MINIMUM INTERNAL CONTROLS FOR RACETRACK GAMING OPERATORS

NEW MEXICO GAMING CONTROL BOARD MINIMUM INTERNAL CONTROLS FOR RACETRACK GAMING OPERATORS 4900 Alameda Boulevard, NE Albuquerque, NM 87113 Phone 505.841.9700 Fax 505.841.9720 Effective 02/28/2005 i

Table of Contents SECTION 1 INTRODUCTION...1 SECTION 2 CURRENCY, COIN AND TOKEN CONTROL...2 Cash Vault General Requirements...2 Vault Cashier, Custodian or Vault Auditor...2-3 Transfer of Vault Funds...3-4 Cage Cashier General Requirements...4-5 Cage Cashier...5 Change Bank...6-7 Check Cashing...7 SECTION 3 GAMING MACHINE ACCESS LOGS...8 SECTION 4 JACKPOT PAYOUTS AND HOPPER FILLS...9 Jackpot Payout Procedures...9-10 Unclaimed Jackpots...10 Hopper Fills and Auxiliary Hopper Fills...10-11 Excessive Hopper Fills...11 SECTION 5 DROP AND COUNT... 12 Drop Procedures...12, 13-14 Drop Count Procedures...14, 15-16 Annual Hopper Adjustments...16 ACCOUNTING 6 ACCOUNTING...17 General Requirements...17 Gaming Machine Procedures...17-18 Reports...18, 19-20 SECTION 7 SIGNATURE CARDS...21 SECTION 8 KEY CONTROL LOGS... 22-23 Duplicate Keys... 23-24 End of Day Key Procedures... 24 SECTION 9 SURVEILLANCE SYSTEMS AND SECURITY GUIDELINES... 25 Closed Circuit Surveillance... 25-26 Areas Requiring Video Surveillance... 26 Surveillance Room... 26-27 Recording and Monitoring... 27 Surveillance Video Record Retention... 27-28 Security... 28 SECTION 10 PROGRESSIVE SLOT MACHINES... 29 General... 29 AGS Power Pro Progressive Controller... 29 Setup or Maintenance of Progressive Jackpot... 29-30 Reset, Base Amount and Increment Rate (Game Outcome Only)... 30 Transfer of Progressive Liability... 30-31 Closure/Continuance... 31 SECTION 11 REQUIREMENTS FOR GAMING FORMS... 32 SECTION 12 SAMPLE FORMS ATTACHED... 33-34 ii

1. INTRODUCTION These rules are the minimum requirements for internal controls as developed by the Gaming Control Board. You may choose to use these minimum internal controls as your system of internal controls, or you may choose to develop your own alternative system. If you develop your own system of internal controls, it must be approved in advance by the Board. If your internal controls do not address a procedure, it will be assumed you have adopted the New Mexico Gaming Control Board (NMGCB) approved minimum internal controls. These minimum internal control requirements do not include references to the Gaming Control Act and other New Mexico Gaming Control Board rules. Compliance with all applicable statutes and rules is mandatory, regardless of whether the statutes or rules are repeated in the internal controls. Internal controls are based on three factors: (1) access to gaming machines, currency, coins, and tokens must be restricted; (2) internal controls for each job function must have proper segregation of duties and; (3) all assets must be safeguarded. In addition to these minimum internal controls, the racetrack licensee must read, understand, and comply with all applicable federal and state statutes and other New Mexico Gaming Control Board rules. Periodically, the NMGCB will revise these minimum internal controls to keep up with changes in the gaming industry or as conditions warrant. All gaming forms must be approved by the Gaming Control Board prior to their use by the Racetracks. If the racetrack does not have the appropriate forms, they must use the attached NMGCB approved forms. 1

2. CURRENCY, COIN, AND TOKEN CONTROL 2.1 CASH VAULT GENERAL REQUIREMENTS A. The cash vault at the racetrack operator s casino is the secured area under constant surveillance where the cash reserves are stored. Cash reserves are currency, coins, tokens, foreign coins, damaged or mutilated currency and coins, loose coins, unclaimed jackpots, and any other item of value as determined by the licensee. The cash reserves stored in the cash vault may be placed in a safe and secured cabinets or shelving units. Each safe must have a locking device (either a key or electronic door combination). B. All coin and currency counting devices (i.e. jet sorts, coin wrappers, currency counters, etc.) MUST be tested at the beginning of each shift. The test amount and the time of the test count must be documented on a Vault Cash Inventory form. C. Sealed clear bags MUST be used for coins and tokens used in the casino. The licensee may request a variance to use canvas bags. The canvas bags must be color coded by denomination. D. When the vault or cage (rack) inside the vault is left unattended, all currency, coins and tokens are to be secured by a lock device. E. Any unreconciled variance (overage or shortage) of $500 or more per shift must be reported to the Audit and Compliance Division of the New Mexico Gaming Control Board within 72 hours of the discovery of the variance using a Variance Report form. The licensee MUST prepare a written report that describes the nature of the variance, how the variance was investigated and who performed the investigation. F. Extraneous items such as sweaters, coats, magazines, books, purses, personal currency, boxes, hats, etc. are not allowed in the vault area. G. The licensee s management must ensure that appropriate written policies and controls are in place to minimize theft. 2.2 VAULT CASHIER, CUSTODIAN OR VAULT AUDITOR A. The casino s vault is to be inventoried at the beginning and closing of each shift. On a quarterly basis, the casino s vault is to be inventoried by someone independent of the cashier cage. All bundled (strapped) currency must be broken down and recounted at least weekly and must be dated and initialed by the vault cashier, custodian or auditor. B. In the presence of each other, the vault cashier, custodian or vault auditor and verifier must independently count the entire vault s cash reserves (currency, coins, tokens, foreign coins, damaged or mutilated currency and coins, loose coins, miscellaneous vault drawers, unclaimed jackpots, and any other item of value. Vault inventory counts are to be documented on a Vault Cash Inventory form. Inventory count means physically counting all strapped and bundled currency, coin cans and token racks, every sealed token bag, physically placing all loose coins or token in the jet sort counting machine, 2

