0001
 1                  TRANSCRIPT OF PROCEEDINGS
 2                         BEFORE THE
 3                  BINGO ADVISORY COMMITTEE
 4                 (TEXAS LOTTERY COMMISSION)
 5                        AUSTIN, TEXAS
 6   
     QUARTERLY MEETING OF THE      §
 7   BINGO ADVISORY COMMITTEE      §
     WEDNESDAY, NOVEMBER 7, 2007   §
 8   
 9   
10   
11                      COMMITTEE MEETING
                   WEDNESDAY, NOVEMBER 7, 2007
12   
13   
14   
15                  BE IT REMEMBERED THAT on Wednesday,
16   the 7th day of November 2007, the Bingo Advisory
17   Committee meeting was held from 10:00 a.m. to
18   2:25 p.m., at the Offices of the Texas Lottery
19   Commission, 611 East 6th Street, Austin, Texas  78701,
20   before CHAIR SUZANNE TAYLOR.  The following
21   proceedings were reported via machine shorthand by
22   Patricia Gonzalez, a Certified Shorthand Reporter of
23   the State of Texas, and the following proceedings were
24   had:
25   
0002
 1                         APPEARANCES
 2   
     BINGO ADVISORY COMMITTEE:
 3   
               Ms. Suzanne Taylor, Chair
 4             Ms. Kimberly Rogers
               Ms. Rosalie Lopez
 5             Ms. Pat Gifford
               Mr. Larry Whittington
 6             Ms. Markey Weaver
               Mr. Knowles Cornwell
 7             Mr. Earl O. Silver
 8   
 9   CHARITABLE BINGO OPERATIONS ASSISTANT DIRECTOR:
10             Mr. Philip D. Sanderson
11   
12   
13   
14   
15   
16   
17   
18   
19   
20   
21   
22   
23   
24   
25   
0003
 1                      TABLE OF CONTENTS
 2                                                 PAGE NO.
 3   AGENDA ITEM NO. 1 - Meeting Called to Order......    5
 4   AGENDA ITEM NO. 2 - Consideration of and
     possible discussion and/or action on the
 5   Minutes of the July 17, 2007 Bingo
     Advisory Committee Meeting.......................    6
 6   
     AGENDA ITEM NO. 3 - Recognition of new Bingo
 7   Advisory Committee Member and outgoing Bingo
     Advisory Committee Member........................    7
 8   
     AGENDA ITEM NO. 4 - Report, possible discussion
 9   and/or action on 2nd quarter calendar year 2007
     bingo conductor information......................   10
10   
     AGENDA ITEM NO. 5 - Consideration of and
11   possible discussion and/or action on the
     Bingo Advisory committee work plan...............   13
12   
     AGENDA ITEM NO. 6 - Consideration, discussion
13   and/or action on the guidelines regarding
     video confirmation...............................   13
14   
     AGENDA ITEM NO. 7 - Consideration of and
15   possible discussion and/or action on planned
     rulemaking relating to licensing.................   66
16   
     AGENDA ITEM NO. 8 - Consideration of and
17   possible discussion and/or action on the
     Conductor-Books and Records Guidelines...........   88
18   
     AGENDA ITEM NO. 9 - Consideration of and
19   possible discussion and/or action, on
     proposed new 16 TAC §402.500 relating to
20   General Records Requirements.....................   90
21   AGENDA ITEM NO. 10 - Consideration of and
     possible discussion and/or action on proposed
22   new rule 16 TAC §402.506 relating to
     Disbursement Records Requirements................   90
23   
24   
25   
0004
 1                TABLE OF CONTENTS (continued)
 2                                                 PAGE NO.
 3   AGENDA ITEM NO. 11 - Consideration of and
     possible discussion and/or action on
 4   proposed new rule 16 TAC §402.511 relating
     to Required Inventory Records....................   90
 5   
     AGENDA ITEM NO. 12 - Consideration of and
 6   possible discussion and/or action on draft
     new rule 16 TAC §402.512 relating to Required
 7   Bingo Occasion records...........................  160
 8   AGENDA ITEM NO. 13 - Report and possible
     discussion on the activities of the Charitable
 9   Bingo Operations Division........................  193
10   AGENDA ITEM NO. 14 - Public comment..............  195
11   AGENDA ITEM NO. 15 - Consideration of and
     possible action on future Bingo Advisory
12   Committee meeting dates and/or items to be
     considered for future meetings on the Bingo
13   Advisory Committee work plan.....................  205
14   AGENDA ITEM NO. 16 - Adjournment.................  209
15   
16   
17   
18   
19   
20   
21   
22   
23   
24   
25   
0005
 1                    P R O C E E D I N G S
 2                 WEDNESDAY, NOVEMBER 7, 2007
 3                        (10:00 a.m.)
 4                      AGENDA ITEM NO. 1
 5                 MS. TAYLOR:  According to our official
 6   clock on the wall, the Lottery Commission clock, it is
 7   ten o'clock; so I'd like to call the meeting to order.
 8                 It's my understanding that Sandy is
 9   going to make some comments before we get going.
10                 MS. JOSEPH:  Yes.  Thank you.
11                 For the record, my name is Sandy Joseph,
12   Assistant General Counsel.
13                 And before you get into your other
14   items, I wanted to advise you of a matter involving
15   the printing of the notice for this meeting from the
16   Lottery website.  First of all, let me tell you that
17   the notice for the meeting was correctly posted with
18   the Secretary of State.  It was also posted on the
19   Lottery website, as it usually is, and it's possible
20   to print that notice off that screen.  However, if you
21   clicked on a link on that page called "Printable
22   Version," the wrong notice appeared and printed -- it
23   didn't appear.  It just printed an old notice from
24   last May.  This was discovered this morning as a
25   result of a phone call from Jamie McNally whose client
0006
 1   had done this very thing and printed out the wrong
 2   notice.
 3                 The question and the issue was raised
 4   whether this would cause some people to -- and, in
 5   fact, did kind of confuse Jamie's client as to what
 6   the agenda was for today, and I wanted to bring this
 7   to your attention so that as you go through your
 8   agenda items today you'll be aware that it's possible
 9   there are people who looked at the wrong agenda.
10   However, notice of this meeting is legally posted;
11   it's correctly posted with the Secretary of State.
12                 I just wanted to make you aware of this.
13                 MS. TAYLOR:  Thank you very much.
14                      AGENDA ITEM NO. 2
15                 MS. TAYLOR:  Item No. 2, Consideration
16   of and possible discussion and/or action on the
17   Minutes of the July 17, 2007 Bingo Advisory Committee
18   Meeting.
19                 MR. CORNWELL:  I move to accept the
20   Minutes as -- no?
21                 MR. SANDERSON:  I didn't hear you.
22                 MS. WEAVER:  Didn't --
23                 MR. CORNWELL:  Do I have to press the
24   button?
25                 MR. SANDERSON:  Yes.
0007
 1                 MR. CORNWELL:  I move that we accept the
 2   Minutes as written.
 3                 MS. WEAVER:  Huh-uh.  Let go.
 4                 Now try it.
 5                 MR. CORNWELL:  I move that we -- there
 6   we go.  I move that we accept the Minutes as written.
 7                 MS. LOPEZ:  I second.
 8                 MS. TAYLOR:  All in favor?
 9                 (All those in favor of the motion so
10   responded.)
11                 MS. TAYLOR:  Opposed?
12                 (No response)
13                 MS. TAYLOR:  With none opposed, that
14   unanimously passes.
15                      AGENDA ITEM NO. 3
16                 MS. TAYLOR:  Item No. 3, Recognition of
17   new Bingo Advisory Committee Members and outgoing
18   Bingo Advisory Committee Member.
19                 MR. SANDERSON:  Members, it's that time
20   of the year where we kind of send out the old and
21   bring in the new.  And at this point in time, I would
22   like to recognize, for his dedicated service for the
23   last three years, Jack Dougherty, and we've got a
24   little presentation to give to him.
25                 (Applause)
0008
 1                 (Brief Pause)
 2                 MR. SANDERSON:  First, I'd like to give
 3   you a certificate for appreciation of service from the
 4   Bingo Advisory Committee and then I'd like to present
 5   to you your official name tag signed by the members
 6   who served on the committee with you.
 7                 MR. DOUGHERTY:  That is so nice.
 8                 MR. SANDERSON:  Thank you so much, Jack.
 9                 MR. DOUGHERTY:  Thank you.
10                 (Applause)
11                 MR. DOUGHERTY:  I loved every minute of
12   it.
13                 MS. TAYLOR:  Every minute?
14                 MR. DOUGHERTY:  Every minute.
15                 (Simultaneous discussion)
16                 MR. SANDERSON:  Now I'd like to welcome
17   the two new members that we have on the committee
18   today, Ms. Pat Gifford out of Austin, representing the
19   general public, and Mr. Earl Silver, representing the
20   commercial lessors out of Conroe.
21                 MR. CORNWELL:  Welcome, you guys.
22                 MR. WHITTINGTON:  Welcome.
23                 Welcome, Pat.
24                 MS. TAYLOR:  Pat, would you like to tell
25   the other members a little bit about yourself?
0009
 1                 MS. GIFFORD:  Can you hear me?
 2                 MS. TAYLOR:  Uh-huh.
 3                 MS. GIFFORD:  Well, I play bingo.
 4                 (Laughter)
 5                 MS. GIFFORD:  And I've played bingo for
 6   a long time.  I remember playing when we put beans on
 7   the cards, if that tells you anything, and I work
 8   full-time.  I'm the TDC coordinator at Williamson
 9   County Sheriff's Office.
10                 MS. TAYLOR:  Thank you.  Welcome.
11                 It's your turn.  Earl, tell us about
12   you.
13                 MR. SILVER:  Well, my name is Earl
14   Silver.  We have a hall in Conroe, Texas, Tejas Bingo,
15   that does pretty well for our charities.  And I'd just
16   like to thank the other members for their support and
17   I look forward to working with them.
18                 MS. TAYLOR:  Thank you.
19                 MR. SANDERSON:  I'd like to also note
20   that this is the first time in probably about the last
21   four years that we've had nine members.  With the
22   adoption of the Bingo Advisory Committee rule this
23   past summer, we put a change in there that if there's
24   not an SSP available to serve on the committee, then a
25   member-at-large could be chosen from any of the
0010
 1   remaining interest groups.  So I wanted to make that
 2   note.
 3                 Thank you.
 4                 MS. TAYLOR:  I noticed Worlanda was just
 5   in here counting heads and wondering who's missing.
 6                 Tom called yesterday and said he wasn't
 7   able to make the meeting, but next meeting, hopefully,
 8   we'll have all nine members here.
 9                      AGENDA ITEM NO. 4
10                 MS. TAYLOR:  Item No. 4, Report,
11   possible discussion and/or action on 2nd quarter
12   calendar year 2007 bingo conductor information.
13                 MS. SHANKLE:  Good morning.  For the
14   record, my name is Terry Shankle.
15                 The presentation this morning contains
16   financial information reported by our licensed
17   charitable organizations for the second quarter of
18   2007.  I would like to thank Susan Beasley of the
19   Office of the Comptroller for preparing the
20   statistical analysis that is included in your
21   notebook.
22                 This "Gross Receipts and Prizes" graph
23   shows for the second quarter of 2007 regular and
24   electronic card sales totaling 95.4 million.  Of that
25   total, 73.7 million were for prizes awarded, which
0011
 1   equates to 77.2 percent of regular and electronic
 2   sales.  Instant pull-tab sales were 67.3 million with
 3   prizes being paid out of 49 million, or 72.9 percent
 4   of pull-tab sales.
 5                 As shown on this cash disbursements
 6   graph, rent payments were just over 9.7 million and
 7   salaries for callers, cashiers and ushers were just
 8   under 9.7 million and were a 24.3 and 24.2 percent of
 9   net receipts.
10                 Organizations reported paying
11   8.6 million in charitable distributions, which is
12   5.2 million more than what was required.  As reported
13   to you earlier in previous quarters, charitable
14   distributions consistently have been high -- two to
15   three times higher than the required amount.
16                 This pie chart shows expenses as a
17   percentage of total expenses but does not include
18   charitable distributions.  Comparing each category of
19   expense, salaries represent 42 percent of total
20   expenses.  Add rent payment to salaries, and the two
21   categories make up 70 percent total expenses.
22                 The pie chart, "Gross Receipts by Type,"
23   reflects the three different products that make up
24   gross receipts.  Again, this quarter, pull-tab sales
25   outperformed regular card sales by 10.7 million.
0012
 1                 The "Average Number of Players per
 2   Occasion" compares the second quarters of 2005, 2006
 3   and 2007.  The average number of players per occasion
 4   decreased 3 percent in the second quarter of 2007 from
 5   the same quarter of 2006.  From 2003 to 2007, the
 6   second quarter pull-tab net receipts shows a continual
 7   increase, but as reported last quarter, the increases
 8   are becoming much smaller.
 9                 Regular bingo net receipts, as shown by
10   the red line, are down approximately $233,000 from the
11   second quarter 2006.  Net receipts, indicated by the
12   green line, are up 1 million when compared to the
13   second quarter of 2006.  As shown on this "Prize
14   Payout Percentage" chart, regular bingo payout
15   percentages dropped slightly while pull-tab percentage
16   payouts slightly increased.
17                 Members, that concludes my update of the
18   second quarter 2007 financial information.  Thank you.
19                 MS. TAYLOR:  Does anybody have any
20   questions?
21                 (No response)
22                 MS. TAYLOR:  Any discussion on this
23   agenda item?
24                 (No response)
25                 MS. TAYLOR:  If not, we'll go on to the
0013
 1   next item.
 2                      AGENDA ITEM NO. 5
 3                 MS. TAYLOR:  Item No. 5, Consideration
 4   of and possible discussion and/or action on the Bingo
 5   Advisory Committee work plan.
 6                 The Advisory work plan was presented to
 7   the Commissioners at their --
 8                 MR. SANDERSON:  August.
 9                 MS. TAYLOR:  -- August Meeting, and they
10   did approve our work plan as it's currently written.
11                 Was there any other discussion on this
12   topic?
13                 (No response)
14                 MS. TAYLOR:  Remember that our agenda
15   items need to fall somewhere within the scope of the
16   work plan when we're working on our agenda.
17                 All right.  At this time, I'd also like
18   to welcome Commissioner Cox, just coming to the
19   meeting.
20                 Thank you for attending.  It's always a
21   pleasure.
22                     AGENDA ITEM NO. 6
23                 MS. TAYLOR:  If no other discussion on
24   this topic, then we'll go on to Item No. 6,
25   Consideration, discussion and/or action on the
0014
 1   guidelines regarding video confirmation.
 2                 MR. CORNWELL:  Ms. Taylor -- Chairman --
 3   Chairwoman, I passed out, earlier, some single --
 4   there's a letter that was drafted to Kenneth Griffith,
 5   K&B Sales, and it is the guidelines that were
 6   written -- or a letter that was written by the Bingo
 7   Division outlining what they viewed as a "video
 8   confirmation equipment," and I just -- Phil, if you
 9   can bear with me and both of us try to answer
10   questions regarding that, I think it would be a real
11   helpful exercise.
12                 Also, I want to recognize one of the
13   leaders in the video confirmation field -- or hopes to
14   be a leader in one of them, is Donnie Freeman with
15   Gamco is in the audience.  We've asked him to be here.
16   I don't believe we're going to get a demonstration of
17   what they've got.  It's much what we saw in August,
18   but if the people would like to see it, I'm sure after
19   the meeting, Donnie would accommodate them, if that's
20   all right.
21                 MR. SANDERSON:  First, I'd like -- the
22   letter went out to all manufacturers and distributors,
23   not just K&B.
24                 MR. CORNWELL:  I'm sorry.  I was
25   identifying that document.
0015
 1                 MR. SANDERSON:  And then, secondly, the
 2   video confirmation demonstration that was held back in
 3   August is viewable on our website.  So at any point in
 4   time, you're able to go out to our website and view
 5   the demonstration.
 6                 Continue, Knowles.
 7                 MR. CORNWELL:  Phil, I just -- I'd like
 8   to get a clear -- and help me out getting a little
 9   clarity here, and I -- I welcome questions from
10   anybody on the committee, too, but I assume a video
11   confirmation equipment is a system -- I'm going to use
12   the word "system" -- that contains all the following
13   features:  A software program, a deal and a flare and
14   the hardware to run it on.
15                 MS. TAYLOR:  Knowles, can we ask
16   questions while you're doing this?
17                 MR. CORNWELL:  Sure.
18                 MS. TAYLOR:  First thing:  Is this a
19   whole new system, something that we don't currently
20   have in the halls?  What are we talking about?  Is
21   this a new kind of electronic device?  Is this
22   something we're using --
23                 MR. CORNWELL:  Video confirmation --
24                 MS. TAYLOR:  -- on what we currently
25   have?
0016
 1                 MR. CORNWELL:  -- was to add to the
 2   entertainment value of the play of existing pull-tabs.
 3   It was to add -- it was to -- entertainment value to
 4   validate the winners to make it -- bring more
 5   integrity to the game of playing event style
 6   pull-tabs.
 7                 MS. TAYLOR:  Is it something like the
 8   horse race that we have that showed on the TV set with
 9   the horses running?
10                 MR. CORNWELL:  Well, today that horse
11   race game was basically designed to play a bingo game
12   on it on bingo paper.  Today, we adapted that horse
13   race that you see out there to play along with tabs,
14   but never has Horse Race Video King ever had a tab to
15   go along with that horse race.  Thanks to the folks at
16   Gamco, they probably made the -- you know, one of the
17   first horse race tickets and probably the most popular
18   ticket in the state of Texas.  We've adapted that
19   ticket to play this video, this horse race video that
20   I think a lot of you have seen.
21                 But, Phil, the question is:  Do you
22   consider Video King a video confirmation equipment?
23                 MR. SANDERSON:  Yes, I do, to -- you
24   know, the short answer is yes.  It's a video
25   confirmation --
0017
 1                 MR. CORNWELL:  Even though there's no
 2   deal or --
 3                 MR. SANDERSON:  Specific deal --
 4                 MR. CORNWELL:  Yeah.
 5                 MR. SANDERSON:  -- tied to it?  There is
 6   not -- it's played in conjunction with an event
 7   ticket.
 8                 MR. CORNWELL:  Yes, it is.
 9                 MR. SANDERSON:  So that's the -- the
10   limitations in the definition of "video confirmation"
11   addresses that is a dynamic representation of a
12   pull-tab event winner or ticket that -- and it's not a
13   verifier and it's not a -- you know, it's not a
14   validate -- it doesn't validate that the ticket is a
15   winning ticket.  It just confirms it as the winning
16   ticket.  And I say that in the sense because
17   "validation" is a term used in the Lottery and there's
18   specific meaning to what validation is.  So that's --
19   this is more just a confirmation.
20                 MS. TAYLOR:  Can I ask a quick question?
21                 How long -- I've never had the
22   opportunity to see the video demonstration.  How long
23   is that?
24                 MR. CORNWELL:  It's --
25                 MS. TAYLOR:  Is it long?
0018
 1                 MR. CORNWELL:  -- over an hour and a
 2   half, total, isn't it?
 3                 MR. SANDERSON:  I think it's pretty
 4   close to two hours.
 5                 MS. TAYLOR:  Okay.  Nevermind.
 6                 MR. WHITTINGTON:  Could I ask a
 7   question?
 8                 (No response)
 9                 MR. WHITTINGTON:  Basically, I know I --
10   we're talking about video; we're talking about
11   confirmation.  But I want to know -- I'm going to be
12   just as straight as an arrow on this question.  How is
13   this supposed to enhance the pull-tab sales versus
14   what we do now?  What actually is that -- is it going
15   to add in the bingo hall to make more money from video
16   confirmation than what I do now?
17                 MR. CORNWELL:  Well, Larry --
18                 MR. WHITTINGTON:  That's what I want to
19   know.
20                 MR. CORNWELL:  -- it would give
21   somebody -- in theory, it would give somebody to buy a
22   ticket, look at the event verification that's on
23   monitors.  It's reinforced, both audio and visually,
24   who the winning pull-tab -- who the winning -- what
25   the winning event is, and that's what it's supposed to
0019
 1   do.  That's the concept behind it, is to allow the
 2   confirmation to be seen by one and all; possibly bring
 3   a little integrity back into it.  Because when we
 4   started doing market research into this thing, we
 5   found out -- we don't have 100 percent of our people
 6   playing event tickets.  We've got only about 50, 55
 7   percent of our players --
 8                 MR. WHITTINGTON:  Right.
 9                 MR. CORNWELL:  -- out there playing
10   event tickets.  And if you'll poll those people who
11   don't want to play those event tickets, they don't
12   trust who's determining the event.
13                 So what we tried -- it started out --
14   video confirmation started out to be a way that we can
15   bring a little integrity and entertainment value to
16   the event pull-tab game.
17                 MR. WHITTINGTON:  Okay.  So this is to
18   encourage more people to see some on video more so
19   than the winner coming up and saying, "I'm the winner"
20   and everybody seeing the winning person.  That's
21   basically what this is all about.
22                 MR. CORNWELL:  Yes.
23                 MR. WHITTINGTON:  So more people can see
24   on the system --
25                 MR. CORNWELL:  And get a little bit more
0020
 1   excitement about --
 2                 MR. WHITTINGTON:  Okay.
 3                 MR. CORNWELL:  You've seen the horse
 4   race video --
 5                 MR. WHITTINGTON:  Yes.
 6                 MR. CORNWELL:  -- where they pull balls
 7   and it moves the horses just like in the county fair
 8   where, you know, you go to that place and you roll
 9   balls up into a hole and it moves your horse.  Well,
10   this is the same concept.  It's allowing these balls
11   to -- the people to watch both the flash board and the
12   monitors and get a little excitement about -- you
13   know, start rooting for their horse.
14                 MR. WHITTINGTON:  Well, the reason that
15   I'm asking is because I'm sure a lot of people don't
16   know this and it needs to be simplified so the average
17   Joe Blow can understand what's going on when it comes
18   to video confirmation, because I didn't know.  So
19   that's why I asked the question, to really just really
20   answer -- not only for me, but I'm sure a lot of
21   people have the same question.
22                 MR. CORNWELL:  If you will go to the
23   website, it was an eye-opening diversity of what video
24   confirmation is and could be in that demonstration.
