is of a robust construction 
designed to resist determined illegal entry and to protect internal 
components;
    (ii) Be able to detect the entry of valid or invalid financial 
instruments and to provide a method to enable the Class II gaming 
system to interpret and act upon valid or invalid input or error 
condition; and
    (iii) Be constructed to permit communication with the Class II 
gaming system of the accounting information required by Sec.  547.9(a) 
and by applicable provisions of any Commission and tribal gaming 
regulatory regulations governing minimum internal control standards.
    (2) Prior to completion of a valid financial instrument transaction 
by the Class II gaming system, no monetary amount related to that 
instrument shall be available for play. For example, credits shall not 
be available for play until currency or coupon inserted into an 
acceptor is secured in the storage component.
    (3) The monetary amount related to all valid financial instrument 
transactions by the Class II gaming system shall be recorded as 
required by Sec.  547.9(a) and the applicable provisions of any 
Commission and tribal gaming regulatory authority regulations governing 
minimum internal control standards.
    (i) Financial instrument dispensers. (1) Any Class II gaming system 
components that dispense financial instruments and that are not 
operated under the direct control of a gaming operation employee or 
agent shall:
    (i) Be located within a secure, locked and tamper-evident area or 
in a locked cabinet or housing that is of a robust construction 
designed to resist determined illegal entry and to protect internal 
components;
    (ii) Provide a method to enable the Class II gaming system to 
interpret and act upon valid or invalid input or error condition; and
    (iii) Be constructed to permit communication with the Class II 
gaming system of the accounting information required by Sec.  547.9(a) 
and by applicable provisions of any Commission and tribal gaming 
regulatory regulations governing minimum internal control standards.
    (2) The monetary amount related to all valid financial instrument 
transactions by the Class II gaming system shall be recorded as 
required by Sec.  547.9(a), the applicable provisions of parts 542 and 
543 of this chapter, and any tribal gaming regulatory authority 
regulations governing minimum internal control standards.
    (j) Game Outcome Determination Components. Any Class II gaming 
system logic components that affect the game outcome and that are not 
operated under the direct control of a gaming operation employee or 
agent shall be located within a secure, locked and tamper-evident area 
or in a locked cabinet or housing that is of a robust

[[Page 60530]]

construction designed to resist determined illegal entry and to protect 
internal components. DIP switches or jumpers that can affect the 
integrity of the Class II gaming system must be capable of being sealed 
by the tribal gaming regulatory authority.
    (k) Door access detection. All components of the Class II gaming 
system that are locked in order to meet the requirements of this part 
shall include a sensor or other methods to monitor an open door. A door 
open sensor, and its components or cables, shall be secure against 
attempts to disable them or interfere with their normal mode of 
operation;
    (l) Separation of functions/no limitations on technology. Nothing 
herein shall prohibit the account access component, financial 
instrument storage component, financial instrument acceptor, and 
financial instrument dispenser from being included within the same 
component, or separated into individual components.


Sec.  547.8  What are the minimum technical software standards 
applicable to Class II gaming systems?