and physically counting loose currency or placing loose currency in the currency counting machine. The entire contents of the cash vault must be inventoried. C. Vault inventory count should agree with the predetermined cash vault amount or the NMGCB should be notified. D. The vault cashier, custodian or vault auditor must reconcile any variances between the inventory count and the predetermined cash vault amount. The vault cashier, custodian or auditor will place a Cash Vault Inventory form in the accounting lock box, or other secured depository. E. At the change of shifts, the off-going vault cashier, custodian or vault auditor physically counts the entire contents of the cash vault and documents his/her closing inventory count on a Cash Vault Inventory form. The on-coming vault cashier, custodian or auditor will conduct a separate physical count of the entire contents of the cash vault and document his/her opening inventory count on a Cash Vault Inventory form. The two vault cashiers, custodian or vault auditor will compare their independent inventory counts. If variances occur, the vault cashiers, custodian or vault auditor will recount the areas of the cash vault that are showing discrepancies. Once the variances are resolved (if any), the cash vault can be transferred to the on-coming vault cashier, custodian or vault auditor. F. The on-coming vault cashier, custodian or auditor must reconcile any variances between the inventory count and the predetermined cash vault amount. After the variance are resolved, if applicable, the on-coming cashier, custodian or auditor will place a Cash Vault Inventory form in the accounting lock box, or other secured depository. G. At the close of the gaming day, vault cashier, custodian or vault auditor counts the cash vault and documents his/her closing inventory on a Cash Vault Inventory form. The verifier will perform a separate inventory count. H. The vault cashier must reconcile any variances between the inventory count and the predetermined cash vault amount. After the variances are resolved, if applicable, the vault cashier, custodian or vault auditor will place the Cash Vault Inventory form in the accounting lock box, or other secured depository. I. The vault cashiers, custodian or vault auditors are responsible for completing a Daily Cash Summary form. All entries on a Daily Cash Summary form must have supporting documentation. Jackpot payouts and hopper fills are to be recorded on a Daily Cash Summary form. J. The licensee must establish written policies and procedures for the use of an accounting lock box system to secure gaming forms. The accounting lock box(s), or other secured depository must be keyed separately and be located in a secure location under surveillance. 2.3 TRANSFER OF VAULT FUNDS A. On drop and count days, the count team leader will transfer the cash drop funds (soft and hard count) from the count room to the vault cashier, custodian or vault auditor. In the count room, the vault cashier will recount the cash drop funds and compare his/her 3

totals to the totals of the count team. Once the totals agree, the count team leader and the vault cashier, custodian or auditor will sign a Bill Validator Summary form for the soft count funds and a Gaming Machine Count Summary form for the hard count funds. B. Following receipt of the money from the count team, the vault cashier, custodian or vault auditor transfers the money to the vault and documents the entry on a Vault Transfer Slip. The vault cashier, custodian or vault auditor will combine the cash drop funds to the cash funds on hand in the cash vault. If required by the licensee, the vault cashier, custodian or vault auditor will prepare the bank deposit and rework the cash in the vault to meet the needs of the casino for the gaming day. Any bank deposits and funds being transferred to the bank must be documented on a Daily Cash Summary form. All funds received back from the bank must be documented on a Daily Cash Summary form. The vault cashier, custodian or vault auditor will also be responsible for ensuring that the validated bank deposit slips are forwarded to the accounting office, custodian or auditor. C. Any transfer of funds from the vault cashier, custodian or vault auditor to the cage cashier or vice versa will be counted by both parties and documented on a Vault Transfer Slip form. D. The vault cashier, custodian or vault auditor is responsible for maintaining the vault s copy of the Vault Transfer Slip form. E. The vault cashier, custodian or auditor is responsible for depositing the other copy of the Vault Transfer Slip form into the accounting lock box, or other secured depository. 2.4 CAGE CASHIER GENERAL REQUIREMENTS A. All coin and currency counting devices (i.e. jet sorts, coin wrappers, currency counters, etc.) must be tested at the beginning of each shift. The test amount and the time of the test count must be documented on a Cage Cashier Inventory form. B. When the cage cashier s drawers are left unattended, all currency, coins and tokens are to be secured by a lock device. C. Extraneous items such as sweaters, coats, magazines, books, purses, currency, boxes, hats etc. are not allowed in the cage cashiers area. D. The licensee s management must ensure that appropriate written policies and controls are in place to minimize theft. E. Cage cashiers may transfer funds or make a change between each other (from cash drawer to cash drawer). F. Transfer of funds can only take place between the cage cashier and the vault cashier using the Vault Transfer Slip. G. Any unreconciled variance (overage or shortage) of $500 or more per shift must be reported to the Audit & Compliance Division of the Gaming Control Board within 72 hours of discovery of the variance using a Variance Report form. The licensee MUST prepare a written report that describes the nature of the variance, how the variance was investigated, who performed the investigation, and how the variance was resolved. 4

H. Tips received by a cashier are not to be combined with the gaming licensee s monies. I. The licensee MUST develop and implement written policies and procedures to collect and distribute tips. 2.5 CAGE CASHIER A. All cage cashier window drawers are to be inventoried at the beginning and closing of each shift. All bundled currency must be counted at least weekly and must be dated and initialed by the cage cashier. Cage cashier inventory counts are to be documented on a Cage Cashier Inventory form. B. Cage cashier drawer inventory counts should agree with the predetermined cage drawer amount. C. The verifier must observe the recount of the opening cage cashier s drawer and/or the closing cage cashier s drawer (whichever is applicable). D. If there is a variance from the predetermined amount, the cage cashier and the cage cashier supervisor will investigate the variance and document the variance using the Variance Report form. Any unreconciled differences should be reported to the Audit & Compliance Division of the New Mexico Gaming Control Board within 72 hours. E. At the change of shifts, the off-going cage cashier physically counts the cage drawer and balances to the predetermined cage drawer amount. The cage cashier will document his/her closing inventory count on the Cage Cashier Inventory form. The on-coming cage cashier will conduct a separate physical count of the cage drawer and document his/her opening inventory count on the Cage Cashier Inventory form. The two cage cashiers will compare their independent inventory counts. If variances occur, the cage cashiers will recount the areas of the cage drawers that are showing discrepancies. Once the variances are resolved (if any), the cage drawers can be transferred to the on-coming cage cashier. F. After the cage cashier drawers are inventoried and variances reconciled, the cage cashier will place the Cage Cashier Inventory form in the accounting lock box, or other secured depository. G. At the end of each shift, all Jackpot Payout/Fill Slips and variance forms are to be turned over to the vault cashier for documenting on the Daily Cash Summary form. H. A Multiple Currency Transaction Log must be completed by the licensee for each single transaction in excess of $3,000 ($3,000.01 or more). This form may also be used to log additional transactions as required under federal law, Title 31, of the United States Code, Sections 5311-5323 (31 USC 5311-5323) and related regulations pertaining to gaming establishments. I. For currency transactions in aggregate for an individual or each single transaction in excess of $10,000 ($10,000.01 or more), the licensee must complete Internal Revenue Service form 8362 - Currency Transaction Report by Casinos. 5

