Source: http://www.pabulletin.com/secure/data/vol38/38-39/1748.html
Timestamp: 2014-10-26 07:38:10
Document Index: 72879319

Matched Legal Cases: ['§ 1202', '§ 1207', '§ 461', '§ 461', '§ 461', '§ 1301', '§ 465', '§ 325', '§ 1301', '§ 461', '§ 461', '§ 745', '§ 745', '§ 745', '§ 1201', '§ 7', '§ 461', '§ 461', '§ 461', '§ 461', '§ 465', '§ 461', '§ 461', '§ 461', '§ 461', '§ 1301']

PA Bulletin, Doc. No. 08-1748
[ 58 PA. CODE CH. 461a ]
Slot Machine Testing and Control
[38 Pa.B. 5316][Saturday, September 27, 2008]
The Pennsylvania Gaming Control Board (Board), under its general authority in 4 Pa.C.S. § 1202(b)(30) (relating to general powers) and the specific authority in 4 Pa.C.S. § 1207 (relating to regulatory authority of the board), amends Chapter 461a (relating to slot machine testing and control) to read as set forth at 38 Pa.B. 343 (January 19, 2008) and in Annex A.
This final-form rulemaking adds provisions governing how slot machine licensees should treat unredeemed gaming vouchers.
Explanation of Chapter 461a
This final-form rulemaking amends §§ 461a.1 and 461a.8 (relating to definitions; and gaming vouchers). In § 461a.1, the Board is adding a definition of ''unredeemed gaming voucher.'' In § 461a.8, the Board is adding new requirements which must be addressed in each slot machine licensee's internal controls. More specifically, slot machine licensees will be required to establish procedures: to pay the value of unredeemed gaming vouchers exceeding $25 to patrons that can be identified by the slot machine licensee; to track unredeemed gaming vouchers and forward the unredeemed gaming vouchers to the Treasury Department (Treasury) as required by Article XIII.1 of The Fiscal Code (72 P. S. §§ 1301.1--1301.28a) (code), referred to as the Disposition of Abandoned and Unclaimed Property Act (DAUPA); and to file copies of any reports submitted to Treasury related to the unredeemed vouchers with the Board.
Notice of proposed rulemaking was published at 38 Pa.B. 343.
The Board received comments on the proposed rulemaking from the Treasury, Downs Racing, L.P. (Downs), Greenwood Gaming and Entertainment, Inc. (Greenwood), Washington Trotting Association, Inc. (WTA) and the Independent Regulatory Review Commission (IRRC). Those comments were reviewed by the Board and are discussed in detail as follows.
Treasury noted that the proposed amendments require slot machine licensees to establish various procedures, but do not require the slot machine licensees to implement or follow them.
The procedures required by this final-form rulemaking are to be made part of the slot machine licensees' internal controls. Under § 465a.2 (relating to internal control systems and audit protocols), slot machine licensees' internal controls must be approved by the Board and complied with by the slot machine licensees. Therefore, an explicit compliance provision does not need to be added to the final-form rulemaking.
IRRC asked for an explanation of why the Board eliminated the provisions related to expiration dates on gaming vouchers. The Board took this action in response to a legal opinion it received from Treasury that unredeemed gaming vouchers are property subject to the DAUPA. They do not expire and the value of any gaming voucher shall be forwarded to Treasury if it is not redeemed within 5 years.
In their comments, Downs recommended that the requirement to track the value of unredeemed gaming vouchers be eliminated. They argued that the value of unredeemed gaming vouchers is usually quite small and the administrative costs incurred would generally exceed the value of the unredeemed gaming vouchers. Greenwood also shared Downs' concerns as to the costs of tracking unredeemed gaming vouchers.
The Board agrees that the administrative costs associated with these requirements will be significant. However, the tracking of the vouchers is necessary to meet the statutorily mandated reporting requirements under DAUPA. The Board believes that slot machine licensees will be able to modify their existing computer systems to produce the reports that will be needed to compile the information that will be required to meet Treasury's reporting requirements.
Both Downs and Greenwood also suggested that the Board adopt a shorter time frame, 1 year rather than 5 years, for tracking unredeemed gaming vouchers and forwarding them to Treasury. They also suggested that the Board adopt provisions similar to those of the Horse and Harness Racing Commissions' regulations that require the forwarding to Treasury, the value of any unredeemed pari-mutuel tickets after April 1 of the year following their purchase. The Board agrees that the suggestion to mirror the regulations of the Horse and Harness Racing Commissions would be a reasonable approach. However, the Horse and Harness Racing Commissions' regulations are based on a specific statutory provision contained in 4 Pa.C.S. § 325.202(b)(3) (relating to general powers of the commission). The Pennsylvania Race Horse Development and Gaming Act (4 Pa.C.S. Part II) does not contain a similar provision, and for this reason, the Board has no authority to adopt such a provision
The Board also notes that these regulations do not specify any time period. This is because the Board does not have the authority to establish the retention period; the provisions of DAUPA are controlling. While the 5-year period in DAUPA applies to unredeemed gaming vouchers, section 1301.13 of the code (72 P. S. § 1301.13) regarding payment or delivery, does allow earlier delivery to Treasury with the consent of the State Treasurer. The Board encourages the slot machine licensees to discuss this option with Treasury.
Concerning the requirement to make payment of the value of unredeemed gaming vouchers to the owner if the owner can be identified, commentators have: questioned the feasibility and practicality of this provision; suggested that it be eliminated; or asked that the Board set a minimum amount that must be met before payment would be required.