    This section provides general software standards for Class II 
gaming systems for the play of Class II games.
    (a) Player interface displays. (1) If not otherwise provided to the 
player, the player interface shall display the following:
    (i) The purchase or wager amount;
    (ii) Game results; and
    (iii) Any player credit balance.
    (2) Between plays of any game and until the start of the next play, 
or until the player selects a new game option such as purchase or wager 
amount or card selection, whichever is earlier, if not otherwise 
provided to the player, the player interface shall display:
    (i) The total purchase or wager amount and all prizes and total 
credits won for the last game played;
    (ii) The final results for the last game played, including 
entertaining displays of results, if any; and
    (iii) Any default purchase or wager amount for the next play.
    (b) Game initiation and play. (1) Each game played on the Class II 
gaming system shall follow and not deviate from a constant set of rules 
for each game provided to players pursuant to Sec.  547.16. Any change 
in rules constitutes a different game. There shall be no automatic or 
undisclosed changes of rules.
    (2) For bingo games and games similar to bingo, the Class II gaming 
system shall not alter or allow to be altered the card permutations or 
game rules used for play of a Class II game unless specifically chosen 
by the player prior to commitment to participate in the game. No 
duplicate cards shall be sold for any common draw.
    (3) No game play shall commence and, no financial instrument or 
credit shall be accepted on the affected player interface, in the 
presence of any fault condition that affects the outcome of the game, 
open door, or while in test, audit, or lock-up mode.
    (4) The player must choose to participate in the play of a game.
    (c) Audit Mode. (1) If an audit mode is provided, the Class II 
gaming system shall provide, for those components actively involved in 
the audit:
    (i) All accounting functions required by Sec.  547.9, by applicable 
provisions of any Commission regulations governing minimum internal 
control standards, and by any internal controls adopted by the tribe or 
tribal gaming regulatory authority;
    (ii) Display player interface identification; and
    (iii) Display software version or game identification;
    (2) Audit mode shall be accessible by a secure method such as an 
employee PIN and key or other auditable access control.
    (3) Accounting function data shall be accessible by an authorized 
person at any time, except during a payout, during a handpay, or during 
play.
    (4) The Class II gaming system shall disable financial instrument 
acceptance on the affected player interface while in audit mode, except 
during financial instrument acceptance testing.
    (d) Last game recall. The last game recall function shall:
    (1) Be retrievable at all times, other than when the recall 
component is involved in the play of a game, upon the operation of an 
external key-switch, entry of an audit card, or a similar method;
    (2) Display the results of recalled games as originally displayed 
or in text representation, including entertaining display results 
implemented in video, rather than electro-mechanical, form, if any, so 
as to enable the tribal gaming regulatory authority or operator to 
clearly identify the game sequences and results that occurred;
    (3) Allow the Class II gaming system component providing game 
recall, upon return to normal game play mode, to restore any affected 
display to the positions, forms and values displayed before access to 
the game recall information; and
    (4) Provide the following information for the current and previous 
four games played and shall display:
    (i) Game start time, end time, and date;
    (ii) The total number of credits at the start of play, less the 
purchase or wager amount;
    (iii) The purchase or wager amount;
    (iv) The total number of credits at the end of play; and
    (v) The total number of credits won as a result of the game 
recalled, and the value in dollars and cents for progressive prizes, if 
different.
    (vi) For bingo games and games similar to bingo only, also display:
    (A) The card(s) used by the player;
    (B) The identifier of the bingo game played;
    (C) The numbers or other designations drawn, in the order that they 
were drawn;
    (D) The numbers or other designations and prize patterns covered on 
each card;
    (E) All prizes won by the player, including winning patterns and 
entertaining displays implemented in video, rather than electro-
mechanical form, if any; and
    (F) The unique identifier of the card on which prizes were won;
    (vii) For pull-tab games only, also display:
    (A) The result(s) of each pull-tab, displayed in the same pattern 
as on the tangible pull-tab;
    (B) All prizes won by the player;
    (C) The unique identifier of each pull tab; and
    (D) Any other information necessary to fully reconstruct the 
current and four previous plays.
    (e) Voucher and credit transfer recall. Notwithstanding the 
requirements of any other section in this part, a Class II gaming 
system shall have the capacity to:
    (1) Display the information specified in Sec.  547.11(b)(5)(ii) 
through (vi) for the last five vouchers or coupons printed and the last 
five vouchers or coupons accepted; and
    (2) Display a complete transaction history for the last five 
cashless transactions made and the last five cashless transactions 
accepted.
    (f) Software signature verification. The manufacturer or developer 
of the Class II gaming system must provide to the testing laboratory 
and to the tribal gaming regulatory authority an industry-standard 
methodology, acceptable to the tribal gaming regulatory authority, for 
verifying the Class II gaming system game software. By way of 
illustration, for game software stored on rewritable media, such 
methodologies include signature algorithms and hashing formulas such as 
SHA-1.
    (g) Test, diagnostic, and demonstration modes. If test, diagnostic,

[[Page 60531]]