25   There is a very wide range.  There's an opportunity to
0021
 1   bring a lot more excitement to the game of pull --
 2   event pull-tabs and a lot more chance to bring a lot
 3   more integrity to that game.
 4                 MR. WHITTINGTON:  Well, I think you've
 5   done very well --
 6                 MR. CORNWELL:  Well, it's -- okay.
 7                 MR. WHITTINGTON:  -- answering the
 8   question, Knowles.
 9                 MR. CORNWELL:  Okay.  Thank you.
10                 Go ahead, Suzanne.  I'm sorry.
11                 MS. TAYLOR:  Oh, no.  No.  That's fine.
12   I just -- because I was looking that it had a separate
13   software program and additional equipment; so I just
14   wasn't sure what equipment it was talking about right
15   here in the very beginning of this.  So I was -- and
16   because I have not watched that video demonstration,
17   I'm totally in the dark; so you have to and -- have
18   you watched it, Rosie?
19                 MS. LOPEZ:  No.  And I guess I had
20   another question.  I know that's --
21                 MS. TAYLOR:  Earl?
22                 MR. SILVER:  No.
23                 MS. TAYLOR:  Has anybody on this --
24   okay.  All of us, besides yourself, Knowles, you've
25   just got to do one little step at a time here with
0022
 1   this --
 2                 MR. CORNWELL:  That's fine.
 3                 MS. TAYLOR:   -- because we haven't seen
 4   it, so --
 5                 MR. CORNWELL:  That's why I'm here.
 6                 MS. TAYLOR:  Okay.  So proceed.  Is it a
 7   separate -- is it -- a separate software program, I'm
 8   seeing here.  So is this something totally different
 9   that you're bringing into the hall?
10                 MR. CORNWELL:  Well, no.  I wanted to
11   make sure that when the Lottery views a video
12   confirmation equipment, I wanted to hear exactly what
13   they view and what the boundaries are for submittal of
14   the system, i.e., a horse race game that's on the
15   screen that is adapted -- not with their permission,
16   but is adapted to our pull-tabs that fortunately just
17   plays in conjunction.  And what I heard from Phil is,
18   "Yeah.  That's a video confirmation equipment."  And
19   if Suzanne, you and I go out and design a video
20   confirmation system, we don't have to submit a
21   pull-tab deal.  Is that right?
22                 MR. SANDERSON:  That -- there's two or
23   three different systems that are considered "video
24   confirmation."
25                 MR. CORNWELL:  Right.
0023
 1                 MR. SANDERSON:  And I think it's based
 2   on the system submittal.  We are working with some of
 3   the -- you know, other manufacturers on the design of
 4   their products and, you know, making sure that we stay
 5   within the guidelines of what we're authorized to do
 6   and authorized to approve.
 7                 MR. CORNWELL:  I understand.
 8                 By the way, Phil, can I ask you:  How
 9   many submittals did you -- November 1st was the
10   deadline submittal.  How many submittals did you get?
11                 MR. SANDERSON:  I'm thinking we only got
12   one that I'm aware of.
13                 MS. TAYLOR:  Was that the deadline or
14   was that the starting period?
15                 MR. CORNWELL:  Anybody that's -- go
16   ahead, Phil.
17                 MR. SANDERSON:  The November 1st
18   deadline was one that we would take any manufacturer's
19   submittal up to that point, test and look at the
20   products and we would offer a simultaneous approval so
21   that a particular manufacturer would not necessarily
22   get into the market ahead of anybody else.  So that
23   was the reason for the November 1st deadline, so that
24   we could say, "If you get it in by this date" -- if
25   it's one, three, five, ten manufacturers, then we
0024
 1   would test them all and they'd all come out at the
 2   same time.
 3                 MR. WHITTINGTON:  I got another
 4   question.
 5                 I know about manufacturer and
 6   distributor and stationary and hand-held computers and
 7   the charge.  I know when you're dealing with a system
 8   there's some charge.  How do you-all plan to make some
 9   money that really -- from these things that these
10   charities got to pay for without having some income
11   coming from them like the stationaries and the
12   hand-helds are being charged for?  Okay?  They make
13   money off the stationary and the hand-held because we
14   charge money for them every day.  How do we --
15                 MR. CORNWELL:  And that's a good
16   question and I'm not in a position to answer that, but
17   the way I see it, if I've got -- today, I think we
18   have seven or eight licensed tab manufacturers in this
19   state.  If they came up with a system that worked with
20   their tabs and worked well with their tabs, they're
21   going to have an opportunity to grab a larger market
22   share, i.e., and possibly get a little bit more money
23   for the tabs.
24                 I don't know what their plan is.  I
25   can't speak for them on that, but it would make a lot
0025
 1   of business sense for somebody wanting to either
 2   maintain or increase their market share of tabs to
 3   come out with a video confirmation system and keep the
 4   products fresh, you know.
 5                 MR. WHITTINGTON:  And basically saying
 6   that the charities don't have to pay for it and
 7   they'll be paying for it putting it in the halls.
 8   Right?
 9                 MR. CORNWELL:  I don't know what the
10   final arrangement is --
11                 MR. WHITTINGTON:  Okay.
12                 MR. CORNWELL:  -- but that's my best
13   wish.
14                 MR. WHITTINGTON:  Basically what I'm
15   saying is I can't see nobody buying this -- a charity
16   when it -- no income coming from it.  They're trying
17   to --
18                 (Simultaneous discussion)
19                 MR. CORNWELL:  Well, but --
20                 MR. WHITTINGTON:  -- innovate the hall a
21   little --
22                 MR. CORNWELL:  -- hopefully you can move
23   those --
24                 (Simultaneous discussion)
25                 MR. WHITTINGTON:  That's basically
0026
 1   what --
 2                 MR. CORNWELL:  -- 45 to 50 percent of
 3   your players who won't play the pull-tabs to a smaller
 4   number.  Hopefully now you can start getting --
 5   instead of doing $5,000 in pull-tabs a session,
 6   hopefully we can move that to $7,500, $8,000 per
 7   session.
 8                 MR. WHITTINGTON:  Well, what I'm -- If
 9   you get this approved, call me, and you can try it in
10   my hall.
11                 MR. CORNWELL:  All right.  Thanks,
12   Larry.
13                 MR. WHITTINGTON:  Okay.  Let me try it
14   free.
15                 (Laughter)
16                 MS. LOPEZ:  Knowles, I'd like to mention
17   that, you know, obviously, video confirmation is an
18   added, I think, component to attracting more
19   customers, because -- I don't know if you guys are
20   facing this throughout your counties where you live,
21   but we've got sweepstakes businesses popping up all
22   over town and after county, and, you know, they
23   attract customers to come in and play, basically, you
24   know, a video type game, and that's what people are
25   wanting to do now.  And so, obviously, I think that we
0027
 1   need to be able to do something in our bingo halls
 2   that will attract those customers that are going out
 3   to these sweepstakes businesses and spending their
 4   money out there instead of coming and spending the
 5   money at the bingo hall.  So we've got to be
 6   innovative and creative.  And, obviously, cost factor
 7   is always real important in that, because, again, you
 8   know, it's the charities that are going to take the
 9   cost.  It's not going to be the --
10                 MR. CORNWELL:  That's right.
11                 MS. LOPEZ:  You know, there's going to
12   be costs involved, and, obviously, we have to look at
13   it from an economical standpoint but also as a
14   marketing standpoint that we've got to be innovative
15   and creative and stay a cut above the edge in our
16   marketing for bingo.  If not, we're going to -- you
17   know, we're going to get left behind.
18                 I mean, I know that there's probably
19   other halls across the state that are facing this with
20   the sweepstakes businesses, and so I'm just, you know,
21   telling you I've seen, you know, decrease in our
22   attendance in the last month over this type of
23   business, and so the more creative we can be, I think
24   the better off we'll be.
25                 MS. ROGERS:  Larry, just to let you
0028
 1   know, we do use the horse race and the video, and it
 2   just -- the hall goes crazy.  People start screaming
 3   for their horses left and right.  It really does help.
 4                 Knowles, are we going to go down
 5   through --
 6                 MR. CORNWELL:  Yes.
 7                 MS. ROGERS:  -- individually?
 8                 MR. CORNWELL:  You go ahead.
 9                 MS. ROGERS:  I have a question.
10                 MR. CORNWELL:  Go ahead.
11                 MS. ROGERS:  I don't know if I should
12   address it to you or to Phil.
13                 MR. CORNWELL:  Well, it's going to have
14   to be addressed by -- a lot of these, Phil, you're
15   going to have to address, because I can't --
16                 MS. ROGERS:  Okay.  It says "Video
17   confirmation equipment can be serviced or reloaded
18   only by a representative of the manufacturer."  Does
19   that mean if we have something in our hall and it goes
20   on the blink at nine o'clock at night we are just done
21   for the evening or -- because I'm sure we can't get a
22   manufacturer to each individual hall --
23                 MR. CORNWELL:  We don't work that late.
24                 (Laughter)
25                 MS. ROGERS:  Right.  Okay.  Well, and,
0029
 1   you know, some of us work at midnight, one o'clock.
 2   So I'm just curious why that has to be like that, what
 3   the -- why that wording is "manufacturer"?  Do you
 4   know or --
 5                 MR. SANDERSON:  Well, I think for the
 6   most part the manufacturer is the one that remains in
 7   control of the software and the system and it's more
 8   of a security feature, to limit the accessibility --
 9                 MS. ROGERS:  Right.
10                 MR. SANDERSON:  -- so that somebody
11   that's not with a manufacturer or somebody that is --
12   couldn't get into it and alter it without the
13   manufacturer's understanding of what's going on.
14   Because if we find that something has been altered,
15   the manufacturer is the one who ultimately is
16   responsible if something is not operating like the way
17   it was tested and approved.
18                 MR. CORNWELL:  Phil, what if -- like I
19   said earlier, what if Knowles and Suzanne decide to
20   make their own video confirmation system and we're not
21   registered manufacturers, do we still submit it and
22   would we still be under that requirement?
23                 MR. SANDERSON:  Well, yes, and you
24   couldn't do it unless you were a manufacturer.
25                 MR. WHITTINGTON:  Right.
0030
 1                 MR. CORNWELL:  Well, but I don't see
 2   that under these rules, that it's manufactured only.
 3   I never saw that in the rules, where it is a
 4   manufactured requirement.
 5                 MR. SANDERSON:  The intent was that it
 6   should have been.  I mean, it's -- the only thing we
 7   did was add a definition for video confirmation, and
 8   it's in the Instant Bingo, which means anything under
 9   that rule is for manufacturers and distributors and so
10   forth, the chain of the tier structure.
11                 MR. CORNWELL:  Okay.  That clarifies
12   that.
13                 MS. TAYLOR:  Knowles, let me ask you
14   another question.  I'm just trying to visualize what
15   we're actually -- the equipment that we're discussing.
16                 If the manufacturer is loading -- this
17   would be like loading a deal of pull-tabs into the
18   equipment?  Is this what you're talking about?  I
19   mean, what --
20                 MR. CORNWELL:  That, at this time, no.
21                 MS. TAYLOR:  If the manufacturer is only
22   loading it, what are we loading?
23                 MR. CORNWELL:  Well, I think what Phil
24   is saying is that:  Look, as a minimum, you'd better
25   have a user and a password -- a user I.D. and a
0031
 1   password in there, because the manufacturer -- if you
 2   and I get in there and we're not designated
 3   representatives of that manufacturer, then -- and we
 4   add -- load some stuff on there that we shouldn't be
 5   loading on there that jeopardizes what they've
 6   approved, then that manufacturer is in trouble.  So
 7   somehow, some way, they've got to come up -- I think
 8   what Phil is saying is they've got to come up with a
 9   reasonable security system to keep us from hacking it.
10                 MR. SILVER:  Would that be a separate
11   security system as related to the software program,
12   the pull-tab deal and --
13                 MR. CORNWELL:  I just think that's a
14   component of it, Earl, is what they're saying, is the
15   software has to be, in some way, protected so you
16   can't --
17                 MR. SILVER:  Well, it also says
18   "representative of a manufacturer."  Is that the
19   manufacturer or can it be a distributor, a charity, a
20   floor runner, an operator?
21                 MR. SANDERSON:  It's whoever the
22   manufacturer has designated their representative to
23   handle that --
24                 MS. TAYLOR:  Can you be a representative
25   of a manufacturer and also be on a charity's license?
0032
 1                 MR. SANDERSON:  I'm not prepared to
 2   answer that question --
 3                 (Laughter)
 4                 MR. SANDERSON:  -- at this time.
 5                 (Laughter)
 6                 MR. CORNWELL:  Phil, I assume when we
 7   say "The minimum video and audio output" in the second
 8   bullet point "is sufficient to connect to at least one
 9   monitor," that monitor also will mean -- have a
10   speaker.  Right?  We're not trying to preclude the
11   display of this and in any way not allowing audio to
12   come across?
13                 MR. SANDERSON:  No.  We're not
14   precluding that.  No.
15                 MR. CORNWELL:  Okay.
16                 MR. WHITTINGTON:  I'm with Suzanne.  I'm
17   trying to understand how it works.  I mean --
18                 (Laughter)
19                 MR. SANDERSON:  Well, I think the first
20   thing is that you need to go out and look at the
21   demonstration.
22                 (Simultaneous discussion)
23                 MR. SANDERSON:  You know, I think that
24   would give you an idea of what the video confirmation
25   is.
0033
 1                 MR. CORNWELL:  Larry, we have -- Donnie
 2   over here has some stuff, but I -- really, I'd like to
 3   just -- if we can --
 4                 MR. WHITTINGTON:  Go.
 5                 MR. CORNWELL:  -- go and then I'll show
 6   you-all that after the meeting --
 7                 MR. WHITTINGTON:  Okay.
 8                 MR. CORNWELL:  -- so you can get a
 9   better idea, conceptually, of that --
10                 MR. WHITTINGTON:  I thought maybe you
11   might push a box of pull-tabs in a machine and kicks
12   the pull-tabs out.
13                 (Laughter)
14                 MR. WHITTINGTON:  You know, people are
15   going to think all kinds of stuff like that.
16                 (Laughter)
17                 MR. CORNWELL:  Keep thinking like that.
18                 (Laughter)
19                 MR. CORNWELL:  Keep thinking like that.
20                 (Laughter)
21                 MR. WHITTINGTON:  Okay.  Shall we?
22                 Okay.  Let's go.
23                 MS. TAYLOR:  Okay.  The next one that I
24   was wondering about, the Item No. 3, that if the video
25   confirmation equipment is something that's going to be
0034
 1   used on multiple tabs -- and I notice it says full
 2   keyboard can't be used -- how do you -- like on the
 3   box of Quick Cash, the serial number starts with an
 4   "M."  So how would you play something like that on
 5   here if you can't -- how do you enter the "M"?
 6                 MR. CORNWELL:  There's a lot of form
 7   numbers.  If the form number is going to be input into
 8   this thing, which I think is necessary, you're going
 9   to have to have some way to get alpha characters into
10   it because form numbers contain both alpha and numeric
11   numbers.
12                 So I don't know -- Phil, why did we
13   exclude a full keyboard?
14                 MR. SANDERSON:  Originally, I think the
15   full keyboard was excluded to once again act as a
16   security level access to the system.  We're trying
17   to -- some of these systems work in conjunction with
18   an electronic card-minding device system, and so
19   there's certain restriction on those devices.  It does
20   allow for a bar code reader.  A lot of the -- there
21   are some pull-tabs that have bar codes --
22                 MR. CORNWELL:  Or will have bar codes.
23                 MR. SANDERSON:  -- or will have bar
24   codes.  So, you know, there's -- you know, I'm not --
25   these are not necessarily set.  I won't say "not set
0035
 1   in stone."  These are the guidelines that we came up
 2   with for the initial testing process.  And as -- even
 3   with the card-minders, as systems come in and we
 4   review systems, then, you know, potentially, there
 5   could be some --
 6                 MR. CORNWELL:  So the beef --
 7                 MR. SANDERSON:  -- modifications.
 8                 MR. CORNWELL:  -- here -- the beef
 9   here -- upfront security on it, the less stringent
10   you're going to become on the hardware requirements.
11                 MR. SANDERSON:  Possibly, yes.
12                 MR. CORNWELL:  Yeah.  I understand.
13                 Thank you.
14                 MR. CORNWELL:  The next item is "Each
15   video confirmation of an event pull-tab ticket
16   displays the following statement: 'Video confirmation
17   has no effect on the play or result of the pull-tab
18   event ticket.'"  Is that supposed to be in some -- go
19   ahead.
20                 MR. WHITTINGTON:  Explain it.  Yeah.
21                 MR. CORNWELL:  Well, I understand that
22   that's a disclaimer that could appear.
23                 MS. ROGERS:  Is that supposed to be in a
24   certain style or letter on the tab?  What is that?
25                 MR. SANDERSON:  There's not any,
0036
 1   necessarily, you know, font requirement.
 2                 MR. CORNWELL:  So you just -- you could
 3   have a flash -- flash a screen at every one of these
 4   that says that.  Right?
 5                 MR. SANDERSON:  Yes.
 6                 MR. CORNWELL:  But the next one about
 7   the continuous banner --
 8                 MR. SANDERSON:  That's one that we're
 9   revisiting.
10                 MR. CORNWELL:  Are you?
11                 MR. SANDERSON:  Yes.
12                 MR. CORNWELL:  Because that's kind of
13   a --
14                 MR. SANDERSON:  Because there are some,
15   as you say, that enables them to use the -- you know,
16   the game name and the form number should remain fairly
17   continuous, but I think that we have looked at
18   allowing that also as a static -- you know, just down
19   in the corner somewhere of what the -- "Horse Race
20   Form Number TT34," or whatever the --
21                 MR. CORNWELL:  Right.
22                 MS. TAYLOR:  That would be better.
23                 MR. CORNWELL:  And 6, Phil, can -- help
24   me with that one.
25                 MR. SANDERSON:  That is one to emphasize
0037
 1   that we're not going to allow a pull-tab ticket face
 2   to be shown on the screen continuously and potentially
 3   allow for someone to touch the screen and a ticket
 4   open up, you know, to give the appearance of an
 5   electronic pull-tab.
 6                 MS. TAYLOR:  I was wondering what the
 7   "animated" meant.
 8                 (Simultaneous discussion)
 9                 MS. TAYLOR:  That they had animated
10   characters on the screen or what that was for.
11                 MR. SANDERSON:  All the ones we saw are
12   animated.  So I don't know if there's any other
13   versions out there that I'm not aware of that --
14                 MR. CORNWELL:  It's pretty much --
15   you're blazing the trail, Phil, with this stuff; so
16   yeah.  I think you got to see about every one I know
17   and then some I didn't know about.
18                 MR. SANDERSON:  And, you know, I think
19   it's animated in the sense that it's got to have some
20   sort of action going along with it.  You know, it's --
21   like I said, it goes back to -- you know, in the past
22   we have seen products that are electronic pull-tabs
23   that have the face of the pull-tab ticket and you
24   touch it and the screen opens it.
25                 MR. CORNWELL:  Well, that's not the
0038
 1   face.  That's the --
 2                 MR. SANDERSON:  Or the back.  The back.
 3                 MR. CORNWELL:  The back and not the
 4   face.  So I think, really, if we show up getting
 5   everybody ready to, you know, start running little ad
 6   trailers for the playing of the next event, just
 7   showing the face up there would not be something --
 8   you're more interested in the back.
 9                 MR. SANDERSON:  Well, and we don't mind
10   the face being shown.  It's just that it can't stay up
11   there the whole time.  It's not -- you know, there are
12   some -- you know, you can put it up there for a
13   certain period of time and then it goes away.
14                 MS. TAYLOR:  Well, I understand what
15   he's saying.  The face doesn't open.  The back is what
16   opens.  So the face, nothing is ever going to change
17   on it.  You can't touch the face and have it open.
18   The back of the pull-tab --
19                 (Simultaneous discussion)
20                 MS. TAYLOR:  Not the face.  You flip it
21   over and rip it open.
22                 MR. SANDERSON:  Well, of the actual
23   pull-tabs, that's true, but I think if you look at
24   some of the ones that are electronic, they are the
25   face of the ticket that have the tabs that --
0039
 1                 MS. TAYLOR:  Okay.
 2                 MR. WHITTINGTON:  We haven't seen those
 3   yet, so --
 4                 MS. TAYLOR:  All of us, we should have
 5   watched this video.
 6                 (Simultaneous discussion)
 7                 MR. SANDERSON:  I thought I sent you-all
 8   a notice saying --
 9                 MS. TAYLOR:  You did.
10                 (Simultaneous discussion)
11                 MS. TAYLOR:  You did.
12                 (Simultaneous discussion)
13                 MS. TAYLOR:  I've got to say, we were
14   sent the notice and each and every one of us neglected
15   to --
16                 MR. WHITTINGTON:  Yeah.  We're just too
17   busy selling pull-tabs --
18                 MS. TAYLOR:  -- watch the video.
19                 MR. WHITTINGTON:  -- that's what
20   happened -- and forgot to look at the video.
21                 MS. TAYLOR:  Thank you for giving us
22   that opportunity.
23                 I believe we're on Item No. 7.
24                 MR. CORNWELL:  Yeah.
25                 MS. TAYLOR:  All this is saying, Item
0040
 1   No. 7, is that we still play the events with the
 2   blower like we're doing it right now.
 3                 MR. CORNWELL:  Playing --
 4                 MS. TAYLOR:  Is that it?  The --
 5                 MR. CORNWELL:  The blower --
 6                 MS. TAYLOR:  -- blower --
 7                 MR. CORNWELL:  -- other items.
 8                 MS. TAYLOR:  -- the seal or whatever.
 9                 MR. SANDERSON:  Or the seal card or a
10   wheel.
11                 MR. CORNWELL:  Right.
12                 MS. TAYLOR:  Okay.  Okay.
13                 MR. CORNWELL:  And -- but --
14                 MR. SILVER:  On a random number
15   generator, is there any place in the Bingo Enabling
16   Act or the rules that prevent that -- prohibit that?
17   I don't know.
18                 MR. SANDERSON:  Yes.
19                 MR. SILVER:  There is?
20                 MR. SANDERSON:  I believe so.
21                 MR. CORNWELL:  Phil, a random number
22   generator is not -- and help me with that.  Random
23   number generator can be a bingo blower.
