La. Admin. Code tit. 42 § VII-707

Current through Register Vol. 50, No. 11, November 20, 2024

Section VII-707 - Audits and Reporting

A. Licensees shall comply with the provisions of R.S. 27:308(D) and 310.

B. Licensees shall provide the following information upon demand by the division. As appropriate, the information shall include, at a minimum, month to date and year to date.

1. For each paid fantasy sports contest offered, the following information:

a. the date and time the fantasy sports contest started (began accepting entries) and ended (results finalized);

b. the contest identifier;

c. the prize structure;

d. the players who entered the fantasy sports contest;

e. the selections each player made for their team;

f. the total number of points earned by each players team;

g. the total amount of entry fees paid;

h. the results, including the points earned by the winning player or players;

i. the total amount of winnings to the players;

j. the total amount of cash equivalents awarded to the players; and

k. the information used to determine the location percentage.

2. Overall reports providing the following information for all players associated with the licensee:

a. total player deposits for the requested period;

b. total player withdrawals for the requested period;

c. total entry fees collected from players;

d. total winnings paid to players; and

e. the same information in Subparagraph c and d of this Paragraph for Louisiana players included in the calculation of the location percentage.

3. A time-stamped player log of the following:

a. a unique player identification;

b. all deposits to the players account;

c. all withdrawals to the player;

d. all cash equivalents added to the players account; and

e. all manual adjustments or modifications to the players account.

4. The following player account information:

a. a unique player identification;

b. the players identity details including, but not limited to: participants legal name; age; and address;

c. any self-restrictions;

d. any previous accounts; and

e. the date and IP address from which the player account was registered or accessed.

C. Annual financial statements shall be provided to the division not later than May 1 each year or 120 days after the end of the fiscal year if not December 31.

D. A licensee shall submit to the division one copy of any report required to be filed with the Securities and Exchange Commission or other domestic or foreign securities regulatory agency by the licensee, and their holding company, intermediate company, or parent company. These reports shall be delivered to the division within 15 days of the time of filing with such commission or agency or within 15 days of the due date prescribed by such commission or regulatory agency, whichever comes first.

E. Each licensee shall submit to the division annual audited financial statements reflecting all financial activities of the licensee's fantasy sports contest operations subjected to an examination conducted according to generally accepted auditing standards by an independent Certified Public Accountant (CPA).

1. This shall include auditing total entry fees, entry fees from players located in Louisiana, location percentage calculations, winnings paid, net revenue, and taxes paid to Louisiana based on net revenues. The auditor shall reconcile these audited amounts to similar amounts on the annual audited financial statements and system reports.

2. All audits and reports required by this Section shall be prepared at the sole expense of the licensee.

F. Annual Review of Operations

1. Each licensee shall require the independent CPA, engaged for purposes of examining the financial statements, to submit to the licensee two signed copies of a written report detailing the continuing effectiveness and adequacy of the internal controls.

2. The auditor shall include in this report any items discovered by the auditor or brought to the auditors attention where the operator does not act in accordance with the internal controls and procedures provided to the division. The report should also include notification and explanation for all occasions when the operator denies a players request to withdraw funds and all occasions when the operator discovers the use of unauthorized scripts on its platform.

a. Denial of a withdrawal means the operator or its agent issues the decision to deny a players request to withdraw. Issues not controlled by the operator, such as banking system issues, incorrect deposit account numbers, or other issues not controlled by the operator are not included.

b. Reportable script items includes unauthorized scripts discovered on the platform whether used or not.

3. This report is due no later than 30 days after the due date of the audited financial statements required in Subsection C of this Section.

