Chapter 13. Sports Wagering Licensee Minimum Internal Control Standards

Handle;

Payout;

Win amount;

Win percentage; and

Average payout percentage;

Loans and other amounts payable by a sports wagering licensee;

Bettor disputes including bettor complaint forms filed with the Commission under Regulation .37 of this chapter;

Negotiable instruments accepted, deposited, returned as uncollected or ultimately written-off by a sports wagering licensee under this chapter; and

Investments in property and equipment for the benefit of a sports wagering licensee.

Transactions or financial events which occur in connection with the sports wagering operation are:

Access to assets is permitted only in accordance with the sports wagering licensee’s authorization protocols; and

The recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with regard to a discrepancy;

That systems accurately and timely communicate all required activities and financial details to the sports wagering platform;

That all functions, duties, and responsibilities are segregated and performed in accordance with sound financial practices by qualified personnel; and

Through the use of a surveillance and a security department, that the sports wagering licensee is secure at all times during normal operation and during any emergency due to malfunctioning equipment, loss of power, natural disaster, or any other cause;

Content of, and administrative responsibility over, the manual or computerized access control matrix governing employee access to restricted areas;

Issuance of a temporary access credential; and

Comprehensive key controls;

Authenticating the age, identity and physical address of an applicant for a sports wagering account; and

Determining whether the applicant is a person prohibited from establishing or maintaining an account under applicable laws or regulations;

The logging in and authentication of a registered bettor to enable the bettor to commence sports wagering; and

The logging off of the registered bettor when the registered bettor has completed play;

Sports wagering website;

Sports wagering platform; or

Sports wagering equipment; and

Establish a consistent overall system of internal controls;

Provide reasonable assurance that financial reporting conforms to generally accepted accounting principles in the United States; and

Conform to the requirements of State Government Article, Title 9, Subtitle 1E, Annotated Code of Maryland, and this chapter; and

The effectiveness of the design of the submitted system of internal controls over financial reporting;

Whether the submitted system of internal controls conforms to the requirements of State Government Article, Title 9, Subtitle 1E, Annotated Code of Maryland, and this chapter; and

If applicable, whether a deviation from the requirements of State Government Article, Title 9, Subtitle 1E, Annotated Code of Maryland, or this chapter identified by the independent certified public accountant in the course of its review of the submitted system of internal controls is material.

Material weaknesses or significant deficiencies in the sports wagering licensee’s Commission-approved internal controls noted in the course of the examination of the financial statements; and

Recommendations as to how to eliminate each material weakness or significant deficiency identified; and

Form S-1;

Form 8-K;

Form 10-Q;

Form 10-K;

Proxy statement;

Information statement; and

Registration statement; and

Accounting principles or practices;

Financial statement disclosure; or

Auditing scope or procedure;

At the sports wagering licensee’s facility; or

An off-site location approved by the Commission under §F of this regulation for the express purpose of document storage;

The identity of the document;

Period of retention; and

Date of destruction.

Signature cards of terminated employees;

Insurance records relating to claims by bettors;

Surveillance and security department:

Documentation pertaining to sports wagering tickets or promotional play instruments reported to the Commission as possibly counterfeit, altered, or tampered with;

Cancelled promotional play instruments for which all reconciliations required by the sports wagering licensee’s approved internal controls have been conducted and resolved;

Voided sports wagering tickets; and

Sports wagering tickets and vouchers redeemed at a facility other than through a ticket redemption unit or kiosk.

On or before the 15th day of the month following the end of each quarter; or

At the request of the Commission.

Rooms;

Food and Beverage;

Travel;

Gifts:

Other; and

Complimentary services offered by a sports wagering licensee in the normal course of business shall be reported at an amount based upon the full retail price normally charged for the service by the sports wagering licensee;

Complimentary services not offered for sale by the sports wagering licensee in the normal course of business but provided directly by the sports wagering licensee to the bettor shall be reported at an amount based upon the actual cost to the sports wagering licensee of providing the service;

Complimentary services provided directly or indirectly on behalf of a sports wagering licensee by a third party not related to the sports wagering licensee shall be reported at an amount based upon the actual cost to the sports wagering licensee of having the third party provide the service; and

Complimentary services provided directly or indirectly on behalf of a sports wagering licensee by a third party related to the sports wagering licensee shall be reported at an amount based upon the actual cost to the third party of providing the service.