24                 MR. SANDERSON:  Yes, but we're -- this
25   here is referencing electronic random number
0041
 1   generator.
 2                 MR. CORNWELL:  Okay.  So it is --
 3                 MR. SANDERSON:  If -- for example, if
 4   you remember -- and I believe it was Mr. Fenoglio,
 5   when he made the presentation of the horse race game
 6   here, there was not any bingo balls or bingo blowers,
 7   but yet balls kept popping up on the screen and horses
 8   kept moving.  So --
 9                 MR. CORNWELL:  Okay.  And 8 -- help me
10   here.  "Device does not retain winning pull-tab
11   information."  What -- I think if I was an operator
12   for dispute resolutions for -- guys, I think --
13                 MS. TAYLOR:  Well, I happened to have
14   this one marked myself, and what I didn't understand
15   is that we have had the games where people have come
16   to us and said, you know, "I bingo'd and you didn't
17   pay me" and having the little list of numbers called
18   after the session, we go back in and stick all the
19   walls back in and put their card back up on the
20   computer, and, sure enough, they were missing a number
21   or they had missed a bingo.  And, you know, it's
22   helpful to be able to show them that you're not
23   cheating and that they -- you know, indeed, the caller
24   never did call 19 or did call 19.  So I wondered, too,
25   why you wouldn't want to retain that information for
0042
 1   dispute resolutions?
 2                 MR. SANDERSON:  I'll have to check with
 3   Homer.  I think we're readdressing that issue, or
 4   clarifying it more.  I think the intent we had in
 5   there was that it's not keeping a list of -- it's not
 6   the historical winning information.  It's the
 7   information that may indicate that a pull-tab is a
 8   winner.  It's getting back to a validator instead of a
 9   verifier, that there's a distinction that a certain
10   pull-tab is a winning ticket.
11                 MR. CORNWELL:  You're talking about a
12   queuing up a future event.  Is that what you're
13   referring to?  Excuse me.
14                 MR. SANDERSON:  I think.
15                 MR. CORNWELL:  Check with Homer and let
16   me --
17                 MR. SANDERSON:  Yeah.  I'll --
18                 MR. CORNWELL:  Can you just have
19   Homer --
20                 MR. SANDERSON:  We'll get back with
21   that.
22                 MR. CORNWELL:  And then I think the last
23   three points are -- if everybody would like to look at
24   them, they're kind of self-explanatory and make all
25   the sense in the world.
0043
 1                 All right.  I -- once again, if you
 2   would like to see Gamco's -- Donnie, help me.  Would
 3   you come to the stand real quick?  Let me put you on
 4   the spot.
 5                 State your name.
 6                 MR. FREEMAN:  Donnie Freeman --
 7                 MR. CORNWELL:  And who you --
 8                 MR. FREEMAN:  -- with International
 9   Gamco.
10                 MR. CORNWELL:  Donnie, have you
11   submitted the system to the Lottery?
12                 MR. FREEMAN:  Yes.  Yes.
13                 MR. CORNWELL:  Okay.  Is it -- Phil, is
14   it all right if he would show that submitted system to
15   the members here today after the meeting?
16                 MR. SANDERSON:  I would have to defer to
17   counsel on --
18                 MR. CORNWELL:  Sandy, can we do that?
19                 MR. SANDERSON:  I think if more than
20   five people are here, then it can't --
21                 MS. JOSEPH:  Well, if there's no
22   decisions to be made or no action or discussion to be
23   taken, I think merely viewing it would be permissible.
24                 MR. CORNWELL:  Donnie, can you make sure
25   it's all educational and that you're not --
0044
 1                 MS. TAYLOR:  Donnie, how long is your --
 2   I'm sorry.
 3                 MR. CORNWELL:  Go ahead.
 4                 MS. TAYLOR:  How long is your --
 5                 MR. CORNWELL:  Make sure --
 6                 MS. TAYLOR:  -- presentation?
 7                 MR. FREEMAN:  It would probably take me
 8   15 minutes.  With questions, maybe three and a half
 9   hours, but -- no.
10                 (Laughter)
11                 MR. FREEMAN:  15 minutes, Suzanne.
12   That's about it, really.  It takes longer to set it up
13   than it does to demo it, so -- it's fairly easy.
14                 MR. CORNWELL:  Let's let him set it up.
15   Let's do it after.
16                 MS. TAYLOR:  Okay.  Let me ask Legal, is
17   there anything precluding us from letting him set it
18   up and looking at it later in the meeting as long as
19   we're not making any decisions?
20                 MR. FREEMAN:  I would prefer to do it
21   after the meeting.
22                 MS. TAYLOR:  Well, the problem is I
23   don't want it to be too many people here watching.
24                 MS. JOSEPH:  I think it would fall under
25   this item and also under the agenda item of public
0045
 1   comment.
 2                 MS. TAYLOR:  So if we could leave it
 3   until the end of the meeting and just not close the
 4   meeting until after it's -- he's finished the
 5   demonstration --
 6                 MS. JOSEPH:  Yes.
 7                 MS. TAYLOR:  -- is that okay?
 8                 MS. JOSEPH:  Yes.
 9                 MS. TAYLOR:  Will that work for you?
10                 MR. FREEMAN:  Sure.  Absolutely.
11                 MS. TAYLOR:  The rest of the committee,
12   if you want to stay, stay.  That way, we don't --
13                 MR. WHITTINGTON:  I won't be saying
14   nothing.
15                 MS. TAYLOR:  -- have to worry about too
16   many of us wanting to stay.  And Larry says he won't
17   talk; so it won't take very long.
18                 (Laughter)
19                 MR. FREEMAN:  Thank you, Larry.
20                 He might start singing, though, but --
21                 (Laughter)
22                 MR. FREEMAN:  That's fine.  Sure.
23                 MR. CORNWELL:  Thank you, Donnie.
24                 MR. FREEMAN:  All right, Knowles.
25                 MS. TAYLOR:  Okay.  We did have --
0046
 1   before we do any more discussion, we have some public
 2   comment.  Then after that, the BAC Members might want
 3   to have additional discussion.
 4                 If we could have Stephen Fenoglio.
 5                 MR. FENOGLIO:  Thank you, Madam Chair.
 6   For the record, my name is Stephen Fenoglio.  I filed
 7   an appearance slip and I've appeared here before.
 8                 I would like to get on record -- and
 9   we've got a court reporter present, that Larry will
10   not ask any questions or speak.
11                 (Laughter)
12                 MR. FENOGLIO:  I'd like to get that in
13   writing.
14                 (Laughter)
15                 MR. FENOGLIO:  Because that would be a
16   true first.
17                 (Laughter)
18                 MR. FENOGLIO:  Phil referenced, and I
19   did make a presentation when we were discussing the
20   pull-tab rule -- and this all springs from -- 16 Tex
21   Admin Code 402.300, I believe, is the pull-tab rule.
22   And it was pretty succinct and brief in the definition
23   in the rule itself of what constitutes video
24   confirmation, which is where I started when I started
25   looking at the letter and I had a lot of questions
0047
 1   and -- you know, lawyers sometimes talk, "Well, you
 2   tell me if you want it flat or round and I'll do it
 3   that way," and there are a lot of ambiguities which
 4   may be good but can also be bad.
 5                 But the definition of "video
 6   confirmation" is a graphic and dynamic representation
 7   of the outcome of a bingo event ticket that will have
 8   no effect on the result of the winning or losing event
 9   ticket.  And then later it says it's subject to
10   Commission testing, which, of course, since it's
11   bingo -- the pull-tab, at least, in the rule, is bingo
12   equipment.
13                 And that begs the question of what
14   constitutes bingo equipment, because when I read the
15   letter, Phil, I'm still uncertain what you're trying
16   to capture.  And I've talked with a couple of
17   manufacturers, and they had questions about what was
18   meant by some of the words.
19                 We have a definition in the statute of
20   bingo equipment, and, basically, it's any equipment
21   used, made or sold for the purpose of use in bingo,
22   and in our presentation back several months ago, you
23   know, part of this confirmation that was going on
24   before there was a rule, and including the pull -- the
25   horse race was on a TV screen; some of it is driven by
0048
 1   a PC.
 2                 Those, historically, have never been
 3   considered bingo equipment, because it's a TV screen.
 4   It's a TV monitor or a flat screen.  And a PC computer
 5   that might run part of the video confirmation, from my
 6   perspective, sitting on my side of the table, has
 7   never been subject.  But when I read the letter, I'm
 8   not certain.  And the first time I'm not certain --
 9   it's something you-all talked about -- is the first
10   bullet, the equipment can be serviced and reloaded
11   only by a representative of the manufacturer.  Well,
12   so what's the equipment?  And I still don't know.  And
13   if I don't know, manufacturers don't know.
14                 Because if it's the PC computer that you
15   have to just reboot, and, you know, periodically my
16   computer won't work and I call my IT consultant and he
17   says, "Well, have you rebooted your computer?"  "No."
18   "Try it."  And, magically, it fixes a lot of problems.
19                 Well, again, Suzanne, your question
20   about if it's eleven o'clock -- Kim, I guess -- 11 --
21   10:00 or 11:00 at night.  There's no one around.  Can
22   we try -- because something is hung up in this video
23   confirmation and customers are pretty misunderstanding
24   if, you know, we can't finish the game.  Can one of
25   the charity -- maybe it's a -- a customer in the hall
0049
 1   who happens to be an IT guy.  Most likely it would be
 2   one of the employees who would go over and try to fix
 3   or fiddle with the equipment.  This first bullet says
 4   they can't do it if they haven't been designated by
 5   the manufacturer.
 6                 And I don't think that's where you are.
 7   What I think you're worried about is manipulating some
 8   of the true bingo equipment to influence an outcome
 9   that would not occur but for that fiddling, and so,
10   again, if the monitors are off, you touch it on and
11   off, that can't be subject to this sentence and a PC.
12                 Where I come down, Phil, is I think this
13   is a good start.  And what I heard you say is you've
14   actually moved beyond some of this.  And it may be,
15   Madam Chair, that there needs to be a -- perhaps a
16   subcommittee formed to meet with Homer, because Homer
17   sees stuff that we don't see.  Homer keeps his own
18   counsel pretty well, and, you know, he may be seeing
19   stuff that concerns the integrity of the game that
20   rightfully he shouldn't be sharing with us because
21   some people would say, "Well, I hadn't thought of that
22   one.  That's a good way to manipulate the outcome.
23   Gosh, Homer, I'm glad you told me that one," and
24   that's not the intent.
25                 But it seems to me there's a lot of
0050
 1   ambiguities here.  There are some manufacturers -- we
 2   have one who's willing to come forward with a product.
 3   There are other manufacturers who want to, but when
 4   they get this letter, they don't know what it means.
 5   And I can't tell them what it means because I'm
 6   uncertain with the words "serviced and reloaded."
 7   Does it -- can you reset the button?  Is that okay?
 8   Well, arguably, that's servicing.  It may be
 9   reloading.  But you're not affecting the integrity in
10   any way.
11                 And the keyboard -- I listened under the
12   third bullet, full keyboards not allowed.  I guess
13   that -- again, I hadn't thought of your side of the
14   table, Phil, that someone could use the keyboard to
15   hack the system.  My sense is, if they're a smart
16   hacker, without a keyboard, they'll figure out a way.
17   Some of these games are RF, radio frequency, so there
18   may be, but if they have an alphanumeric serial
19   number, you've got to have a keyboard.
20                 And the other -- the -- I guess it's
21   the -- these aren't enumerated, but the fifth bullet,
22   the video must be animated -- and, again, I'm still
23   not clear what that means.  I thought it meant
24   something else to what -- Phil made some comments.
25   But then "cannot contain a static display," I don't
0051
 1   understand why.  I understand now that you're worried
 2   about someone being able to touch the screen and open
 3   up.  You could write that in your guideline.  I think
 4   that would be precluded under the Commission's
 5   consideration of the pull-tab rule.  I don't think
 6   it's precluded by the plain language in the pull-tab
 7   rule, but certainly part of that is the history of the
 8   rule as it was developed.
 9                 But more importantly, halls regularly
10   display the paper tab in a static sense when they say,
11   "Okay.  Here's the winning paper," and they put it up
12   on the screen all around so everyone can be assured
13   that, in fact, Bresnen played bingo and actually won
14   the bingo game and that's the winning card.
15                 My thought, when we were going through
16   this, was, that was -- would lend integrity to the
17   game, that you could flash it up, because maybe -- I'm
18   going to pick on my friend Bresnen.  Maybe Bresnen
19   buys $100 worth of pull-tabs; so guess what?  And
20   everyone has a few -- usually less than six -- heavy
21   pull-tab players.  They win a lot.  And customers
22   complain that it's a fixed game.  "Bresnen always
23   wins."  Well, they don't see that Bresnen buys $100 or
24   $150 worth of pull-tabs.  So you run the numbers --
25   every punt intended -- and he has a high degree of
0052
 1   winning.  Putting that static display up on the screen
 2   tells the customers, the nonbelievers, "Oh, well, he
 3   did have it."
 4                 Now, it may still leave them with a
 5   question, "Well, did they somehow slip the card to
 6   Bresnen?"  Well, if you're doing the event ticket in a
 7   video confirmation in conjunction with a game, that,
 8   again, was part of our purpose, is to give the
 9   integrity and the air of integrity because they can
10   now see, "Boy, that would be a real neat trick how
11   they can" -- "since it's based on the outcome of a
12   drawing of a ball, that Bresnen magically has the
13   winning ticket, how can they know what's going to be
14   blown out of the blower?"  So I would urge you to
15   reconsider that.
16                 And, again, it occurs to me, Madam
17   Chair -- and hopefully the Gamco guy, we can volunteer
18   to be a part of if there's going to be a group, task
19   force, subcommittee -- whatever -- to come up with
20   revised guidelines so we can actually get a
21   manufacturer who's active enough to come down and talk
22   to us.
23                 And then, finally, the words "device" --
24   and it's in several references -- two, in particular
25   that come together, "Device does not contain a random
0053
 1   number generator."  "Device" isn't defined, and so
 2   I'm -- that goes back to "What bingo equipment?"  And
 3   the same question on "servicing and reloading," what
 4   are you talking about?
 5                 I know the Commissioners did not want an
 6   event ticket to be a part of a random generator, and
 7   there's some legislative history in that rule about
 8   the Armbrister amendment.  And I'm not trying to
 9   reopen that discussion, but what I want to focus on
10   is: "What device are you talking about?"  Because as
11   Knowles pointed out, part of this video confirmation
12   is the blower in -- at least in some event games, and
13   that clearly is a random generator.  It's -- and I
14   would disagree with you, Phil, when you say, "Well,
15   it's not electronic."  Well, it's connected.
16                 And then the second bullet, "Device does
17   not contain winning pull-tab information," well, what
18   device are we talking about?  Because the winning
19   pull-tab information, if it's part of the blower, is
20   part of the device, it seems to me, and yet you can't
21   have that.  So, again, I think there needs to be some
22   modifications.
23                 And then, finally, in touching on either
24   Suzanne's or Kim's -- I can't remember.  Phil, we've
25   had a series of rulemaking discussions in the last
0054
 1   three months and there's a lot more coming.  One of
 2   what I heard your auditors wanting to be able to do
 3   was to be able to have a look-back to see if that game
 4   was rigged in some way.  And it occurs to me that if
 5   some device retains the winning information, that
 6   would be a good thing in an audit to be able to
 7   download it, like you can with the card-minder today.
 8   I mean, that's the beauty -- there's some challenges
 9   with card-minders, and that's for another discussion,
10   but one of the beauties of the card-minding system
11   that you and Homer and others have forced the industry
12   to come to the table with, is, there's a lot of data
13   that's recorded that removes the opportunity for a
14   level of slippage.  And so I would encourage you to
15   rethink whether you can retain that, because, for the
16   same reason that you're having a lot more rulemaking,
17   you're trying to drive charities to have a lot better
18   record-keeping.  And that was one of our intents when
19   we came forward with this, was, that was one of the
20   additional benefits.
21                 And then, finally, there's a bullet,
22   "Video confirmation device is not capable of detecting
23   winning pull-tabs," I don't have a quarrel with that
24   because I think that is unfair, but it goes back to,
25   "Well, what's the device," and, you know, I'm not
0055
 1   certain what you're talking about in some of the
 2   components here, some of which are clearly bingo
 3   equipment under the statutory definition in the Bingo
 4   Enabling Act, .0025; some of which is not bingo
 5   equipment.
 6                 I'll be happy to answer any questions
 7   and I'll be happy to sit down.
 8                 MS. TAYLOR:  Members, any questions?
 9                 (No response)
10                 MR. FENOGLIO:  Thank you.
11                 MS. TAYLOR:  Thank you.
12                 We also have a witness affirmation form
13   from Steve Bresnen.
14                 MR. BRESNEN:  My name is Steve Bresnen.
15   I'm here on behalf of the Bingo Interest Group.  I'll
16   be very brief.
17                 Phil, I would like to direct everybody's
18   attention to Page 2 of the letter where it says that
19   if you currently have a video confirmation product in
20   use in Texas, the Division asks that you cease its
21   operation and submit it for approval.
22                 It was clear when the rule was
23   adopted -- I think we made it clear that this was
24   being used out there today, and I think you have a
25   transition problem, because, clearly, you want things
0056
 1   to come in under the rule and be approved.  On the
 2   other hand, I don't think it was the Commission's
 3   intention -- and certainly wasn't ours -- who
 4   advocated this to withdraw from the market from any
 5   period of time something that's out there making money
 6   for the charities today.  So I note that you say you
 7   would ask that they cease operations and submit them
 8   for approval, and I would hope that you would exercise
 9   prosecutorial discretion going forward so that this
10   doesn't freeze out something that people have been
11   doing out there that's been productive for the
12   charities.
13                 I'm not asking you to make a commitment
14   on the record or anything about that, but I think it's
15   very important that we not allow the adoption of this
16   rule to curtail something in the marketplace that's
17   been working for people and treat this as a -- sort of
18   a transition problem that can be dealt with
19   administratively.
20                 Thanks.
21                 MS. TAYLOR:  Mr. Bresnen --
22                 MR. BRESNEN:  Yes.
23                 MS. TAYLOR:  -- I'm glad you brought
24   that up because I read right over that and didn't see
25   it, because we do use tabs right now that we use video
0057
 1   confirmation on.  So is -- for instance, the Stinger
 2   tab.  I mean, we're not supposed to be using Stingers
 3   anymore since we do --
 4                 MR. SANDERSON:  No.  That's --
 5                 MS. TAYLOR:  -- video confirmation?  I
 6   mean, what exactly --
 7                 MR. SANDERSON:  We're asking that they
 8   submit the products that they have in the market for
 9   approval.  And I think that, as Mr. Bresnen said, you
10   know, we'll use the discretion in enforcing this in
11   the transition period.
12                 MS. ROGERS:  Who, exactly, are you
13   asking to submit it?
14                 MR. SANDERSON:  It's a requirement that
15   the manufacturers submit.
16                 MR. CORNWELL:  Right.  And we --
17                 MS. ROGERS:  Okay.  So as a charity, are
18   you still allowed to continue to use it in the hall in
19   hopes that your manufacturer is submitting it in hopes
20   that you don't get in trouble or --
21                 MR. SANDERSON:  The manufacturer would
22   be the one that would get in trouble for using -- for
23   allowing the video confirmation.
24                 MS. ROGERS:  Oh, okay.
25                 MR. BRESNEN:  I'd like to make one more
0058
 1   suggestion.
 2                 It seems like you may need an additional
 3   letter clarifying some of these things.  The way the
 4   addition -- the original letter is written, it looks
 5   like you do -- "if you have this, you're out," but
 6   from what I'm hearing you say, you're going to judge
 7   these things on balance as to whether there's
 8   sufficient security and that sort of thing.  So it
 9   might be good to communicate to the regulated
10   community that notion so we're not, again, frozen from
11   people submitting when they think, "Well, there's no
12   point in me submitting because I've got a keyboard,
13   because I don't use a bar code" or something.
14                 MR. SANDERSON:  Okay.
15                 MS. TAYLOR:  Let me just ask one more to
16   make sure.
17                 So, for instance, I'm just using the
18   Stinger as an example because we have several tabs
19   that we -- so are you actually asking the manufacturer
20   to quit selling the Stinger until they've resubmitted
21   them for approval for video confirmation?
22                 MR. SANDERSON:  The Stinger tab has been
23   approved.  The ticket is approved.  The video
24   confirmation is what has not been approved.
25                 MS. TAYLOR:  So what does that mean?
0059
 1                 MR. SANDERSON:  Can you play the Stinger
 2   without the video confirmation?
 3                 MS. TAYLOR:  Fine.  So it's okay to play
 4   it and still do the video confirmation on it?
 5                 (Laughter)
 6                 MR. BRESNEN:  I would suggest that those
 7   of you who have this in your hall, encourage your
 8   manufacturer to submit for approval.
 9                 MR. CORNWELL:  And I think, Phil, you
10   need to also encourage those manufacturers with some
11   clarity to submit.
12                 MR. SANDERSON:  And we've corresponded
13   with those manufacturers.
14                 MS. ROGERS:  Because I will just go on
15   record to say, Phil, in a hall where you sell Horse
16   Race or Stinger -- whatever -- when the individuals
17   can see it on TV and play along with it and scream
18   with it and holler -- like, Larry, I don't know if
19   you've been in a hall and seen that, it does generate
20   more sales.  And so in the long run, the person that's
21   getting hurt is the charity if that's taken away.
22                 I, too, just kind of read over this and
23   didn't --
24                 MS. LOPEZ:  I might also mention, too,
25   with the video confirmation, like that with the Horse
0060
 1   Race, a lot of times when it's right before your
 2   intermission, people know they've got, you know, Horse
 3   No. 5 or whatever.  They've got it in their hand, but
 4   the video is going on.  They have an opportunity to go
 5   up to the pull-tab counter and spend a lot more money
 6   because they know that it's -- they can just glance
 7   back at the TV screens and watch to see who's going to
 8   win.  So, again, I think that that's a big plus -- a
 9   major plus in what we do in our hall as well.
10                 MR. BRESNEN:  I would say two things
11   about this.  We have very good evidence right here
12   that this can make money for the charities and
13   stimulate play out there, people who have actual
14   experience with it.  And, number two, I think the
15   result of the show-and-tell that we did for a couple
16   of hours that day, I think the members of the -- the
17   staff for the members of the legislature that were
18   here and some of the people who were concerned about
19   the open nature, the language in the rule, I think
20   they saw pretty benign product there.
