Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO: KRS Chapter 230
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
230.260(16)(a) requires the
racing commission to promulgate regulations to establish standards related to
sports wagering, including standards for "maintaining and auditing books and
financial records, securely maintaining records of bets and wagers, integrity
requirements for sports wagering and related data,. .. surveillance and
monitoring systems, and other reasonable technical criteria related to
conducting sports wagering."KRS 230.811(2)
requires tracks and service providers to "comply with the standards established
by the racing commission. .. to ensure the integrity of the system of sports
wagering."KRS
230.805 establishes requirements for
geolocation, technology, and servers. This administrative regulation
establishes the technical standards for sports wagering technology within the
state, establish testing procedures, as well the handling of changes in sports
wagering technology.
Section 1. Sports
Wagering Standards. A licensee shall use a sports wagering system to offer,
conduct, or operate sports wagering in accordance with applicable laws and
these regulations. Only an approved licensee may process, accept, offer, or
solicit sports wagers.
(1) The licensee shall
operate in conformity with the license conditions issued by the racing
commission pursuant to
KRS
230.290(3) and GLI-33
Standards.
(2) A sports wagering
system shall meet the specifications established in subsection (1) of this
section and these regulations. Failure to comply with the approved
specifications, internal controls, or technical specifications may result in
disciplinary action by the racing commission.
Section 2. Testing and Certification of
Sports Wagering System. Prior to conducting sports wagering, and annually
thereafter, the sports wagering system utilized by the licensee shall be
submitted to a nationally recognized, independent testing laboratory approved
by the racing commission for certification testing. Certification and racing
commission approval shall be received prior to the use of any sports wagering
system to conduct sports wagering. The licensee is responsible for all costs
associated with testing and obtaining such certifications.
(1) To obtain a temporary license, a licensee
may submit to the racing commission a certification report of an independent
testing laboratory of a system in operation in another jurisdiction in the
United States where the licensee is currently licensed or permitted. The report
must certify the system to either the GLI-33 Standards or, at the discretion of
the racing commission, a standard deemed to be the equivalent of the GLI-33
Standards. This alternative certification report must include a list of all
critical files and associated signatures and an appendix which lists the
differences of any controlled items or processes required to be certified in
Kentucky which were not certified in the jurisdiction in which the report was
issued. Upon review of the certification report, the racing commission will
make a determination on whether to accept the certification or require
additional information or documentation or testing.
(2) Unless otherwise authorized by the racing
commission, the independent testing laboratory shall be provided access to the
sports wagering system's controlled software source code along with the means
to verify compilation of such source code. The result of the compiled source
code shall be identical to that in the software submitted for
evaluation.
(3) If the sports
wagering system meets or exceeds the GLI-33 Standards and the commission's
regulatory requirements in KAR Title 809, the independent testing laboratory
approved by the racing commission shall certify the sports wagering system.
Licensees are prohibited from offering sports wagering in Kentucky without such
certification.
Section
3. Integration Requirements. The licensee shall be responsible for
sports wagering offered by the licensee through other service providers and
suppliers, and other licensees where applicable.
(1) The servers and equipment of service
providers and suppliers will be considered part of the licensee's sports
wagering system and shall comply with these regulations.
(2) The licensee shall guarantee that any
integration with the servers and other equipment of another licensee is
completed in a way that complies with these regulations.
(3) An independent testing laboratory shall
conduct integration testing and certification for each server and other
equipment with the licensee's sports wagering system prior to its deployment
and as requested by the racing commission.
Section 4. Change Management Processes. The
licensee shall submit change management processes to the racing commission for
approval. The change management processes shall detail evaluation procedures
for identifying the criticality of updates and determining which updates shall
be submitted to the approved independent testing laboratory for review and
certification.
(1) These change management
processes shall be:
(a) Developed in
accordance with the Kentucky Horse Racing Commission license conditions issued
by the commission pursuant to
KRS
230.290(3) and the GLI-CMP
Guide;
(b) Approved by the racing
commission prior to its deployment; and
(c) Available for audit by the racing
commission or its designee at any time.
(2) Quarterly change reports shall be issued
to the racing commission for review to ensure risk is being assessed according
to the change management processes and all documentation for all changes to the
critical components are complete.