and/or demonstration modes are provided, the Class II gaming system 
shall, for those components actively involved in the test, diagnostic, 
or demonstration mode:
    (1) Clearly indicate when that component is in the test, 
diagnostic, or demonstration mode;
    (2) Not alter financial data on that component other than temporary 
data;
    (3) Only be available after entering a specific mode;
    (4) Disable credit acceptance and payment unless credit acceptance 
or payment is being tested; and
    (5) Terminate all mode-specific functions upon exiting a mode.
    (h) Multi-game. If multiple games are offered for player selection 
at the player interface, the player interface shall:
    (1) Provide a display of available games;
    (2) Provide the means of selecting among them;
    (3) Display the full amount of the player's credit balance;
    (4) Identify the game selected or being played; and
    (5) Not force the play of a game after its selection.
    (i) Program interruption and resumption. The Class II gaming system 
software shall be designed so that upon resumption following any 
interruption, the system:
    (1) Is able to return to a known state;
    (2) Shall check for any fault condition upon resumption;
    (3) Shall verify the integrity of data stored in critical memory;
    (4) Shall return the purchase or wager amount to the player in 
accordance with the rules of the game; and
    (5) Shall detect any change or corruption in the Class II gaming 
system software.
    (j) Class II gaming system components acting as progressive 
controllers. This paragraph applies to progressive controllers and 
components acting as progressive controllers in Class II gaming 
systems.
    (1) Modification of progressive parameters shall be conducted in a 
secure manner approved by the tribal gaming regulatory authority. Such 
parameters may include:
    (i) Increment value;
    (ii) Secondary pool increment(s);
    (iii) Reset amount(s);
    (iv) Maximum value(s); and
    (v) Identity of participating player interfaces.
    (2) The Class II gaming system component or other progressive 
controller shall provide a means of creating a progressive balancing 
report for each progressive link it controls. At a minimum, that report 
shall provide balancing of the changes of the progressive amount, 
including progressive prizes won, for all participating player 
interfaces versus current progressive amount(s), plus progressive 
prizes. In addition, the report shall account for, and not be made 
inaccurate by, unusual events such as:
    (i) Class II gaming system critical memory clears;
    (ii) Modification, alteration, or deletion of progressive prizes;
    (iii) Offline equipment; or
    (iv) Multiple site progressive prizes.
    (k) Critical memory. (1) Critical memory may be located anywhere 
within the Class II gaming system. Critical memory is any memory that 
maintains any of the following data:
    (i) Accounting data;
    (ii) Current credits;
    (iii) Configuration data;
    (iv) Last game recall information required by Sec.  547.8(d);
    (v) Game recall information for the current game, if incomplete;
    (vi) Software state (the last normal state software was in before 
interruption);
    (vii) RNG seed(s), if necessary for maintaining integrity;
    (viii) Encryption keys, if necessary for maintaining integrity;
    (ix) Progressive prize parameters and current values;
    (x) The five most recent financial instruments accepted by type, 
excluding coins and tokens;
    (xi) The five most recent financial instruments dispensed by type, 
excluding coins and tokens; and
    (xii) The five most recent cashless transactions paid and the five 
most recent cashless transactions accepted.
    (2) Critical memory shall be maintained using a methodology that 
enables errors to be identified and acted upon. All accounting and 
recall functions shall be verified as necessary to ensure their ongoing 
integrity.
    (3) The validity of affected data stored in critical memory shall 
be checked after each of the following events:
    (i) Every restart;
    (ii) Each attendant paid win;
    (iii) Each attendant paid progressive win;
    (iv) Each sensored door closure; and
    (v) Every reconfiguration, download, or change of prize schedule or 
denomination requiring operator intervention or action.
    (l) Secured access. Class II gaming systems that use a logon or 
other means of secured access shall include a user account lockout 
after a predetermined number of consecutive failed attempts to access 
system.


Sec.  547.9  What are the minimum technical standards for Class II 
gaming system accounting functions?

    This section provides standards for accounting functions used in 
Class II gaming systems.
    (a) Required accounting data. The following minimum accounting 
data, however named, shall be maintained by the Class II gaming system.

------------------------------------------------------------------------
                Title                             Description
------------------------------------------------------------------------
(1) Amount In........................  The total value of all financial
                                        instruments and cashless
                                        transactions accepted by the
                                        Class II gaming system. Each
                                        type of financial instrument
                                        accepted by the Class II gaming
                                        system shall be tracked
                                        independently per financial
                                        instrument acceptor, and as
                                        required by applicable
                                        requirements of any Commission
                                        and tribal gaming regulatory
                                        authority regulations governing
                                        minimum internal control
                                        standards.
(2) Amount Out.......................  The total value of all financial
                                        instruments and cashless
                                        transactions paid by the Class
                                        II gaming system, plus the total
                                        value of attendant pay. Each
                                        type of financial instrument
                                        paid by the Class II Gaming
                                        System shall be tracked
                                        independently per financial
                                        instrument dispenser, and as
                                        required by applicable
                                        requirements of any Commission
                                        and tribal gaming regulatory
                                        authority regulations governing
                                        minimum internal control
                                        standards.
------------------------------------------------------------------------

    (b) Accounting data storage. If the Class II gaming system 
electronically maintains accounting data:
    (1) Accounting data shall be stored with at least eight decimal 
digits.
    (2) Credit balances shall have sufficient digits to accommodate the 
design of the game.