2.6.1 CHANGE BANK For licensees that have change banks on the casino floor, the following procedures must be performed: A. A change bank is to contain a pre-determined currency and/or token amount. B. The change person will perform a daily inventory of each change bank/drawer and verify that the totals equal the pre-determined dollar amount. The inventory is to be taken at the beginning and end of each shift. At the end of each shift, the verifier (as determined by the licensee) must verify the ending inventory count. C. The change bank account is to be entered on a Change Bank Inventory form. D. When a change person needs to exchange cash from the cage cashier, the change person and the cage cashier count the currency and coins and fill-out a Change Bank Transfer Slip form. E. If an overage occurs, the change person will transfer the overage using the Change Bank Transfer Slip form to the cage cashier. The cage cashier will send one copy of the Change Bank Transfer Slip form to the vault cashier to document the overage on the Daily Cash Summary form. The second copy will be deposited in the accounting lock box, or other secured depository. F. If a shortage occurs, the cage cashier issues an amount necessary to replenish the imprest bank using the Change Bank Transfer Slip form. The cage cashier will send one copy of the Change Bank Transfer Slip form to the vault cashier to document the shortage on the Daily Cash Summary form. The second copy will be deposited in the accounting lock box, or other secured depository. G. Any unreconciled variance (overage or shortage of $500 or more per shift) must be reported to the Audit & Compliance Division of the Gaming Control Board within 72 hours of the discovery of the variance using the Variance Report form. The licensee MUST prepare and submit to the Audit & Compliance Division of the New Mexico Gaming Control Board a written report that describes the nature of the variance, how the variance was investigated, who performed the investigation, and how the variance was resolved. 2.6.2 CHANGE BANK For licensees that do not have change banks on the casino floor, the following procedures must be performed: A. The cage cashier checks out change banks to change persons using a Change Bank Inventory form. B. The currency and coins are to be counted by the cage cashier and then by the change person. Both parties sign the Change Bank Inventory form. C. When a change person needs to exchange cash from the cage cashier, the change person and the cage cashier count the currency and coins and fill-out a Change Bank Transfer Slip form. 6

D. If a variance occurs when the imprest bank is returned, the cage cashier and change person will recount the contents. E. If an overage occurs, the change person will transfer the overage using the Change Bank Transfer Slip form to the cage cashier. The cage cashier will send one copy of the Change Bank Transfer Slip form to the vault cashier to document the overage on the Daily Cash Summary form. The second copy will be deposited in the accounting lock box, or other secured depository. F. If a shortage occurs, the cage cashier issues an amount necessary to replenish the change bank using the Change Bank Transfer Slip form. The cage cashier will send one copy of the Change Bank Transfer Slip form to the vault cashier to document the shortage on the Daily Cash Summary form. The second copy will be deposited in the accounting lock box, or other secured depository. G. Any unreconciled variance (overage or shortage of $500 or more per shift) must be reported to the Audit & Compliance Division of the Gaming Control Board within 72 hours of the discovery of the variance using the Variance Report form. The licensee MUST prepare and submit to the Audit & Compliance Division of the New Mexico Gaming Control Board a written report that describes the nature of the variance, how the variance was investigated, who performed the investigation, and how the variance was resolved. 2.7 CHECK CASHING A. Each licensee must establish its own written policy for cashing checks. B. The check cashing policy must include the following: 1. Types of checks accepted; 2. Types of identification required to accept checks; 3. Criteria for not accepting checks; 4. Policies to handle dishonored checks; 5. Checks must only be accepted at the cashiers cage; 6. Checks must not be accepted that are not payable on demand. 7

3. GAMING MACHINE ACCESS LOGS When the gaming machine door is opened, the Gaming Machine Access Log form must be filled out and placed back inside the gaming machine. The only exception is when the gaming machine is accessed to remove the bill validator boxes for regularly scheduled drops. The licensee is to develop procedures to file and retain completed Gaming Machine Access Log(s) forms for a period of five years. The completed Gaming Machine Access Log(s) forms should be made available within a reasonable period of time upon request for review by the Board s agent. 8

4. JACKPOT PAYOUTS AND HOPPER FILLS 4.1 JACKPOT PAYOUT PROCEDURES A. Licensee MUST establish a written policy identifying which gaming positions are authorized to sign the Jackpot Payout/Fill Slip and which gaming positions may sign for the different levels of payouts up to $1,200.00 (i.e. $500, $1,000, etc.). The written policy MUST also define who may sign as verifiers. B. Slot employees verify that a jackpot has occurred at the gaming machine and notifies security and surveillance of the transaction. C. Slot employee enters the appropriate jackpot payout information into the computer and produces a Jackpot Payout/Fill Slip. D. The slot employee proceeds to the cage cashier to obtain the jackpot payout funds. The jackpot payout is counted out by the cage cashier and given to the slot employee. The jackpot payout is recounted by the slot employee. The Jackpot Payout/Fill Slip is signed by both the cage cashier and the slot employee. The cage cashier will retain the appropriate copy to balance the cage drawer and the slot employee will retain a copy for additional signatures. E. For jackpots of $1,200 or more the slot employee will complete a Verification of Winnings in Excess of $1,200 form (State of New Mexico Human Services Department form). A W-2G Statement of Gambling Winnings (IRS form) must be completed for jackpots of $1,200 or more. The slot employee will verify all the necessary information provided by the patron and have the patron sign the appropriate forms. The slot employee is required to ensure the patron provides the appropriate forms of identification before issuing the patron their winnings. If the patron does not have the appropriate forms of identification, the jackpot is considered an unclaimed jackpot. F. The slot employee counts out the payout to the patron and then gives the funds to the patron. The patron MUST sign the Jackpot Payout/Fill Slip. The slot employee will have the verifier (to be determined by the licensee) sign the Jackpot Payout/Fill Slip. If the jackpot payout is in excess of $1,200 ($1,200.01 or more), security and the casino floor supervisor must also sign the Jackpot Payout/Fill Slip. G. The remaining completed copies of the Jackpot Payout/Fill Slip are forwarded to the accounting lock box, or other secured depository. H. When a Jackpot Payout/Fill Slip is voided, the cage cashier MUST ensure that the slip is properly voided. The face of the original slip and copies of the slip MUST be clearly marked as voided, dated and signed by the cage cashier and casino floor supervisor. All copies of the voided slip are to be deposited in the accounting lock box, or other secured depository. The voided slip MUST be attached to the replacement Jackpot/Fill Slip. I. If the licensee allows slot attendants to perform more than one jackpot payout transaction at a time, the licensee MUST develop written procedures allowing such 9

transactions. The written procedures MUST address the number of jackpot transactions that may be processed at one time and verified by another employee. J. After the patron is paid his/her jackpot winnings, the slot employee must request that the patron play off the machine. If the patron declines, the slot attendant must notify the slot supervisor that the slot attendant will be opening the gaming machine to a take a coin or token from the hopper and play off the machine. The slot attendant will notify security and surveillance that he/she will be accessing the gaming machine before he/she removes the coin or token from the hopper in order for this transaction to be monitored. 4.2 UNCLAIMED JACKPOTS A. An Unclaimed Jackpot Receipt MUST be completed for all unclaimed jackpots. The Unclaimed Jackpot Receipt is transferred to the cash vault. B. If after thirty days, the jackpot remains unclaimed, the vault cashier writes void on the Jackpot Payout/Fill Slip. The Unclaimed Jackpot Receipt and Jackpot Payout/Fill Slip are then forwarded to accounting. C. After the thirty day period has expired and the Unclaimed Jackpot Receipt and the Jackpot Payout/Fill Slip is forwarded to accounting, the unclaimed jackpot is then included in net revenue and gaming tax is paid. D. The patron will have 180 days (or longer as determined by the licensee) from the date of the jackpot win to claim the unclaimed jackpot win. E. If after 30 days and the unclaimed jackpot is added back into income and gaming taxes are paid and the patron claims the unclaimed jackpot before the 180 days period expires (or longer as determined by the licensee), the accounting department can reverse the unclaimed jackpot transaction in Section C above and may make an adjustment to gaming revenue for the current months tax bill. The licensee must make a proper gaming revenue adjustment and obtain approval for the adjustment with the Information System Division. F. After 30 days, prepare the Unclaimed Jackpots over 30 Days form (GC-9B). 4.3 HOPPER FILLS AND AUXILIARY HOPPER FILLS The following procedures are performed when a gaming machine hopper indicator light is lit: A. The slot employee verifies the need to perform a hopper fill. The slot employee will open the gaming machine door and verify that the hopper is empty or jammed. If the hopper is not empty, the slot employee will stir the coins or tokens with their hand to release the jammed coins or tokens in the hopper and close the gaming machine door. The slot employee will re-verify that a hopper fill still needs to be performed. If the hopper is empty, the slot employee will proceed to the cage cashier to initiate the request to obtain hopper fill bags. 10