21                 Now, I understand your desire to protect
22   the integrity of that product, and one of the reasons
23   we wanted to bring this in was to improve the
24   integrity and accounting.  We have a transition
25   problem here and I would just ask that you work this
0061
 1   through, kind of person to person, agency to
 2   manufacturer, to get them in here, but don't upset
 3   what's happening, because you can tell this is a
 4   moneymaker for the charities and I don't think it's
 5   the sort of thing people have been worried about.
 6                 I would encourage everybody on the BAC
 7   to watch that thing because you'll see things that
 8   might be applicable in your hall and you might see
 9   some things like, "Well, that's not what we want to
10   do."  And hopefully -- I really congratulate Gamco for
11   coming forward with a product and I'm hoping some
12   other manufacturers will, too.
13                 Do these belong to somebody here?
14                 (No response)
15                 UNIDENTIFIED SPEAKER:  I think they're
16   Fenoglio's.
17                 MR. CORNWELL:  Let me -- Phil, Suzanne
18   brings up a very good point here.  It was -- and it's
19   addressing your -- this isn't a validator.  You don't
20   want video confirmation to be a validator.  Okay?
21                 Stingers -- the Stingers she's referring
22   to is a daub ticket, and it daubs the end rows.  Okay?
23   So they simply go and call up that card number on a
24   Bingo King Blower.  It's a Gamco ticket.  They call up
25   that card number that corresponds with that bingo card
0062
 1   and they validate that ticket as a good bingo.
 2                 MR. SANDERSON:  They verify it as a good
 3   bingo.
 4                 MR. CORNWELL:  Validate it or verify it,
 5   yes, as a good winning event ticket.
 6                 So that's the distinction and difference
 7   that's out there and was used before the adoption of
 8   this rule.  So that's a different twist and a
 9   different take.
10                 MR. SANDERSON:  My understanding is that
11   the term "validate" is an indication that it's
12   determining that that is a winning ticket; whereas a
13   "verification" of it is -- you know, does not make
14   that determination.  It just indicates that that
15   ticket is a winning ticket.
16                 MR. CORNWELL:  Okay.  I'll stop using
17   the word "validate" and use "verify."
18                 MR. SANDERSON:  Thank you.
19                 MS. TAYLOR:  Okay.  Can you tell me
20   again what the "verify" definition was?
21                 (Laughter)
22                 MS. TAYLOR:  Because as I was writing
23   the other one, it seems like I was hearing the same
24   words.
25                 MR. SANDERSON:  Well, in the context --
0063
 1   I'll -- "validate" as it relates to instant tickets in
 2   the Lottery side, that ticket is not a winning ticket
 3   until it's validated.  It may appear to be a winning
 4   ticket, but when you go to the convenience store to
 5   cash it in, they scan it and they put in the different
 6   numbers and it validates that that is a winning
 7   ticket.  It's been sold.  It's been tracked.  It's
 8   been -- you know, they can pay that winning ticket.
 9   All this here is is a verifier that says "This ticket
10   contains the information that makes it a winning
11   ticket."  It's just like the verifier for the bingo
12   cards.
13                 MR. CORNWELL:  Right.
14                 MR. SANDERSON:  It's not called a
15   validator on the -- it's --
16                 MR. CORNWELL:  So when we talk about
17   video confirmation equipment, we can't -- we don't
18   need to take the word "verification" off the table.
19   Is that correct?
20                 MR. SANDERSON:  Correct.
21                 MS. TAYLOR:  Okay.
22                 MR. CORNWELL:  Are we totally confused?
23                 (No verbal response)
24                 MR. CORNWELL:  I do want to make one
25   comment before we wrap it up, and whatever -- you
0064
 1   know, Steve recommended we form a committee, and
 2   that's your call, but I want to hand it to the Texas
 3   Lottery Commission, the Bingo Division and Phil
 4   Sanderson for leading the way down this avenue.  And
 5   there's a lot of people watching what we're doing down
 6   here, and those people are on both sides of the aisle.
 7   And I really appreciate the hard work you guys are
 8   doing and maybe we can come with a product that can
 9   reinvigorate the industry again and make it fun and
10   attract new players.  That's the ultimate goal.  We
11   appreciate your patience with us in trying to move
12   down that road.
13                 Thank you.
14                 MS. TAYLOR:  Okay.  Any other discussion
15   on this topic?
16                 (No response)
17                 MS. TAYLOR:  Now, remember, if -- you
18   guys are going to stay after we finish with the other
19   items on this agenda and we're going to see a
20   demonstration and it will all become clear at that
21   time.
22                 MR. WHITTINGTON:  Well, I'm not going to
23   talk then, but I'm going to say the last thing now.
24                 (Laughter)
25                 MR. WHITTINGTON:  You-all got to
0065
 1   understand, I believe in innovation and I want us to
 2   have something that will better the halls at all
 3   times.  Pull-tabs is not really going up.  They about
 4   even out.  It's not on the up climb on pull-tabs now.
 5   And anything that will innovate your halls where we
 6   can make more money I'm for.
 7                 All I'm saying is, if you got something
 8   new, it needs to be explained and simplified for a lot
 9   of people so they can understand.  That's basically
10   all I'm saying.  I'm always looking for new
11   innovations.  We need that in the halls.  We need
12   something.  We don't need sweepstakes because we can't
13   have that, because that's just like A (phonetic)
14   lottos, any way you put it.  That's what they're
15   doing, they're paying cash, but we can't do that.
16                 So we definitely need some type of new
17   innovation, and if that can help in the halls, I'm all
18   for it 100 percent.  I wasn't cutting it down.  I'm
19   for it, but I need -- I just need to know how to
20   operate, and most people will want to know the same
21   questions.  "How does it operate?  How can we do this?
22   What does it mean?"  Okay?  And that's basically all
23   I'm saying.
24                 MS. TAYLOR:  And we are going to find
25   that out today.
0066
 1                 MR. WHITTINGTON:  Yes.
 2                 MS. TAYLOR:  Okay.  Any other
 3   discussion?  Any other questions?
 4                 (No response)
 5                 MS. TAYLOR:  Not Larry.
 6                 (Laughter)
 7                 MS. TAYLOR:  Anybody else?
 8                 (No response)
 9                 MS. TAYLOR:  Okay.  I'm just kidding,
10   Larry.
11                      AGENDA ITEM NO. 7
12                 MS. TAYLOR:  Item No. 7, Consideration
13   of and possible discussion and/or action on planned
14   rulemaking relating to licensing.
15                 You know, let me ask:  Are you okay,
16   still?
17                 THE REPORTER:  Yes.
18                 MS. TAYLOR:  Okay.
19                 MR. MINER:  Madam Chair, Committee
20   Members, my name is Bruce Miner.  I'm the manager of
21   the Licensing Department of the Charitable Bingo
22   Division.
23                 This morning, in front of you, I laid
24   out a number of draft rules.  In the recent past, your
25   focus has been on audit.  In the meantime, we still
0067
 1   continue to draft rules in an effort to streamline the
 2   processes that we are facing in an effort to clarify
 3   some of the things that we continually get questions
 4   on.
 5                 So behind Tab 7, you have a number of
 6   draft rules.  If you notice, they're all one or two
 7   pages long.  We're trying to keep them short.  We
 8   could make one rule for amendments and include six
 9   draft rules, but we would like to keep it short so
10   you'd know where to look if you're looking for an
11   answer.
12                 Our intent is to put the industry on
13   notice of what we're looking for when you submit
14   certain documentation, different areas that are
15   important to us in the original application process.
16   We have a draft rule in there that identifies the
17   proof of existence that we're looking for for the
18   different types of charities that are submitting
19   original application.
20                 So I don't want to go over each one
21   separately.  I think, if you count, there's about 16
22   draft rules there.  And I think what I'd like from
23   you -- not necessarily at this meeting, but to see if
24   you are interested in developing work groups to
25   address these.  And if there was a benefit of
0068
 1   combining them into common types -- I just glanced
 2   through here, and there's six different types of
 3   amendments that might be combined into one work group.
 4   There's three rules that appear to address lessors, or
 5   lessor transfer, lessor amendment source of funds.  So
 6   that might be considered being combined, or we may
 7   come up with 16 work groups and just overwhelm you.
 8                 So it's just for information at this
 9   time.  We can continue how you would prefer in the
10   future, and these are our initial steps, just getting
11   them out there and an opportunity for everybody to
12   look at it.  And I'm available to answer some
13   questions, but I don't want to go into a whole lot of
14   detail because they are just drafts and we're making
15   the first step.
16                 MS. TAYLOR:  Bruce, what were the other
17   two types?  You said you saw that there was three
18   types, one being lessors.  What were the other two
19   that you --
20                 MR. MINER:  It's really two, because the
21   other ones were pretty much miscellaneous.  I was
22   looking through and there's license fees and
23   affiliated organizations and common roof/common
24   foundation.  So I don't think they fall under any
25   specific group, but amendments to conductors, one;
0069
 1   change in lessor applications, the second one; and all
 2   the rest, the third one.
 3                 MR. CORNWELL:  Yeah, but, Bruce, you can
 4   break these down to is -- all these rules under some
 5   factor of either the conduct of bingo by a charitable
 6   organization or you could -- and then you get all the
 7   issues that a lessor would deal with, common roof and
 8   changes, and then you could also -- there's no
 9   licensing draft rules in here that affect a
10   manufacturer or a distributor, is there, other than
11   the two-year rule?
12                 MR. MINER:  I think that's correct.
13                 MR. CORNWELL:  I didn't see anything.
14                 MR. MINER:  The only -- the licensing
15   fees relate to manufacturer and distributor, but --
16   actually, not totally because we're trying to bring in
17   the recalculation of the license fee, and there is no
18   recalculation.
19                 MR. CORNWELL:  No.
20                 MR. MINER:  You just pay 3,000 or you
21   pay 1,000.
22                 MR. CORNWELL:  No.  There's no
23   recalculation.
24                 Madam Chair, I think it's an important
25   matter that we assign some work groups to this.
0070
 1                 MS. TAYLOR:  I think you're right.
 2   Which one are you Chairing?
 3                 MR. CORNWELL:  Oh.
 4                 (Laughter)
 5                 MR. MINER:  The manufacturer/distributor
 6   one.
 7                 (Laughter)
 8                 MR. CORNWELL:  Yeah.  Thank you, Bruce.
 9                 I'll take whatever is -- I'm not good
10   at -- I don't want to be on the lessor group.  I don't
11   want to -- I'll try to help on the conductors group.
12   How about that?
13                 MR. SANDERSON:  Are the amendment -- the
14   six or seven amendment rules, they cover the spectrum
15   from lessors, conductors and --
16                 MR. MINER:  No.  I mean --
17                 MR. SANDERSON:  Or is it primarily --
18                 MR. MINER:  The six were -- just quickly
19   looking at it, were related --
20                 MR. CORNWELL:  Give us the six --
21                 MR. MINER:  -- to conductors.
22                 MR. CORNWELL:  -- again, Bruce.
23                 MR. MINER:  Oh.  I just highlighted
24   mine.  Let's see my six.  I'll just run over them
25   quickly:  A change to a license record; the
0071
 1   abandonment lease termination rule; amendment of the
 2   license, general provisions rule; amend a license by
 3   telephone or fax rule; an amendment to a license to
 4   conduct bingo; and amending a license under APA,
 5   Administrative Procedures Act.  So these are all
 6   related to conductor applications.
 7                 MR. CORNWELL:  Conductor -- every one of
 8   those groups related to conductors.
 9                 MR. MINER:  Yes.
10                 MR. CORNWELL:  Okay.
11                 MR. MINER:  So you want me to touch
12   on --
13                 MR. CORNWELL:  And then you have -- you
14   could do the same thing as a commercial lessor work
15   group.  Right?
16                 MR. MINER:  Right.  I captured --
17                 MS. TAYLOR:  Earl, which ones did you
18   want to take?  I'll let you and Knowles decide how to
19   divide that between the two of you.  Who would like to
20   be on Knowles' work group?
21                 (No response)
22                 MS. TAYLOR:  Well, I guess that side of
23   the table can go with Knowles and that side of the
24   table can go with Earl.
25                 Okay.  That's going to be Rosie and Pat
0072
 1   with Earl, and Larry and Markey with Knowles.
 2                 MR. CORNWELL:  And I will take the
 3   conductor side of it.  Okay?  You-all have got to take
 4   the commercial lessor side of it.
 5                 (Simultaneous discussion)
 6                 MS. TAYLOR:  You're going to be Chairing
 7   a work group, and Knowles will let you know which
 8   items that you're going to be looking at, which of
 9   these draft rules.
10                 MR. MINER:  I just put that out as --
11                 MR. CORNWELL:  I'd like to trade -- our
12   group would like to trade our number one draft choice
13   to the other group -- Markey would like to sit on that
14   group over there, and I would like probably to have
15   Rosie come over and work with Larry and I --
16                 MS. LOPEZ:  Okay.
17                 MR. CORNWELL:  -- since she's got a lot
18   of conductor knowledge.
19                 Is that a deal?
20                 MS. TAYLOR:  Fine with me.  Is everybody
21   comfortable with that?
22                 (No verbal response)
23                 MR. CORNWELL:  So two work groups.  A
24   lot of overlap here, folks.
25                 MS. LOPEZ:  Okay.  But I think that even
0073
 1   as two separate work groups, we still, I think, need
 2   to come together as one complete work group --
 3                 MR. CORNWELL:  I think that's the only
 4   way you're going to get it done.
 5                 MS. LOPEZ:  -- from the two work groups
 6   to bring --
 7                 MR. SANDERSON:  Just remember, you can't
 8   have five members for one work group.
 9                 MS. LOPEZ:  Okay.  So that would be how
10   many?  Six?  Okay.  Then one of us would have to --
11                 MR. SANDERSON:  The two chairs could get
12   together and --
13                 MS. LOPEZ:  Okay.  There you go.
14                 MR. MINER:  And you could do them by
15   phases.  I'm not saying I'm expecting 16 of them to
16   come before the Commissioners in three months.
17                 MR. CORNWELL:  Right.  I understand.
18                 MR. MINER:  I don't think we could
19   support that, but we will be involved with all of
20   these and --
21                 MR. CORNWELL:  Earl, would you get with
22   your group and see what available dates are and e-mail
23   them to Phil and Bruce and let them pick dates that
24   they would be more than willing to work with, and I'll
25   do the same with my group.  And then you and I are
0074
 1   going to have to work together on joint issues, Earl.
 2                 MR. SILVER:  Okay.
 3                 MR. MINER:  And as you've looked at
 4   these and digest them and as you have some questions,
 5   bring those to us quickly and we can have an answer
 6   for everybody's consideration so we get through this.
 7                 MR. CORNWELL:  Do I hear a second to all
 8   this motion and commotion?
 9                 (Laughter)
10                 MS. TAYLOR:  Well, actually -- yes, sir.
11                 MR. McNALLY:  Excuse me.  I apologize.
12   I had signed up to be heard on this issue and wondered
13   if I could just speak before you actually vote.
14                 MS. TAYLOR:  Well, we're actually not
15   going to vote, because we don't vote on work groups.
16   I just get to make them.  That's in the rules.  So --
17   that's the power of getting to come to these meetings.
18                 So those are the work groups and that's
19   what we're going to have, and we will hear your public
20   comment before we close this item.
21                 And thank you for separating those into
22   those two groups for us.  That's been very helpful.
23                 MR. MINER:  Well, after you look at
24   them, you may disagree, but that's available to you.
25                 (Laughter)
0075
 1                 MR. SANDERSON:  One thing that I would
 2   like to emphasize is that these are -- what's in the
 3   notebook are very, very early stages of draft.  They
 4   have not -- you know, they have not necessarily gone
 5   through the complete review process internally.  As we
 6   go through these and review these, there may be some
 7   modifications or changes to those.  So if you would,
 8   let Bruce know who's on what work group and which ones
 9   they're working on so that we can send out any changes
10   that we may make in the meantime.
11                 Also, it may be of benefit to have other
12   individuals on these work groups outside of the BAC,
13   some other industry representatives.
14                 MR. CORNWELL:  If there's individuals
15   wanting to serve on these individual committees who
16   are not part of the BAC, are more than welcomed to
17   contact either myself or Earl.  And I don't think
18   there will be a -- Chairman, is there a problem --
19                 (Simultaneous discussion)
20                 MS. TAYLOR:  No problem.  Add whoever --
21                 MR. CORNWELL:  -- delegating that --
22                 MS. TAYLOR:  -- you would like, at your
23   discretion, to these work groups.
24                 MR. CORNWELL:  Okay.
25                 MS. TAYLOR:  Okay.  And now we have some
0076
 1   public comment.  James McNally.
 2                 MR. McNALLY:  Thank you, Madam Chair,
 3   Committee Members, appreciate that.  I did want to
 4   address you this morning with regard to this issue.
 5                 I was the one who called earlier, Sandy
 6   Joseph and Kim Kiplin.  I see -- and I do appreciate
 7   the opportunity to have other members besides the
 8   Bingo Advisory Committee Members on the work group.  I
 9   think that's been common to do in the past, and I
10   think that would be important to do here.  And that
11   was really my main concern.  So I do appreciate that.
12                 But the reason I'm here is because I
13   think there were two problems.  First of all, the
14   notice -- the printable notice of the meeting on the
15   website was not the actual notice of the meeting, and
16   it did cause some concern and confusion with my
17   client, and also me, because this item was not on the
18   printable version of the agenda.  So that those --
19   there may be other interested parties in the industry
20   that didn't get proper notice of this particular item
21   that also may be interested in participating in the
22   various work groups.
23                 Secondly, the notice that did go out,
24   you know, didn't include copies of the actual draft
25   rules.  They weren't available on the website.  I
0077
 1   believe the only way to get them was to make an open
 2   records request.  Secondly (sic), the agenda item
 3   didn't indicate the topic of the actual draft rules.
 4                 So I would suggest to you that there may
 5   be other folks -- interested parties -- that had they
 6   had a little bit better notice of the agenda item
 7   might be here requesting to be on a particular work
 8   group.  So I might suggest that the website notice be
 9   fixed and perhaps you revisit this again at a
10   subsequent meeting for those folks -- those additional
11   folks that might be interested in the work group.
12                 Now, having said that, I would like to
13   participate in the work groups as well as to comment
14   on the actual split.  It may be that some of the
15   provisions which go to the conductor group or which
16   you've talked about going to the conductor group
17   actually touched other industry participants,
18   including lessors.  So there may be -- I would request
19   that there be some ability for folks to comment on the
20   various divisions.  Either that or participate in
21   meetings of perhaps both groups.
22                 MR. CORNWELL:  Jamie, you understand
23   that if we've got two groups, one looking at the
24   conductor side and another group looking at the lessor
25   side, that it would be great to get everybody
0078
 1   together, but I can't have any more than four people
 2   in the room on the BAC or else it constitutes a public
 3   hearing.
 4                 And, Jamie, you're more than welcome to
 5   have anybody call -- the Chairman has indicated that
 6   Earl and I can add whoever we want.  And that's very
 7   common practice.  I've joined work groups that have
 8   been in existence for a year, and so it's very common
 9   and we'll make it well known.  So --
10                 MR. McNALLY:  Sure.  Sure.  And I
11   appreciate that.
12                 MR. CORNWELL:  Jamie, what's the name of
13   your law firm and what -- who's the client that you
14   represent?
15                 MR. McNALLY:  I'm with Clark, Thomas and
16   Winters, and I'm representing Littlefield Corporation
17   here.  And I've participated in work groups as well
18   very successfully in the past and really see the
19   benefit in that.
20                 I was talking more to the division of
21   the subjects between the two, and what I'm suggesting
22   is there may be some topics that overlap.  So --
23                 MR. CORNWELL:  Oh, there will be.  And,
24   again, that's when Earl and I will probably get
25   together and carry that water to each subgroup.
0079
 1   You've got the opportunity -- you can sit on both
 2   groups and hear both sides of that story and probably
 3   get a better feel than each one of these work groups.
 4   So you can be a great resource, go-between, because
 5   you don't sit up here on the BAC.  So we'll look for
 6   your -- a lot of guidance and help from you.
 7                 MR. McNALLY:  Well, I certainly
 8   appreciate that.  And do I understand that other
 9   interested parties in the industry can also
10   participate in these various work groups?
11                 (No verbal response)
12                 MR. McNALLY:  Okay.
13                 MS. LOPEZ:  I might mention that
14   Ms. Joseph had informed us of that prior to the
15   beginning of the meeting.  You may have missed that,
16   but, again, it was just an error that happened, and
17   so, obviously -- you know, human error does happen.
18   The wrong notice got posted.  The agenda was not the
19   correct agenda, by error.  So if there's individuals
20   that for whatever reason were not here today because
21   of that, again, it was just a pure, mere error, and,
22   you know --
23                 MR. McNALLY:  Sure.  Sure.  And I
24   certainly understand errors; mistakes do get made,
25   which is why I suggested that it might be a good idea
0080
 1   to take it up subsequently with perhaps proper notice
 2   so that other interested parties might appear and
 3   request the ability to participate.
 4                 MR. CORNWELL:  Well, I want to make
 5   something clear here, Jamie.  If -- Earl and I have
 6   got to do a job.  Right?  And we've got to maintain a
 7   certain amount of order.  And sometimes groups can get
 8   overly large.  So I do want to make sure you
 9   understand that Earl and I may decide to limit the
10   number of people that get -- that we work with on this
11   committee and that we just reserve that right to do
12   so.  We've never had to do that in the past, but we
13   may reserve the right to limit the number of folks on
14   the committee.
15                 MR. McNALLY:  Yeah.  And I've never seen
16   that done in the past either.  I'd be shocked --
17                 MR. CORNWELL:  Okay.  I just want to --
18                 MR. McNALLY:  -- if enough --
19                 MR. CORNWELL:  -- make sure.
20                 MR. McNALLY:  -- people, you know,
21   wanted to participate, that that would be a problem.