[[Page 60532]]

    (3) Accounting data displayed to the player may be incremented or 
decremented using visual effects, but the internal storage of this data 
shall be immediately updated in full.
    (4) Accounting data shall be updated upon the occurrence of the 
relevant accounting event.
    (5) Modifications to accounting data shall be recorded, including 
the identity of the person(s) making the modifications, and be 
reportable by the Class II gaming system.
    (c) Rollover. Accounting data that rolls over to zero shall not 
corrupt data.
    (d) Credit balance display and function. (1) Any credit balance 
maintained at the player interface shall be prominently displayed at 
all times except:
    (i) In audit, configuration, recall and test modes; or
    (ii) Temporarily, during entertaining displays of game results.
    (2) Progressive prizes may be added to the player's credit balance 
provided:
    (i) The player credit balance is maintained in dollars and cents;
    (ii) The progressive accounting data is incremented in number of 
credits; or
    (iii) The prize in dollars and cents is converted to player credits 
or transferred to the player's credit balance in a manner that does not 
mislead the player or cause accounting imbalances.
    (3) If the player credit balance displays in credits, but the 
actual balance includes fractional credits, the Class II gaming system 
shall display the fractional credit when the player credit balance 
drops below one credit.


Sec.  547.10  What are the minimum standards for Class II gaming system 
critical events?

    This section provides standards for events such as system critical 
faults, deactivation, door open or other changes of states, and lockup 
within the Class II gaming system.
    (a) Fault events. (1) The following events are to be treated as 
described below:

------------------------------------------------------------------------
                Events                 Definition and action to be taken
------------------------------------------------------------------------
(i) Component fault..................  Reported when a fault on a
                                        component is detected. When
                                        possible, this event message
                                        should indicate what the nature
                                        of the fault is.
(ii) Financial storage component full  Reported when a financial
                                        instrument acceptor or dispenser
                                        includes storage, and it becomes
                                        full. This event message should
                                        indicate what financial storage
                                        component is full.
(iii) Financial output component       Reported when a financial
 empty.                                 instrument dispenser is empty.
                                        The event message should
                                        indicate which financial output
                                        component is affected, and
                                        whether it is empty.
(iv) Financial component fault.......  Reported when an occurrence on a
                                        financial component results in a
                                        known fault state.
(v) Critical memory error............  Some critical memory error has
                                        occurred. When a non-correctable
                                        critical memory error has
                                        occurred, the data on the Class
                                        II gaming system component can
                                        no longer be considered
                                        reliable. Accordingly, any game
                                        play on the affected component
                                        shall cease immediately, and an
                                        appropriate message shall be
                                        displayed, if possible.
(vi) Progressive communication fault.  If applicable; when
                                        communications with a
                                        progressive controller component
                                        is in a known fault state.
(vii) Program storage medium fault...  The software has failed its own
                                        internal security check or the
                                        medium itself has some fault.
                                       Any game play on the affected
                                        component shall cease
                                        immediately, and an appropriate
                                        message shall be displayed, if
                                        possible.
------------------------------------------------------------------------

    (2) The occurrence of any event identified in paragraph (a)(1) of 
this section shall be recorded.
    (3) Upon clearing any event identified in paragraph (a)(1) of this 
section, the Class II gaming system shall:
    (i) Record that the fault condition has been cleared;
    (ii) Ensure the integrity of all related accounting data; and
    (iii) In the case of a malfunction, return a player's purchase or 
wager according to the rules of the game.
    (b) Door open/close events. (1) In addition to the requirements of 
paragraph (a)(1) of this section, the Class II gaming system shall 
perform the following for any component affected by any sensored door 
open event:
    (i) Indicate that the state of a sensored door changes from closed 
to open or opened to closed;
    (ii) Disable all financial instrument acceptance, unless a test 
mode is entered;
    (iii) Disable game play on the affected player interface;
    (iv) Disable player inputs on the affected player interface, unless 
test mode is entered; and
    (v) Disable all financial instrument disbursement, unless a test 
mode is entered.
    (2) The Class II gaming system may return the component to a ready 
to play state when all sensored doors are closed.
    (c) Non-fault events. (1) The following non-fault events are to be 
treated as described below, if applicable:

------------------------------------------------------------------------
                Event                  Definition and action to be taken
------------------------------------------------------------------------
(i) Player interface power off during  This condition is reported by the
 play.                                  affected component(s) to
                                        indicate power has been lost
                                        during game play.
(ii) Player interface power on.......  This condition is reported by the
                                        affected component(s) to
                                        indicate it has been turned on.
(iii) Financial instrument storage     This condition is reported when a
 component container/stacker removed.   financial instrument storage
                                        container has been removed. The
                                        event message should indicate
                                        which storage container was
                                        removed.
------------------------------------------------------------------------

Sec.  547.11  What are the minimum technical standards for money and 
credit handling?

