820 Kar 1:110. Keno

Link to law: http://www.lrc.ky.gov/kar/820/001/110.htm
Published: 2015

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      820 KAR 1:110. Keno.


      RELATES TO: KRS 238.505(17)

      STATUTORY AUTHORITY: KRS 238.515(2), (9),

238.545(4), 238.550(1)


Charitable Gaming is authorized to establish circumstances under which

"special limited charitable games" will be conducted. This

administrative regulation establishes standards for the conduct of Keno,

establishes reporting requirements, and establishes standards for the use of

Keno equipment.


      Section 1. Recordkeeping and Reporting Requirements.

(1) For a period of thirty-six (36) months following the last date of the

special limited charitable games, the charitable organization shall maintain

accurate records as to the conduct of the Keno games. The records shall


      (a) The information contained in the transaction


      (b) Payout information for each game played;

      (c) The number draw and time of the draw for each

game played;

      (d) Appropriate system parameter information

including probable payout percentages and odds of winning for each game played;

      (e) System exception information including voids

and late pays for each game played; and

      (f) The exception log.

      (2) Other Keno records. The charitable organization

shall retain all outside copies of winning tickets of $500 or more for a period

of thirty-six (36) months following the date of the Keno games.

      (3) At least once during each day of the special

limited charitable games, the organization shall generate an updated shift

report, and at the conclusion of each day generate a daily report, which shall

be retained for a period of thirty-six (36) months following the date of the

Keno games.


      Section 2. Conduct of the Game - Keno. The

following rules govern the conduct of Keno.

      (1) All individuals involved in any way in the

conduct of Keno shall be trained in the proper conduct of the game and the

control of funds.

      (2) Participation.

      (a) No person under the age of eighteen (18) shall

play or conduct the game of Keno.

      (b) No individual involved in any capacity in the

conduct of Keno at a charitable gaming event shall be permitted to play Keno at

the same event and on the same day in which such individual was involved in the

conduct of Keno.

      (3) Only computerized Keno games may be conducted.

Brush or manual games are prohibited.

      (4) No player shall have access to, or be allowed

to activate, the Keno equipment. Each number selected by the player, along with

the amount wagered and the total numbers played shall be entered into the

computer, and an outside ticket shall be presented to the player. The inside

ticket shall be retained for such period deemed necessary by the Keno manager.

      (5) Players shall mark the inside ticket with their

number selections or selection by quick pick is permissible.

      (a) Concurrently with the generation of the outside

ticket, the information on the outside ticket shall be recorded on the

transaction log.

      (b) If a ticket is voided, the void information

shall be input in the computer, and the computer shall document the appropriate

information pertaining to the voided wager. A void slip shall then be issued,

which shall be retained with the outside tickets to serve as documentation of

the transaction.

      (6) If the Keno equipment breaks down or

malfunctions during the selection of the winning numbers and the problem is not

promptly corrected, players shall be refunded the amount wagered upon

presenting their outside ticket.

      (7) Once the Keno manager is satisfied that all

tickets for a game have been issued, the game shall be closed and all players

shall be so notified. No tickets may be written or voided after a game has been

closed and the number selection process has begun. Controls shall exist to

prevent the writing and voiding of tickets after a game has been closed and

after the number selection process has begun.

      (8) The potential payout or prize for each

different type of wager shall be made known to the players prior to their

selecting numbers. This may be done through posting the potential payouts in a

manner clearly visible to the players or through a printed schedule that is

available at each location where Keno is played.

      (9) No ticket, including a way ticket, may be

purchased representing a wager of over five (5) dollars, except that a

multirace ticket may be purchased for an amount over five (5) dollars if the

wager for each game does not exceed five (5) dollars.

      (10) A statement indicating any time restrictions

for redeeming a winning ticket shall be visibly posted at each location where

Keno is played or printed on the outside ticket or the schedule of prize


      (11) The outside ticket that is given to the player

shall contain the following information:

      (a) Date of the game;

      (b) Numbers chosen by the player;

      (c) Ticket sequence number;

      (d) Conditioning of the ticket;

      (e) Station number where the ticket was generated;

      (f) Game number; and

      (g) The name of the charitable organization.