22                 MR. CORNWELL:  But you're scaring me
23   Jamie, that we'll have a whole bunch of people.
24                 (Laughter)
25                 MR. McNALLY:  No.  I certainly don't
0081
 1   mean to do that.  I was just concerned that proper
 2   notice -- my view, proper notice hadn't -- in the
 3   industry hadn't been made and that there might be
 4   other people out there who really do want to -- I
 5   mean, these are important rules.  We haven't had the
 6   opportunity to look at them in detail, and, really,
 7   other folks in the industry haven't yet either.
 8                 MR. CORNWELL:  Right.
 9                 MR. McNALLY:  But I suspect that, you
10   know, they will generate some interest, and I just
11   wanted to make sure there was the opportunity to
12   participate.
13                 MR. SANDERSON:  Well, Jamie, like I said
14   earlier, these -- you know, they're in the very, very
15   early stages.  And the only reason that I had
16   requested this be put on the BAC's agenda was for two
17   reasons:  One, to let them know that we are now moving
18   into some rulemaking on the licensing side.  We've
19   just finished, you know, a lot of rules on the audit
20   side and enforcement side.  And we're still, you know,
21   working on some of those rules as well.  And, you
22   know, I doubt that if there's -- you know, take
23   Bruce's 16, if that's the right number that's here, if
24   there's 16 different rules, I very seriously doubt
25   that they will be at a Commission Meeting before the
0082
 1   next BAC Meeting.  We just wanted the Bingo Advisory
 2   Committee to have an opportunity to look at the rules,
 3   or the drafts, which is one of the items in their work
 4   plan.  We are still moving forward, as I mentioned, on
 5   these rules.  You know, there may be some minor
 6   changes or corrections here and there as we go through
 7   these, and we'll be glad to hand those out.  Once they
 8   get to a -- what I would consider a very good draft
 9   stage is when we'll post them on the Internet and
10   offer individuals to have informal comments, which
11   we've always done in the past.
12                 So what we're looking for here is that
13   the Bingo Advisory Committee can create some work
14   groups or sub work groups to look at these rules and
15   offer any thoughts or concerns that they may see in
16   what we're working on.
17                 MR. McNALLY:  Certainly.  And I
18   appreciate that.  I just wanted to make sure that
19   there was a vehicle for industry participation, and
20   specifically my client's participation, and I
21   appreciate that.
22                 MS. LOPEZ:  I might mention that, you
23   know, the BAC has worked very closely here in the past
24   year on a lot of the, you know, recommendations of the
25   propose -- or of the administrative rules that have
0083
 1   taken place and we've worked really well together and
 2   I think that we will continue to do that, you know,
 3   because, again, we work really well together to make
 4   sure that everything that we propose or that we submit
 5   for recommendation to the Lottery Commission and to
 6   everyone in the industry obviously benefits, you know,
 7   the industry on a whole.
 8                 MR. McNALLY:  Absolutely.  And I
 9   appreciate your consideration for that.
10                 MS. TAYLOR:  Thank you.
11                 The work groups are posted on the
12   website.  I think anybody that has been interested in
13   joining these knows who the Chair of each work group
14   is, and we'll leave that up to the individual Chair to
15   add to that work group as they see fit.
16                 And, also, if you will let us know, the
17   rest of the BAC Members who aren't on your work group,
18   when you're going to meet.  If we have that meeting,
19   then, you know, there's a possibility, if there's only
20   going to be three members, that Kim or myself would
21   like to come and join that discussion, you know, as
22   long as we're not putting ourselves in a quorum.
23                 We do have some public comment on this
24   agenda item.
25                 Stephen Fenoglio.
0084
 1                 MR. FENOGLIO:  I've got my clock on,
 2   Madam Chair.  Stephen Fenoglio.  I filed an appearance
 3   slip.  I'll be happy to participate in both
 4   subcommittees.  Thank you for your consideration.
 5                 MS. TAYLOR:  Thank you.
 6                 MR. FENOGLIO:  Nine seconds.
 7                 (Laughter)
 8                 MS. TAYLOR:  Ten now.
 9                 MR. WHITTINGTON:  A first.
10                 (Laughter)
11                 MS. TAYLOR:  And Steve Bresnen.
12                 MR. BRESNEN:  Yes, Madam Chair.  My name
13   is Steve Bresnen.  I'm here on behalf of the Bingo
14   Interest Group.  I'll defer most of my comments.  I
15   thought we were going to talk about some substantive
16   aspects of these rules this morning.  If we're going
17   to do it in a work group format, I would certainly
18   participate in both of those.  If I can't be present,
19   personally, my assistant, Annie Spillman (phonetic)
20   may attend one of those, with you-all's permission,
21   but I would like to say something.
22                 That is an avalanche.  And,
23   Commissioner, we're just about to get to rulemaking
24   fatigue in the industry.  I know that I am.  You know,
25   I've never come down here -- I don't believe I've ever
0085
 1   come down here and asked for any consideration for a
 2   commercial lessor at one of these meetings.  If I
 3   have, one of you correct me later.  I'm always down
 4   here talking about the charities and how to make them
 5   more money, and that's going to continue to be our
 6   focus, but if we're going to impose draconian
 7   record-making rules and restrictions on commercial
 8   lessors because of the abuses by two or three of them
 9   in this state in a manner that penalizes the rest of
10   them, then I will be most active and most aggressive
11   about those rules.
12                 I think the Commission, between its
13   advisory opinion capabilities and the existing
14   statutes and rules, has the ability to put the whammy
15   on those handful of people that are putting the black
16   cat on a bunch of other people, and it really ticks me
17   off because I've spent 12 years at the Legislature
18   trying to demonstrate that the good commercial lessors
19   in this state want to take care of these charities and
20   nurture their business and not overreach and not wreck
21   their business and not try to figure out a way to
22   gouge them every way they possibly can conceive.
23                 So excuse me for getting irritated early
24   on a Monday morning, but when I see an avalanche like
25   this, Phil -- and some of it is clearly targeted at a
0086
 1   broad class of people when you have the tools to work
 2   with -- it just ticks me off.  And I'm sorry.
 3                 I'll work on the work groups and I
 4   promise not to be quite so agitated the next time.
 5   And I would appreciate the Agency considering using
 6   the tools that you have and being a little creative
 7   about it where you need to be to put an end to some of
 8   these abuses out there.  I think it can be done
 9   without hamstringing the rest of the industry.
10                 And I'm sorry I raised my tone of voice.
11                 Thank you.
12                 MS. LOPEZ:  I liked it.  Thank you.
13                 (Simultaneous discussion)
14                 MS. TAYLOR:  I agree with you,
15   Mr. Bresnen.
16                 Thank you.  Thank you.
17                 MR. WHITTINGTON:  Steve, it's a
18   Wednesday, not a Monday.
19                 (Laughter)
20                 MR. BRESNEN:  It felt like Monday.  Got
21   a lot of work to be done; it always looks that way on
22   a Monday.
23                 (Laughter)
24                 MS. TAYLOR:  Thank you.  Is there any
25   other discussion on this topic?
0087
 1                 (No response)
 2                 MS. TAYLOR:  If not, I think we'll go
 3   ahead and take -- Committee, how long of a break do
 4   you want to take?  A quick break?
 5                 MS. ROGERS:  Ten minutes.
 6                 MS. TAYLOR:  Ten minutes?
 7                 (Simultaneous discussion)
 8                 MS. TAYLOR:  Okay.  Ten-minute break.
 9   We'll be back here at -- 11-minute break.  We'll be
10   back here at 20 till 12:00.
11                 (Recess: 11:27 a.m. to 11:38 a.m.)
12                 MS. TAYLOR:  Okay.  It's 20 minutes till
13   12:00.  If we can go ahead and call the meeting back
14   to order.
15                 (Brief Pause)
16                 MS. TAYLOR:  Okay.  Before we go on --
17   we will be going on to Item No. 8 -- we wanted to make
18   sure if Markey had anything she needed to say about
19   Items 1 through 7.
20                 Markey, do you have any comments that
21   you would like to make?
22                 MS. WEAVER:  Not any longer.
23                 MR. CORNWELL:  You've already said them
24   all off the record.  Right?
25                 (Laughter)
0088
 1                      AGENDA ITEM NO. 8
 2                 MS. TAYLOR:  Okay.  Then Item No. 8,
 3   Consideration of and possible discussion and/or action
 4   on the Conductor-Books and Records Guidelines.
 5                 Phil, isn't in his seat yet.  Markey,
 6   would you like to talk about this item?
 7                 (Laughter)
 8                 MS. WEAVER:  No.
 9                 MR. CORNWELL:  She's actually blushing.
10                 MR. SANDERSON:  Item No. 8 are books and
11   records guidelines that were developed by staff and
12   presented to the Commission at their October meeting.
13   These are just strictly guidelines.  They're not any
14   requirements.  They offer organizations the
15   opportunity to utilize additional record-keeping forms
16   to maintain information to hopefully keep oversight of
17   their bingo operations and ensure that they're
18   maximizing their profits.
19                 MS. TAYLOR:  Phil, on the pull-tab recap
20   and verification, is there some form that's being
21   created or being worked on?
22                 MR. SANDERSON:  There is a form, I
23   believe.  I don't know if it's on the website yet.  I
24   can check and see.  These guidelines have been posted
25   to the website.  We have a -- added a new menu item
0089
 1   under "Regulations and Statutes" called "Policy and
 2   Procedures."  When you go to that menu item, you'll
 3   see the internal control guidelines that we've posted
 4   and also the -- these bookkeeping requirements -- or
 5   guidelines.
 6                 MS. TAYLOR:  So if there's not one at
 7   this time, there will be one?
 8                 MR. SANDERSON:  Yes.  I know I have seen
 9   one.  Yes.
10                 MS. TAYLOR:  I know that I've heard or
11   seen something about it.
12                 (Brief Pause)
13                 MS. TAYLOR:  Any other discussion?
14                 (No response)
15                 MS. TAYLOR:  Then we'll go on to public
16   opinion -- public opinion --
17                 (Laughter)
18                 MS. TAYLOR:  Public comment.
19                 Stephen Fenoglio.
20                 MR. FENOGLIO:  Pass.
21                 MS. TAYLOR:  One second.
22                 (Laughter)
23                 MS. TAYLOR:  Steve Bresnen.
24                 MR. BRESNEN:  I pass, too.
25                 MS. TAYLOR:  And Sharon Ives.
0090
 1                 MS. IVES:  I'll pass as well.
 2                 MS. TAYLOR:  Did anybody else from the
 3   group have anything else to say on this at this time?
 4                 Markey?
 5                 MS. WEAVER:  No, Lady Chair.  Thank you.
 6                 (Laughter)
 7                  AGENDA ITEMS 9, 10 AND 11
 8                 MS. TAYLOR:  Okay.  Then we'll go on to
 9   the next agenda item, No. 9, consideration of and
10   possible discussion and/or action on proposed new 16
11   TAC 402.500 relating to general records recordkeeping.
12                 MR. SANDERSON:  Madam Chair, I would
13   request, if possible, to take up Items 9, 10 and 11
14   together.
15                 MS. TAYLOR:  Let's go ahead and do that.
16                 MR. SANDERSON:  In order to keep from
17   repeating myself in other items.
18                 These three items are rules that were
19   voted on at the October meeting to publish for public
20   comment.  I believe -- and I look to Sandy Joseph for
21   confirmation, that the rules should be published in
22   the November 9th Texas Register, this Friday.
23                 MS. JOSEPH:  I believe that's correct.
24                 MR. SANDERSON:  And we have a public
25   hearing scheduled for November the 13th, which is next
0091
 1   Tuesday on these rules.
 2                 We have received some informal comment
 3   since the Commission has proposed to adopt the --
 4   proposed to publish these rules for comment, and we
 5   are working on a -- with those informal comments.
 6                 The purpose for these three agenda items
 7   on your meeting today is to give you the opportunity
 8   as the Advisory Committee to discuss, and if you would
 9   like to put a report together to make public comments
10   at the hearing, or later, that's the general purpose
11   of these three agenda items.
12                 MS. WEAVER:  The hearing date was?
13                 MR. SANDERSON:  The hearing date is
14   November the 13th, which is next Tuesday.  And I
15   believe it's at 10:00 a.m.
16                 MS. JOSEPH:  That's correct.
17                 MS. TAYLOR:  Now, for the record, Item
18   No. 10 is consideration of and possible discussion
19   and/or action on proposed new 16 TAC 402.506 relating
20   to disbursement records requirements, and 11 is
21   consideration of and possible discussion and/or action
22   on proposed new 16 TAC 402.511 relating to required
23   inventory records.
24                 MR. SANDERSON:  And I would like to make
25   sure that you're clear and you understand that any
0092
 1   comments that you make on these rules today are not
 2   part of the public --
 3                 MR. CORNWELL:  Well, that --
 4                 MR. SANDERSON:  -- comment period.
 5                 MR. CORNWELL:  You mentioned that.  You
 6   said -- you started out your conversation saying "The
 7   reason you present this here is that 'Did BAC want to
 8   prepare a report for public comment as the BAC?'"  Is
 9   that --
10                 MR. SANDERSON:  That is correct.  Yes.
11                 MR. CORNWELL:  And that is something the
12   BAC can do?
13                 MR. SANDERSON:  Yes.
14                 MS. TAYLOR:  Do the public comments of
15   the BAC go in -- I know when I come to the Commission
16   hearings, legal always comes up and says, "We received
17   a comment that," da-da da-da, "and our response is
18   this."  Is that what they will also do to the BAC
19   comments then?
20                 MR. SANDERSON:  Yes.  That is correct.
21   If the BAC, you know -- now, it may not say "BAC."  It
22   may say "A number of commentors made the" -- if you
23   made the same comment as someone else.  The comments
24   are summarized.
25                 MS. TAYLOR:  Okay.
0093
 1                 MR. SANDERSON:  And I'll let Sandy
 2   Joseph provide any further information on that.
 3                 MS. TAYLOR:  I have a question, then,
 4   Sandy.
 5                 I also noticed at the last Commission
 6   Meetings that people that had made the particular
 7   public comment were allowed to address the
 8   Commissioners at that time explaining in that limited
 9   scope of why they made that comment about the
10   particular rule.  Does that mean BAC members would
11   also have that opportunity to talk to the
12   Commissioners?
13                 MS. JOSEPH:  I would certainly think the
14   Commissioners would hear any comments the BAC wanted
15   to make.
16                 MS. TAYLOR:  As a BAC member?  Not just
17   as an individual?  I mean, would we be discussing this
18   as a group to them?
19                 MS. JOSEPH:  If the -- if the group had
20   designated one of you, such as yourself, to speak on
21   their behalf, then I think that would be proper.  I
22   don't think you can just come up with something on
23   your own and get up and represent it as the group's
24   viewpoint.
25                 If anything is offered that had not been
0094
 1   presented during the official comment period to the
 2   Commissioners, then the Commissioners, if they choose
 3   to consider any additional comments, would have to
 4   direct the staff to go back and summarize that
 5   comment, et cetera.  So, generally, the Commissioners
 6   like to confine any comments to amplification of
 7   comments that have already been received.
 8                 MS. TAYLOR:  Okay.  Great.  Thank you.
 9                 MS. TAYLOR:
10                 Okay.  Members, Kimberly, tell me, what
11   are your thoughts?
12                 MS. ROGERS:  As far as should we put
13   together some individuals to look over this to present
14   comment to Commissioners, or you would like to go back
15   to each one?
16                 MS. TAYLOR:  What are the wish of the
17   committee?  Would you like to go through these one
18   rule at a time and comment on particular aspects of
19   the rule?
20                 MR. SILVER:  Is it going to go into the
21   record?
22                 MR. CORNWELL:  No.
23                 MS. TAYLOR:  No.
24                 MR. CORNWELL:  Excuse me.  It goes onto
25   the BAC record, but what they're saying, Earl, is that
0095
 1   it doesn't -- what we say in the BAC is not addressed
 2   as public comment to these rules.  What -- my
 3   understanding is Phil says, "You guys can comprise a
 4   work group.  Make your comments as a work group
 5   and" -- I don't know.  Would we have to re-adjourn
 6   a --
 7                 MR. SANDERSON:  Let me --
 8                 MR. CORNWELL:  Let's get -- help me
 9   here.
10                 MR. SANDERSON:  As you're aware, the
11   Bingo Advisory Committee is subject to the Open
12   Meetings Notice, and no more than, you know, four
13   members can get together and discuss anything related
14   to Bingo without constituting a quorum, if five or
15   more participate.
16                 I mean, there's -- you know, you could
17   put together a -- you know, a work group that would
18   allow, you know, some sort of meetings to take place
19   to come up with any comments that you would like to
20   prepare, but I -- my intent was that this -- at this
21   point in time would be when you had the opportunity to
22   discuss something, and we could definitely get the
23   transcript expedited so that the Chair or whoever she
24   designates to draft a report from the discussion could
25   make that available for public comment.
0096
 1                 Now, if the rule is -- if the rules are
 2   published on November the 9th, then the comment period
 3   I think is -- is it 30 days that we post it on this
 4   one?
 5                 MS. JOSEPH:  That's correct.
 6                 MR. SANDERSON:  So it would be somewhere
 7   around December 8th, is when the 30-day period would
 8   be over with.  And, like I said, that's the purpose of
 9   today, is so that you-all can discuss these.  If
10   you-all have any -- if you want to make a comment as
11   the BAC.  Nothing precludes you from making comments
12   as individuals at all.  So --
13                 MR. CORNWELL:  I think that answers our
14   question.
15                 MS. ROGERS:  I would be happy to --
16   let's take each one of these individually.  If anyone
17   has any comments, I'll -- if -- I don't know if
18   there's a vote that has to be taken or if you-all
19   would give me permission to comprise a letter
20   together, submit it as open record, and then I will be
21   happy to present it to the Commissioners at the
22   meeting -- the appropriate meeting, if that is okay
23   within legal and everything else.
24                 MR. CORNWELL:  Sounds like a plan.
25                 MS. JOSEPH:  It would be best if you
0097
 1   either appeared at the hearing next week and offered
 2   those comments or submitted them in writing --
 3                 MS. ROGERS:  Okay.
 4                 MS. JOSEPH:  -- so that we would be able
 5   to review them and respond to them prior to any formal
 6   presentation to the Commissioners.
 7                 MS. ROGERS:  Very good.
 8                 MS. TAYLOR:  Okay.  Let's -- just to
 9   make this really formal, let's hear a quick motion
10   from somebody that Kim is going to put the comments
11   together.  Is there a motion to do that?
12                 MS. LOPEZ:  I make the motion.
13                 MS. TAYLOR:  Is there a second?
14                 MR. CORNWELL:  Second.
15                 MS. TAYLOR:  All in favor?
16                 (All those in favor of the motion so
17   responded.)
18                 MS. TAYLOR:  Okay.  Then we've agreed
19   that she's going to take the notes from the
20   transcript; put them together for presentation as
21   public comment.
22                 Let's go back to Item No. 9.  This is
23   the general records -- additional bingo records.  Do
24   we have any comment on these?
25                 (No response)
0098
 1                 MS. TAYLOR:  I think there's -- really,
 2   all that's telling you is the licenses, we need the
 3   stuff for four years, and something that I do agree
 4   with is that organizations can -- as long as they
 5   contain the information that's required, that they can
 6   use their own forms, which I think most halls already
 7   are doing that.  So that's a great thing.  And all
 8   information must be available at the request of the
 9   Commission.
10                 Is there anything on this?
11                 UNIDENTIFIED SPEAKER:  No.
12                 MS. TAYLOR:  We're in agreement with
13   that.  The BAC agrees with that.
14                 MS. TAYLOR:
15                 No. 10, this is relating to disbursement
16   records requirements, 402.506.
17                 MR. SILVER:  I just have a comment on
18   (b) -- let me see.  Yeah, (b), No. 3, that the game
19   schedules and pricing structure documents, including
20   the dates of any changes to these documents that must
21   be kept, in the halls that -- and especially in Conroe
22   and Victoria, we use price in order to compete at
23   certain times.  We run specials.  We run manager's
24   specials.  We run unannounced specials.
25                 MR. SANDERSON:  Which rule are you on?
0099
 1                 MR. SILVER:  50 -- I'm sorry.  402.506.
 2                 (Simultaneous discussion)
 3                 MS. TAYLOR:  What page and line are you
 4   on?
 5                 MR. SILVER:  The second -- the last
 6   page -- last -- last line of the last page.
 7                 MS. TAYLOR:  Okay.  That would be --
 8                 MR. SILVER:  (11).
 9                 MS. TAYLOR:  -- yeah, (11).
10                 MR. SILVER:  My lines got changed.
11                 MS. TAYLOR:  Okay.  So, actually, we're
12   talking about (b) --
13                 MS. LOPEZ:  Page 4 on Line 22.
14                 MS. LOPEZ:  Page 4, Line 22.
15                 (Simultaneous discussion)
16                 MR. SILVER:  Yeah.  Page 4, Line 22 and
17   23.
18                 MS. TAYLOR:  Okay.  Go ahead, Earl.
19                 MR. SILVER:  Okay.  The game schedule --
20   the pricing structure is pretty fluid in our hall at
21   times when we're trying to increase attendance or run
22   holiday specials or whatever we want to do to try to
23   increase the attendance.  If we're running an event
24   tab special or something like that, we may change the
25   price, and I just think -- I know what the intent is,
0100
 1   is to be able to audit and see if any wrong-doing is
 2   happening, but I just think it could be a little bit
 3   labor intensive for an auditor to try to keep track of
 4   different price changes.  I mean, it's -- you have to
 5   have a certain price to play, but when you have to
 6   keep the change of the documents -- I'm just
 7   wondering, is that going to be is a separate line item
 8   on the DCR or something like that to what you charge
 9   that day or --
10                 MR. SANDERSON:  I'll answer your --
11   normally, you know, I don't answer the questions in
12   this format, but I'll -- this is just a game -- you
13   know what the game schedule is?
14                 MR. SILVER:  Uh-huh.  Yeah.
15                 MR. SANDERSON:  It's the thing you hand
16   out to people playing, and, usually, it's a handout.
17   And then the pricing structure would be whatever
18   prices you charge, and you're just -- you would have a
19   folder that you might keep these things in and the
20   effective dates of when this particular schedule and
21   pricing structure was in place.
22                 MR. SILVER:  So does any changes have to
23   go in there also?  Because it says on there "changes
24   to these documents."  Like if we run a weekend
25   special, do we have to -- do the charities have to
0101
 1   keep that in that folder also as far as auditing and
 2   assign it to that DCR?