B. The Gaming Machine Access Log is filled out by the slot employee and put back into the gaming machine. C. The slot employee enters the information into the computer and generates a Jackpot Payout/Fill Slip and presents the fill slip to the cage cashier. D. The cage cashier transfers the fill bags to the slot employee and both sign the Jackpot Payout/Fill Slip. E. The hopper is replenished by the slot employee. F. The slot employee signs the Jackpot Payout/Fill Slip. G. The Jackpot/Fill Slip is forwarded to the accounting lock box, or other secured depository. H. When a Jackpot Payout/Fill Slip is voided, the cage cashier and casino floor supervisor MUST ensure that the slip is properly voided. The face of the original slip and copies of the slip MUST be clearly marked as voided, dated and signed by the cage cashier and casino floor supervisor. All copies of the voided slip are to be deposited in the accounting lock box, or other secured depository. The voided Jackpot Payout/Fill Slip must be attached to the replacement slip number. I. If the licensee allows slot employees to perform more than one hopper fill transaction at a time, the licensee MUST develop written procedures allowing such transactions. The written procedures MUST address the number of hopper fill transactions that maybe processed at one time or verified by another employee. These procedures should minimize potential errors by employees while processing multiple hopper fills. J. Hopper fills from the gaming machine drop bucket is strictly prohibited. 4.4 EXCESSIVE HOPPER FILLS A. On a drop-by-drop basis, the licensee will review actual fills to identify excessive hopper fills. Excessive hopper fills will be based on volume of play, location of machine, past history of machine, day and seasonality factors, and other factors affecting the amount of play machine receives. After identifying the machines that appear to have excessive fills, the licensee will perform a hopper fill analysis using the following formula: Estimated Fills = (Ending Coin in Beginning Coin in) (Ending Drop Beginning Drop) B. Estimated hopper fills are compared to actual fills and should be within +/- one fill. All variances must be investigated. C. Licensee must develop their own form to document the excessive hopper fill analysis performed. 11

5. DROP AND COUNT 5.1 DROP PROCEDURES A. Drops must be conducted at times that have been previously submitted to the New Mexico Gaming Control Board on the Drop and Count Schedule. B. The drop team is to wear coveralls issued by the licensee. The licensee must develop written procedures for the issuance and inspection of the coveralls issued to drop team members. The licensee s inspection procedures must include at a minimum, procedures that will deter theft of funds during and after the drop and count process. C. At a minimum, one drop team must consist of one drop team leader, two security guards, and as many others as deemed necessary. D. The drop team leader or designee and security will obtain all keys from the dual key lock box necessary for the drop. E. The drop buckets and bill validator boxes are distributed to each machine. F. The team or teams stay together and drop one gaming machine bank section at a time. The soft drop takes place first. Once the soft drop is completed, the hard drop can commence. G. Soft Drop Procedures The following are the minimum procedures that MUST be performed during the soft drop: 1. The gaming machine door is opened and the bill validator box is removed. 2. An empty bill validator box is placed back into the gaming machine and the gaming machine door relocked. 3. The bill validator box containing the removed money is taken to the bill validator cart. 4. The bill validator box containing the money is placed on the bill validator cart. One soft drop team member MUST be assigned to stay with the bill validator cart at all times during the soft drop process. 5. Soft drop team members MUST ensure that all bill validator box covers are secured and locked. 6. One security guard must be stationed with the soft drop team to observe all of the drop team members perform the soft drop duties. The second security guard will be stationed with the bill validator box cart. 7. In the event currency is not fully secured in the bill validator box, security will tell all members to stop the soft drop process. Security will notify surveillance which gaming machine bill validator box has currency not secured and the amount of 12

currency not secured. The soft drop team leader will obtain the bill validator box cover key from security to secure the currency back into the box. Security will notify surveillance that the currency is secured and the soft drop team members can continue the drop process. 8. Once the drop is completed and/or bill validator box cart is full, security will lock the cart. All drop team members and security personnel will take the full cart to the soft count room. Surveillance must ensure that the bill validator cart in the soft count room is monitored until the soft drop count is completed. 9. The soft drop team and security will continue the soft drop process until it is complete. 10. If the licensee use two separate soft drop teams, both bill validator carts are to be transported to the soft count room together. H. Hard Drop Procedures The following are the minimum procedures that MUST be performed during the hard drop: 1. The gaming machine cabinet door to the hard drop bucket is opened and the hard drop bucket is removed from the gaming machine cabinet. Every hard drop bucket must be removed regardless if it is empty or full. 2. Anytime there is loose coin inside the gaming machine cabinet, security must first notify surveillance that the drop team member will be placing the loose coin back into the hard drop bucket and security will notify let surveillance know when that process is completed. If loose coin is found on the gaming floor prior to the hard drop, the coin is to be turned over to the cage cashier and recorded as miscellaneous income. 3. For slant top style gaming machines, the drop team must show surveillance the drop bucket. If the drop bucket has coin inside, the drop team must show surveillance that they are pouring the contents of the bucket into a separate hard drop bucket. Once emptied, the drop team will put the original hard drop bucket back into the gaming machine cabinet. If the drop bucket does not have coin, the drop team must show surveillance that the drop bucket is empty before placing the bucket back into the cabinet. 4. A gaming machine tag is placed in the hard drop bucket to identify which gaming machine the hard drop bucket came from. 5. The hard drop bucket is taken to the hard drop bucket cart. 6. The hard drop bucket is placed on the hard drop bucket cart. One hard drop team member must be assigned to stay with the hard drop bucket cart at all times during the hard drop process. 7. One security guard must observe the hard drop to ensure that any loose coin is put in the hard drop bucket and all hard drop buckets are removed and replaced. 8. The second security guard stays with the hard drop cart. 13