    This section provides standards for money and credit handling by a 
Class II gaming system.
    (a) Credit acceptance, generally. (1) Upon any credit acceptance, 
the Class II gaming system shall register the correct number of credits 
on the player's credit balance.
    (2) The Class II gaming system shall reject financial instruments 
deemed invalid.
    (b) Credit redemption, generally. (1) For cashable credits on a 
player interface, players shall be allowed to

[[Page 60533]]

cash out and/or redeem those credits at the player interface except 
when that player interface is:
    (i) Involved in the play of a game;
    (ii) In audit mode, recall mode or any test mode;
    (iii) Detecting any sensored door open condition;
    (iv) Updating the player credit balance or total win accounting 
data; or
    (v) Displaying a fault condition that would prevent cash-out or 
credit redemption. In this case a fault indication shall be displayed.
    (2) For cashable credits not on a player interface, the player 
shall be allowed to cash out and/or redeem those credits at any time.
    (3) A Class II gaming system shall not automatically pay an award 
subject to mandatory tax reporting or withholding.
    (4) Credit redemption by voucher or coupon shall conform to the 
following:
    (i) A Class II gaming system may redeem credits by issuing a 
voucher or coupon when it communicates with a voucher system that 
validates the voucher or coupon.
    (ii) A Class II gaming system that redeems credits by issuing 
vouchers and coupons shall either:
    (A) Maintain an electronic record of all information required by 
paragraphs (b)(5)(ii) through (vi) of this section; or
    (B) Generate two identical copies of each voucher or coupon issued, 
one to be provided to the player and the other to be retained within 
the machine for audit purposes.
    (5) Valid vouchers and coupons shall contain the following:
    (i) Gaming operation name and location;
    (ii) The identification number of the Class II gaming system 
component or the player interface number, as applicable;
    (iii) Date and time of issuance;
    (iv) Alpha and numeric dollar amount;
    (v) A sequence number;
    (vi) A validation number that:
    (A) Is produced by a means specifically designed to prevent 
repetition of validation numbers; and
    (B) Has some form of checkcode or other form of information 
redundancy to prevent prediction of subsequent validation numbers 
without knowledge of the checkcode algorithm and parameters;
    (vii) For machine-readable vouchers and coupons, a bar code or 
other form of machine readable representation of the validation number, 
which shall have enough redundancy and error checking to ensure that 
99.9% of all misreads are flagged as errors;
    (viii) Transaction type or other method of differentiating voucher 
and coupon types; and
    (ix) Expiration period or date.
    (6) Transfers from an account may not exceed the balance of that 
account.
    (7) For Class II gaming systems not using dollars and cents 
accounting and not having odd cents accounting, the Class II gaming 
system shall reject any transfers from voucher payment systems or 
cashless systems that are not even multiples of the Class II gaming 
system denomination.
    (8) Voucher redemption systems shall include the ability to report 
redemptions per redemption location or user.


Sec.  547.12  What are the minimum technical standards for downloading 
on a Class II gaming system?

    This section provides standards for downloading on a Class II 
gaming system.
    (a) Downloads. (1) Downloads are an acceptable means of 
transporting approved content, including but not limited to software, 
files, data, and prize schedules.
    (2) Downloads of software, games, prize schedules, or other 
download packages shall be conducted only as authorized by the tribal 
gaming regulatory authority.
    (3) Downloads shall use secure methodologies that will deliver the 
download data without alteration or modification, in accordance with 
Sec.  547.15(a).
    (4) Downloads conducted during operational periods shall be 
performed in a manner that will not affect game play.
    (5) Downloads shall not affect the integrity of accounting data.
    (6) The Class II gaming system or the tribal gaming regulatory 
authority shall log each download of any download package. Each log 
record shall contain as a minimum:
    (i) The time and date of the initiation of the download;
    (ii) The time and date of the completion of the download;
    (iii) The Class II gaming system components to which software was 
downloaded;
    (iv) The version(s) of download package and any software 
downloaded. Logging of the unique software signature will satisfy this 
requirement;
    (v) The outcome of any software verification following the download 
(success or failure); and
    (vi) The name and identification number, or other unique 
identifier, of any individual(s) conducting or scheduling a download.
    (b) Verifying downloads. Following download of any game software, 
the Class II gaming system shall verify the downloaded software using a 
software signature verification method that meets the requirements of 
Sec.  547.8(f). Using any method it deems appropriate, the tribal 
gaming regulatory authority shall confirm the verification.