Rooms;

Food and beverage;

Travel;

Gifts:

Other; and

At least quarterly, by the 15th day of the month following the end of each quarter; or

At the request of the Commission.

Commit an error or to perpetrate a fraud; and

Conceal the error or fraud in the normal course of the individual’s duties;

Based for employment purposes at the facility;

Licensed as a principal employee; and

Ultimately responsible for the daily conduct of all sports wagering business; and

A surveillance department supervised by a director of surveillance:

An internal audit department supervised by a director of internal audit:

An information technology department supervised by a director of information technology:

A security department supervised by a director of security:

An accounting department supervised by a director of finance:

A sports wagering department supervised by a director of sports wagering operations:

The sports wagering licensee; or

A Commission-authorized licensed affiliate of the sports wagering licensee.

The vacant position;

The date on which the position will become or became vacant; and

The date on which the sports wagering licensee anticipates that the vacancy will be filled on a permanent basis;

The vacant position filled;

The name of the individual designated to fill the position;

The date that the vacancy was filled; and

Whether the vacancy has been filled on a temporary or permanent basis.

Lenses of sufficient magnification to monitor activity at each betting window, kiosk and other sports wagering related areas and activities in a facility;

Lighting which is continuous and of sufficient quality to produce clear video recordings and still pictures; and

360-degree pan, tilt, and zoom capability, without camera stops, configured to clandestinely monitor and record:

Staffed by employees of the sports wagering licensee’s surveillance department 24 hours per day; and

Equipped with:

Superimpose the date and time on all monitoring and recording;

Identify and locate, through the use of a meter, counter, or other device or method, a particular event which was recorded;

Identify on video recording disks or other storage media the type of media player and software prerequisite to viewing the digital images; and

Be authenticated through use of an embedded video verification encryption code or watermark;

Installed and disclosed to employees of the facility; and

Consistent with the Courts and Judicial Proceedings Article, §§10-401—10-414, Annotated Code of Maryland; and

Controls:

Restricts access to the security administration capabilities of the system.

Camera configuration inside and outside the facility;

Monitor room configuration;

Video recording format and configuration specifications;

Authentication of digital recordings, including Commission access to the system’s video verification encryption code or watermark;

Audio recording format; and

System access controls; and

Full and partial failure of the surveillance system including:

Planned shutdown of the surveillance system;

Be maintained by monitor room employees in:

Document the scheduled coverage in §D(1) of this regulation and all other non-routine surveillance activity as follows:

Be Signed by an individual entering the surveillance monitor room who is not a surveillance department employee assigned to the monitor room’s work shift at the time of entry;

Be maintained by monitor room employees in:

Document the following:

Security department supervisory personnel within 5 minutes of an incident of equipment failure affecting coverage of the facility; and

The Commission within 30 minutes of an incident of equipment failure affecting coverage of the facility citing:

An intoxicated individual; or

An excluded individual; and

Enabled by lenses of sufficient magnification to monitor activity at each betting window, kiosk and other sports wagering related areas and activities in the facility;

Enabled by lighting which is continuous and of sufficient quality to produce clear video recordings and still pictures; and

Configured to clandestinely monitor and record:

Superimpose the date and time on all monitoring and recording;

Identify and locate, through the use of a meter, counter or other device or method, a particular event which was recorded; and

Identify on video recording disks or other storage media the type of media player and software prerequisite to viewing the digital images.