9. When the hard drop process is complete, all hard drop team members escort the hard drop bucket cart to the hard count room with security personnel. 10. All drop keys are immediately checked back into the dual keyed locked box at the completion of the soft and hard drop process. 11. Drop team members MUST rotate duties on a weekly basis as determined by the licensee. 5.2 DROP COUNT PROCEDURES A. The count team consists of a count leader and three team members, one of the team members must be the count recorder. B. Drop counts must be performed immediately following the drops (after the soft and hard drops are completed), allowing a reasonable amount of time for break purposes. C. The licensee will determine the order in which the soft count and hard count will take place. Each count process must be performed separately. D. A Bill Validator Report, Count (Weigh)/Wrap Variance Report, and a Gaming Machine Count Summary are completed during the count procedure. These reports must be forwarded to accounting immediately after the completion of the count process. E. The count team enters the count room escorted by security. Security leaves the room and locks the door. Two members test the count machines with a predetermined amount of currency and coin. The predetermined amount cannot come from the drop buckets or bill validator boxes. This test is documented on the Gaming Machine Count Summary. The licensee must develop written procedures to test the counting machines. F. The count team members cannot leave the count room until all money is counted, verified, sorted, and totaled into the computer and cash drop funds are transferred to the cash vault. If a count team member needs to leave the count room for any reason, all count team members must secure all of the cash drop funds in the count room, notify security that the count team needs to leave the count room, all count team members must be screened by security before leaving the count room, and under no circumstances may a count team member be left in the count room alone. The count team members cannot reenter the count room until all count team members are present. Surveillance must monitor the count room at all times during the drop count process. G. All team members sign the Gaming Machine Count Summary. H. At the completion of the count, the team leader and another member, transfer accountability of the money to the vault cashier, who verifies the total and signs the Gaming Machine Count Summary. The Gaming Machine Count Summary is forwarded to accounting after the completion of the count process. I. Upon leaving the count room, all money is to be transferred to the cash vault and locked up and secured. The count team members will be wanded down by security with a metal detector at the completion of the hard count. 14

J. Count team members MUST rotate duties on a weekly basis as determined by the licensee. K. Soft Count Procedures - The following are the minimum procedures that must be performed during the soft count: 1. A count team member unlocks the bill validator box, removes the currency, shows the empty box to the camera, and relocks the box. 2. A count team member runs a first count of the currency through the bill counting machine. 3. After the first count, the currency is given to another count team member for a second count. 4. After the second count is complete, the currency is placed in a sorting bin (to be determined by the licensee) and a printed receipt indicating the amount counted is given to the soft count recorder. 5. The soft count recorder enters both the gaming machine number that corresponds to the bill validator box counted and the total counted from the printed receipt into the computer. 6. A team member that receives the currency placed in the sorting bin may begin the bundling process. 7. After the bundling process is complete, all bundles are recounted and reconciled to the computer total. 8. After each count procedure is performed, the members MUST clear their hands (show both palms up) to the surveillance camera. L. Hard Count Procedures - The following are the minimum procedures that must be performed during the hard count: 1. A count team member removes the gaming machine tag from the hard drop bucket and gives the tag to the count recorder. The count recorder enters gaming machine number into the computer or on the Gaming Machine Count Summary form for manual operations. 2. A count team member places the hard drop bucket on the weigh scale. The count team member weighs the contents of the hard drop bucket on the scale. The count team member calls out the amount from the weigh scale to the count recorder and the count recorder will restate the amount back to the count team member for verification purposes. The count recorder will enter the weigh scale amount into the computer. 3. If the licensee uses a coin counting machine during the hard count process, count team member pours the drop bucket into the coin counter. The team member gives 15

the printed ticket to the count recorder. The count recorder enters the amount from the coin counting machine printed ticket into the computer. 4. A team member either bags or rolls the coins or tokens in accordance with the licensee s policies and procedures. 5.3 ANNUAL HOPPER ADJUSTMENTS A. At least once per year, the licensee must perform a physical inventory count on 100% of the gaming machines. The licensee must use a weigh scale or a jet sort coin counter to perform the physical hopper inventory count. The machine used for the inventory count must be properly calibrated and tested before the start of the hopper inventory count. The licensee will forward the results of the physical hopper count inventory to accounting. Accounting will make the necessary hopper count adjustments to the licensee s accounting records. All documentation relating to the physical hopper inventory count must be attached to the Hopper Summary form. 16

6. ACCOUNTING 6.1 GENERAL REQUIREMENTS A. Accounting is responsible for reviewing, analyzing, comparing, reconciling, filing, and maintaining all source documents. B. Accounting determines amounts to deposit into the licensee s gaming tax transfer account for subsequent transfer to the state, and prepares and files standard financial statements with the Gaming Control Board. C. Additional responsibilities include preparing statistical reports as required by Internal Control Minimum Procedures, and analyzing and documenting variances noted as a result of reviewing statistical reports. D. Accounting is to document their analysis and review of statistical reports. Accounting MUST also provide written documentation that will support their review and results of investigations conducted to explain variances outside allowable thresholds. E. The licensee MUST develop written procedures that outline the process for the preparation, review, analysis, and maintenance of statistical reports. F. For control purposes, accounting personnel cannot participate in any gaming transactions or activities (i.e., drops, counts, fills, cashiering, handling currency and coin, etc.) other than reading and recording gaming machine meters. G. All gaming related records and forms must be maintained for a period of five years in the State of New Mexico. The licensee MUST have written backup and recovery policies that ensure the timely restoration of data (onsite and offsite) in order to resume operating after hardware or software failure. H. Documents supporting each drop period MUST be filed together by gaming day and stored in a secured area as determined by the licensee. 6.2 GAMING MACHINE PROCEDURES A. At the end of each shift and soft/hard counts, all documents and supporting forms are immediately forwarded to the accounting lock box, or other secured depository. B. Accounting personnel MUST sign the gaming forms where appropriate. C. On a daily basis, accounting obtains a copy of all gaming forms from the accounting lock box, or other secured depository. D. Accounting reviews, matches, and verifies all Jackpot Payout/Fill Slips used since the previous drop. Accounting verifies the sequence of slip numbers from shift to shift, determines that no slips are missing or unaccounted for, verifies that all voided slips are properly accounted for, and examines slips for proper signatory authority, mathematical accuracy, and proper completion. 17

E. Accounting reviews, matches, and verifies all Unclaimed Jackpot Receipts; matches them to corresponding Jackpot Payout/Fill Slips. Non-compliance issues are investigated, resolved, and documented on a timely basis. F. Accounting enters information from the Jackpot Payout/Fill Slips on the Payout/Fill Summary Sheet. The Payout/Fill Summary Sheet is used to summarize, by machine, the payout/fills for each drop period. G. Non-compliance issues are investigated, resolved, and written documentation is prepared on the results of the investigation of the non-compliance issue. H. The Gaming Machine Count Summary, Count (Weigh)/Wrap Variance Report, and Bill Validator Summary are reviewed by count team leader to verify that: a. The count/weigh machine has been properly tested by a count team member. b. All team members have signed the Gaming Machine Count Summary, Count (Weigh)/Wrap Variance Report, and Bill Validator Summary and have proper signatory authority. I. The above mentioned reports must be properly completed on a timely basis. J. The cashier, custodian or auditor has signed the Gaming Machine Count Summary, Count (Weigh)/Wrap Variance Report, and Bill Validator Summary as evidence of receipt of the drop into the cage. K. There should not be any variances between the Gaming Machine Count Summary, Count (Weigh)/Wrap Variance Report, Bill Validator Summary, and Daily Cash Summary. If it occurs, any variances should be investigated and the results of the investigations MUST have written explanations and supporting documents for conclusions reached. L. Upon completing the review procedure, accounting signs the Gaming Machine Count Summary, Count (Weigh)/Wrap Variance Report, and Bill Validator Summary. M. Variances of 2% or more by denomination, or in total, are investigated and documented on The Count (Weigh)/Wrap Variance Report. N. ALL LICENSEES MUST CONTACT THE INFORMATION SYSTEMS DIVISION OF THE NEW MEXICO GAMING CONTROL BOARD AT 1-877- 297-1159 PRIOR TO PERFORMING ANY MAINTENANCE ON ANY GAMING MACHINE. 6.3 REPORTS A. There are three statistical reports that Accounting must prepare at least on a monthly basis. These reports are to remain on the premises and be readily available at the request of the Gaming Control Board: 18