 3                 MR. SANDERSON:  It wouldn't be
 4   necessarily assigned to the -- you would just -- an
 5   example would be a game schedule.  And if it's on the
 6   weekends, you can say "These are our weekend prices
 7   during, is" -- you know, "During this period of time,
 8   from April to January of next year, we charge $5 a" --
 9   you know, "entry fee" or whatever.
10                 MR. SILVER:  So the changes in the price
11   schedule for specials would be disregarded?
12                 MR. SANDERSON:  No.  You could
13   incorporate a page in that folder that would say "This
14   is what we charged on this day."  You would just have
15   a file that keeps track of all your price changes.
16                 MS. LOPEZ:  I have a question.  What if,
17   for example, say, we've got a low attendance night one
18   night and we -- it's five minutes to 7:00, and we want
19   to try to sell more computers?  Obviously, we offer a
20   special of, "You know, you've already purchased a
21   computer.  You can come back up to the counter and get
22   one for half price," or whatever, how would we
23   document those type of like immediate -- because,
24   obviously, you don't know what you're going to face
25   every night when you go into the hall.  It fluctuates.
0102
 1   How would you document that?  I mean, if you make a
 2   decision that night that you're going to run a special
 3   and, you know, you didn't announce it other than a few
 4   minutes before session starts.
 5                 MR. SANDERSON:  I would write it on the
 6   game schedule and stick it in the folder.
 7                 MS. LOPEZ:  Just like that?
 8                 (No verbal response)
 9                 MS. LOPEZ:  Okay.  I mean, there doesn't
10   have to be a specific flyer or anything, just --
11                 MR. SANDERSON:  All we're asking for is
12   documentation.
13                 MS. LOPEZ:  It's documented on the --
14   maybe on the session recap or --
15                 MR. SANDERSON:  The session recap, the
16   daily cash report, if you want to put it there.  We're
17   just asking you to document --
18                 MS. LOPEZ:  Okay.
19                 MR. SANDERSON:  -- the activities of
20   selling of the paper and the game schedules.
21                 MS. TAYLOR:  Okay.  I notice here that
22   (b)(2) is the written lease agreement between the
23   lessor and the organization, and if there's no written
24   lease agreement, you must support the rental payments
25   with an invoice stating the location, rental dates and
0103
 1   rental amounts by occasion.  So in this instance, if
 2   this is the way the organizations are doing this on
 3   the rent, then they wouldn't need to have a
 4   forgiveness letter by the lessors.  Is that correct?
 5   If a lessor reduces the rent for that month, then you
 6   wouldn't need a letter saying the rent had been
 7   reduced if you're -- do you see what I'm asking?
 8                 MR. SANDERSON:  I know what you're
 9   asking, and I guess I -- you know, I'm not trying to
10   not answer questions, but I think this is where
11   you-all need to discuss what comments you-all want to
12   make on the rule --
13                 MS. TAYLOR:  Okay.  Well --
14                 MR. SANDERSON:  -- as to, you know, the
15   clarifications that you may need, you know, that we
16   can answer when we propose the rules for adoption at
17   the later date.
18                 MS. TAYLOR:  Okay.  Well, in this
19   instance, then my comment would be:  If this is the
20   way that the organizations are doing this and you're
21   handing them an invoice, then I don't think there
22   would be a forgiveness letter.
23                 MS. ROGERS:  Because the invoice would
24   reflect the amount of the rent of that month.
25                 MS. TAYLOR:  Right.  And I just want to
0104
 1   make sure that that's --
 2                 MS. ROGERS:  So your question is more on
 3   wording than -- no?
 4                 MS. TAYLOR:  Yeah, because, I mean,
 5   actually, you are forgiving a rent.  If you give them
 6   an invoice and the rent has been reduced for the
 7   month, do you also have to do a forgiveness letter?
 8   That's -- I just wanted to -- we're not answering
 9   questions, but that was a question that I had when I
10   read that one.
11                 MR. SILVER:  Yeah.  And then when you go
12   to abate a rent for a session or something, when you
13   have ten people in the hall and it's time to play
14   bingo or --
15                 MS. TAYLOR:  It's time to write a
16   forgiveness letter.
17                 (Laughter).
18                 MR. SILVER:  Yeah.  Do I need to keep
19   that in a form letter on my computer or something?
20                 MS. TAYLOR:  Right.  And the other
21   thing, I know that previously -- and I know it's in
22   the rule, but when an organization's rent changes,
23   they have to notify the Commission within ten days.
24   So what if it only changed for that one day?  Do you
25   notify them that it changed for one day and then it
0105
 1   changed back again?  You know, it's --
 2                 MR. SILVER:  It's two letters.
 3                 MS. TAYLOR:  -- forgiveness for a
 4   letter.  So does it stay the same if your rent is
 5   really supposed to be $300 a session but your lessor
 6   forgave you rent?  You shouldn't have to change
 7   anything, I don't think, but I don't know.  Don't
 8   answer the question.
 9                 (Laughter)
10                 MS. TAYLOR:  But, I mean, those are
11   questions that as I read through this that I think
12   about.  You know, "Are they going to have to notify
13   the Commission they got a rent reduction for that
14   session or does the forgiveness letter take care of
15   that or do you have to do a forgiveness letter if you
16   invoice the charities?"
17                 Okay.  Those are my comments on that.
18                 Okay.  Does anybody else have a comment
19   on this particular rule?  This was 402.506.
20                 MS. ROGERS:  Comment would be that it
21   would be very difficult for a charity to let the
22   Commissioners know in a ten-day period when the rent
23   is forgiven, abated or --
24                 MS. TAYLOR:  Well, because something
25   changed on the -- I mean, the rent really hasn't
0106
 1   changed, but it did change.  But my thing is that I
 2   think that it's very -- I don't know -- ambiguous.  I
 3   can't tell what I'm supposed to do.  Am I supposed to
 4   just give them the invoice with a decreased rent if I
 5   don't have a lease or this -- if I have a lease -- if
 6   you don't have a lease?  The way I'm reading this, if
 7   you don't have a lease, you hand the charities an
 8   invoice and that's their rent.  If you do have a
 9   lease, you have to give forgiveness letters, which
10   makes it sound like a whole lot easier just not to
11   have a lease.
12                 MR. SILVER:  Just give them an invoice.
13                 MS. TAYLOR:  You just give them an
14   invoice monthly.  But then their rent will always be
15   changing, because, you know, the rent fluctuates, and
16   they would need to notify the Commission within ten
17   days.
18                 So those are all my thoughts when I read
19   across this.
20                 MS. WEAVER:  Lady Chair?
21                 MS. TAYLOR:  Markey.
22                 MS. WEAVER:  Do I need to go back and
23   write forgiveness letters for the past four years for
24   all the times that we didn't do it?  Because I've
25   never written one.  I just reduced the rent on a
0107
 1   monthly basis when we have a bad month.
 2                 MS. TAYLOR:  Have your organizations
 3   sent in a thing in ten days saying their rent was
 4   changed?
 5                 MS. WEAVER:  No, Lady Chair, I'm sure
 6   they didn't.
 7                 MR. SILVER:  To the best of your
 8   knowledge.
 9                 MS. WEAVER:  To the best of my
10   knowledge, but they do have their invoice that says
11   what they paid.
12                 MS. TAYLOR:  So although you have a
13   lease with them, you give them a monthly invoice?
14                 MS. WEAVER:  No.  My charities write
15   their own.
16                 (Laughter).
17                 MS. LOPEZ:  I think that's the solution.
18                 MS. WEAVER:  I'm being honest.  I mean,
19   they keep it on their books of what rent they paid and
20   what rent they didn't pay.  You know, for a whole year
21   I didn't collect hardly any rent, you know, to keep
22   the hall open, but I didn't -- you know, I didn't
23   change their lease.  They just knew that we were
24   having bad times and we wanted to work with the
25   charities to keep it open.  Do I need to go back for
0108
 1   that whole year and --
 2                 MR. CORNWELL:  Only if you've
 3   permanently reduced or forgiven that debt.
 4                 MS. WEAVER:  Yeah.  I never went back
 5   and charged them again.
 6                 MS. LOPEZ:  Markey, and if you forgave
 7   rent, did you ever go back and try to collect it or --
 8                 MS. WEAVER:  No.
 9                 MS. LOPEZ:  -- anything like that?
10                 MS. WEAVER:  No.
11                 MS. ROGERS:  So what I'm gathering is it
12   needs to be made -- acknowledged -- the Commissioners
13   need to be made aware of that it is going to be
14   difficult for the charities to have to -- as long as
15   they can produce to the auditors an invoice for the
16   rent that they paid, then that should be sufficient.
17   It's very difficult to go back -- because it would be
18   difficult to every ten days or -- you don't know when
19   those ups or downs are going to go -- or come.
20                 MS. WEAVER:  We don't break the rules.
21                 MR. CORNWELL:  Well, maybe the legal
22   counsel in the audience will address this, but I don't
23   know why you couldn't have a lease that sets down to
24   say "You will pay per invoice."
25                 MS. TAYLOR:  Or a lease that just says
0109
 1   "The maximum rent will be this much money."  That's
 2   what my lease says.
 3                 (Simultaneous discussion).
 4                 MR. CORNWELL:  "Will pay by invoice."
 5                 MS. TAYLOR:  It's -- well, "The maximum
 6   charge" --
 7                 (Simultaneous discussion)
 8                 MS. WEAVER:  "This amount" --
 9                 MS. TAYLOR:  -- "per session will
10   be"  --
11                 MS. WEAVER:  -- "the Lottery Commission
12   allows."
13                 MS. TAYLOR:  I mean, it says -- you
14   know, there is no minimum in that lease.  It just
15   tells the most you're going to charge.
16                 MS. WEAVER:  Right.
17                 MS. TAYLOR:  Okay.  Any other discussion
18   on this one rule?
19                 MS. LOPEZ:  Well, I have a question.
20   Like, if, for example, you're asking for an actual
21   invoice, would that be like a monthly invoice or a
22   biweekly invoice?  I mean, would that be the
23   determination of --
24                 MS. TAYLOR:  I think the invoice would
25   need to match the check they've written to you.
0110
 1                 MS. LOPEZ:  Okay.  But that's what I'm
 2   saying, it could be either a monthly invoice or --
 3                 MS. TAYLOR:  I'm saying that --
 4                 MS. LOPEZ:  -- a biweekly --
 5                 MS. TAYLOR:  -- not as any legal
 6   counsel.
 7                 MS. LOPEZ:  Okay.
 8                 MR. CORNWELL:  Madam Chair, I have one
 9   issue.  And I don't know about you-all's bank
10   statements, but we no longer get the deposit slips and
11   the checks back -- cancelled checks.  And I think that
12   this rule is -- I'm sure the bank would provide them
13   to you at an additional fee, and that's going to put a
14   burden on the charities or the organizations for that,
15   and I wish that we could direct the Lottery Commission
16   Bingo Division to find an alternative way around those
17   documents.
18                 And that's my comment.
19                 MS. TAYLOR:  You're right.  I believe
20   that most of the banks now are sending you those
21   little, teeny ones that -- you know, in your bank
22   statements.  The ones you have to blow up on the copy
23   machine if you really want to see what they say.
24                 MS. ROGERS:  A credit union --
25                 MS. WEAVER:  You don't even --
0111
 1                 MS. ROGERS:  -- should not return --
 2                 MS. WEAVER:  -- get those --
 3                 MS. ROGERS:  -- checks.
 4                 MS. WEAVER:  -- unless you pay -- even
 5   our charities -- I mean, as incorporation, we don't
 6   get them for our individual accounts, but the
 7   charities, they don't get their deposit slips and all
 8   that in there.  It costs them extra.  Even as a
 9   nonprofit, our bank doesn't give them a break because
10   our, you know, family-owned bank was bought out.
11                 MS. LOPEZ:  That's right, because, I
12   mean, I know that we get the bank statements that have
13   just the digital copies of the checks, and we did pay
14   extra for them -- I mean, just so that we would be
15   able to get those.
16                 MS. WEAVER:  Listed by number.
17                 MS. ROGERS:  But everyone does get a
18   deposit slip when you make a deposit.  You do get a
19   stamped deposit slip.
20                 (Simultaneous discussion)
21                 MS. ROGERS:  Okay.  So only --
22                 MR. CORNWELL:  It's not returned to
23   you --
24                 MS. ROGERS:  -- only thing --
25                 MR. CORNWELL:  -- within the statement.
0112
 1                 MS. ROGERS:  No.  The only thing in here
 2   is cancelled checks, because I know credit unions do
 3   not return checks.  So that's what needs to be --
 4                 MS. LOPEZ:  Neither do any of the other
 5   banking institutions unless they're digitally --
 6                 MR. CORNWELL:  Right.
 7                 MS. LOPEZ:  They're not the actual
 8   original check.  It's a copy of it.
 9                 MS. TAYLOR:  Okay.  Any other comment?
10                 (No response)
11                 MS. TAYLOR:  Any public comment?
12                 MR. FENOGLIO:  Stephen Fenoglio, for the
13   record, and I'll be making written comments as well.
14                 I wanted to jump back to the first
15   benign rule, and I'm reminded of the famous statement
16   by President Clinton of the definition of what the
17   word "is" is.
18                 In the provision, Phil, in the "relating
19   to bingo" language in your first rule, it's a very
20   short rule, and my only comment on that is "relating
21   to bingo," for example, could include dauber
22   equipment, because it relates to bingo, and I don't
23   think you-all ever intended a charity -- to mandate
24   that a charity maintain dauber equipment records for
25   four years.  Most charities, if they control the
0113
 1   dauber, will, but -- and I'll make that comment on the
 2   record.
 3                 I want to first take the Check 21
 4   requirement -- and Phil and I have had a number of
 5   comments about this requirement and the statutory
 6   provision that mandates cancelled checks be maintained
 7   by the Commission, and, yet, you've got a federal
 8   statute and regulatory standard called "Check 21" that
 9   states that banks are no longer required to provide
10   their customers with cancelled checks.  And it occurs
11   to me, Phil, that -- I can understand why an auditor
12   wants that information, and in the perfect world, the
13   auditor wants to look at, in some cases, the actual
14   cancelled check, but you've got a federal mandate that
15   says you no longer have to do that.  And it seems to
16   me, under our doctrine of jurisprudence -- and I'm
17   looking to Sandy Joseph -- that I think the federal
18   regulatory requirement trumps the state statute.  And
19   this rule is -- fairly well tracks the state statute
20   on cancelled checks and deposit slips.  You can't
21   reconcile the two, and it seems to me that the federal
22   standard wins.
23                 You can get, obviously -- under certain
24   circumstances, if you go make a live deposit, the bank
25   or financial institution gives you a cancelled -- or a
0114
 1   deposit slip.  If you do cash drop-offs, which a
 2   number of charities do because they're conducting late
 3   at night and no one wants to keep $2,800 in cash in
 4   their trunk -- so they drop it off and they may or may
 5   not ever get a deposit slip.  Some banks will send
 6   one -- or some financial institutions; others will
 7   just, you go up on your statement and you confirm that
 8   the $2,832.58 that you dropped off is on your
 9   statement and that's it.  And I don't perceive this as
10   a big issue.  And, again, I'll be addressing that in
11   comment.
12                 The other issue on the disbursement
13   records reimbursement, though, is the Subparagraph (a)
14   mandates affirmatively that bank statements and
15   cancelled checks alone are not adequate.  I just
16   observed that IRS will accept a cancelled check and/or
17   a bank statement for -- and routinely does, for
18   certain category of expenses on either a business
19   income tax return or a personal income tax return.
20                 I understand why you want some
21   background information in your audits, and I've seen
22   some of the audits where you needed that, but the
23   affirmative statement in (a) says it can never be good
24   enough, and I would suggest some modifying language in
25   that regard.
0115
 1                 And I've got some similar comments
 2   throughout.
 3                 The ten-day rule -- and I tried to
 4   e-mail my legal assistant to do the word search on the
 5   10-day rule you-all talked about earlier.  As I
 6   recollect -- and it's in the statute, but that deals
 7   with manufacturers and distributors only.  And so I'm
 8   not certain what the ten-day rule is.  And I know Phil
 9   is not going to answer questions, but I don't think
10   that -- historically, some of the auditors have said
11   that particular section -- and it's toward the very
12   end of the subsection dealing with -- here it is,
13   Section 2001.211 of the Bingo Enabling Act.  Again,
14   that section is a part of Subchapter E, which
15   addresses manufacturers and distributors only, and
16   those sections run from 2001.201 to 2001.218.
17                 Some auditors in the past have said a
18   ten-day -- ah, okay.  So this is a different proposed
19   rule that you're pointing to as a ten-day.  Okay.  I
20   had missed that in the 1 of 16 rules.
21                 (Laughter)
22                 MR. FENOGLIO:  So maybe that's where
23   that springs from.
24                 And I would -- then I would agree with
25   you that it may be a good business practice to have it
0116
 1   on a timely basis, but, to date, there's no mandate
 2   that you keep -- that you document appropriately in a
 3   ten-day period.
 4                 I'll be happy to answer any questions.
 5                 Thank you.
 6                 And for the record, my name is Stephen
 7   Fenoglio.  I don't think I said that, Madam Chair.
 8                 MS. TAYLOR:  Sharon Ives.
 9                 MS. IVES:  Hello.  My name is Sharon
10   Ives with Fort Worth Bookkeeping, and I would like to
11   start off by saying I would like to volunteer as a
12   public member, if need be, to serve on the work groups
13   discussing the various 16 or so draft rules as
14   mentioned by Bruce Miner.
15                 I'm confused.  There are a lot of draft
16   rules floating around right now and lots of duplicate
17   pieces of the puzzle, so to speak, that can be
18   summarized in a short and organized way.
19                 Unfortunately, I was one of the people
20   that Ms. Joseph had stated that printed the wrong or
21   the incorrect agenda.
22                 A majority of the bingo bookkeeping is
23   currently being done correctly, as far as I know.  I
24   need some time to go through the current requirements
25   and to compare what I have received this morning from
0117
 1   the table, since I was not able to access it.
 2                 Now, which rules will be discussed on
 3   the public hearing on Tuesday?
 4                 MR. CORNWELL:  I think it's 402.500 and
 5   402.506 and --
 6                 MS. ROGERS:  402.511.
 7                 MR. CORNWELL:  Yeah, 511.
 8                 MS. IVES:  Okay.  I will be attending
 9   the public hearing Tuesday and I will comment in
10   detail more at that time.
11                 And, also, I just want to go on record
12   by saying that I would like things to kind of slow
13   down a bit on the rulemaking.
14                 Thank you.
15                 MS. TAYLOR:  Thanks, Sharon.
16                 Is there any other public comment on
17   this item?
18                 Steve Bresnen.
19                 MR. BRESNEN:  Madam Chair, I'm Steve
20   Bresnen.  I'm here on behalf of the Bingo Interest
21   Group.  And if I didn't list this item on my form, if
22   you'd change it for me, I'd appreciate it.
23                 MS. TAYLOR:  Done.
24                 MR. BRESNEN:  We'll comment in detail on
25   the published rules on the 13th, but I would like
0118
 1   your -- the committee's endorsement, and this goes to
 2   Mr. Silver's comment about Page 4, Lines 22 and 23.
 3                 This rule is about disbursements and
 4   bingo expenses, and it would seem to me that the
 5   pricing structure and the game schedules have more to
 6   do with revenue; so it seems like it's inappropriate
 7   to be in this rule.
 8                 Also, there's at least a couple of other
 9   places where the information about game schedules and
10   prices are required to be kept; so it seems to be
11   surplus.
12                 Without -- since you're taking these
13   three rules up together, let me just say -- and I
14   really kind of wish we were taking the fourth one up,
15   but it might require some additional detail.  If I
16   count right, there's something like 55 items of
17   information listed in that one rule.
18                 I think -- the problem that I'm having,
19   Phil, and I hope I've articulated this consistently,
20   is that all of these things have to work together.
21   There's obviously a recodification -- or a
22   codification in some cases and a recodification in
23   others of everything relating to bingo.  And I think
24   that there is a big problem in the regulated community
25   with seeing how these things fit together and whether
0119
 1   they're redundant or not.
 2                 I also think that your number of
 3   infractions is going to go through the roof because
 4   there are too many places where information is being
 5   kept under different rules for different -- for or by
 6   different people, and I'm just going to use this one
 7   as an example here.  It really relates back to this
 8   Disposable Card Sale Summary, but in the item that's
 9   later on the agenda -- that's this bingo occasions
10   records requirement, on the second page of that, you
11   have occasional paper -- "Occasion Paper Floor Sales
12   by Usher."  Those items of information are also
13   discussed in the Disposable Card Sale Summary rule
14   that's on the agenda for the 13th.  I'm assuming that
15   the one that's on this -- for the 13th is a roll-up of
16   these numbers that are in Item g on this single-spaced
17   document here.  I would assume you'd take all that
18   information and roll it up into this other one.
19                 I think right there, when things are
20   happening on the fly in the bingo hall, is where
21   you're going to have a big gap, and especially if
22   you're trying to do it by usher, because we know that
23   people pass paper from one aisle of tables over to
24   another aisle because they're trying to make sales.
25   They're not trying to make a record.  They're trying
0120
 1   to make sales.
 2                 And I think the problem that we're
 3   having, and especially when you put these other 16
 4   rules out here, is I think it's going to be really
 5   hard to coordinate them all and make them all work
 6   together and have the least amount of recordkeeping
 7   and record retention that will meet your goals for
 8   integrity and don't -- doesn't swamp the regulated
 9   community with cost.
10                 On one of these rules -- and I'm sorry,
11   but I can't keep track of which one it is, it's one of
12   them where you have to retain the records.  I guess
13   under -- is it 505 or 511 that requires you to retain
14   the records?  I didn't bring it up here.
15                 MR. CORNWELL:  500.
16                 MR. BRESNEN:  The general rules.
17                 MR. SANDERSON:  500.
18                 MR. BRESNEN:  All right.  Well, under
19   500, you're going to hold these records, and it's
20   generally going to be for four years.  Under another
21   one of these deals -- and it may -- maybe it's this
22   one, you're going to -- you have to keep the winning
23   bingo card or a computer printout if it was done on a
24   computer.  If you play 30 games -- if an organization
25   plays 30 games in a session and it uses 168 sessions,
0121
 1   which I count as 3 per week plus 12 temporaries,
 2   that's 168 times 30, which, according to my telephone,
 3   is 5,000-and-something bingo cards for one charity.
