Fairness Audits

What is fairness auditing?

Fairness auditing for an Internet casino is “An independent and transparent examination of records and other information in order to form an opinion on the integrity and fairness of the Internet casino’s games.”

In fully understanding this statement, the following definitions apply:

Independent

Auditors should not be directly involved with the organization being audited. They should be free to state the objective facts of a situation as well as their honest opinions without fear of recrimination from those being audited or from others in the auditing company.

Transparent

Transparency means that all of the facts gathered, all of the methods used, all of the conclusions reached and all of the opinions expressed should be subject to review and rebuttal by the company being audited, the auditing company itself, and any individuals or companies directly affected by the conclusions of the audit. What “transparent” does not mean is that any or all of the methodology or reporting of the auditor will be publicly available or that permission will be given to publicly disclose such items.

Examination

Auditing requires the auditor to gather and assess factual information from a variety of sources. The gathering and processing of this information must not be hindered by any party. Examination is the process used to obtain facts and draw conclusions. All facts and conclusions must be traceable to valid information sources.

Records and other information

Auditors need full access to all information pertinent to the specific context of the audit. To this end, the auditor needs a full accounting of the types of data stored by the company. If inadequate records are stored, the auditor may require additional information to be obtained before commencing. Auditors use data analysis tools to examine computer records, so the data must be given in a consistent format. It must be clear that the information is intact, uncompromised and complete.

For fairness testing of Internet casino games, the auditor may require access to the following:

• Proprietary information about operational computer programs.
• The random number generator used by the system and its implementation.
• The algorithms used for event generation.
• Intact, uncompromised and complete log files.
• The mathematical design specifications for each game to be audited.

Opinion

Auditing is not a sterile task taking place in a vacuum. It is the obligation of an auditor to both provide objective facts and subjective opinions about a given situation. Although subjective, the opinions expressed must be reasonable interpretations of the facts. All opinions must be open to legitimate challenge.

Integrity

The definition of integrity is: “adherence to moral and ethical principles; soundness of moral character; honesty.”

Integrity of the audited

Without integrity, the audit will be completed very quickly, with a statement of the facts that lead to the conclusion that the company fails the “integrity” standard, and may include the subjective conclusion that the casino is rogue.

Integrity of the auditor

The auditing company and auditor must be respected, known and trusted. There must have a track record of accurate statements of fact and the auditor must have expressed opinions that have held up under scrutiny and reexamination.

Fairness

There are four principles that define the concept of casino game fairness.

1. The game must operate in a manner that is indistinguishable (in principle) from the same game as offered in a brick and mortar casino.
2. The game must pass a suite of statistical tests designed to detect bias.
3. The game can have no operational flaws that allow the house edge to be changed by the player or casino.
4. The game must remain statistically stable over time.

Normal testing procedures are used for items #1, #3 and #4. The auditor must have sufficient experience with testing casino games to design statistical tests sufficient to make reasonable conclusions with regard to item #2.

Internet casino games

This term limits the scope of the auditing activities undertaken. The auditor is concerned with the fairness of slots, video poker, blackjack, craps, roulette, keno and other games of chance offered by the casino.