a. Drop/Meter Comparison, b. Jackpot/Meter Comparison c. Meter Reading Summary B. Review of these reports is critical in maintaining an effective internal control environment. Unusual, large, and/or unexpected unreconciled variances (5% or more) must be investigated by appropriate personnel, documented in writing and reported within 72 hours to the Audit & Compliance Division of the New Mexico Gaming Control Board. Explanations for variances MUST include: a. The procedures used to investigate the variance. b. The results of the investigation. c. Any actions taken or to be taken to monitor or correct the cause of the variance. d. Results of corrective actions taken. C. Drop/Meter Comparison Report a. The Drop/Meter Comparison is used to compare the meter drop with the actual drop by machine. b. Variances of 5% or more must be investigated and documented on this report and reported to the Board. D. Jackpot/Meter Comparison Report a. This report compares the meter jackpots with the actual paid jackpots by machine, by denomination, and in total. b. Information needed to calculate the report includes the actual manual pay jackpot from the Jackpot Payout/Fill Slips, and the current and prior jackpot meter readings. Variances of 5% or more must be investigated and documented on this report and reported to the Board. E. Meter Reading Summary a. Licensees must ensure the soft meter readings are documented on the Meter Reading Summary. Soft meters and the accounting system reports must be investigated and documented on this summary and reported within 72 hours to the Gaming Control Board s Audit and Compliance Division. F. Instructions for Completing Gaming Forms All entries made on all gaming forms are to be made in ink. If an error occurs on a gaming form, the error is to be crossed out and initialed by the person making the correction. The correct entry must be made on the same gaming form. A new gaming form should not be generated to correct errors. 19

Under no circumstances shall any gaming document be shredded or destroyed in any manner. If an error occurs in the preparation of the gaming document and the error causes the original gaming document to become illegible, the licensee must attach the original gaming document to the corrected gaming document. At no time shall any gaming employee who serves in a supervisory position directly or indirectly solicit any tip or gratuity from a gaming employee under their supervision, or any other gaming employee, at the premise where they are employed. 20

7. SIGNATURE CARDS Signature Card General Requirements: A. Signature Cards are to be used for two purposes: 1. To document the Key Person personnel and Work Permit employees signature, initials, and license number. 2. To document the gaming forms licensed personnel are authorized to use and sign and which keys the licensed personnel are authorized to use and check out. The keys to be checked out are either unrestricted or restricted. B. All Signature Cards must contain the following elements: 1. The Licensee s name. 2. The gaming employee s printed name. 3. Key Person personnel and Work Permit employees respective Key Person number or work permit number issued by the New Mexico Gaming Control Board AND the employee identification number issued by the licensee. 4. The gaming employee s handwritten signature and a box for employee s initials. 5. The name of the department where the Key Person or Work Permit employee works. 6. Any gaming forms Key Person or Work Permit employees are authorized to sign. 7. Keys authorized to be checked out by the Key Person or Work Permit employee. 8. The department head s signature authorizing the signature card. C. All Signature Cards are to be updated on an as needed basis or change in employee status. D. The original Signature Card is to be maintained as determined by the licensee. 21

8. KEY CONTROL LOGS The licensee is to determine which keys will be restricted. The licensee will establish appropriate written policies and procedures to determine who may check out AND use the restricted keys. The key control policies and procedures MUST include at a minimum: 8.1 Keys to restricted areas are kept in a dual-keyed locked box. This box is to be secured in an area to be determined by the licensee and under 24 hour surveillance. The licensee will determine the appropriate custodian of the dual-keyed locked box. The custodian will ensure that only authorized employees check out restricted keys. The licensee MUST determine and define in their internal control system which keys will be restricted. 8.2 Gaming machine door keys may be checked out at the beginning of each shift for the entire shift. The keys may be transferred from one shift to the next. The first person to check out the keys must check in the keys, and the next person must recheck out the keys in order to properly maintain the key control logs. 8.3 No keys are to remain in the lock of the dual keyed locked box. No one person can have access to more than one key to the locked box. 8.4 All restricted keys are controlled through restricted access and Key Control Logs, which include the following: A. Date of issuance B. Time of issuance C. Signature of individual receiving key D. Key number E. Reason for issuing key F. Signature of issuer G. Date of return H. Time of return I. Initials of individual accepting return of key. 8.5 The following procedures are to be followed when a key is requested: 22

A. The employee requests the key from the cashier. B. The cashier verifies authority. If the person does not have authority the cashier denies access. C. If the employee has the authority, the Key Control Log is completed. D. The cashier fills in the key number, initials the log, and gives the key to the authorized person. The gaming manager or security employee initials the log. E. When the key is returned, the cashier accepts custody and responsibility for the key by recording the time, date in, and initialing the Key Control Log. F. The cashier immediately places the key back into the locked key box, locks the box, and removes the access key. 8.6 DUPLICATE KEYS A. Duplicate copies of all restricted keys are locked in a secured area as determined by the licensee and are only accessible to authorized personnel. B. An authorized person and a licensed employee must be present when duplicate keys are accessed. C. If there is no vault, duplicate keys are stored in a dual-keyed locked box located in the accounting office, in the security office, or in another secure area. One key to the locked box for the duplicate keys is kept in the security locked box. The second key to the duplicate lock box is kept in the Director of Securities locked box. D. Duplicate restricted keys must be inventoried at least annually. E. Upon receiving duplicate keys the Duplicate Key Control Log must be completed with the following information: 1. Date key(s) received, 2. Restricted key description, 3. Number of new keys made, 4. Signature of individual receiving key(s), 5. Key number(s), and 6. Total number of duplicate keys existing. F. If a duplicate key is removed or checked out to an authorized employee for any reason, the Duplicate Key Control Log must be completed with the following information: 1. Signature and I.D. # of individual issuing key, 2. Signature and I.D. # of individual receiving key, 3. Reason for issuing the key, 4. Date of issuance, 5. Time of issuance, and 23

6. Number of keys remaining. G. If a duplicate key is permanently removed to replace a broken key, the Duplicate Key Control Log is completed. The broken key must be returned and replaced with a duplicate key. The broken key is to be properly disposed of by security. H. When the duplicate key is returned, the Duplicate Key Control Log must be completed with the following information: 1. Initials and I.D. # of individual accepting the returned key, 2. Date of return, 3. Time of return, and 4. Number of keys remaining. 8.7 END OF DAY KEY PROCEDURES At the end of the day, the keys to access the restricted dual keyed locked boxes must be secured. 24