(3) At least once annually, each product
operating under the approved change management processes shall be fully
certified to the specifications established in these regulations and other
technical specifications as prescribed by the racing commission and accompanied
by formal certification documentation from an independent testing laboratory.
the licensee shall be allowed to seek approval for extension beyond the annual
approval if hardship can be demonstrated. Granting of a hardship waiver is the
sole discretion of the racing commission, upon written proof of good cause by
the licensee.
Section 5.
Geolocation Requirements. Mobile sports wagers shall be initiated, received,
and otherwise placed in the authorized geographic boundaries within the
Commonwealth of Kentucky.
(1) The geographic
boundaries shall be approved by the racing commission.
(2) The licensee shall use geolocation or
geofencing technology pursuant to
KRS
230.805 and to monitor and block unauthorized
attempts to place sports wagers when an individual or patron is physically
outside the authorized geographic boundaries within the Commonwealth of
Kentucky at the time the sports wager is placed.
(3) The licensee shall trigger:
(a) A geolocation check prior to the
placement of the first wager after login or upon a change of IP
address;
(b) Recurring periodic
geolocation checks as follows:
1. For static
connections, at least every twenty (20) minutes or five (5) minutes if within
one (1) mile of the border; and
2.
For mobile connections, at intervals to be based on a patron's proximity to the
border with an assumed travel velocity of seventy (70) miles per hour or a
demonstrated average velocity of a roadway/path, not to exceed twenty (20)
minutes.
(4)
Mechanisms shall be in place to detect software, programs, virtualization, and
other technology that may obscure or falsify the patron's physical location for
the purpose of placing sports wagers.
(5) The geolocation services used by the
licensee shall be certified by the approved independent testing laboratory,
including, without limitation, applicable field testing as authorized by the
commission, before its deployment.
(6) The racing commission may enter into
agreements with other jurisdictions or entities to facilitate, administer, and
regulate multi-jurisdictional sports wagering by licensees pursuant to
KRS
230.805.
Section 6. Data Security. A licensee's data
security policies shall comply with
KRS
230.805. Nothing in this section shall
preclude the use of internet or cloud-based hosting of such data and
information or disclosure as required by Commonwealth or federal law or a court
order.
Section 7. Location of
Servers, Security, and Cloud Storage. A licensee shall maintain in secure
locations in the Commonwealth its primary servers used to transmit information
for purposes of accepting or settling of wagers on a sporting event placed by
patrons in the Commonwealth.
(1) The location
of all other technology and servers used by a licensee in connection with
sports wagering shall be approved by the racing commission and shall be
accessible by the racing commission.
(2) The racing commission may approve of the
use of internet or cloud-based hosting of duplicate data or data not related to
transactional wagering data upon written request of a licensee.
Section 8. Integrity and Security
Assessments. Each licensee shall run integrity and security assessments that
comply with GLI-33 Standards.
(1) Each
licensee shall, within ninety (90) calendar days after commencing operations in
Kentucky, and annually thereafter, have integrity and security assessments of
the sports wagering system conducted by a third-party contractor experienced in
security procedures, including, without limitation, computer security and
systems security. The third-party contractor shall be selected by the licensee
and shall be subject to approval of the racing commission. Such integrity and
security assessments shall include a review of the following:
(a) Network vulnerability;
(b) Application vulnerability;
(c) Application code;
(d) Wireless security;
(e) Security policy and processes;
(f) Security and privacy program
management;
(g) Technology
infrastructure and security controls;
(h) Security organization and governance;
and
(i) Operational
effectiveness.
(2) The
scope of the integrity and security assessments is subject to approval of the
racing commission and shall include the following:
(a) A vulnerability assessment of all digital
platforms, Web sites, mobile applications, internal, external, and wireless
networks with the intent of identifying vulnerabilities of all devices, the
sports wagering systems, and applications transferring, storing, or processing
Personally Identifiable Information or other sensitive information connected to
or present on the networks;
(b) A
penetration test of all digital platforms, Web sites, mobile applications,
internal, external, and wireless networks to confirm if identified
vulnerabilities of all devices, the sports wagering systems, and applications
are susceptible to compromise;
(c)
A review of the firewall rules to verify the operating condition of the
firewall and the effectiveness of its security configuration and rule sets
performed on all of the perimeter firewalls and the internal
firewalls;
(d) A security control
assessment conducted in accordance with the provisions outlined in the racing
commission's regulations, including the technical security controls specified
within the GLI-33 Standards, and with generally accepted professional standards
approved by the racing commission.
