Current through Register Vol. 54, No. 44, November 2, 2024
(a) At least 45 days prior to commencing
fantasy contests under this subpart, a fantasy contest licensee or an applicant
for a fantasy contest license shall submit to the Board for approval all
internal control systems and audit protocols for the fantasy contest
operations.
(b) An applicant for a
fantasy contest license who is conducting fantasy contests in this Commonwealth
prior to the effective date of 4 Pa.C.S. Chapter 3 (relating to fantasy
contests) shall submit a copy of its internal control systems and audit
protocols for the fantasy contest operations simultaneously with its
application for a fantasy contest license.
(c) A fantasy contest licensed operator's
internal controls and audit protocols must include all of the following:
(1) Provide for reliable records, accounts
and reports of any financial event that occurs in the conduct of fantasy
contests, including reports to the Board related to fantasy contests.
(2) Provide for accurate and reliable
financial records related to the conduct of fantasy contests, including by or
through participants located in this Commonwealth.
(3) Establish procedures and security for the
recordation of wagering, winnings, and fantasy contest adjusted revenue and
taxation.
(4) Establish procedures
and security standards for the maintenance of fantasy contests and associated
equipment used in connection with the conduct of fantasy contests.
(5) Establish procedures and rules to govern
the conduct of fantasy contests and the responsibility of employees related to
fantasy contest.
(6) Establish
procedures for the collection, recording and deposit of revenue from the
conduct of fantasy contests by or through participants located in this
Commonwealth.
(7) Establish
reporting procedures and records required to ensure that all money generated
from fantasy contests by or through participants located in this Commonwealth
is accounted for.
(8) Ensure that
all functions, duties and responsibilities related to fantasy contests are
appropriately segregated and performed in accordance with sound financial
practices by qualified employees.
(9) Ensure the confidentiality of the
participant's personal and financial information.
(10) Ensure the segregation of participant
funds from operational funds in separate accounts and maintain a reserve in the
form of cash, cash equivalents, security deposits held by banks and processors,
an irrevocable letter of credit, payment processor reserves and receivables, a
bond or a combination thereof in an amount sufficient to pay all prizes and
awards offered to winning participants.
(d) The submissions required under
subsections (a) and (b) must include a detailed description of the fantasy
contest license operator's administrative and accounting procedures related to
fantasy contests, including its written system of internal controls. Each
written system of internal controls must include all of the following:
(1) An organizational chart depicting
appropriate functions and responsibilities of employees involved in fantasy
contests.
(2) A description of the
duties and responsibilities of each position shown on the organizational
chart.
(3) A detailed narrative
description of the administrative and accounting procedures to satisfy the
requirements in
4
Pa.C.S. §
325 (relating to conditions of
licensure).
(4) The record
retention policy of the licensed operator.
(5) The procedure to be utilized to ensure
that money generated from the conduct of fantasy contests is safeguarded,
including mandatory counting and recording procedures.
(6) Procedures to ensure that recorded
accountability for assets is compared with actual assets at intervals required
by the Board and appropriate action is taken with respect to
discrepancies.
(7) Procedures to be
utilized by an employee of a licensed operator in the event of a malfunction of
a fantasy contest terminal or other equipment used in the conduct of fantasy
contests.
(8) Procedures to be
utilized by a licensed operator to prevent individuals under the age of 18 or
fantasy contest self-excluded individuals from entering fantasy
contests.
(9) Other items the Board
may request in writing to be included in the internal controls.
(10) A statement signed by the chief
financial officer of the proposed licensed operator or other competent person
and the chief executive officer of the proposed licensed operator or other
competent person attesting that the officer believes, in good faith, that the
system satisfies the requirements in
4
Pa.C.S. §
325.
(e) Prior to authorizing a licensed operator
to begin the conduct of fantasy contests, the Board will review the system of
internal controls and audit protocols submitted under subsections (a) and (b)
to determine whether it conforms to the requirements in this chapter and
whether it provides adequate and effective controls for the conduct of fantasy
contests.
(f) If a licensed
operator intends to make a change or amendment to its system of internal
controls, it shall submit the change or amendment electronically to the Bureau
of Gaming Operations in a manner prescribed by the Bureau of Gaming Operations.
The licensed operator may implement the change or amendment upon receipt of
approval or on the 30th calendar day following the filing of a complete
submission unless the fantasy contest licensee receives written notice tolling
the change or amendment in accordance with subsection (g) or written notice
from the Board's Executive Director rejecting the change or
amendment.
(g) If during the 30-day
review period in subsection (f), the Bureau of Gaming Operations preliminarily
determines that a procedure in a submission contains an insufficiency likely to
negatively affect the integrity of fantasy contests or the control of revenue
generated from fantasy contests, the Bureau of Gaming Operations, by written
notice to the licensed operator, will:
(1)
Specify the nature of the insufficiency and, when possible, an acceptable
alternative procedure.
(2) Direct
that the 30-calendar day review period in subsection (f) be tolled and that any
internal controls at issue not be implemented until approved under subsection
(i).
(h) A submission
under this section shall be deemed insufficient and likely to negatively affect
the integrity of fantasy contests if the submission:
(1) Fails to provide information sufficient
to permit the review of fantasy contests.
(2) Fails to provide for the segregation of
incompatible functions so that no employee is in a position to commit an error
or perpetrate a fraud and to conceal the error or fraud in the normal course of
the employee's duties.
(3) Does not
include forms or other materials referenced in the submission or required under
4 Pa.C.S. Chapter 3 or this subpart.
(4) Would implement operations or accounting
procedures not authorized by 4 Pa.C.S. Chapter 3 or this subpart.
(i) When a change or amendment has
been tolled under subsection (g), the licensed operator may submit a revised
change or amendment within 30 days of receipt of the written notice from the
Bureau of Gaming Operations. The licensed operator may implement the revised
change or amendment upon receipt of written notice of approval from the Board's
Executive Director or on the 30th calendar day following the filing of the
revision unless the licensed operator receives written notice tolling the
change or amendment in accordance with subsection (g) or written notice from
the Board's Executive Director rejecting the change or amendment.
