SGC-23-16-00014-P Criteria for the Licensing, Conduct and Operation of Independent Testing Laboratories

6/8/16 N.Y. St. Reg. SGC-23-16-00014-P

NEW YORK STATE REGISTER

VOLUME XXXVIII, ISSUE 23

June 08, 2016

RULE MAKING ACTIVITIES

NEW YORK STATE GAMING COMMISSION

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. SGC-23-16-00014-P

Criteria for the Licensing, Conduct and Operation of Independent Testing Laboratories

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Proposed Action:

Addition of Part 5318; and amendment of sections 5100.2 and 5118.6 of Title 9 NYCRR.

Statutory authority:

Racing, Pari-Mutuel Wagering and Breeding Law, sections 104(19), 1307(1), 1303, 1326(1) and 1335(8); Lottery for Education Law (Tax Law, art. 34), section 1617-a(c)

Subject:

Criteria for the licensing, conduct and operation of independent testing laboratories.

Purpose:

To govern the licensing, conduct and operation, testing and reporting requirements of independent testing laboratories.

Substance of proposed rule (Full text is posted at the following State website:www.gaming.ny.gov):

The addition of Part 5318 of Subtitle T of Title 9 NYCRR will allow the New York State Gaming Commission (“Commission”) to prescribe rules requiring that gaming facility and video lottery facility licensees not operate any slot machine, video lottery gaming system or other gaming equipment unless such have been certified by a licensed independent testing laboratory. These rules also establish the standards for licensing and operating an independent testing laboratory as well as the required notification and reporting of inspection and certification results.

Section 5318.1 sets forth the requirement that a gaming facility licensee not operate any slot machine or other gaming equipment unless such has been certified by a licensed independent testing laboratory. Section 5318.2 sets forth licensing requirements for an independent testing laboratory. Section 5318.3 sets forth additional standards for the issuance of a license to an independent testing laboratory. Section 5318.4 sets forth notification and reporting requirements. Section 5318.5 sets forth requirements for the conduct and operation of a licensed independent testing laboratory. Section 5318.6 sets forth the reporting of inspection and certification results.

Text of proposed rule and any required statements and analyses may be obtained from:

Kristen Buckley, Acting Secretary, New York State Gaming Commission, One Broadway Center, Schenectady, NY 12305, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

Same as above.

Public comment will be received until:

45 days after publication of this notice.

Regulatory Impact Statement

1. STATUTORY AUTHORITY: Racing, Pari-Mutuel Wagering and Breeding Law (“Racing Law”) section 104(19) grants authority to the Gaming Commission (“Commission”) to promulgate rules and regulations that it deems necessary to carry out its responsibilities. Racing Law section 1307(1) authorizes the Commission to adopt regulations that it deems necessary to protect the public interest in carrying out the provisions of Racing Law Article 13.

Racing Law section 1303 authorizes the Commission to utilize the services of an independent testing laboratory that has been qualified and approved by the Commission to perform the testing of slot machines and other gaming equipment and to utilize applicable data.

Racing Law section 1326(1) requires the Commission to regulate the method and form of vendor licensing including the licensing of independent testing laboratories.

Racing Law section 1335(8) mandates the testing of all slot machines and other gaming equipment prior to being used to conduct gaming.

Lottery for Education Law (Article 34 of the Tax Law) section 1617-a(c) authorizes the Commission to promulgate rules and regulations that it deems necessary to carry out the implementation of video lottery gaming.

2. LEGISLATIVE OBJECTIVES: The above referenced statutory provisions carry out the legislature’s stated goal “to tightly and strictly” regulate casinos “to guarantee public confidence and trust in the credibility and integrity of all casino gambling in the state and to prevent organized crime from any involvement in the casino industry” as set forth in Racing Law section 1300(10).

