The purpose and effect of the proposed rule will be to implement and interpret Florida Statutes that relate to rules regulating the operation of a cardroom, record keeping and reporting requirements for cardrooms, and the collection of taxes and ...

DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION
Division of Pari-Mutuel Wagering

RULE NO: RULE TITLE
61D-11.019: Internal Control System
PURPOSE AND EFFECT: The purpose and effect of the proposed rule will be to implement and interpret Florida Statutes that relate to rules regulating the operation of a cardroom, record keeping and reporting requirements for cardrooms, and the collection of taxes and fees imposed by Section 849.086, Florida Statutes.
SUMMARY: The rule addresses the following subject matter areas: the internal control system of a cardroom licensee for the play of a series of games of poker.
SUMMARY OF ESTIMATED REGULATORY COSTS: No Statement of Estimated Regulatory Cost was prepared.
Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.
SPECIFIC AUTHORITY: 550.0251(12), 849.086(4), (7), (12), (14) FS.
LAW IMPLEMENTED: 849.086 FS.
IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE,TIME AND PLACE SHOWN BELOW(IF NOT REQUESTED, THIS HEARING WILL NOT BE HELD):
TIME AND DATE: January 4, 2007, 10:00 a.m. – Noon
PLACE: Florida Department of Business and Professional Regulation, Northwood Centre, Board Room, 1940 N. Monroe Street, Tallahassee, Florida 32399.
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Mary Polombo, Clerk, Division of Pari-Mutuel Wagering, 1940 North Monroe Street, Tallahassee, Florida 32399-1035
Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this program, please advise the Department at least 5 calendar days before the program by contacting Mary Polombo at [phone]. If you are hearing or speech impaired, please contact the agency using the Florida Dual Party Relay System by calling [phone] (Voice) or [phone] (TDD).
Written comments or suggestions on the proposed rule may be submitted to: Mary Polombo, Clerk, Division of Pari-Mutuel Wagering, Department of Business and Professional Regulation, 1940 North Monroe Street, Tallahassee, Florida 32399-1035, within 21 days of this notice for inclusion in the record of this proceeding.

THE FULL TEXT OF THE PROPOSED RULE IS:

61D-11.019 Internal Control System.

(1) No change.

(2) Failure of any cardroom operator to follow the internal controls once filed with the division shall be a violation of these rules. A cardroom operator is responsible for compliance with its internal control system.

(3) No change.

(4) Each cardroom operator’s internal control procedures shall comply at a minimum with Section 849.086, Florida Statutes, the rule promulgated thereunder, and the following requirements:

(a) The cardroom operator shall provide a cardroom manager or supervisor. The cardroom manager or supervisor shall have the authority to control all activity and all cardroom employees when the cardroom is operating.

(b) Transfers between imprest trays and the cardroom bank shall be authorized, documented, and verified by a supervisor.

(c) Playing cards, both used and unused, shall be maintained in a secure location to prevent unauthorized access and reduce the possibility of tampering.

(d) Tokens and chips shall be stored in a secure location. Records documenting the inventory of tokens and chips shall be current and accurate.

(e) The amount of the main cardroom bank shall be counted, recorded, and reconciled on at least a per shift basis, but not less than once daily.

(f) All transactions that flow through the cardroom bank shall be summarized on a per shift basis.

1. Increases and decreases to the cardroom bank inventory shall be supported by documentation.

2. Cardroom bank inventories shall be counted by at least two persons and recorded at the end of each shift, but not less than once daily.

3. Information shall be summarized and posted to the accounting records on a daily basis.

(g) Internal audits shall be performed every six months of operation and shall include documentation of material exceptions to internal controls.

(h) At the close of each shift, but not less than once daily, the cardroom operator shall:

1. Count and record on the Daily Control Sheet the amount of chips or tokens and currency for each table.

2. Make a fill or credit to bring the imprest bank tray back to its beginning balance.

3. Document beginning and ending inventories if final fills are not made.

4. Verify that the beginning and ending inventories are made by a supervisor.

5. Ensure that drop boxes are removed from tables by two employees, one of whom shall be independent of the supervisor of the shift that is being dropped.

6. Ensure that drop boxes are transported at all times by a minimum of two employees, one of whom shall be independent of the supervisor of the shift being dropped.

7. Ensure that drop boxes shall be transported immediately to the count room or other secure place and locked in a secure manner until the count takes place.

(i) The soft count shall be performed by a count team with a minimum of three persons.

(j) Count team members shall be rotated on a routine basis. The rotation shall be such that the team is not the same three individuals more than three days per week.

(k) The count team shall be independent of transactions being reviewed and counted, and independent of the subsequent accounting of soft drop proceeds.

(l) Drop boxes shall be individually emptied and counted on the count room table.

(m) The contents of each box shall be counted and verified by the count team. The count shall be legibly recorded on the count sheet in ink prior to commingling the funds from other boxes.

(n) Drop boxes, when empty, shall be shown to another member of the count team, and either to another person who is observing the count or to recorded surveillance.

(o) Orders for fill, original, and first copies shall be matched or otherwise reconciled by the count team; fills shall be traced and recorded on the count sheet.

(p) Opening and closing inventory forms shall be examined and traced to, or recorded on, the count sheet.

(q) Corrections to information originally recorded by the count team or to soft count documentation shall be made by crossing out the error, entering the correct figure, and entering the initials of at least two count team members who verified the change.