Sec.  547.13  What are the minimum technical standards for program 
storage media?

    This section provides minimum standards for removable, (re-
)writable, and nonwritable storage media in Class II gaming systems.
    (a) Removable program storage media. All removable program storage 
media shall maintain an internal checksum or signature of its contents. 
Verification of this checksum or signature is to be performed after 
every restart. If the verification fails, the affected Class II gaming 
system component(s) shall lock up and enter a fault state.
    (b) Nonrewritable program storage media. (1) All EPROMs and 
Programmable Logic Devices (PLDs) that have erasure windows shall be 
fitted with covers over their erasure windows.
    (2) All unused areas of EPROMs shall be written with the inverse of 
the erased state (e.g., zero bits (00 hex) for most EPROMs), random 
data, or repeats of the program data.
    (3) Flash memory storage components intended to have the same 
logical function as ROM, i.e. not to be dynamically written, shall be 
write-protected or otherwise protected from unauthorized modification.
    (4) The write cycle shall be closed or finished for all CD-ROMs 
such that it is not possible to write any further data to the CD.
    (5) Write protected hard disks are permitted if the hardware means 
of enabling the write protect is easily viewable and can be sealed in 
place Write protected hard disks are permitted using software write 
protection verifiable by a testing laboratory.
    (c) Writable and rewritable program storage media. (1) Writable and 
rewritable program storage, such as hard disk drives, Flash memory, 
writable CD-ROMs, and writable DVDs, may be used provided that the 
software stored thereon may be verified using the mechanism provided 
pursuant to Sec.  547.8(f).
    (2) Program storage shall be structured so there is a verifiable 
separation of fixed data (e.g. program, fixed parameters, DLLs) and 
variable data.
    (d) Identification of program storage media. All program storage 
media that is not rewritable in circuit, (e.g. EPROM,

[[Page 60534]]

CD-ROM) shall be uniquely identified, displaying:
    (1) Manufacturer;
    (2) Program identifier;
    (3) Program version number(s); and
    (4) Location information, if critical (e.g. socket position 3 on 
the printed circuit board).


Sec.  547.14  What are the minimum technical standards for electronic 
random number generation?

