205 Mass. Reg. 138.04

Current through Register 1523, June 7, 2024

Section 138.04 - Gaming Licensee's Organization

(1) A system of internal controls submitted by a gaming licensee in accordance with 205 CMR 138.02 shall include tables of organization, which shall provide for:

(a) A system of personnel and chain of command which permits management and supervisory personnel to be held accountable for actions or omissions within their areas of responsibility;

(b) The segregation of incompatible functions so that no employee is in a position both to commit an error or to perpetrate a fraud and to conceal the error or fraud in the normal course of his or her duties;

(c) Primary and secondary supervisory positions which permit the authorization or supervision of necessary transactions at all relevant times; and

(d) Areas of responsibility which are not so extensive as to be impractical for one person to monitor.

(2) A system of internal controls submitted by a gaming licensee in accordance with 205 CMR 138.02 shall include provisions detailing the structure, function, and area of responsibility for the following mandatory departments and supervisory positions, with each of the mandatory departments and supervisors cooperating with, yet performing independently of, all other mandatory departments and supervisors of the gaming licensee as follows:

(a) A surveillance department supervised by an executive who shall be responsible for the management of the surveillance department. The chief surveillance executive shall be subject to the reporting requirements specified in 205 CMR 138.04(4). The surveillance department monitoring room shall be supervised by an individual licensed as a key gaming employee in accordance with 205 CMR 134.00: Licensing and Registration of Employees, Vendors, Junket Enterprises and Representatives, and Labor Organizations who shall be present in the room at all times or, if not present, be within immediate contact and at a known location at the gaming establishment.

(b) An internal audit department supervised by an audit department executive. The audit department executive shall be subject to the reporting requirements specified in 205 CMR 138.04(4).

(c) An IT department supervised by an executive who shall be responsible for the management of the IT department.

(d) A casino games department supervised by an executive who shall be responsible for the management of the casino games department. The chief casino games executive shall be responsible for the operation and conduct of all authorized games and gaming devices in a gaming establishment

(e) A security department supervised by an executive who shall be responsible for the management of the security department.

(f) A gaming accounting department supervised by an executive who shall be responsible for the management of the gaming accounting department. The chief gaming accounting executive shall be responsible for all gaming related accounting control functions.

(g) A compliance committee consisting of at least three members, at least one of whom shall be independent of the gaming licensee. The compliance committee may consist of less than three members on a temporary basis upon a showing of good cause by the gaming licensee, but, under all circumstances, a compliance committee must include at least one independent member. The compliance committee may be created at either the gaming licensee level or at the level of a parent, holding or intermediary company. The compliance committee shall provide its policies and procedures to the commission, which policies and procedures shall provide for, at a minimum, the following:

1. The monitoring of policies, procedures, material transactions and proposed transactions for purposes of avoiding impropriety or the appearance thereof;

2. The review of payments to individuals and entities and the provision of services, gifts or anything of value to or on behalf of any public official provided, that review of such conduct as it relates to foreign public officials may be performed by legal counsel to the gaming licensee who shall then report their findings to the compliance committee;

3. The review of political contributions;

4. Ensuring compliance with all applicable federal, state and local laws and regulatory requirements;

5. Protecting against unethical or unlawful behavior by employees;

6. The conduct of due diligence reviews and investigations of directors, officers, executive level employees and those entities and individuals having material associations with the gaming licensee; and

7. Providing the commission with the minutes of its meetings within 45 days of the conduct of those meetings. If necessary, minutes in draft form may be submitted followed by final minutes when approved.

(h) An independent audit committee consisting of at least three members provided, however, that the independent audit committee may be comprised of less than three members on a temporary basis upon a showing of good cause to the commission. The independent audit committee may be created at either the gaming licensee level or at the level of a parent, holding or intermediary company. The Committee shall provide the commission with the minutes of its meetings within 45 days of the conduct of those meetings. If necessary, minutes in draft form may be submitted followed by final minutes when approved.

(3) Each mandatory department shall be supervised at all times by at least one individual who has been licensed as a key gaming employee in accordance with 205 CMR 134.00: Licensing and Registration of Employees, Vendors, Junket Enterprises and Representatives, and Labor Organizations.

(4) The chief executives of the surveillance and internal audit departments required by 205 CMR 138.04(2) shall comply with the following reporting requirements:

(a) Each executive shall report directly to the chief gaming executive of the gaming licensee regarding administrative matters and daily operations provided, however, a gaming licensee may allow each of these executives to report directly to a management executive of the licensee other than the chief gaming executive if that management executive reports directly to the chief gaming executive.

(b) Each executive shall report directly to one of the following persons or entities regarding matters of policy, purpose, responsibility, and authority. The hiring, termination, and salary of each executive shall also be controlled by one of the following persons or entities:

1. The independent audit committee of the gaming licensee's board of directors;

2. The independent audit committee of the board of directors of any holding company of the gaming licensee which has absolute authority to direct the operations of the gaming licensee;

3. The senior surveillance or internal audit executive of any holding company included in 205 CMR 138.04(4)(b)2. if such executive reports directly to the independent audit committee of the board of directors of the holding company; or

4. For gaming licensees or holding companies which are not corporate entities, the non-corporate equivalent of any of the persons or entities listed in 205 CMR 138.04(4)(b)1. through 3.

(5) In the event of a vacancy in the chief executive officer position, the chief gaming executive, or in any executive position responsible for management of one of the mandatory departments set forth in 205 CMR 138.04(2)(a) through (f), the gaming licensee shall:

(a) Provide written notice to the commission no later than five days from the date of the vacancy, advising of the following:

1. The vacant position;

2. The date on which the position became vacant; and

3. The date on which it is anticipated that the vacancy will be filled on a permanent basis.

(b) Within 30 days, the gaming license shall either fill the vacant position described in 205 CMR 138.04(5) on a permanent basis or designate an individual to assume the duties and responsibilities of the vacant position on a temporary basis, which appointment shall not exceed 120 days, subject to extension upon approval by the commission. An individual temporarily designated shall not simultaneously function as the department supervisor for any department identified in 205 CMR 138.04(2) and such individual's areas of responsibility shall not be so extensive as to be impractical for one individual to monitor.

(c) Within five days of filling any vacancy, whether on a temporary or permanent basis, the gaming licensee shall provide written notice to the commission advising of the following:

1. The position;

2. The name of the person designated;

3. The date that the vacancy was filled; and

4. An indication of whether the position has been filled on a temporary or permanent basis.

(6) A system of internal controls submitted by a gaming licensee in accordance with 205 CMR 138.02 shall include, and a gaming licensee shall maintain on file, a current table of organization delineating the lines of authority for all personnel engaged in the operation of the gaming establishment, which shall, for each department and division, include direct and indirect lines of authority within the department or division.

(7) A system of internal controls submitted by a gaming licensee in accordance with 205 CMR 138.02 shall include a plan for ensuring that all gaming employees employed in the gaming establishment are properly trained in their respective professions. Proper training of a gaming employee in the respective field for which the gaming employee is or shall be employed by the gaming licensee may be established as follows:

(a) Satisfactory completion by the employee of a course of instruction in the employee's respective field provided by a person recognized by the commission as a certified training school in accordance with 205 CMR 137.00: Gaming Schools;

(b) Satisfactory completion by the employee of a course of instruction or on the job training program provided by the gaming licensee in the employee's respective field;

(c) Relevant prior work experience of the employee in the employee's respective field; or