Concerning the feasibility, slot machine licensees all use player tracking software that allows the slot machine licensees to track individual's play and that would be capable of identifying any unredeemed gaming vouchers that were won by a player if the player is using their player card. While this will require some modifications to the slot machine licensees' computer systems, these changes would have to be made anyway because Treasury requires that the names and addresses of individuals who have unclaimed property be reported if known.
It was not the Board's intention that slot machine licensees be required to identify the winner of an unredeemed gaming voucher beyond those individuals who could be identified through the player tracking systems. To clarify this intention, the phrase ''through the slot machine licensee's player tracking system'' has been added to the end of the proposed language in § 461a.8(d)(9).
Concerning the practicality of this requirement, the Board agrees that requiring refunds of de minimis amounts is unreasonable. Accordingly, the Board has amended § 461a.8(d)(9) to only require payment when the individual or aggregated value of unredeemed gaming vouchers is $25 or more. This level corresponds to the highest threshold suggested by commentators and strikes a reasonable balance between the amount of money to be paid and the administrative costs involved. Slot machine licensees would, however, have the option to adopt a lower threshold for making payments if they so desire.
Finally, Greenwood and WTA suggested that if the Board proceeds with the proposed amendments, that the Board provide a period of time for slot machine licensees to make the necessary changes to their computer systems. The Board agrees that this is a reasonable request and has deferred the effective date of this final-form rulemaking until December 26, 2008.
This final-form rulemaking will affect slot machine licensees by establishing specific requirements as to how they should treat unredeemed gaming vouchers.
There are currently 11 slot machine licensees.
There will be no new costs to the Board or other Commonwealth agencies as a result of this rulemaking. Reports filed with the State Treasurer by the slot machine licensees will be handled by existing staff.
Slot machine licensees will be required to track unredeemed gaming vouchers and forward them to the State Treasurer as required by DAUPA.
This final-form rulemaking may result in some patrons receiving payment for gaming vouchers that they did not redeem.
This final-form rulemaking will require slot machine licensees to annually prepare reports for the State Treasurer and submit copies of those reports to the Board.
The contact person for questions about this final-form rulemaking is Richard Sandusky, Director of Regulatory Review at (717) 214-8111.
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on January 9, 2008, the Board submitted a copy of the proposed rulemaking, published at 38 Pa.B. 343, and a copy of the Regulatory Analysis Form to IRRC and the Chairpersons of the House Gaming Oversight Committee and the Senate Committee on Community, Economic and Recreational Development Committee (Committees).
Under section 5.1(j.2) of the Regulatory Review Act (71 P. S. § 745.51(j.2)), on August 20, 2008, the final-form rulemaking was deemed approved by the Committees. Under section 5.1(e), of the Regulatory Review Act (71 P. S. § 745.5a(e)), IRRC met on August 21, 2008, and approved the final-form rulemaking.
(1) Public notice of intention to adopt these amendments was given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations thereunder, 1 Pa. Code §§ 7.1 and 7.2.
(a) The regulations of the Board, 58 Pa. Code Chapter 461a, are amended by amending § 461a.1 to read as set forth at 38 Pa.B. 343 and by amending § 461a.8 to read as set forth in Annex A, with ellipses referring to the existing text of the regulations.
(c) This order shall take effect December 26, 2008.
MARY DIGIACOMO COLINS, Chairperson
(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 38 Pa.B. 4961 (September 6, 2008).)
Fiscal Note: Fiscal Note 125-78 remains valid for the final adoption of the subject regulations.
Subpart E. SLOT MACHINES AND ASSOCIATED EQUIPMENT
CHAPTER 461a. SLOT MACHINE TESTING AND CONTROL
§ 461a.8. Gaming vouchers.
(b) The design specifications for a gaming voucher, the voucher verification methodologies utilized and any limitation on the value of a gaming voucher must be in compliance with technical standards on gaming vouchers under § 461b.3 (relating to gaming vouchers).
(d) Prior to issuing a gaming voucher, a slot machine licensee shall establish a system of internal controls for the issuance and redemption of gaming vouchers. The internal controls shall be submitted and approved by the Board under § 465a.2 (relating to internal control systems and audit protocols) and address:
(1) Procedures for assigning a slot machine's asset number and identifying other redemption locations in the system, and enabling and disabling voucher capabilities for slot machines and redemption locations.
(2) Procedures for issuance, modification and termination of a unique system account for each user in accordance with technical standards under § 461b.3.
(3) Procedures used to configure and maintain user passwords in accordance with technical standards under § 461b3.
(4) Procedures for restricting special rights and privileges, such as administrator and override capabilities, in accordance with technical standards under § 461b.3.
(5) The duties and responsibilities of the information technology, internal audit, slot operations and finance departments, respectively, and the level of access for each position with regard to the gaming voucher system.
(6) A description of physical controls on all critical hardware such as locks and surveillance, including the location and security protocols applicable to each piece of equipment.
(7) Procedures for the backup and timely recovery of critical data in accordance with technical standards under § 461b.3.
(8) Logs used to document and maintain the details of Board-approved hardware and software modifications upon implementation.
(9) Procedures for the payment of the value of unredeemed gaming vouchers, which individually or in the aggregate equal $25 or more, to a patron whose identity can be determined by the slot machine licensee using the slot machine licensee's player tracking system.
(10) Procedures for the retention, tracking and payment of the value of unredeemed gaming vouchers to the State Treasurer as required by Article XIII.I of The Fiscal Code (72 P. S. §§ 1301.1--1301.28a) regarding the disposition of abandoned and unclaimed property.
(11) Procedures for filing with the Board a copy of any report submitted to the State Treasurer as required by Article XIII.I of The Fiscal Code.
[Pa.B. Doc. No. 08-1748. Filed for public inspection September 26, 2008, 9:00 a.m.]