    This section provides minimum standards for electronic RNGs in 
Class II gaming systems.
    (a) Properties. All RNGs shall produce output having the following 
properties:
    (1) Statistical randomness;
    (2) Unpredictability; and
    (3) Non-repeatability.
    (b) Statistical Randomness. (1) Numbers produced by an RNG shall be 
statistically random individually and in the permutations and 
combinations used in the application under the rules of the game. For 
example, if a bingo game with 75 objects with numbers or other 
designations has a progressive winning pattern of the five numbers or 
other designations on the bottom of the card and the winning of this 
prize is defined to be the five numbers or other designations are 
matched in the first five objects drawn, the likelihood of each of the 
75C5 combinations are to be verified to be statistically equal.
    (2) Numbers produced by an RNG shall pass the statistical tests for 
randomness to a 99% confidence level, which may include:
    (i) Chi-square test;
    (ii) Equi-distribution (frequency) test;
    (iii) Gap test;
    (iv) Poker test;
    (v) Coupon collector's test;
    (vi) Permutation test;
    (vii) Run test (patterns of occurrences shall not be recurrent);
    (viii) Spectral test;
    (ix) Serial correlation test potency and degree of serial 
correlation (outcomes shall be independent from the previous game); and
    (x) Test on subsequences.
    (c) Unpredictability. (1) It shall not be feasible to predict 
future outputs of an RNG, even if the algorithm and the past sequence 
of outputs are known.
    (2) Unpredictability shall be ensured by reseeding or by 
continuously cycling the RNG, and by providing a sufficient number of 
RNG states for the applications supported.
    (3) Re-seeding may be used where the re-seeding input is at least 
as statistically random as, and independent of, the output of the RNG 
being re-seeded.
    (d) Non-repeatability. The RNG shall not be initialized to 
reproduce the same output stream that it has produced before, nor shall 
any two instances of an RNG produce the same stream as each other. This 
property shall be ensured by initial seeding that comes from:
    (1) A source of ``true'' randomness, such as a hardware random 
noise generator; or
    (2) A combination of timestamps, parameters unique to a Class II 
gaming system, previous RNG outputs, or other, similar method.
    (e) General requirements. (1) Software that calls an RNG to derive 
game outcome events shall immediately use the output returned in 
accordance with the game rules.
    (2) The use of multiple RNGs is permitted as long as they operate 
in accordance with this section.
    (3) RNG outputs shall not be arbitrarily discarded or selected.
    (4) Where a sequence of outputs is required, the whole of the 
sequence in the order generated shall be used in accordance with the 
game rules.
    (5) The Class II gaming system shall neither adjust the RNG process 
or game outcomes based on the history of prizes obtained in previous 
games nor make any reflexive or secondary decision that affects the 
results shown to the player or game outcome. Nothing in this paragraph 
shall prohibit the use of entertaining displays.
    (f) Scaling algorithms and scaled numbers. An RNG that provides 
output scaled to given ranges shall:
    (1) Be independent and uniform over the range;
    (2) Provide numbers scaled to the ranges required by game rules, 
and notwithstanding the requirements of paragraph (e)(3) of this 
section, may discard numbers that do not map uniformly onto the 
required range but shall use the first number in sequence that does map 
correctly to the range;
    (3) Be capable of producing every possible outcome of a game 
according to its rules; and
    (4) Use an unbiased algorithm. A scaling algorithm is considered to 
be unbiased if the measured bias is no greater than 1 in 100 million.


Sec.  547.15  What are the minimum technical standards for electronic 
data communications between system components?

    This section provides minimum standards for electronic data 
communications with gaming equipment or components used with Class II 
gaming systems.
    (a) Sensitive data. Communication of sensitive data shall be secure 
from eavesdropping, access, tampering, intrusion or alteration 
unauthorized by the tribal gaming regulatory authority. Sensitive data 
shall include, but not be limited to:
    (1) RNG seeds and outcomes;
    (2) Encryption keys, where the implementation chosen requires 
transmission of keys;
    (3) PINs;
    (4) Passwords;
    (5) Financial instrument transactions;
    (6) Transfers of funds;
    (7) Player tracking information;
    (8) Download Packages; and
    (9) Any information that affects game outcome.
    (b) Wireless communications. (1) Wireless access points shall not 
be accessible to the general public.
    (2) Open or unsecured wireless communications are prohibited.
    (3) Wireless communications shall be secured using a methodology 
that makes eavesdropping, access, tampering, intrusion or alteration 
impractical. By way of illustration, such methodologies include 
encryption, frequency hopping, and code division multiplex access (as 
in cell phone technology).
    (c) Methodologies shall be used that will ensure the reliable 
transfer of data and provide a reasonable ability to detect and act 
upon any corruption of the data.
    (d) Class II gaming systems shall record detectable, unauthorized 
access or intrusion attempts.
    (e) Remote communications shall only be allowed if authorized by 
the tribal gaming regulatory authority. Class II gaming systems shall 
have the ability to enable or disable remote access, and the default 
state shall be set to disabled.
    (f) Failure of data communications shall not affect the integrity 
of critical memory.
    (g) The Class II gaming system shall log the establishment, loss, 
and re-establishment of data communications between sensitive Class II 
gaming system components.


Sec.  547.16  What are the minimum standards for game artwork, glass, 
and rules?