      (12) A draw ticket shall be prepared by the


      (13) A player shall wait until the last game

wagered on has been called in order to collect any winnings. A player may be

allowed to play fewer consecutive games than originally indicated, if approval

has been obtained from the Keno manager and the voided wagers are properly

documented in the transaction log.


      Section 3. Winner Verification. Winning tickets

shall be verified prior to payout and paid in the following manner:

      (1) Procedures shall be established to preclude

payment of a ticket previously presented for payment, unclaimed winning tickets

after a specified period of time, voided tickets, and tickets which have not

been issued.

      (2) The sequence number of a ticket presented for

payment shall be input into the computer, and the payment amount shall be

generated by the computer and shall be given to the player.

      (3) No payouts shall be made unless a winning

outside ticket has been presented. If the payout amount is not indicated on the

outside ticket, a payout slip shall be issued.

      (4) The exception log shall be produced and

maintained documenting any payments made on tickets which have not been

authorized by the computer.

      (5) In addition to computer system approval,

winning tickets of fifty (50) dollars through $250 shall be verbally verified

by the Keno manager, winning tickets of over $250 require the signature of the

Keno manager and winning tickets of $1,000 or more require approval of the Keno

manager evidenced by his signature, the performance of comparison of the

winning customer outside ticket to the transaction log and a regrading of the

customer copy using the payout schedule and draw information.


      Section 4. Security Standards and Controls. Access

to the area in which Keno workers operate shall be restricted to charitable

organization workers and authorized equipment service personnel only. Access to

the computer system shall be adequately restricted, and the computer and Keno

supplies shall be maintained under lock and key while not in use. These keys

shall be maintained only by the designated chairperson of the charitable



      Section 5. Keno Tournaments Prohibited. Tournaments,

whereby players pay an entry fee for a certain amount to play a number of Keno

games and where prizes are awarded from a pool of entry fees paid back to the

players based on their scores, are prohibited. Keno leagues played in a similar

fashion as Keno tournaments are also prohibited.


      Section 6. Progressive Keno Games Prohibited. Games

with a prize payout that increases by a predetermined percentage or amount as

each game is played if the prize has not been awarded in a previous game are

also prohibited.


      Section 7. Prize Payouts. (1) No individual prize

valued in excess of $25,000 may be awarded in any Keno game.

      (2) Every charitable organization shall have

sufficient funds available to pay every winner of its Keno games by the end of

the business day following the date such winning ticket is verified. Every

winning prize shall be paid in full to the winning player and shall not be paid

over a period of time or through an annuity, unless such annuity is the prize.

      (3) For any prizes valued at $10,000 or more, the

charitable organization shall have sufficient funds insured or guaranteed by:

      (a) An insurance company licensed to transact

business in Kentucky;

      (b) Money deposited into an insured account

maintained by a financial institution and held in escrow for these purposes;

      (c) An irrevocable letter of credit issued by a

financial institution; or

      (d) A bond from a bonding company registered to do

business in Kentucky.

      (4) If two (2) or more tickets fulfill the

requirements for winning the largest prize on the same game, the full prize

shall be divided equally among the winning tickets subject to any prize payout

limit per game. Applicable prize payout limits shall be legibly posted at each

location where Keno is played and printed on the schedule of prize payouts.

      (5) All unclaimed prizes shall be the property of

the charitable organization.

      (6) All winning tickets of $500 or more shall be

paid to the player by check and not in cash, made payable to the order of the


      (7) If there are multiple players on the same

winning ticket and the prize is $500 or more, the prize payment shall also be

paid by a single check and not in cash, made payable to the order of the



      Section 8. Payout Structure. Each game of Keno

shall be conducted in such a manner that the probable payout percentage for

each game shall not exceed seventy-five (75) percent.


      Section 9. Keno Equipment Maintenance and

Standards. (1) An effective maintenance plan shall be established to service

Keno equipment, including computer program updates, hardware servicing, and

Keno number selection equipment.