 4   If there are five charities in a hall, that's over
 5   25,000 paper records that are going to be maintained
 6   there.  And that's, again, assuming I'm understanding
 7   all this.
 8                 There's 55 pieces of information, I
 9   believe, in this rule.  That doesn't count the house
10   rule's rule, the fair conduct rule, the inventory
11   rule; maybe the audit rule.  And that one item has got
12   25,000 records for a single hall and it -- I don't
13   know.  Maybe that's all necessary.  You-all run bingo.
14   I'm just a government guy.  But it seems to me that if
15   you start running the numbers that the benefit is
16   grossly outweighed by the burden.
17                 What I would like to do -- I think I've
18   told you.  What I'm intending to do is to get a small
19   group of people -- and this is not to invite everybody
20   and their sister to participate because I intend to
21   get something done at this meeting.  But next week,
22   I'm going to get a group of my clients seated with
23   people who actually run the bingo halls and work
24   through some of these things and see if we can draft
25   something that kind of synthesizes all this and puts
0122
 1   together so we can give you something that we think
 2   will work that's as consistent with current practice
 3   as we can do it, but where we see the gap-filling that
 4   you're trying to do, we can recommend a way to fill
 5   it.  So we're not just here griping.  We're trying to
 6   be proactive and creative in what we do.
 7                 But I didn't see this until today; so
 8   unless I'm mistaken -- now, I've gotten a lot of paper
 9   over the last few months, so -- I didn't see this
10   until today, if there's something else that we need to
11   reconcile -- this is the single-page item.  If there's
12   something else that we need to put together so all
13   this stuff will fit together in a coherent way, I need
14   it between now and Tuesday morning so we can try to
15   incorporate it all in.  I realize it may not fit the
16   way we got rules published and everything, but we can
17   identify that and straighten it out.
18                 Also, just for the committee's notice,
19   at the Commission Meeting where these rules were voted
20   to be published, I raised some of these concerns about
21   the big picture and how everything would fit together.
22   And I asked the agency -- once these rules are
23   published, they have 180 days to either adopt them or
24   they go out of -- they fail of adoption.  So there's
25   plenty of time, if we put our noses to the grindstone
0123
 1   to make all this stuff work together.
 2                 Also, if you'll look on the first page
 3   of each of these three that's been published already,
 4   it says in the middle of the page -- it's similar
 5   language.  It says -- well, something to the effect --
 6   it said, "The Commission" -- and I'm looking on the
 7   one that's 506 down at Line 18.  It says, "The
 8   Commission believes that the requirements in the
 9   proposed new rule are consistent with existing" --
10   well, that's the wrong one.
11                 Well, there's another line in one of
12   these that basically says, "We think all this
13   information is currently required.  We don't see any
14   inconsistency, but we're under this statutorily
15   required review process of the existing rules, and if
16   we find them, we'll work out the conflicts during that
17   process."  Is that a fair rendition of the process?
18                 MR. SANDERSON:  That's a good synopsis.
19   Yes.
20                 MR. BRESNEN:  I'm concerned, then, if we
21   don't take the whole 180 days and make all the
22   existing rules and the proposed rules match up
23   together, that we're going to have repetition, at a
24   minimum, if not conflict.  Different words may mean
25   the same thing in most people's minds, but when the
0124
 1   different words are -- when words are different
 2   between two rules, a reasonable person might conclude
 3   that the lawmaker intended something different by
 4   those.  So I'm really concerned that if we don't
 5   homogenize all these things and make them work
 6   together in the simplest way possible, that we're
 7   going to have conflicts of interpretation.  It will be
 8   really good for my business, but it won't be very good
 9   for your business.
10                 So I'd like to ask the committee to go
11   on record as saying take ample time to make sure that
12   these rules are coordinated and streamlined and that
13   confusions, conflict, redundancy are eliminated before
14   final adoption of any of them.
15                 And I'd also like your endorsement for
16   taking Lines 22 and 23 on Page 4 of the Rule 506 out
17   of this rule because it's covered somewhere else, I
18   think.
19                 Thanks.
20                 MS. TAYLOR:  Thank you, Steve.
21                 Okay.  Kim, what are you thinking here?
22                 MS. ROGERS:  I think --
23                 MS. TAYLOR:  First of all, is there a
24   motion -- would somebody like to make a motion
25   restating the two suggestions that Steve Bresnen just
0125
 1   gave us?
 2                 MR. CORNWELL:  Not only that.  He
 3   probably, in that same motion, ought to consider what
 4   Mr. Fenoglio testified for us.  Is he right?  Is that
 5   something we want to adopt?  And then I believe Sharon
 6   Ives' request to slow down the process is something
 7   else you might want to consider in that motion or want
 8   to discuss.
 9                 MS. ROGERS:  And I agree.  I go on
10   record as saying I agree with them.
11                 MR. CORNWELL:  Well, we'll --
12                 MS. ROGERS:  It's overwhelming.
13                 MR. CORNWELL:  -- put it to a motion and
14   we can --
15                 MS. ROGERS:  It's so many -- I motion.
16                 MS. TAYLOR:  So you're making a motion
17   to go on the record saying that the -- you want the
18   rule process to slow down, for the rules to be
19   streamlined and any redundancy eliminated?
20                 MS. ROGERS:  And condensed, yes.
21                 MS. TAYLOR:  Write that down.
22                 MS. ROGERS:  I'm writing.
23                 MS. TAYLOR:  Is there a second to that
24   motion?
25                 MS. WEAVER:  Second.
0126
 1                 MS. TAYLOR:
 2                 MS. LOPEZ:  All in favor?
 3                 (All those in favor of the motion so
 4   responded.)
 5                 MS. TAYLOR:  Opposed?
 6                 (No response)
 7                 MS. TAYLOR:  It passes unanimously.
 8                 Let's continue.  Is there any more
 9   public comment on this one particular rule?
10                 MS. ROGERS:  I'd like to make a comment
11   real quick.
12                 MS. TAYLOR:  Go ahead.
13                 MS. ROGERS:  And the reason for this
14   that I will bring up here as someone who knows about
15   books and records and the way a bingo operates and
16   what happens nightly and daily -- whatever -- is that
17   it's all of sudden you've got so many -- just
18   everywhere -- little, bitty rules that have all come
19   forward.  And, yes, I agree with the Lottery side that
20   a lot of them are necessary to a certain extent, but,
21   on our side, there's so many that I can see a lot of
22   charities being overwhelmed, with, "Now, you've gone
23   from 20" -- help me -- "21 years, 24 years, however
24   long bingo has been around to having this set of
25   rules, and now, all of a sudden, you've got" --
0127
 1   "they've been tripled," and people will get, just,
 2   overwhelmed.
 3                 And you don't know -- I agree with
 4   Mr. Bresnen so much, you look at this and it says to
 5   do it this way and this this way.  They're trying to
 6   make one thing fit for the entire state, and that's a
 7   very difficult thing to do.  And I agree with that,
 8   but we've got to condense it down and make it where
 9   it's not -- you can find everything in each category
10   and not so many of them.
11                 MS. LOPEZ:  And not only that, with the
12   turnover of charities' representatives that
13   continually go off as being representatives of
14   organizations and with all the changes and the rules
15   coming into place, there's going to be more room for
16   error, always, you know, again, because you've got new
17   people coming in that don't -- may not know the
18   industry, may not know --
19                 MS. ROGERS:  Quarterly reports are
20   something to look at.  Five years ago, your quarterly
21   report was -- what -- two pages.  Now a quarterly
22   report can be up to nine pages long.  We've gone from
23   not trying to -- trying somehow to simplify it, and
24   we've just grown.
25                 That's my comment.
0128
 1                 MS. WEAVER:  Lady Chair, may I ask a
 2   question to Director Sanderson?
 3                 MS. TAYLOR:  Can't ask any questions.
 4                 (Laughter)
 5                 MS. WEAVER:  Sandy Joseph has been
 6   really nice about answering our questions, though.
 7                 (Laughter)
 8                 MR. SANDERSON:  What's the question,
 9   Markey?
10                 MS. WEAVER:  Markey, I'm not trying to
11   upset the flow or anything, but these are so many
12   items that are redundant, as said.  I have a question
13   more to the Lottery Commission side than the bingo
14   side, but it seems like you-all probably have already
15   addressed this.
16                 Since you've got so many scratch-offs
17   that are out there and all the convenience stores and
18   all this and all them have serial numbers and they all
19   have to be tracked and everything, is all this
20   information required for all those gas stations and
21   everybody that sells Lottery?  Is all this information
22   required for them?  Is their form shorter?  I mean,
23   can we maybe go from that guideline?  Is all this
24   information --
25                 MR. SANDERSON:  Well, I'm not familiar
0129
 1   with the requirements on the scratch-off tickets or
 2   the retailer services.  That's -- you know, I've got
 3   some minimal understanding of it.  I think one of the
 4   big differences is that the Texas Lottery Commission
 5   runs the Lottery and they've got controls in place
 6   that as a business operating a business -- or an
 7   industry operating a business that they've -- they've
 8   got the information, I'm sure, somewhere that tracks
 9   these tickets and how they're located.  So it's a --
10                 MS. WEAVER:  So the Lottery Commission
11   tracks them and the gas stations don't have to track
12   them?
13                 MR. CORNWELL:  I believe they pay --
14                 MS. WEAVER:  I was going to --
15                 MR. CORNWELL:  -- for their rolls up
16   front.
17                 MS. WEAVER:  I was going to say --
18                 MR. CORNWELL:  They pay 95 cents --
19                 MS. WEAVER:  -- but they do have to
20   track them.
21                 MR. CORNWELL:  -- on every dollar for
22   those rolls.  So they -- the Lottery gets their money
23   up front.
24                 MS. WEAVER:  Okay.
25                 MR. CORNWELL:  They are activated when
0130
 1   they scan in a code -- and help me, Phil.  They're
 2   activated when they scan in a roll code and they're
 3   put into the system, available for play.
 4                 MS. WEAVER:  So each gas station in --
 5   like a hall and they don't have to track anything.
 6   They've don't have to --
 7                 (Simultaneous discussion).
 8                 MR. CORNWELL:  As far as the Lottery
 9   Commission is concerned, they can -- the gas station
10   can play every one of these tickets.  They don't care.
11   They've got their money.  And as far as the Lottery is
12   concerned, too, you know, there's -- there's no
13   control that a winning ticket will be -- excuse me --
14   validated by the proper owner of that ticket.
15                 MS. ROGERS:  I would like to make a
16   comment, probably -- kind of what Markey is trying to
17   say here, in these rules, we're trying to get down
18   so -- just down there that each individual floor
19   worker will record the serial numbers that they sell.
20   Well, part of Markey's question I would say to staff
21   would be "Do you-all know exactly what Ice House
22   individual sells 10 Lottery tickets with those serial
23   numbers?"  "No.  It's not known."  And that's where
24   we're coming from to say that some of this stuff is
25   just -- it's too precise.  It's not necessarily
0131
 1   precise.
 2                 MS. WEAVER:  It's like us having to keep
 3   records for bingo for sales trying to get someone to
 4   sign, you know, Sleeping Beauty to something that --
 5   you know, $599 that the Lottery Commission on a
 6   scratch-off doesn't even require a signature.  They
 7   don't require anything for that same amount.
 8                 I'm just trying to make sure that we're
 9   judged as fair as other commissions under the division
10   and not held down and asked for more to scare more
11   charities off and make it harder for them to get in
12   and more -- buy -- spend more money on filing cabinets
13   and storage and everything else, because that is
14   extremely a lot of money and bookkeeping, paying a
15   bookkeeper and your storage and your filing and
16   everything else.
17                 Plus, it's very scary for -- I've got a
18   new charity coming in -- hopefully coming in, and to
19   tell them, "Oh, but now we're going to have to do all
20   this also" -- they're scared to death as it is because
21   of how our books have been going.
22                 MR. SANDERSON:  I don't know -- and I
23   have not seen every bingo operation.  I've seen some
24   bingo operations.  I've seen some records that are
25   maintained by organizations.
0132
 1                 These rules that are addressing the
 2   different forms, the different information to
 3   maintain, in the majority of the records I've looked
 4   at, they have these records.  They're already doing
 5   these things.  The only difference is that it's never
 6   been in writing in a rule.  And one of the items as it
 7   relates to the internal audit was that we were trying
 8   to regulate or enforce requirements that were not in
 9   rule.
10                 And any business should have a good
11   business plan.  Any business should have inventory
12   controls in place; more especially if it's a cash
13   business.  And that is all that we're trying to do
14   through these rules, is to set up something that will
15   help organizations make sure, that, "Yes.  We bought
16   this ticket, and, yes, we sold this ticket."
17                 The difference between the bingo and the
18   Lottery -- and I'm not an expert on the Lottery side,
19   but as Knowles, I think, indicated, when a -- the
20   Lottery knows where this particular instant ticket was
21   sold.  They know it's sold to the ABC Convenience
22   Store -- or it was shipped to them, and they know when
23   ABC opens that deal.  I'll use the term "deal" as it
24   relates to pull-tabs.  They know when it's open.  They
25   know when that ticket is redeemed as a winning ticket.
0133
 1   So all of that is maintained on a computer somewhere
 2   and they've got controls in place.
 3                 And we're not asking the organizations
 4   in bingo to do anything different.  You've got a
 5   record of you receiving this pull-tab.  You've got a
 6   record of when you sold the deals.  You've got a
 7   record of redeeming the tickets.  You know, there's
 8   not any -- it does seem overwhelming.
 9                 And as Mr. Bresnen indicated, the draft
10   rule, which is the next agenda item -- or Agenda Item
11   13, I believe, that does not -- you know, has not been
12   presented to the Commission yet; it's just -- it's an
13   official draft.  And I think I -- I did e-mail it, I
14   thought, to everyone that was on my mailing list.  I'm
15   not sure if I did or not.  And we're working with that
16   and we're, you know, gathering some information, but
17   if you look at daily packets that organizations
18   maintain for their bingo occasion, most of those
19   items -- I'm not going to say all of them, but most of
20   those items are on some document that they had that
21   they're keeping.
22                 And it looks -- you know, when you mass
23   them all together in two and a half pages, it looks
24   like a lot of information, but there's not really
25   anything there that organizations aren't already
0134
 1   keeping.
 2                 MS. WEAVER:  But it's not all on the
 3   same form all the time.  It may be on -- part of that
 4   information may be on closing at the end of the night
 5   or something.  It may not be altogether.
 6                 MR. SANDERSON:  And we're not asking
 7   that the -- you know, there's -- we have forms that
 8   have this information on it and I -- correct me if I'm
 9   wrong.  And I look to Marshall to correct me also.
10   We're not requiring you to keep a form.  We're
11   requiring you to keep information, and the first rule,
12   500, that we discussed, says you're not required to
13   use a form just as long as you have the information.
14                 These are items that we look at.  We
15   took the terms from -- actually, from some of the
16   recordkeeping requirements that were at the
17   Comptroller when they had -- regulated bingo.  These
18   were the terms that they were using for certain
19   documents, and we're saying that, you know -- we tried
20   to keep, you know, this information, and as it -- this
21   is what it contains.  Now, it may be on two pieces of
22   paper; it may be on three.  But we're just asking that
23   you keep information.
24                 MR. WHITTINGTON:  Well, I'm going to say
25   something about this, because what I see happening --
0135
 1   I know last year, a couple of years that we got
 2   audited -- and, of course, they went through a lot.
 3   They look at a lot of things when they go in to audit
 4   bingo or a charity.
 5                 But the problem is we just got a lot of
 6   unnecessary stuff that's necessary, let me put it like
 7   that.  Because some people might come in and write you
 8   up for unnecessary stuff that don't need to be on
 9   here, and that's the big problem.  I found people
10   coming in, reading all this and they're getting the
11   wrong definition to it, one of the auditors, and
12   writing you up for it.
13                 They might write us up all year long,
14   but if we don't rectify and simplify this stuff and
15   make it where it's necessary -- okay.  That's the
16   problem.  It's just unnecessary and necessary
17   together.  And believe me, if they was coming in and
18   do audit of all this stuff that we might get written
19   up about, they'd be in our hall for a whole month
20   doing an audit.  That's the truth.  But it's just so
21   much.  Okay?
22                 And believe me, bingo is not this
23   complex.  What the problem is, we got people writing
24   this stuff that don't actually involve themselves in
25   the bingo halls and participate on a day-to-day
0136
 1   activity in a bingo hall.  That's what we're trying to
 2   do.  We're trying to pull the bingo activity together
 3   with the people who write this stuff; maybe we can
 4   come up with some simple solution to the problem, and
 5   that's what's happening here.  That's what we need to
 6   try to focus on.
 7                 And that's why we're saying we need to
 8   slow down and get this stuff together and come up with
 9   some simple way -- everybody can look at this, "Okay.
10   This is what we got to do," that anybody with a simple
11   mind or a high school education going to understand.
12   That's basically what we got to get to.
13                 And this is very important, Phil,
14   because I've seen it happen many a times.  Just like
15   on the 5 percent thing I was telling you -- can I
16   bring that up now?
17                 MR. SANDERSON:  I don't think that's an
18   agenda item.
19                 MR. WHITTINGTON:  Okay.  But we was
20   talking about just rules, somebody coming in the hall
21   and writing you up for something so simple like that.
22   That's what I'm saying.
23                 I'll get off it now, but, basically,
24   yeah, we need to simplify this stuff.  It's way out
25   there.  I don't understand it myself, but I know we
0137
 1   can get written up for it if it's not changed.  That's
 2   all I know.
 3                 Now, these guys are serious when they
 4   come out.  They're going to go by the book.  "This is
 5   what it says."  "Oh. No.  Well" -- "No.  I got to
 6   write you up for this."  That's what's going to
 7   happen.
 8                 MS. TAYLOR:  Okay.  Any other discussion
 9   on 402.506?
10                 (No response)
11                 MS. TAYLOR:  We're trying to put this in
12   some kind of order so that Kim can get this together
13   for us.
14                 Any other discussion?
15                 (No response)
16                 MS. TAYLOR:  Public comment?
17                 (No response)
18                 MS. TAYLOR:  Markey, did you have
19   anything more to say?
20                 MS. WEAVER:  No, ma'am.
21                 MS. TAYLOR:  Okay.  Then we're going to
22   go on to -- we're continuing on with 402.511.
23                 MS. LOPEZ:  I have a comment.
24                 MS. TAYLOR:  Okay.
25                 MS. LOPEZ:  On Page 3, Line 6, "The
0138
 1   licensed authorized organization is responsible for
 2   reimbursing its bingo account with non-bingo funds for
 3   gross receipts, prizes and prize fees associated with
 4   missing or unaccounted for disposable bingo cards and
 5   pull-tab bingo tickets," that's, I guess, one of the
 6   new additions to this particular rule.
 7                 My question is:  Why does it have to be
 8   paid out of general fund and not out of bingo funds
 9   when there is, obviously -- I mean, what I understand
10   here is if you've got a box of pull-tabs that's
11   missing, your general fund check has to pay for that.
12   Is that -- is that how I'm understanding this, your
13   general fund account?
14                 MR. CORNWELL:  You've got it.  That's
15   what they're asking --
16                 MS. LOPEZ:  Why?
17                 MR. CORNWELL:  -- you to do, is,
18   somebody needs to reimburse the bingo account for
19   someone.  Somebody other than the bingo account can
20   reimburse itself for missing product.
21                 MS. LOPEZ:  For a missing box of
22   inventory.
23                 MR. CORNWELL:  Missing product or
24   missing cash or --
25                 MS. LOPEZ:  It doesn't say cash.  It
0139
 1   says "unaccounted disposable bingo cards and pull-tab
 2   bingo tickets."
 3                 MS. TAYLOR:  Well, haven't you ever had
 4   a session where you count the books and there's two
 5   books missing that you don't know where they went?
 6   You don't know if a customer picked up an extra book
 7   or if they stuck together, which they do.
 8                 MR. CORNWELL:  They do.
 9                 MS. TAYLOR:  So what you're talking
10   about is that right now we have a place on the sheet
11   that says over or short on the books --
12                 (Simultaneous discussion)
13                 MS. TAYLOR:  -- by session.  So now
14   everything is going to just have to be accounted for
15   and you're just going to be that much cash short at
16   the end of the session.
17                 MS. LOPEZ:  And it's all going to --
18                 MS. TAYLOR:  I mean, instead of --
19                 MS. LOPEZ:  -- come out of general fund.
20   Right?
21                 MS. TAYLOR:  No.  It would just be cash
22   short.  So that means that we're not allowed any more
23   cash shortages.  When your floor workers are short --
24                 (Simultaneous discussion).
25                 MR. CORNWELL:  So --
0140
 1                 MS. WEAVER:  Madam Chair, is that what
 2   they're asking?
 3                 MS. TAYLOR:  Well, it doesn't actually
 4   say anything about cash.  So, I mean, to me, right now
 5   we can be really honest with saying "There's five
 6   books missing," or, "There's two books missing," and
 7   we don't know what happened.  We don't know if they
 8   stuck together.  We don't know if somebody grabbed one
 9   when we weren't looking.  You know, we don't know that
10   the set was complete.  There could have been a missing
11   book out of that.  Who knows?  I mean, we don't count
12   every single book when we unseal a thing of paper, but
13   right now we can be real honest and say "There was" --
14   "We're missing one and we don't know where it went,"
15   but, with this, you would have to be going to the
16   general account and saying, "We're missing the $4
17   book.  Can you give me $4?"
18                 MS. LOPEZ:  Yeah.  "Cut me a $4 check
19   from the general fund account."
20                 MS. TAYLOR:  Exactly.
21                 So I think that we would take that
22   line -- I mean, everybody would just take the line off
23   the form and it wouldn't be out there anymore and the
24   cash register would just be short, because you can't
25   go -- we all know you can't go to the general account
0141
 1   and ask them to be doing that.  You can't.  I mean,
 2   it's not like it's a huge amount of income.  I mean,
 3   it's $4, but at the same time --
 4                 MS. LOPEZ:  It's just more -- again, one
 5   more thing that we have to do.
 6                 MS. TAYLOR:  Any other discussion on
 7   (c)?