G. Each licensee shall engage an independent Certified Public Accountant (CPA). The CPA shall examine the statements in accordance with generally accepted auditing standards. The CPA is prohibited from providing internal audit services. Should the CPA previously engaged as the principal accountant to audit the licensee's financial statements resign or be dismissed as the principal accountant, or if another CPA is engaged as principal accountant, the licensee shall file a report with the division within 10 days following the end of the month in which the event occurs, setting forth the following:

1. The date of the resignation, dismissal, or engagement;

2. Any disagreements with a former accountant, in connection with the audits of the two most recent years, on any matter of accounting principles, or practices, financial statement disclosure, auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the former accountant, would have caused him to make reference in connection with his report to the subject matter of the disagreement; including a description of each such disagreement; whether resolved or unresolved;

3. Whether the principal accountant's report on the financial statements for any of the past two years contained an adverse opinion or a disclaimer of opinion or was qualified. The nature of such adverse opinion, disclaimer of opinion, or qualification shall be described; and

4. A letter from the former accountant furnished to the licensee and addressed to the division stating whether the CPA agrees with the statements made by the licensee in response to this Section.

H. Unless the division approves otherwise in writing, the statements required must be presented on a comparative basis. Consolidated financial statements may be filed by commonly owned or operated operations, but theconsolidated statements must include consolidating financial information or consolidated schedules presenting separate financial statements for each licensee. The CPA shall express an opinion on the consolidated financial statements as a whole and shall subject the accompanying consolidating financial information to the auditing procedures applied in the examination of the consolidated financial statements.

I. Each licensee shall submit to the division two originally signed copies of its audited financial statements and the applicable CPA's letter of engagement not later than May 1 or 120 days after the last day of the licensee's business year if not December 31.

J. If a licensee changes its fiscal year, the licensee shall prepare and submit to the division audited financial statements covering the period from the end of the previous business year to the beginning of the new business year not later than 120 days after the end of the period.

K. Each licensee shall submit a quarterly financial report including gross fantasy sports contests revenues, net revenues, location percentage calculations, and taxes paid on net revenues. The report shall be forwarded to the division not later than 30 days after the last day of the applicable quarter.

L. The division may request additional information and documents from either the licensee or their CPA, regarding the financial statements or the services performed by the C PA. The division may review any and all work papers of the CPA at a time and place determined by the division. These requirements shall be included in agreements between the licensee or its affiliates and the CPA.

M. The licensee shall submit to the division, postmarked by the United States Postal Service or deposited for delivery with a private or commercial interstate carrier, or in another manner approved by the division, any audit report prepared by the Internal Revenue Service (IRS) and issued to the licensee. The report is due within 30 days of receipt from the IRS.

N. Impairments to the independence of a CPA to perform a financial audit include, but are not limited to:

1. during the period of professional engagement to perform an audit, or at the time the opinion was issued, the auditing person:

a. had or was committed to acquire any direct or indirect financial interest in the licensee;

b. was a trustee of any trust or executor or administrator of any estate if the trust or estate had or was committed to acquire any direct or indirect financial interest in the licensee;

c. had any joint closely held business investment with the licensee or any key person or owner thereof that was material in relation to the auditing person or the auditing persons firms net worth; or

d. had any loan to or from the licensee or any key person or owner thereof, when made under normal lending procedures, terms, and requirements, except:

i. loans that are not material to the net worth of the borrower;

ii. home mortgages; or

iii. other secured loans, except loans guaranteed by the auditing persons firm that are otherwise unsecured.

2. during the period covered by the licensees financial statements, during the period of the professional engagement to perform an audit, or at the time the opinion is issued, the auditing person was:

a. connected with the licensee as a promoter, underwriter, voting trustee, key employee, or in any capacity equivalent to that of a key employee; or

b. a trustee for any pension or profit-sharing trust of the licensee;

3. functioning as if a key employee of the licensee;

4. performing an audit of the independent CPA or independent CPAs firms own work;

5. advocacy for the licensee; or

6. having any other role with the licensee or its affiliates other than as independent auditor.

La. Admin. Code tit. 42, § VII-707

Promulgated by the Department of Public Safety and Corrections, Gaming Control Board, LR 47268 (2/1/2021).

AUTHORITY NOTE: Promulgated in accordance with R.S. 27:15, 24, and 304.