3. NEEDS AND BENEFITS: The proposed rules implement the above listed statutory directives regarding the utilization of independent testing laboratories that are qualified and approved by the Commission to perform the testing of slot machines, video lottery gaming systems and other gaming equipment. The rules provide specificity with respect to the above listed statutory directives to assure a credible, independent and secure testing process for all games, gaming devices, associated equipment, cashless wagering systems, inter-casino linked systems, mobile gaming systems and interactive gaming systems and any components thereof or modifications thereto. The rules represent best practices in the testing of slot machines, video lottery gaming systems and other gaming equipment and are the result of input from stakeholders and other gambling jurisdiction best practices and regulation. Best practices addressed in the proposed rules include the payment of independent testing laboratory service fees, licensing criteria, the conduct and operation of independent testing laboratories, notification and reporting requirements and inspection and certification results.

4. COSTS:

(a) Costs to the regulated parties for the implementation of and continuing compliance with these rules: Gaming facility and video lottery facility licensees are responsible for the payment of any fees imposed by an independent testing laboratory for services performed. Those fees will be approximately $3 to $4 million annually. Gaming facility and video lottery facility licensees or licensed independent testing laboratories are responsible for the payment of any costs associated with the Commission’s review or approval of (i) slot machine, video lottery gaming system and other gaming equipment testing, and (ii) independent testing laboratory inspection, certification or review. Those fees will be approximately $500,000 to $750,000 annually.

(b) Costs to the regulating agency, the State, and local governments for the implementation of and continued administration of the rule: The costs to the Commission for the implementation of and continued administration of the rule will be negligible given that all such costs are the responsibility of the gaming facility and video lottery facility licensees or licensed independent testing laboratories. These rules will not impose any additional costs on local governments.

(c) The information, including the source or sources of such information, and methodology upon which the cost analysis is based: The cost estimates are based on the Commission’s experience regulating racing and gaming activities within the State.

5. LOCAL GOVERNMENT MANDATES: There are no local government mandates associated with these rules.

6. PAPERWORK: These rules impose paperwork burdens on independent testing laboratories to apply for licensure, perform slot machine, video lottery gaming system and other gaming equipment testing and report on results. Examples of paperwork burdens on the independent testing laboratories include the drafting and maintenance of audits and reviews as well as inspection and certification results.

7. DUPLICATION: These rules do not duplicate, overlap or conflict with any existing State or federal requirements.

8. ALTERNATIVES: The Commission consulted stakeholders and reviewed other gambling jurisdiction best practices and regulation. Alternatives were discussed and considered with stakeholders and compared to other jurisdictions regulations. These included the definition of associated equipment; the allocation and payment of independent testing laboratory fees; the best practices concerning conduct and operation of an independent testing laboratory; the appropriate entity to receive testing and certification results; the appropriate criteria included in the testing and certification results; and the best practices concerning reciprocity of independent testing laboratory results from other jurisdictions. The Commission is also required to promulgate these rules pursuant to Racing Law sections 1303 and 1335(8).

9. FEDERAL STANDARDS: There are no federal standards applicable to the licensing of gaming facilities in New York; it is purely a matter of New York State law.

10. COMPLIANCE SCHEDULE: The Commission anticipates that the affected parties will be able to achieve compliance with these rules upon adoption.

Regulatory Flexibility Analysis, Rural Area Flexibility Analysis and Job Impact Statement

These rules will not have any adverse impact on small businesses, local governments, jobs or rural areas. These rules set forth the requirement that gaming facility and video lottery facility licensees not operate slot machines, video lottery gaming systems or any other gaming equipment unless such have been certified by a licensed independent testing laboratory. These rules also establish the standards for licensing and operating an independent testing laboratory as well as the required notification and reporting of inspection and certification results. These rules apply only to licensed gaming facilities and video lottery facilities.

These rules do not impact local governments or small businesses as it is not expected that any local government or small business will hold a gaming facility or video lottery facility license.

These rules impose no adverse impact on rural areas. These rules apply uniformly throughout the state and solely apply to licensed gaming facilities and video lottery facilities.

These rules will have no adverse impact on job opportunities.

These rules will not adversely impact small businesses, local governments, jobs, or rural areas. Accordingly, a full Regulatory Flexibility Analysis, Rural Area Flexibility Analysis, and Job Impact Statement are not required and have not been prepared.