    This section provides standards for the display of game artwork, 
the displays on belly or top glass, and the display and disclosure of 
game rules, whether in physical or electronic form.
    (a) Rules, instructions, and prize schedules, generally. The 
following shall at all times be displayed or made readily available to 
the player upon request:
    (1) Game name, rules, and options such as the purchase or wager 
amount stated clearly and unambiguously;
    (2) Denomination;
    (3) Instructions for play on, and use of, the player interface, 
including the functions of all buttons; and

[[Page 60535]]

    (4) A prize schedule or other explanation, sufficient to allow a 
player to determine the correctness of all prizes awarded, including;
    (i) The range and values obtainable for any variable prize;
    (ii) Whether the value of a prize depends on the purchase or wager 
amount; and
    (iii) The means of division of any pari-mutuel prizes; but
    (iv) For bingo and games similar to bingo, the prize schedule or 
other explanation need not state that subsets of winning patterns are 
not awarded as additional prizes (e.g. five in a row does not also pay 
three in a row or four in a row), unless there are exceptions, which 
shall be clearly stated.
    (b) Disclaimers. The Class II gaming system shall continually 
display:
    (1) ``Malfunctions void all prizes and plays'' or equivalent; and
    (2) ``Actual Prizes Determined by Bingo [or other applicable Class 
II game] Play. Other Displays for Entertainment Only.'' or equivalent.


Sec.  547.17  How does a tribal gaming regulatory authority apply for a 
variance from these standards?

    (a) Tribal Gaming Regulatory Authority approval. (1) A tribal 
gaming regulatory authority may approve a variance from the 
requirements of this part if it has determined that the variance will 
achieve a level of security and integrity 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 within 30 days, a detailed report, which shall include the 
following:
    (i) An explanation of how the variance achieves a level of security 
and integrity sufficient to accomplish the purpose of the standard it 
is to replace; and
    (ii) The variance as granted and the record on which it is based.
    (3) In the event that the tribal gaming regulatory authority or the 
tribe's government chooses to submit a variance request directly to the 
Chairman for joint government to government review, the tribal gaming 
regulatory authority or tribal government may do so without the 
approval requirement set forth in paragraph (a) (1) of this section.
    (b) Chairman Review. (1) The Chairman may approve or object to a 
variance granted by a tribal gaming regulatory authority.
    (2) Any objection by the Chairman shall be in written form with an 
explanation why the variance as approved by the tribal gaming 
regulatory authority does not provide a level of security or integrity 
sufficient to accomplish the purpose of the standard it is to replace.
    (3) If the Chairman fails to approve or object in writing within 60 
days after the date of receipt of a complete submission, the variance 
shall be considered approved by the Chairman. The Chairman and the 
tribal gaming regulatory authority may, by agreement, extend this 
deadline an additional 60 days.
    (4) No variance may be implemented until approved by the tribal 
gaming regulatory authority pursuant to paragraph (a)(1) of this 
section or the Chairman has approved pursuant to paragraph (b)(1) of 
this section.
    (c) Commission Review. Should the tribal gaming regulatory 
authority elect to maintain its approval after written objection by the 
Chairman, the tribal gaming regulatory authority shall be entitled to 
an appeal to the full Commission in accordance with the following 
process:
    (1) Within 60 days of receiving an objection, the tribal gaming 
regulatory authority shall file a written notice of appeal with the 
Commission that may include a request for an oral hearing or it may 
request that the matter be decided upon written submissions.
    (2) Within 10 days after filing a notice of appeal the tribal 
gaming regulatory authority shall file a supplemental statement 
specifying the reasons why the tribal gaming regulatory authority 
believes the Chairman's objection should be reviewed, and shall include 
supporting documentation, if any.
    (3) Failure to file an appeal or submit the supplemental statement 
within the time provided by this section shall result in a waiver of 
the opportunity for an appeal.
    (4) If an oral hearing is requested it shall take place within 30 
days of the notice of appeal and a record shall be made.
    (5) If the tribal gaming regulatory authority requests that the 
appeal be decided on the basis of written submission, the Commission 
shall issue a written decision within 30 days of receiving the 
supplemental statement.
    (6) The Commission shall uphold the objection of the Chairman, only 
if, upon de novo review of the record upon which the Chairman's 
decision is based, the Commission determines that the variance approved 
by the tribal gaming regulatory authority does not achieve a level of 
security and integrity sufficient to accomplish the purpose of the 
standard it is to replace.
    (7) The Commission shall issue a decision within 30 days of the 
oral hearing unless the tribal gaming regulatory authority elects to 
provide the Commission additional time, not to exceed an additional 30 
days, to issue a decision. In the absence of a decision by the 
Commission within the time provided, the decision of the tribal gaming 
regulatory authority shall be deemed affirmed.
    (8) The Commission's decision shall constitute final agency action.

    Dated: September 24, 2008.
Philip N. Hogen,
Chairman.
Norman H. DesRosiers,
Vice Chairman.
 [FR Doc. E8-23084 Filed 10-9-08; 8:45 am]
BILLING CODE 7565-01-P