Ariz. Admin. Code § 19-4-207

Current through Register Vol. 30, No. 44, November 1, 2024

Section R19-4-207 - Internal Control System

A. Responsible parties shall operate fantasy sports contests pursuant to a written internal control system approved by the Department. The internal control system shall be designed to reasonably assure that for the purposes of fantasy sports contests offered in the State:

1. Assets are safeguarded and accountability over assets is maintained;

2. Liabilities are properly recorded and contingent liabilities are properly disclosed;

3. Financial records including records relating to revenues, expenses, assets, liabilities, and equity/fund balances are accurate and reliable;

4. Transactions are performed in accordance with the responsible party's general or specific authorization;

5. Access to assets is permitted only in accordance with the responsible party's specific authorization;

6. Recorded accountability for assets is compared with actual assets at frequent intervals and appropriate action is taken with respect to any discrepancies; and

7. Functions, duties and responsibilities are appropriately segregated and performed in accordance with sound practices by qualified personnel.

B. The internal control system shall include:

1. A description of, and the inter-relationships and dependencies of, the fantasy sports contest platform, hardware, software, and all integrated supplier platforms;

2. Procedures for verifying geolocation services and establishing a fantasy sports contest player's geographic location;

3. Procedures for monitoring, investigating, resolving, documenting, and reporting security incidents associated with information technology systems;

4. Procedures for the access to, and use of scripts;

5. Procedures for the mitigation of risk of fraud, cheating, and/or money laundering;

6. Procedures for the identification of highly experienced fantasy sports contest players;

7. Procedures to mitigate problem gambling and curtail compulsive gambling;

8. A responsible gaming training and education program;

9. Procedures for the identification, notice, and removal of self-excluded or barred persons from fantasy sports contest platforms;

10. Procedures for accepting entry fees, canceling fantasy sports contest entries, paying out prizes or awards, and issuing tax or other required forms;

11. Procedures for the recording and reconciliation of all fantasy sports contest transactions to fantasy sports contest platform reports;

12. Procedures for the reconciliation of assets contained in player accounts;

13. Procedures for the verification of player identification;

14. Procedures for the issuance and acceptance of promotional and/or bonus credit for fantasy sports contests;

15. Procedures for handling fantasy sports contest player disputes;

16. Procedures for creating, updating, adjusting, and closing player accounts;

17. Procedures for the retention of fantasy sports contest records; and

18. Procedures for the identification and prohibition of prohibited participants from participation in fantasy sports contests.

C. Responsible parties shall have obtained written approval of the internal control system, or any changes deemed material by the responsible party, from the Department prior to implementation. The Department shall review the system, or any material changes, and issue a written approval or disapproval of the system.

1. Prior to the commencement of operations in the State, the responsible party shall have obtained written approval from the Department for the internal control system.

2. After the commencement of operations in the State, the responsible party shall submit any material changes to the internal control system to the Department for review and approval. If, after five days, the responsible party has not received a response from the Department regarding the material changes to the internal control system, then the material changes shall be deemed approved by the Department.

D. For fantasy sports contests under the Act, responsible parties shall maintain:

1. Accurate, complete, legible and permanent records of all transactions in a manner suitable for audit under the standards of the American Institute of Certified Public Accountants;

2. General accounting records using a double entry system of accounting with transactions recorded on a basis consistent with generally accepted accounting principles;

3. Detailed supporting and subsidiary records;

4. Detailed records identifying revenues, expenses, assets, liabilities and fund balances or equity;

5. All records required by the internal control system including, but not limited to, those relating to any fantasy sports contest activity authorized by the Act;

6. Journal entries;

7. Detailed records sufficient to accurately reflect gross income and expenses relating to its operations; and

8. Records of any proposed or adjusting entries made by an independent certified public accountant.

E. The responsible party shall maintain bank account or accounts that are separate and distinct from all other corporate accounts, unless otherwise agreed to by the Department. The account or accounts shall be used for all player deposits, receipts, and disbursements relating to its operation of fantasy sports contests under the Act. The responsible party shall utilize a software accounting system that separates and distinguishes all receipts and disbursements regarding or in any way relating to fantasy sports contest activity under the Act.

F. Responsible parties shall notify the Department in writing of their fiscal year end and any changes to the fiscal year end within 10 days after deciding on a fiscal year end or a change to that year end.

Ariz. Admin. Code § R19-4-207

Adopted by final exempt rulemaking at 27 A.A.R. 1186, effective 7/26/2021.