Camera configuration inside and outside the facility;

Monitor room configuration;

Video recording format and configuration specifications;

Authentication of digital recordings, including Commission access to the system’s video verification encryption code or watermark;

Audio recording format; and

System access controls; and

The date and time the surveillance system is accessed by an individual;

The accessing individual’s name and department or affiliation;

The reason for accessing the surveillance system; and

The date and time the individual ended their access of the surveillance system;

The date and time of the failure;

The cause of the failure;

The length of time the surveillance system was inoperable or malfunctioning; and

The length of time the before the surveillance system is expected to be operable or have the malfunction to be corrected;

Enabled by lenses of sufficient magnification to observe front and back of each server cabinet that house all servers that collectively are the online wagering and associated systems;

Enabled by lighting which is continuous and of sufficient quality to produce clear video recordings and still pictures; and

Configured to monitor and record physical access to the online wagering and associated systems; and

Superimpose the date and time on all monitoring and recording;

Through the use of a meter, counter or other device or method, identify and locate a particular event which was recorded; and

Identify on video recording disks or other storage media the type of media player and software prerequisite to viewing the digital images.

Camera configuration inside and outside the data information centers and operations centers;

Monitor room configuration;

Video recording format and configuration specifications;

Authentication of digital recordings, including Commission access to the system’s video verification encryption code or watermark;

Audio recording format; and

System access controls; and

The date and time the surveillance system is accessed by an individual;

The accessing individual’s name and department or affiliation;

The reason for accessing the surveillance system; and

The date and time the individual ended their access of the surveillance system;

The date and time of the failure;

The cause of the failure;

The length of time the surveillance system was inoperable or malfunctioning; and

The length of time the before the surveillance system is expected to be or operable or the malfunction to be corrected;

The physical safety of employees of and invitees to the facility;

The safeguarding of assets;

Compliance with all applicable laws and regulations including Commission approved internal controls and operating procedures;

That the following individuals are identified, prohibited from entering the facility, and, if necessary, immediately removed from the facility:

That an individual younger than 21 years old is identified, prohibited from accessing the facility floor in accordance with State Government Article, §9-1E-11(a)(1), Annotated Code of Maryland, and, if necessary, immediately removed from the facility floor;

Facility access controls including:

A temporary access credential;

Key controls;

Emergency alarm and fire command responsibilities including communication protocols with the surveillance department;

Evacuation of the facility in the event of fire or other emergency;

The identification and immediate removal of an intoxicated individual, an individual younger than 21 years old, an excluded individual;

Bettor disputes under Regulation .37 of this chapter; and

The notice requirements of §E(4) of this regulation;

Maintained by security department employees in:

Documenting the following:

An individual engaged in, attempting to engage in, or suspected of cheating, theft, embezzlement, or other illegal activities; or

An individual who is:

The physical safety of employees and invitees to the facility;

The safeguarding of assets;

Compliance with all applicable laws and regulations including Commission approved internal controls and operating procedures;

That intoxicated individuals are identified, prohibited from entering the facility and, if necessary, immediately removed from the facility; and

That an individual younger than 21 years old is identified, prohibited from sports wagering and, if necessary immediately removed from the facility;

Facility access controls including:

A temporary access credential;

Key controls;

Emergency alarm and fire command responsibilities;

Evacuation of the facility in the event of fire or other emergency;

The identification and immediate removal of an intoxicated individual, and, if applicable, an individual younger than 21 years old; and

The notice requirements of §C(4) of this regulation;

Maintained in:

Documenting:

An individual engaged in, attempting to engage in, or suspected of cheating, theft, embezzlement, or other illegal activities; and

An individual who is:

The audit committee;

The chief executive officer;

Management; and

The Commission;

Unless an alternate risk assessment and audit plan is submitted in writing and approved in writing by the Commission, all departments of the sports wagering licensee that are designated under §§C and D of this regulation; and

A department of the sports wagering licensee designated by the Commission;

Audit objectives;

Audit procedures and scope;

Findings and conclusions;

A recommendation for addressing a deficiency in, or noncompliance with, the sports wagering licensees internal controls;

Resolution of all exceptions; and

Managements response;

A deficiency or noncompliance revealed during an audit has been corrected; and

An exception disclosed during an audit has been resolved.