(r) The count shall be verified by the signature of all members of the count team.

(s) All monies and tokens shall be turned over to the cage cashier for verification.

(t) The cage cashier shall certify, by signature, the accuracy of the money, tokens, and chips received from the count team.

(u) Drop box keys shall be maintained by a department independent of the pit department.

1. Drop boxes shall require dual keys, one release key for the table and one for the contents.

2. Only a person authorized to remove the drop boxes from the tables shall be allowed access to the release keys. Count team members shall be authorized to have access to the release keys during soft count order to reset drop boxes.

3. Drop box release keys and drop box contents keys shall require separate custodians.

4. If drop box storage racks are used, a separate lock with a separate custodian other than the release and contents keys custodians shall be required.

5. Persons authorized to access the drop storage rack shall be precluded from having access to drop box contents keys.

6. Only count team members shall be allowed access to box contents keys.

7. For emergencies or repairs, all access to keys shall be documented in a log; the log entry shall include written justification, time, date and the signatures of at least two persons.

8. At least two count team members shall be required to be present at the time count room keys and other soft count keys are issued.

9. All duplicate keys shall be maintained in a manner to provide control over drop boxes as required for the original key.

(4) The division will use standards set forth in the “Minimum Internal Control Standards,” herein incorporated by reference, to determine whether the requirements of Section 849.086, F.S., and the rules promulgated thereunder are complied with in the submitted internal control system. If the submitted system is disapproved, the division shall provide a written report detailing the deficiencies and will make suggestions in the report on how the deficiencies can be corrected.

(5) (a) A floor plan based on a scale of one quarter inch equals one foot and demonstrates the placement or location of the following:

1. Each cardroom table and its corresponding table number;

2. Security cameras and other surveillance equipment;

3. The exact location of the designated cardroom gaming area of the applicant’s facility. Any designated cardroom gaming area shall be separated by a check-in area where the cardroom licensee shall check identifications of players prior to being seated for play or shall have controlled entry and exit points where the cardroom licensee shall check identifications to ensure no persons under eighteen (18) years of age are allowed access to the designated cardroom gaming area.

(b) A cardroom licensee who proposes to make changes to the floor plan shall submit the proposed changes to the division for review. The division shall review the proposed changes for compliance with the security standards set forth in these rules prior to approving the changes. Floor plan changes shall not be made without the approval of the division. The division shall notify the cardroom licensee in no less than 30 days of whether it approves the new floor plan.

(6) Each cardroom licensee who conducts a series of games of poker for a fee that is contributed to the overall pot shall submit an internal control system for the conduct of such a series of games of poker. The internal controls for a series of games of poker shall at a minimum include the following:

(a) A written methodology that ensures the fee to be contributed to the overall pot for the games to be played in a series of games of poker does not exceed the wagering limitation of a maximum $2 per bet with no more than three raises in any round as provided by Section 849.086(8), Florida Statutes;

(b) A written methodology by which the cardroom operator will charge a fee for participation for the series of games of poker;

(c) Procedures for the conduct of the series of games that shall include a written description of the following:

1. The minimum number of games to be played in the series of games, or the minimum time duration of the series of games;

2. The point values of chips used in a series of games of poker;

3. The appearance of chips used in a series of games of poker that shall be visually distinct from those used in regular play;

4. The responsibilities and procedures of the dealer in conducting the games;

5. A patron dispute resolution process; and

6. A limitation to card games of poker as indicated on the current cardroom license.

(d) A methodology to ensure that prizes do not exceed the pot created from the total fees for each series of games minus any fee for participation that is charged by the cardroom operator pursuant to Section 849.086(10), Florida Statutes;

(e) Procedures for annual training of cardroom employees for a series of games of poker and associated internal controls established by the cardroom operator;

(f) An inclusion in the monthly remittance report filed with the division in conjunction with the report required by Section 849.086(13), Florida Statutes, shall include a daily accounting of the following:

1. The total amount collected by the cardroom operator for games played in a series of games;

2. The total amount of participation fees collected by the cardroom;

3. The total number of participants in series of games of poker played;

4. The total amount distributed to winning participants;

5. The taxable gross receipts amount;

6. Calculation of total tax due to the State of Florida.

(7) The internal control system required by subsection (5) shall be submitted to the division under the signature of the cardroom manager and the general manager. No series of games of poker shall be played until the internal control system for that series of games has been approved by the division. The cardroom manager shall be responsible for ensuring that any series of games shall only be played under internal controls approved by the division.

(8) The division shall review and approve or disapprove the internal control system within 30 days of receipt. An internal control submission shall be disapproved by the division for any of the following:

(a) The internal controls do not meet the requirements in subsections (1) through (7) above;

(b) Any game or series of games played is not poker; or

(c) Players are allowed to wager in excess of the wagering limitation found in Section 849.086(8)(b), Florida Statutes.

Specific Authority 550.0251(12), 849.086(4), (7), (12), (14) FS. Law Implemented 849.086 FS. History–New 1-7-97, Amended_______.

NAME OF PERSON ORIGINATING PROPOSED RULE: David J. Roberts, Director, Division of Pari-Mutuel Wagering
NAME OF SUPERVISOR OR PERSON WHO APPROVED THE PROPOSED RULE: Simone Marstiller, Secretary, Department of Business and Professional Regulation
DATE PROPOSED RULE APPROVED BY AGENCY HEAD: November 16, 2006
DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAW: August 11, 2006