9. SURVEILLANCE SYSTEM & SECURITY GUIDELINES A. GENERAL Surveillance system and security guidelines apply to all licensed gaming operators, unless waived by the Board. A written surveillance and security plan must be submitted to the Board for approval within 7 days after filing an application. The plan should include the following: description of surveillance equipment, blueprint or diagram of areas to be monitored and the placement of surveillance equipment, procedures used to monitor equipment, and other information required by the Board, pursuant to 15.1.10.23 NMAC. Modifications-Alterations to Floor Plan All enhancements or modifications to an approved surveillance plan including camera and gaming machine placement and modifications to the infrastructure of the licensed premise shall be submitted to the Board for approval. Gaming machine movement or modification to the infrastructure in the gaming area (licensed premise) shall not affect or impede live surveillance monitoring. B. SPECIFIC STANDARDS AND GUIDELINES Any failure of the surveillance system or its continuous operation must be immediately reported to the Board or its Agent. The Board or its Agent may determine a temporary suspension of gaming operations is necessary until the system is returned to full operation. Each gaming operator will install and maintain the following minimum standards regarding video gaming surveillance operations: 9.1 CLOSED CIRCUIT SURVEILLANCE Unless the Board exempts a gaming operator licensee, each gaming operator MUST install, maintain, and operate a closed-circuit surveillance system of sufficient quality to produce video recordings and still picture reproduction. This system MUST include: a) Date and time generators that display the date and time of events on each recording. The displayed date and time must not obstruct the recorded view. b) Recorders that produce high quality pictures with high-speed scanning and playback capability in real time. c) A monitoring screen that provides sufficient detail to clearly distinguish the value of currency, coins, tokens, and the outcome of the game. d) Cameras equipped with lenses of sufficient magnification and clarity to allow the viewer to clearly distinguish the value of currency, coins, tokens, and the outcome of the game. Cameras will provide pan, tilt and zoom capabilities to effectively monitor gaming operations from different angles. 25

e) Adequate lighting in all areas where closed-circuit camera coverage is required to enable clear videotape and still reproduction. 9.2 AREAS REQUIRING VIDEO SURVEILLANCE The surveillance system must monitor and record clear, unobstructed, and overall views of the following areas within the licensed premises twenty-four (24) hours a day, seven (7) days a week: a) All video gaming machine operations, including access points to the licensed gaming area. b) Cash drawers, safes, drop areas, coin storage areas (coin rooms), and other areas where the drop, count and wrap processes are conducted. c) Key storage facility where coin drop cabinet keys, bill acceptor drop box release keys, and bill acceptor drop box keys are maintained. d) All transactions at cashier cages and booths, including, but not limited to, the view of cash handling personnel s hands after each transaction. All cash handlers should turn palms up with open hands after each transaction, i.e., after hopper fills, change transactions, jackpot hand pays, etc. 9.3 SURVEILLANCE ROOM a) Each licensed gaming premise will establish a separate room dedicated to the surveillance of the gaming area, allowing gaming employees or Agents of the Gaming Control Board to covertly monitor the activities of all gaming operations and any suspicious activity within the licensed premise. Video Monitor, Video Recording Equipment and surveillance tapes will be maintained in this surveillance room. b) Staffing Requirements A minimum of one (1) trained surveillance technician will be required. At a minimum, surveillance must be required to effectively monitor the major events (i.e., jackpot payouts of $1,200 or more, patron disputes, hopper fills, drop and count process, etc.) of all gaming operations. At no time will the surveillance room be left unattended or unmanned. The surveillance operator must be properly relieved by another trained surveillance operator or supervisor. c) A complete index and guide to the gaming cameras, monitors and controls must be posted in clear view in the surveillance room. This guide must include, but not be limited to, a map of the camera locations, how to call up each camera and the number of each camera. d) Access to surveillance rooms shall be limited to essential employees authorized by the licensee, service personnel, Gaming Control Board personnel, and others approved by the Board. A current list of authorized employees and service 26

personnel that have access to the surveillance room must be posted in the surveillance room. Events to be Viewed 1. Patrons and employees at machines 2. Face of slot machine 3. Pay-out line 4. Token pay out into currency at cashiers cage 5. Access points into licensed area 6. Cashier cage 7. Count rooms 8. Tokens or currency that are dropped on the casino floor, 9. Hands of cash handling personnel after each transaction, see Paragraph (d) above Application of Surveillance 1. Only personnel trained to operate surveillance equipment will be authorized to monitor surveillance activities. Trained surveillance personnel shall only conduct camera placement and position adjustment. A complete and current list of personnel trained to conduct surveillance and camera placement shall remain in the surveillance room at all times. Wiring Requirements-Backup System 1. To maintain continuous surveillance in the event of power loss to the surveillance system, the licensee must install and maintain an auxiliary or backup power source capable of providing immediate restoration of power to all elements of the surveillance system that enable surveillance personnel to observe all gaming activities for a minimum of 4-8 hours. 9.4 RECORDING AND MONITORING Licensed operators must maintain written records of all suspicious activities that warrant real time surveillance monitoring. Record requirements include: a) Five year retention period of all investigative surveillance logs or investigative reports. b) Records must be maintained by licensed operators and stored in a secure area. c) Licensee will allow Gaming Control Board employees access to the records at any time. d) Video recordings and still picture reproductions must be made available to the Gaming Control Board upon request. 9.5 SURVEILLANCE VIDEO RECORD RETENTION A licensee must retain in a secure manner all video recordings for a minimum period of 30 days. The licensee must retain a video recording and still picture reproductions 27

for an undetermined time period when circumstances exist where there are suspected unusual or irregular activities, or where activities appear to violate any criminal statute. Video tapes, copies of tapes or reproductions from video surveillance tapes will not be released to anyone without prior approval of the Board or its Investigative Services Division Agents. 9.6 SECURITY Each Licensee Security Plan must include procedures for providing escorts to winning patrons. Upon request of any winning patron, security personnel will provide a physical security escort to the winning patron s vehicle. The licensee MUST post in a conspicuous place the availability of this service to winning patrons. 28