Have access to the Cashiers’ cage;

Activate or deactivate alarm systems for the cashiers’ cage; and

Grant access to the cashiers’ cage through the access control matrix or a computerized access control system.

General cashiers shall be responsible for:

Main bank cashiers shall be responsible for:

Recording the amount of the inventory in the window or bank;

Reconciling the total closing inventory with the total opening inventory; and

Including the signature of the:

Agreement of opening and closing inventories; and

Comparison of forms or documents; and

The reason for the overage or shortage and corrective action taken or adjustment made; or

That a notice of investigation is ongoing and the written report will be submitted within the following 48 hours.

Is an affiliate of the sports wagering licensee; and

Holds a valid sports wagering license in another jurisdiction.

Sports wagering activity;

Casino activity; or

Maryland lottery prizes.

A Social Security check;

An unemployment insurance check;

A disability payment check; or

A public assistance check; or

Initialed by the accepting general cashier;

Date and time stamped;

Documented on the face of the check the number on the bettor’s government-issued photographic identification; and

If a personal check equaling or exceeding $5,000, confirmed for availability of funds under §G of this regulation;

Obtain from the bettor one form of identification that is a valid, unexpired government-issued photographic identification; and

Satisfactorily compare the:

Cash;

If the sports wagering licensee has the capability, a sports wagering ticket; or

Funding for a sports wagering account in accordance with this chapter.

A sequential number assigned by the sports wagering licensee to the wire transfer accepted;

Date and time notice of the wire transfer was received;

Name of the financial institution to which the funds were sent;

Amount transferred;

Name of the bettor for whose benefit the funds were accepted;

The name of the financial institution from which the funds were transferred;

The method by which the sports wagering licensee was notified of the receipt of the wire transfer;

If noticed by telephone, the name and title of the individual providing notice; and

The signature of the employee receiving and recording the information required by this section;

Independently confirm date, time, and method by which the sports wagering licensee was notified of the wire transfer;

Record the date and time of confirmation in the wire transfer log; and

Sign the wire transfer log as completing the confirmation process;

Establish, verify, and document the identity of a bettor sending a wire transfer;

Make the wire transfer proceeds available to a bettor at the cashiers’ cage or any other means as approved by the Commission; and

Adjust the cashiers’ cage accountability or other accounting records;

A sequential number assigned by the sports wagering licensee to the wire transfer sent;

Name of the bettor;

Date of the transaction;

Amount wired;

Source of funds;

The name and address of the financial institution to which the funds were wired;

Account number to which the funds are credited;

If the request to send a wire transfer is made in person at the cashiers’ cage, the signature of the bettor;

If the request to send a wire transfer is not made in person at the cashiers’ cage, documentation supporting the receipt of a request by the sports wagering licensee to send a wire transfer on behalf of a bettor;

The signature of the cashiers’ cage employee or accounting department employee receiving and recording the information required by this regulation; and

The signature of the cashiers’ cage supervisor or accounting department supervisor authorizing the wire transfer; and

Establish, verify, and document the identity of a bettor requesting that a wire transfer be sent;

Send the wire transfer; and

Adjust the cashiers’ cage accountability or other accounting records.

Perform the specific verification procedures required by each issuer;

Prepare and maintain documentation evidencing the verification of a cash equivalent accepted; and

Examine a cash equivalent for counterfeiting, forgery, or alteration;

Amount deposited;

Date of the deposit; and

If applicable, the signature of the general cashier accepting the customer deposit;

By a bettor at the cashiers’ cage or by any other means as approved by the Commission; or

Upon receipt by the sports wagering licensee of a written request for withdrawal for which validity has been established; and

Has registered with the licensee for inclusion in the bettor tracking system; and

Submits a request for the spending level documentation at:

Bettor’s information recorded on the spending level request documentation with the information contained on the valid, unexpired government-issued photographic identification presented by the bettor; and

Bettor’s physical appearance with the photograph contained on the valid, unexpired government-issued photographic identification presented by the bettor.