      (2) With the exception of routine maintenance, all

Keno equipment maintenance shall be performed by the manufacturer's or

distributor's authorized service personnel. Routine maintenance shall include

clearing of ticket printer paper jams, changing printer heads and cutter bars,

and changing paper tape, adding paper to the ticket printer or aligning the

paper on the ticket printer.

      (3) A manufacturer or distributor shall not offer

or market any type of Keno equipment unless the equipment complies with the

requirements contained in this section.

      (4) The office shall have the authority to request

the testing and approval of any Keno equipment at any time if deemed necessary

in order to ensure fairness to the public and maintain the integrity of the


      (5) Hardware requirements.

      (a) All electrical and mechanical parts and design

principles shall follow acceptable industrial codes in standards in both design

and manufacture.

      (b) Logic boards and software EPROM's shall be in a

locked or sealed area within the machine or in a separate machine. No access to

this area is allowed by persons other than the manufacturer's or distributor's

authorized service personnel. Any unauthorized tampering or entrance into the

logic area is prohibited.

      (c) All PROMs and EPROMs shall have unique serial

numbers that may be used to identify the PROMs and EPROMs for approval and

inspection purposes. All logic boards shall have unique serial numbers or model

numbers for approval and inspection purposes.

      (d) A machine shall have a nonremovable

identification label externally attached to the machine which includes the name

of the manufacturer, the serial number of the machine and the model or make of

the machine.

      (6) Machine protection and integrity.

      (a) A surge protector that feeds all power to the

equipment shall be installed.

      (b) The operation of the Keno equipment shall be

impervious to influences from the outside of the device, including electro-magnetic

interference, electro-static interference, and radio frequency interference.

      (c) All computer functions and programs shall be

secured in a locked and protective housing.

      (d) The design of the Keno equipment shall ensure

that there are no readily accessible game function related points which would

allow any input and that there is no access to input or output circuits unless

it is necessary for the proper operation of the equipment. No switches or other

controlling devices may be added to the machine that would cause the machine to

operate in a manner other than in which it was designed to play.

      (7) Software requirements.

      (a) The logic of the hardware or software may not

interfere with the random number generator software.

      (b) The software shall meet the minimum internal

control standards for the conduct of Keno.

      (c) Machine programs shall be capable of detecting

corruption and shall provide an error message due to failure of the program

storage media and cause the machine to cease play until corrected.

      (d) All programs residing in the equipment shall be

contained in a storage media which is not alterable through any use of the

circuitry or programming of the machine itself.

      (8) Retention of game data.

      (a) No Keno equipment shall have a mechanism

whereby an error will cause the game data to automatically clear. Game data

shall be maintained at all times regardless of whether the machine is being

supplied with power.

      (b) Game data shall be stored in such a way as to

prevent loss of the data when replacing parts or modules during normal


      (9) Random number generator. Random number

generator selection device. A random number generator shall reside on a PROM or

EPROM secured in the logic board of the computer. The numbers selected by the

random number generator for each game shall be stored in the computer’s memory

and be capable of being output to produce a draw ticket with no manual input of

the numbers required. Each possible combination of numbers which produce

winning or losing game outcomes shall be available for random selection at the

initiation of each game. The random selection process shall not produce any

patterns of game outcomes, or be dependent upon any previous number selections

or game outcomes, the amount wagered, or upon the style or method of play.

      (10) Printer.

      (a) The numbers that the player selects shall be

printed on the outside ticket.

      (b) The printer mechanism shall have a

paper-sensing device that upon sensing a "paper low" condition will

allow the machine to finish printing the ticket and then prevent further ticket


      (c) Each machine shall recognize a printer power

loss occurrence and cease play until power has been restored to the printer and

the machine is capable of producing a valid ticket.

      (d) Printed game data shall be printed in ink that

will remain legible throughout the retention period required by Section 1 of

this administrative regulation. (23 Ky.R. 1279; Am. 1938; eff. 11-8-96;

Recodified from 500 KAR 11:110, 2-23-99.)