Tenn. Comp. R. & Regs. 1350-03-.02

Current through January 8, 2025

Section 1350-03-.02 - GENERAL STANDARDS

The following controls are required for Licensees offering Interactive Sports Gaming:

(1) A Licensee shall receive approval from the Council of its internal controls for all aspects of Sports Gaming Systems prior to commencing operations, as well as any time a significant change is made thereafter. The internal controls shall be submitted to the Council as part of the License Application, and shall be approved by the Council prior to when the Licensee begins conducting Interactive Sports Gaming.

(2) The following list of items includes procedures and controls that must be a part of each Licensee's internal controls:

(a) Safeguarding assets and revenues, including maintaining reliable records relating to accounts, transactions, profits and losses, operations, and events;

(b) Safeguarding Sports Gaming Accounts;

(c) Requirements for internal and independent audits of Licensee;

(d) User access controls for all Interactive Sports Gaming personnel;

(e) Segregation of duties among all Interactive Sports Gaming personnel;

(f) Automated and manual risk management procedures;

(g) Procedures for identifying and reporting fraud, Cheating, and Suspicious or Unusual Wagering Activity;

(h) Procedures for identifying and preventing Minors from engaging in Interactive Sports Gaming;

(i) Procedures to prevent wagering by Prohibited Participants;

(j) Description of AML compliance standards;

(k) Description of all types of Wagers available to be offered by the Sports Gaming System;

(l) Description of all integrated third-party systems;

(m) Description of all hardware and software applications that comprise the Sports Gaming System;

(n) Description and sources of data and information feeds and services, including, but not limited to, official data, odds and line monitoring services, integrity monitoring services, and risk management support;

(o) Controls ensuring regulatory compliance;

(p) A monitoring system utilizing software to identify irregularities in volume or odds and swings that could signal Suspicious Wagering Activities that should require further investigation;

(q) Suspicious Wagers over any threshold set by the Licensee; and

(r) Description of the method to prevent past posting (i.e., a Wager made outside of the Wager period).

(3) Changes to Sports Gaming Systems

(a) A Licensee shall maintain a change management log listing changes to its Sports Gaming System. A Licensee shall submit the log to the Executive Director on the 15th day following the close of each calendar quarter. The log shall list:

1. Date and time of change;

2. A description and reason for the change, including each required control program component affected. If the component being changed is a hardware component, include its physical location;

3. The name or other user ID of the individual responsible for authorizing and/or conducting the change;

4. The Council approval date, if applicable;

5. The level of the change (Level 1, 2, or 3); and

6. The recording of the new digital signature for any change to a regulated control program component.

(b) Classification of changes:

1. Level 1 - No Impact: This change has no impact to regulated components of the Sports Gaming System. A Licensee shall report Level 1 changes as part of the quarterly change management log submission.

2. Level 2 - Low Impact: This change has a low impact on the integrity of the Sports Gaming System, including hardware component changes. A Licensee shall report Level 2 changes to the Executive Director at least five (5) business days in advance of the proposed implementation. The Executive Director may request more information or a pause in implementation if there are concerns.

3. Level 3 - High Impact: This change has a high impact on regulated components of the Sports Gaming System. A Licensee shall obtain prior written approval from the Executive Director or designee for Level 3 changes. A Licensee shall submit a request for a Level 3 change to the Executive Director for review and approval at least ten (10) business days in advance of the proposed implementation. The Licensee may deploy the update only after receiving written approval from the Executive Director or designee.

Tenn. Comp. R. & Regs. 1350-03-.02

Emergency rules filed December 22, 2021 to become effective January 1, 2022; effective through June 30, 2022. New rules filed March 22, 2022; effective 6/20/2022.

Authority: T.C.A. §§ 4-49-106, 4-49-110, 4-49-111, 4-49-112, 4-49-115, 4-49-117, 4-49-122, and 4-49125.