Use reward credits from the rewards program of the Class A Sports Wagering Facility at the Class B Sports Wagering Facility for non-wagering activity;

Earn reward credits for the reward program of the Class A Sports Wagering Facility at the Class B Sports Wagering Facility; and

Use reward credits from the reward program earned at the Class B Sports Wagering Facility at the Class A Sports Wagering Facility.

The account wallet of a Class A Sports Wagering Facility Licensee for wagering at a Class B Sports Wagering Facility;

Reward credits earned in §E(1)(b) of this regulation to be applied in the bettor’s wallet; and

Reward credits of the Class A Sports Wagering Facility for wagering at the Class B Sports Wagering Facility.

Prevent issuance of a sports wagering ticket from a kiosk exceeding $10,000; and

Require sports wagering tickets or vouchers of $3,000 or more to be redeemed only at the cashiers’ cage;

Redeem only a sports wagering ticket or voucher of less than $3,000; and

Direct a bettor attempting to redeem a sports wagering ticket or voucher of $3,000 or more to the cashiers’ cage; and

Cash or check; or

Check on the request of a bettor.

Name or trade name of the sports wagering licensee;

Date and time of issuance;

A description of the wager;

Amount of the sports wagering ticket;

Unique series number automatically generated by the sports wagering ticket system;

Asset number of the ticket redemption unit or point of sale device dispensing the sports wagering ticket;

Sports wagering facilities where the sports wagering ticket may be redeemed and any restrictions applicable to redemption;

A bar code which enables the sports wagering ticket system to identify the numeric information required by this section; and

Notice to the bettor of the terms of expiration; and

Require a sports wagering ticket system to perform the following prior to payment:

Require the sports wagering ticket system to be configured to:

Address the following events:

Require generation, at the conclusion of each wagering day, of reports detailing:

Redeem a sports wagering ticket or voucher of less than $3,000; and

Direct a bettor attempting to redeem a sports wagering ticket or voucher of $3,000 or more to the cashiers’ cage; and

A sports wagering ticket transaction report which details:

A reconciliation report which details:

A sports wagering ticket and currency storage box report which details the following data whenever a storage box is removed from the ticket redemption unit:

Date of the wager or payout;

Name of the bettor;

Name and signature of the sports wagering employee authorizing the acceptance of the wager; and

Name and signature of the sports wagering employee identifying the bettor and generating the sports wagering ticket or making the payout.

At least one lock; and

Requiring the key to the lock to be maintained by the security department.

The key shall be controlled by the sports wagering department in:

Immediately prior to the commencement of the drop, the sports wagering department may issue its belly door or main door key to the accounting department;

A key transferred from the sports wagering department to the accounting department shall be returned immediately following the conclusion of the drop;

The sports wagering licensee shall establish sign in and sign out procedures in its internal controls documenting the transfers; and

If an automated key tracking system is used, a sports wagering licensee shall require dual access from the security department and accounting department to obtain keys.

At least one lock; and

Requiring the key to the lock to be maintained by the accounting department.

Is permanently imprinted or affixed to the outside of the cash storage box; and

Corresponds to the asset number of the kiosk in which the cash storage box is installed; or

Assigning a unique identification number to a cash storage box; and

Attributing it to the sports wagering kiosk in which the cash storage box is currently installed.

In accordance with the drop schedule; and

On an emergency basis; and

Cash storage drop boxes to be transported directly to, and secured in:

Except as provided in §F of this regulation, the cash storage drop box collection process to involve the participation of at least three employees, at least one of whom is an employee of the:

Prior to the movement of a trolley containing cash storage boxes from the sports wagering facility floor into the count room, an accounting department supervisor to verify that the number of cash storage boxes being transported from the facility floor equals the number of cash storage boxes scheduled for collection that day; and

Prior to changing the type of a kiosk, or removing a kiosk from the sports wagering facility floor, that an emergency drop shall be conducted.

