Supersedes Revenue Rulings 35-06-1, 35-96-2, and 35-96-3
COMPLIANCE PROCEDURES FOR COUNTIES, CITIES, AND VILLAGES LICENSED TO CONDUCT A KENO LOTTERY
(see Annual Compliance Procedures of the Keno Activity of Counties, Cities, and Villages)
What compliance procedures should a county, city, or village follow to perform the required annual examination of its keno lottery?
The Nebraska Department of Revenue (Department) has adopted Nebraska County and City Lottery Regulation 35-616 to require the performance of annual compliance procedures of keno lotteries conducted by counties, cities, and villages. The attached “Annual Compliance Procedures” documents the minimum procedures to be performed annually for county, city, or village keno lottery activity.
Keno Manager. Keno manager means the shift manager, supervisor, or person in charge of the daily operation of a keno game.
Lottery Operator. Lottery operator means an individual or business with whom a county, city, or village contracts to run a keno game on its behalf.
Sales Outlet Location. Sales outlet location means a location other than the lottery operator where keno wagers are placed.
Sponsor. Sponsor means the county, city, or village conducting the lottery.
Sponsor’s Representative. The sponsor’s representative means personnel or contracted staff of the county, city, or village conducting the lottery.
The Department’s authority to require an annual examination of a county, city, or village keno lottery is found in Neb. Rev. Stat. § 9-620(7) and (13) of the Nebraska County and City Lottery Act (Act) which provide, respectively:
The department shall have the following powers, functions, and duties:
. . .
(7) To require periodic reports of lottery activity from licensed counties, cities, villages, manufacturer-distributors, and lottery operators and any other persons, organizations, limited liability companies, or corporations as the department deems necessary to carry out the act;
. . .
(13) To adopt and promulgate such rules and regulations and prescribe all forms as are necessary to carry out the act; . . .
The procedures can be completed by a sponsor’s representative, a contracted professional (e.g., certified public accountant), or a combination of the two. The lottery operator may not conduct the compliance procedures, nor can the lottery operator contract for the performance of the compliance procedures on behalf of the sponsor.
A sponsor conducting a keno lottery pursuant to the Act is required to perform annual compliance procedures of its keno activity. This Annual Compliance Procedures document is the basis for the keno compliance procedures referenced in this revenue ruling as published by the Department, and is intended to supplement Regulation 35-616.
The compliance procedures in the revenue ruling are not limited to the performance of the procedures specified. The sponsor may require additional procedures to be performed. If additional procedures are performed (e.g., increased sample sizes, expanded testing, or additional visits to the keno site), the results must be included in the required report to the Department.
The sponsor’s representative will be required to perform these minimum procedures on an annual basis to coincide with the fiscal year of the sponsor. A report outlining the findings of the procedures must be submitted by the sponsor or the sponsor’s representative to the Department within 90 days of the end of the fiscal year of the sponsor.
Douglas A. Ewald
December 2, 2010
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