10. PROGRESSIVE SLOT MACHINES A. GENERAL A progressive slot machine game is a slot machine game with an award that increases based on coin, credit or token play. One or more slot machine may be linked to a progressive controller. The following control procedures apply to one or more progressive slot machine games linked to a progressive controller. A multi game slot machine offering any progressive games for play must apply all of the coins, tokens, or credits wagered during each and every game which can win a certain progressive award to that progressive award. The multi game slot machine must not apply any coins, tokens, or credits wagered during any game that cannot win a certain progressive award to that progressive award. Each progressive slot machine game must be linked to a meter showing the payoff. This payoff, referred to as the advertised amount, must be visible to all players playing a slot machine game which may potentially win the progressive jackpot. This meter is referred to as a progressive meter. All machines linked to a progressive bank must be the same denomination. Additionally, each slot machine game on the link must have the same probability of hitting the combination that will award the progressive amount. There are two types of progressive games supported by the Board, Game Outcome and Mystery-Style. A Game Outcome jackpot is a progressive jackpot that is won when a player hits a specific game defined outcome, such as a royal flush in poker or three bards on a spinning reel game. When the player hits the specified outcome, he or she wins the funds in the prize pool. A Mystery-Style jackpot is a progressive jackpot won when a player s contribution pushes the balance of the prize pool over a randomly chosen winning amount. The win amount for the prize pool is calculated randomly by the site controller. B. AGS POWER PRO PROGRESSIVE CONTROLLER The AGS Power Pro Progressive Controller is the hardware and software that controls all communications among the linked machines. It consists of the AGS Central Host and associated software plus the Site Controllers that are installed at each licensee s premises. The progressive controller continuously monitors each linked machine for inserted coins. It also calculates the amounts to apply to the progressive jackpot. The progressive jackpot display is constantly updated by the use of MRI s (Management Ring Interface). C. SET UP OR MAINTENANCE OF PROGRESSIVE JACKPOT Each licensee wishing to set up, modify or end a progressive jackpot must perform the following: 1. Licensee submits a completed jackpot request form for any of the following conditions: a. New Jackpot (Game Outcome or Mystery-Style) b. Version change 29

c. Jackpot ending (See Closure/Continuance) or Funds Transfer (See Transfer of Progressive Liability). 2. Licensees must notify (written or via telephone) the Information Systems Division seven days in advance of any new progressive. 3. Information Systems will evaluate the request and the requested parameters. If the request is for a new jackpot, the parameters will be tested using a simulator which will provide a theoretical baseline indicating the progression of the award and any reserves that the licensee may wish to setup. The results will be provided to the licensee for evaluation. Once the licensee has accepted and signed the final form, a new jackpot instance will be created and placed into production. D. RESET, BASE AMOUNT, AND INCREMENT RATE (GAME OUTCOME ONLY) The reset amount for a progressive jackpot must be equal to or greater than the top award as stated on the par sheet of any machine on the link. For example, if the top award on the link is $10,000, the base amount (or reset amount) of the progressive jackpot must be at least $10,000. If more than one progressive jackpot will be awarded, such as a progressive jackpot for both the top and second awards on the slot machine, the base amount for each must be equal to or greater than the highest corresponding awards on the slot machine games linked. E. TRANSFER OF PROGRESSIVE LIABILITY With prior written notification to, and approval from, the Information Systems Division, licensees may transfer the progressive liability from one progressive bank of slot machines to another progressive at the same licensed premises. To aid the Information Systems Division in scheduling progressive liability transfers, licensees must notify (written or via telephone) the Information Systems Division seven days in advance of transferring the progressive liability. The Board allows for the transfer of the patron s contributions (the difference between the advertised progressive amount and the non-progressive amount and the nonprogressive award for the combination, which causes the progressive jackpot). The progressive slot game to which the jackpot is transferred must have a comparable probability of winning as the original progressive slot game. This means the patron must have the same or better theoretical chance of winning the progressive jackpot on the new bank of slot games as they had on the old progressive slot games. If no comparable probability slot machine game (s) is available (as determined by the Board), the Board will allow for the distribution of the patron contributions in another approved method, like an additional payout. Again, licensees must receive prior written approval to distribute the patron contribution in another method. Upon transferring the progressive liability, the dollar amount of the wager must be equal to or less than that of the old progressive slot game. For example, where the original progressive jackpot on a quarter machine could be won with a three coin wager (75 cents), this progressive liability could not be transferred to a dollar progressive because any wager could exceed the original wager (75 cents) for the prize. Conversely, if a retail licensee wishes to transfer the progressive jackpot liability from a nickel progressive slot game (five 30

coins, 25 cent wager) to a quarter progressive slot game, the new wager would have to be one coin (25 cents). Denomination changes are considered transfers. The licensee may change the denomination of a progressive slot machine game, or a progressive slot machine game bank, prior to a patron winning the progressive jackpot, pursuant to the same rules stated above. This change requires prior approval from the Board. F. CLOSURE/CONTINUANCE After a progressive jackpot has been put into play, the amount may not be lowered until it is won by a patron, unless the progressive is transferred or discontinued in an approved manner. After being closed, and upon reopening, a retail licensee must reactivate any progressive liabilities that were in effect upon closure by re-establishing the patron amounts. As an example, Casino XYZ closes on December 31, 2001, with a progressive jackpot of $20,000; $10,000 of this progressive jackpot is from patron contributions. When Casino XYZ reopens at a later date the progressive jackpot must be at least $10,000 and all the original conditions of winning (probability of winning and amount of wager) must be re-instated. 31

11. REQUIREMENTS FOR GAMING FORMS All entries made on all gaming forms are to be made in ink. If an error occurs on a gaming form, the error is to be crossed out and initialed by the person making the correction. The correct entry must be made on the same gaming form. A new gaming form should not be generated to correct errors. Under no circumstances shall any gaming document be shredded or destroyed in any manner. If an error occurs in the preparation of the gaming document and the error causes the original gaming document to become illegible, the licensee must attach the original gaming document to the corrected gaming document. At no time shall any gaming employee who serves in a supervisory position directly or indirectly solicit any tip or gratuity from a gaming employee under their supervision, or any other gaming employee, at the premise where they are employed. 32

12. SAMPLE FORMS ATTACHED The following sample forms were discussed above. The forms reflect the minimum information that is required. The licensee can customize these forms to adapt to their gaming operations. The forms may have the licensee s name and logo printed on them. The licensee may create additional forms that are essential to their operations. Alternative and additional forms used by the licensee must be pre-approved by the NMGCB prior to their implementation. 1. GC 1 [Vault Cash Inventory Form] 2. GC 2 [Cage Cashier Cage Inventory Form] 3. GC 3 [Imprest Bank Inventory Form] 4. GC 4 [Daily Cash Summary] 5. GC 5 [Variance Report Form] 6. GC 6 [Vault Transfer Slip] 7. GC 7 [Imprest Bank Transfer Slip] 8. GC 8 [Jackpot Payout/Fill Slip] 9. GC 9 [Unclaimed Jackpot Receipt] 10. GC 10 [Drop and Count Schedule] 11. GC 11 [Gaming Machine Access Log] 12. GC 12 [Signature Card] 13. GC 13 [Key Control Log] 14. GC 14 [Key Authorization Log] 15. GC 15 [Hard Meter Reading Summary] 16. GC 16 [Bill Validator Summary] 17. GC 17 [Count (Weigh)/Wrap Variance Report] 18. GC 18 [Drop/Meter Comparison Report] 19. GC 19 [Jackpot/Meter Comparison Report] 33

20. GC 20 [Bankroll Analysis Worksheet] 21. GC 21 [Gaming Machine Count Summary] 22. GC 22 [Hopper Summary] 23. GC 23 [Meter Reading Summary] 24. GC 24 [Additional Payouts Reporting Form] 34