(e) If a cloud service provider is in use, an
assessment performed on the access controls, account management, logging and
monitoring, and over security configurations of their cloud tenant;
and
(f) An evaluation of
information security services, payment services such as financial institutions
and payment processors, geolocation services, and any other services which may
be offered directly by the sports wagering licensee or involve the use of
service providers.
(3)
To qualify as a third-party contractor, the third-party contractor shall
demonstrate to the commission's satisfaction, at minimum, the following
qualifications:
(a) Relevant education
background or in other ways provide relevant qualifications in assessing sports
wagering systems;
(b)
Certifications sufficient to demonstrate proficiency and expertise as a network
penetration tester by recognized certification boards, either nationally or
internationally; and
(c) At least
three (3) years' experience performing integrity and security assessments on
sports wagering systems; and
(4) The third-party contractor's full
security audit report containing the overall evaluation of sports wagering in
terms of each aspect of security shall be provided to the racing commission no
later than thirty (30) calendar days after the assessment is conducted and
shall include the following:
(a) Scope of
review;
(b) Name and company
affiliation, contact information, and qualifications of the individual or
individuals who conducted the assessment;
(c) Date of assessment;
(d) Findings;
(e) Recommended corrective action, if
applicable; and
(f) The licensee's
response to the findings and recommended corrective action.
(5) It is acceptable to reuse the
results of prior assessments within the past year conducted by the same
third-party contractor when the testing was conducted pursuant to accepted
industry standards as approved by the commission, such as International
Organization for Standardization ("ISO")/International Electrotechnical
Commission ("IEC") standards, the NIST Cybersecurity Framework ("CSF"), the
Payment Card Industry Data Security Standards ("PCI-DSS"), or the equivalent.
Such reuse shall be noted in the third-party contractor's security audit
report. This reuse option does not include any critical components of a sports
wagering system unique to the Commonwealth which will require fresh
assessments.
(6) If the third-party
contractor's security audit report recommends corrective action, the licensee
shall provide the racing commission with a remediation plan and any risk
mitigation plans which detail the Licensee's actions and schedule to implement
the corrective action.
(a) The remediation and
risk mediation plans shall be presented within a time period prescribed by the
racing commission, which shall be based on at least the following factors:
1. The severity of the problem to be
corrected;
2. The complexity of the
problem to be corrected; and
3. The
risks associated with the problem to be corrected.
(b) The commission may require suspension of
operations until implementation of any critical corrective action(s).
(c) Once the corrective action has been
taken, the licensee shall provide the racing commission with documentation
evidencing completion.
Section 9. Quarterly Vulnerability Scans.
Internal and external network vulnerability scans shall be run at least
quarterly and after any significant change to the sports wagering system or
network infrastructure.
(1) Testing procedures
shall include protocol verifying that four (4) quarterly internal and external
scans took place in the past twelve (12) months and that re-scans occurred
until all "Medium Risk" (CVSS 4.0 or Higher) vulnerabilities were resolved or
accepted via a formal risk acceptance program approved by the racing
commission. Internal scans should be performed from an authenticated scan
perspective. External scans can be performed from an uncredentialed
perspective.
(2) The quarterly
scans can be performed by either a qualified employee of the licensee or a
qualified third-party contractor selected by the licensee and subject to
approval of the racing commission.
(3) Verification of scans shall be submitted
to the racing commission on a quarterly basis and within thirty (30) calendar
days of running the scan. The scan verifications shall include a remediation
plan and any risk mitigation plans for those vulnerabilities not able to be
resolved. The commission may impose disciplinary action in the event of
critical unresolved vulnerabilities or vulnerabilities that continue
unabated.
STATUTORY AUTHORITY:
KRS
230.260(16),
230.805,
230.811(2)