Conduct two separate counts;

If the separate counts are not in agreement, document the discrepancy; and

If a sports wagering platform, point of sale system, or promotional play system is utilized to obtain the amount of a winning sports wagering ticket, sports wagering voucher or promotional play instrument, require the system to perform a calculation or integrity check to ensure that the amount of a sports wagering ticket or promotional play instrument has not been altered in the system in any manner since the time of issuance; and

The actual count of cash, winning sports wagering tickets, sports wagering vouchers and promotional play instruments in a cash storage box as determined in the count room; and

The amount for the cash storage box recorded on the sports wagering licensee’s sports wagering platform or point of sale system;

Total amount in promotional play awarded in noncashable credits; and

Other forms of promotional play; and

Total amount in promotional play redeemed in noncashable credits; and

Other forms of promotional play redeemed.

Issue promotional play; and

Redeem promotional play; and

Name or trade name of the sports wagering licensee;

Amount in noncashable credits;

Unique series number automatically generated by the promotional play system;

Locations where a promotional instrument may be redeemed and any restrictions applicable to redemption;

If applicable, a bar code or magnetic strip which enables the promotional play system to identify the numeric information required by this section; and

Notice to the player of the terms of expiration.

The sports wagering licensee shall honor any bettors request to withdraw funds by the later of 5 days after receipt of the request or 5 days after submission of any tax reporting paperwork required by law;

The sports wagering licensee may decline to honor the request for withdrawal of funds for a reasonable investigatory period if it provides notice of the nature of the investigation to the bettor it believes has engaged in either:

A request for withdrawal shall be considered honored if it is processed by the sports wagering licensee but delayed by a payment processor or the custodian of a segregated account; and

Ensuring that the terms and conditions of all promotions are communicated to bettors by a link posted on the licensee’s home website, and on the home website or any website operated on behalf the licensee by a contractor or vendor;

Stating the terms and conditions clearly and in plain language, and displaying them conspicuously so they are readily accessible and available for bettors’ review for the duration of the promotion;

Providing a clear and conspicuous method for a bettor to cancel the bettor’s participation in a promotion that utilizes restricted sports wagering credits;

When a bettor requests cancellation, informing the bettor of the amount of unrestricted funds that will be returned upon cancellation, and the value of restricted funds that will be removed from the bettor’s sports wagering account; and

If a bettor elects to proceed with cancellation, returning unrestricted funds remaining in the bettor’s sports wagering account in accordance with the terms and conditions.

Offer or conduct a promotion which violates any federal, State or local law or regulation;

When a bettor has met the terms of a promotion, cap or limit a bettor’s winnings earned while participating in the promotion;

Include in an advertisement language that suggests the outcome is guaranteed or without risk; or

Advertise, market, promote, offer, or conduct sports wagering in a manner that may adversely impact the public or the integrity of sports wagering.

“Agent of a regulated gaming entity” includes a marketing firm or other similar entity contracted to perform gaming-related services for a regulated gaming entity.

“Institution of higher education” has the meaning stated in Education Article, §10–101, Annotated Code of Maryland.

“Regulated gaming entity” means:

“Sports marketing entity” means a person that contracts with a sports wagering licensee or regulated entity to provide advertising or marketing services for the sports wagering operations of a regulated entity.

An institution of higher education may not enter into a contract with a regulated gaming entity or an agent of a regulated gaming entity if, under the terms of the contract, the institution of higher education receives a commission, a bonus, or any other incentive payment based on the success of securing student participation in sports wagering or online sports wagering.

An institution of higher education may not enter into a contract with a sports marketing entity that enters into a contract with a regulated gaming entity or an agent of a regulated gaming entity if, under the terms of the contract, either the sports marketing entity or the institution of higher education receives a commission, a bonus, or any other incentive payment based on the success of securing student participation in sports wagering or online sports wagering.

A regulated gaming entity;

An agent of a regulated gaming entity; or

A sports marketing entity.