 8                 (No response)
 9                 MS. TAYLOR:  Did you want to say
10   anything more about that one item?
11                 MS. LOPEZ:  No.  I just -- I have a
12   concern with it.
13                 MS. TAYLOR:  Okay.  Markey, did you have
14   anything you would like to say about that item?
15                 MS. WEAVER:  Huh-uh.
16                 MS. TAYLOR:  I'm going to go down to the
17   "Disposable Card Sales Summary."  It's (d)(1), and
18   underneath that, onto the next page, is (N) -- well,
19   let me go right back up to No. (1).  I'm sorry.  Flip
20   the page back.
21                 Do you notice where it says now "Each
22   serial number must be recorded on a separate sheet" --
23   which doesn't make any sense to me, because, right
24   now, we use a form provided by the Lottery Commission
25   for our books -- for the actual books.  And on the
0142
 1   form, there's a place for three different serial
 2   numbers.  And, usually, there's only about two lines
 3   or three lines under each serial number that are
 4   filled in.  And it always seems like a terrific waste
 5   of paper, but now we're talking about putting one
 6   serial number on each page and writing down "We sold
 7   it this day" and putting that paper in the back of the
 8   book and starting a new serial number, because I'm
 9   sure that you've had the sessions where, you know, you
10   use it in one or two sessions, the books -- you know,
11   the sets of books.  So this just seems ridiculous, not
12   to be able to put the three serial numbers on the same
13   page.
14                 I mean, we've got a form now that's a
15   nice looking form from the Lottery and now we're
16   taking it down to more pages of paper and you're going
17   to write about two lines under that serial number and
18   then it goes to the back of a book.
19                 We also sell a lot of individual paper.
20   On our rapid nights, we'll selling -- oh, my
21   goodness -- there's like 30 different sheets of paper,
22   and we have all of the sheets listed, you know, going
23   across the top of the page.  You know, and then the
24   serial number is listed and then we do the inventory
25   by night so that that's all on one page.  If I was the
0143
 1   auditor, that seems a whole lot easier than searching
 2   for 30 separate sheets of paper to chase the inventory
 3   down for each session, because now I'm going to 30
 4   different pages in the book trying to find the paper
 5   where it's all listed on one nice, easy-to-read page
 6   going right across the page.  You know, it's very easy
 7   to tell what serial number you're in --
 8                 MS. LOPEZ:  Almost like a spreadsheet.
 9                 MS. TAYLOR:  It is.  It is.  It's put
10   just like a spreadsheet.  That's how we have it now.
11                 And I think of one sheet of paper -- I
12   mean, if I was going to audit us, I wouldn't want to
13   have to look through all of that.  If this is for the
14   ease of the auditors, I think they're making it a lot
15   harder by just that one thing.
16                 What other thing do we have in here?
17                 The pull-tab summary, it's No. 2 on the
18   last page, on Page 4.  It says, "A record that
19   contains perpetual inventory of pull-tab tickets" --
20   "pull-tab tickets, including event tabs purchased."
21   That makes perfect sense to me, because if this is the
22   record of the inventory and this is my inventory
23   record, it should show my inventory at all times, but
24   I don't see what (H), total prizes payout per deal,
25   has to do with whether or not I have the tabs in my
0144
 1   inventory.  I don't see what (L), the total gross
 2   sales per occasion, has to do with whether or not I
 3   have an accurate inventory, or the prizes paid per
 4   session has to do with do I have an accurate
 5   inventory.
 6                 Are we keeping an inventory?  I mean,
 7   these items, once again, it's the redundant
 8   information.  This is included on our daily sales.
 9   Why would this be part of our inventory records?  It
10   doesn't make any sense.  It's not -- doesn't have
11   anything to do with the inventory.  This has to do
12   with our sales which is included on our daily sales
13   report.
14                 So those are my items on there.
15                 Rosie, would you like to add anything?
16                 MS. LOPEZ:  No.  I'm in agreement with
17   you on the fact of not, obviously, having to have
18   separate sheets for each particular disposable paper
19   that is purchased.  Again, that would be just a lot of
20   more recordkeeping that we'd have to do, especially if
21   we've already got it on a spreadsheet format.
22                 And my concern, again, is going back to
23   having to retrieve funds from general fund to pay for,
24   you know, a missing box of Comet pull-tabs or whatever
25   it might be that cannot be found for whatever --
0145
 1                 MS. ROGERS:  Would you just propose
 2   taking a loss or --
 3                 MS. LOPEZ:  Definitely.
 4                 MS. ROGERS:  Okay.  I was curious as to
 5   what --
 6                 MS. TAYLOR:  You know, one other thing
 7   that I didn't mention was that under the "Disposable
 8   Card Sales Summary," (O) says "total gross sales per
 9   occasion," which we're back to the same thing.  Why is
10   the gross sales per occasion have anything to do with
11   whether or not your inventory is correct?
12                 So I just think an inventory book should
13   be just that, it should be an inventory showing the
14   true and accurate inventory of what you started with,
15   what you used and what you have left at the end of
16   every session.  I don't mind initialing it, you know.
17   It doesn't hurt to have a responsible party.  I don't
18   mind doing inventories, but putting this here doesn't
19   make any sense to me.
20                 Earl, you look like you want to say
21   something.
22                 MR. SILVER:  Yeah.  Just on (c), what
23   you were talking about, for "unaccounted for
24   disposable bingo cards and pull-tab tickets," is that
25   like per session -- like if you lose one per
0146
 1   session -- or is it per month or quarter?  Because
 2   we've had, in one of the halls, pull-tabs that were
 3   unaccounted for but then they became accounted for.
 4   So, I mean -- so if it's "per session," do you have to
 5   write a check out?  Then how does the money go back
 6   into your general fund if they are found again on a
 7   per session basis?  Because they could be at the
 8   bottom of a bucket or a bucket could be put on top of
 9   a bucket with $50 worth of event tickets in there.
10                 I mean, it would show short on the DCR,
11   and it's like what you were mentioning earlier,
12   "unaccounted for," are you going to be short or over
13   or whatever?  How do the numbers then equate when you
14   find it again if you do?
15                 MR. CORNWELL:  Earl, I think what (c) is
16   trying to do, in the way I'm reading it, it makes "The
17   licensed authorized organization is responsible for
18   reimbursing."  It doesn't give you any time frames.
19   It is one -- I guess when discovered and it's a
20   permanent shortage, then I guess the general fund
21   would be required to do it, but it is -- the word
22   "responsible" here, that doesn't give us any other
23   further guidance than that in this rule.
24                 MS. ROGERS:  I just have a comment kind
25   of, I guess, and please forgive me if I'm missing
0147
 1   something here.  I guess it's kind of to Phil, kind of
 2   to those of you -- I recall going to a work group
 3   meeting prior -- I did get sick, so I was out for a
 4   while -- and we discussed this with the agents that
 5   were there.  And our same concerns were brought up,
 6   that this -- and, Phil, I was just wondering:  We
 7   asked that a lot of this be looked at again and taken
 8   out or whenever.  Is there someone that I can e-mail
 9   or contact as to maybe can explain to me -- because
10   I'm the one kind of putting this together and maybe I
11   can let everyone else know -- why these things were
12   not taken out when we got together and we specifically
13   had major concerns with what this would do?
14                 I mean, I remember there was a young
15   lady taking, you know, notes, putting in and out what
16   we -- our comments, what we asked to take in and out,
17   but it doesn't seem like anything changed.  Now, am I
18   wrong or am I right?  Knowles was at the meeting.
19   Suzanne was there.  Rosie was there.  Am I wrong or am
20   I right?
21                 MR. CORNWELL:  We had a lot of
22   discussion.
23                 MS. TAYLOR:  I believe we had discussion
24   on it, but that doesn't necessarily mean that the
25   staff agreed with us.  And since these rules are just
0148
 1   still written just like this, I would just guess that
 2   they didn't agree with us on these particular items.
 3                 MS. ROGERS:  Well, that's what, maybe, I
 4   was asking, if they could tell us, "Look, guys, we
 5   can't agree with that.  We can't take that out because
 6   here's the reason why."  Not that I'm asking to know
 7   any background on anything -- individual halls or
 8   anything like that, but maybe then we would understand
 9   as to why they need it.  Because right now, we're all
10   sitting around saying, "We don't want it.  We don't
11   need it."
12                 Is that possible?
13                 MR. SANDERSON:  Well, I guess it could
14   be.  I don't know what, necessarily, you're
15   referencing here in broad, general terms.
16                 I wasn't a participant in the meetings
17   that took place in drafting these rules.  Marshall
18   was.
19                 MS. ROGERS:  Right.
20                 MR. SANDERSON:  And I do know that we
21   looked at them and there were some areas that we felt
22   like were necessary.  I think there were some things
23   that were changed or removed.  I don't know exactly
24   which ones.
25                 MS. ROGERS:  Okay.
0149
 1                 MR. SANDERSON:  And I'd like to say,
 2   this is exactly the kind of interaction that we need
 3   from the bingo Advisory Committee in offering this
 4   information, and that's the whole purpose of the
 5   comment period when rules are published, is to receive
 6   this type of comment.  And I'm not saying that I agree
 7   with everything you're saying or I disagree with
 8   everything you're saying.
 9                 MS. ROGERS:  Okay.
10                 MR. SANDERSON:  You know, I think that
11   the comments are very good, and that's what the
12   purpose is.
13                 MS. TAYLOR:  Okay.  Let me go to one
14   other thing that doesn't make any sense to me.
15                 This is on Page 4.  It's talking about
16   the daily Disposable Card Sales Summary, and (P) says
17   "the cumulative number of sheets or packs sold," and
18   that is so opposite of how you do inventory, because
19   you don't add up what you sold.  You subtract it and
20   show what's left.  So this is exactly the opposite of
21   how we do our inventory.
22                 MS. LOPEZ:  Exactly.  I agree with you.
23                 MR. CORNWELL:  Suzanne, I'm sorry.  Tell
24   me that again, would you?
25                 MS. TAYLOR:  It's on Page 4.  It's Line
0150
 1   4, (P), "cumulative number of sheets or packs sold."
 2                 MR. CORNWELL:  (H) refers to the "number
 3   of sheets or packs remaining after each occasion."
 4                 MS. LOPEZ:  Oh, yeah.  20, (H).
 5                 MR. CORNWELL:  (H).
 6                 MS. LOPEZ:  Yeah, "number of sheets or
 7   packs remaining after each occasion."  So that's
 8   like --
 9                 MR. CORNWELL:  Would that be reasonable
10   to sit down and assume that (M) means after you've
11   subtracted from previous inventory less --
12                 MS. TAYLOR:  I would think that if you
13   started with a thousand and you sold your 500, that
14   number remaining would be 500 in the next column, yes.
15   But, you know, you sell 100 the next time and you get
16   your 400 left, but then you would need another column
17   where you're adding up what you've sold.  So --
18   anyway.
19                 Okay.  Any other comments?
20                 (No response)
21                 MS. TAYLOR:  Pat, did you have a
22   comment?
23                 MS. GIFFORD:  No.
24                 MS. TAYLOR:  Knowles.
25                 MR. CORNWELL:  I was wondering what
0151
 1   happened to her.
 2                 (Laughter)
 3                 MS. ROGERS:  Well, there's a part of me
 4   that wants to say that the work group needs to get
 5   together with Lottery again, I guess.  I don't know.
 6                 MS. TAYLOR:  I believe it's too late for
 7   that.
 8                 MS. ROGERS:  Too late for that.  Okay.
 9                 MR. BRESNEN:  Madam Chair, can I ask a
10   question?
11                 MS. TAYLOR:  Absolutely.
12                 MR. BRESNEN:  I'm sorry.  I forgot to --
13   I'll bring this up in the public hearing, too, and I'm
14   sorry -- Steve Bresnen on behalf of the Bingo Interest
15   Group.
16                 You know, I'm fixing to demonstrate that
17   finance is not my strongest point, but if I don't
18   understand it, it may be true that somebody else won't
19   understand it.
20                 I'm looking on Page 3 -- this is on
21   511 -- 402.511, Line 7.  This goes to the issue of the
22   organization being responsible for reimbursing its
23   bingo account with non-bingo funds for gross receipts,
24   prizes, prize fees, associated with missing or
25   unaccounted for cards or tickets.
0152
 1                 Now, usually, to me, receipt -- gross
 2   receipts is money coming in, or that should have come
 3   in.  Prizes are -- and prize fees is money that should
 4   be coming in.  Right?  Prizes seem to me like money
 5   going out.
 6                 So assume for a minute if there's a
 7   bingo card that is not accounted for but somebody won.
 8   They had that card; it just didn't get written down
 9   somewhere.  It didn't get accounted for and I paid a
10   prize out for that.  Now, I'm out the money for the
11   prize and now I've got to recover that prize money
12   from non-bingo funds.  Am I missing something?  Am I
13   not getting a double whammy for that?  Is that --
14   something does not seem right about that.
15                 MR. CORNWELL:  I think the word "prize"
16   should be deleted.  And that's in your public comment,
17   because you're right --
18                 MR. BRESNEN:  You know, Phil, again,
19   this may be something that makes sense to the auditors
20   and doesn't make sense to me, but I can see, if
21   there's a card out there that wasn't accounted for and
22   there's some prize fees that should have been
23   associated with it -- the State wants its money -- I
24   think it's going to be darn hard to figure it out, but
25   the State ought to get its money.
0153
 1                 On behalf of my clients, I stipulate
 2   that the State ought to get its money.  There should
 3   be -- if the card's gone from inventory, there should
 4   be some gross receipts for that card.  I agree.  It
 5   could have been destroyed and -- but if it's
 6   unaccounted for, there should be some gross receipts
 7   associated with it, but I don't know if you can ever
 8   figure out what prizes should have been associated
 9   with it.
10                 But if you've got all this information
11   and you're keeping the number of balls -- the balls
12   called and the order they were called in and the
13   serial number for every card, all 25,000 of them, and
14   all of those -- and you could track your way back to
15   say there was -- somebody won based on that
16   unaccounted for card and I've paid the money out.  To
17   make me reimburse my account when somebody actually
18   won the money seems like I'm getting dinged twice.
19                 So, anyway, you-all are -- again,
20   you-all -- I'm just in the government business.
21   You-all are in the bingo business.  You might be able
22   to figure it out better than me, but I would -- I'll
23   make that comment again, but if that makes sense, I
24   would solicit the committee's endorsement of that
25   comment.
0154
 1                 MR. CORNWELL:  I think, technically,
 2   he's correct.  If we were missing a box of pull-tabs,
 3   for example, this would make the non-bingo account be
 4   responsible for reimbursing the bingo account for the
 5   prizes in there.  Not only the prize fees to the State
 6   but the prizes that were due.  And I don't think --
 7                 (Simultaneous discussion).
 8                 MR. SANDERSON:  Well, that's not -- that
 9   deal has a specific gross and a specific prize payout,
10   and, in this context, I would assume that when they're
11   talking about the "gross receipts, prizes and prize
12   fees," it would be the -- whatever the net amount for
13   that missing pull-tab deal could be.  So there would
14   be the gross receipts.  Then you get a credit for the
15   prizes that should have been paid out from those gross
16   receipts, and then the prize fees associated with
17   these prizes.
18                 MS. TAYLOR:  So would this go on the
19   daily paperwork showing a total tab?  You would add
20   that tab to your daily paperwork and then you would
21   put the general check fund check in showing that --
22   giving -- paying for it?  That would be like --
23                 MR. SANDERSON:  I guess that's the only
24   way --
25                 MS. TAYLOR:  That would be like playing
0155
 1   bingo, though, which it would be illegal for us to do.
 2                 MR. SANDERSON:  This is the -- you know,
 3   and this paragraph here addresses concerns as it
 4   relates to audits, when an audit is performed and
 5   there's missing pull-tabs or missing paper or
 6   unreported prizes or unreported gross receipts.  All
 7   that's saying is that the licensed authorized
 8   organization is responsible for putting that money
 9   into the bingo bank account, and we -- you know,
10   that's -- that is who we license.  That is who we have
11   regulatory authority over as it relates to these
12   activities, and so the licensed authorized
13   organization is the one that's responsible to make
14   sure that that money gets put back in as it relates to
15   an audit finding of unaccounted for paper or pull-tabs
16   or underreporting of sales.
17                 MR. WHITTINGTON:  So, basically, they're
18   going to get it back -- put it in and then get it
19   right back, because the organization putting it in is
20   going to give it back to you.
21                 MS. LOPEZ:  From your general fund.
22                 MR. SANDERSON:  Well, I mean, it depends
23   on the -- you know, I mean, it depends on the
24   situation and the circumstance.
25                 MR. WHITTINGTON:  What if a box of -- I
0156
 1   mean, I can understand the State getting their money
 2   and just the taxes being paid on the box that's due
 3   and just leave it at that.  It's gone.
 4                 MR. CORNWELL:  Well, he clarified his
 5   position, I think, Larry, when -- so we're going to
 6   give you -- we're going to charge you for the gross
 7   receipts, but then we're going to give you credit back
 8   for the prize.  And, yeah, you will pay the prizes.
 9                 MS. WEAVER:  Lady Chair, the bingo
10   verifier actually takes care of all that, because if
11   the paper wasn't sold, it can't be verified and we
12   can't lose the money.
13                 MS. TAYLOR:  Mr. Bresnen.
14                 MR. BRESNEN:  I just want to say that
15   the rule doesn't say what you're indicating you think
16   was on the minds of the people who wrote it.  So, I
17   mean, again, I'll make this -- if it said that it was
18   the net of all that, that would make sense to me,
19   assuming you could, I guess, prove that a prize was
20   paid out, but that's to the benefit of the charity, I
21   guess, if you subtract the prize out.
22                 But, at any rate, it just -- these words
23   are important because we're going to fight over them
24   later after they're adopted.  We're going to have
25   different interpretations and the words need to say
0157
 1   what they mean to say.
 2                 MS. WEAVER:  It's just a couple of
 3   words.  It's easy.
 4                 MS. TAYLOR:  Okay.  What I'm wondering
 5   is:  If this -- this is only talking about during an
 6   audit.  Like if you go in and you find massive amounts
 7   of paper missing, like hundreds of books missing or
 8   boxes of pull-tabs missing that haven't been sold, I
 9   can understand that.  You know, but on a daily basis,
10   two sheets of paper here and a book there, and -- you
11   know, when you've got $2 in this session and $4 in
12   that session, that's where it worries me that this
13   could be -- if this is just supposed to be for large
14   amounts missing and not where they need to be during
15   an audit, then I would understand that more, but to --
16   but, I mean, how far does it go?
17                 MS. WEAVER:  Well, at night when your
18   hall manager, or whoever is doing your paperwork,
19   they're going to balance.  If they don't balance, they
20   know right then and right there that you're short.
21   Just like when your floor runners come back and
22   they're short, it comes out of their check.  If
23   they're using a bingo verifier, that paper wasn't
24   sold, they don't have a receipt for that, they don't
25   get the prize.  They didn't do that.
0158
 1                 MS. TAYLOR:  Absolutely.  But what do
 2   you do about the missing paper?  What if you're
 3   missing two books?  Okay.  They're not -- it's not --
 4                 MS. WEAVER:  Prize --
 5                 MS. TAYLOR:  -- shown sold.
 6                 MS. WEAVER:  Prize is eliminated from
 7   that and that doesn't --
 8                 MS. TAYLOR:  How do you show those two
 9   books missing?  You just put it on your paperwork that
10   "We're short two books"?  I mean, the funds were never
11   there.  So I hate to say I'm short at the end of the
12   session because we're not short because we sold the
13   books and lost the money.  We're short because for
14   some reason the books aren't there.
15                 MS. WEAVER:  Are gone.
16                 MS. TAYLOR:  You know, maybe they were
17   there when we started and they're not there when we --
18                 MS. LOPEZ:  But you're still going to
19   have to pay the prize fee taxes on those books even
20   though --
21                 MS. TAYLOR:  Well, they didn't win a
22   prize because they were never out on the floor.  So
23   what prize fee tax would there be?  There wouldn't be.
24                 MR. CORNWELL:  I don't see a prohibition
25   of using an inventory adjustment on my inventory
0159
 1   sheets and an entry of "Missing books.  Unaccounted
 2   for books."
 3                 MS. WEAVER:  I mean, as long as it
 4   wasn't, you know, 100 at a time -- a box, you know, or
 5   you know, something like that or water damaged.  Okay?
 6   You've got a roof leak and it came and, you know,
 7   everything is wet, and when you're writing them down
 8   before they were destroyed, somebody missed one.  You
 9   know, there's all kinds of things that can happen like
10   that, but at this --
11                 MS. TAYLOR:  Then we have those sessions
12   where it shows we sold one book more than was
13   absolutely possible.
14                 (Laughter)
15                 MS. TAYLOR:  It's like they produced
16   while they were sitting on the desk.
17                 MS. TAYLOR:
18                 Okay.  So -- okay.  Is there anything
19   else that we want to discuss for Kim to put in these
20   notes on this one particular rule?  And we're talking
21   402.511, Required Inventory Records.  Anything else on
22   this one?
23                 MS. ROGERS:  Condense and save the
24   trees.
25                 MS. TAYLOR:  Okay.  Any other public
0160
 1   comment?
 2                 (No response)
 3                 MS. TAYLOR:  Sharon, did you want to
 4   comment?
 5                 MS. IVES:  Huh-uh.  Not at this time,
 6   but thank you.
 7                 MS. TAYLOR:  Okay.  Any other comment?
 8                 (No response)
 9                 MS. TAYLOR:  Okay.  Then let's move on
10   to Agenda Item No. 12.
11                     AGENDA ITEM NO. 12
12                 MR. SANDERSON:  Agenda Item No. 12 is a
13   draft rule for the records requirements for a bingo
14   occasion.  It lays out what information needs to be
15   maintained and what those documents should contain or
16   could contain, depending on how you keep the
17   information yourself.
18                 This is a draft form.  It has not been
19   presented to the Commissioners at this point in time.
20   We are looking for informal comment as we move through
21   this process, and, hopefully, it will be put on the
22   agenda for a -- at the next Commission Meeting,
23   whenever that takes place.
24                 MS. TAYLOR:  Okay.  The first comment I
25   would like to make -- I'll just go down to Item (d) on
0161
 1   this, "The occasion records must be completed in
 2   non-erasable ink."  I can't tell you how many times I
 3   personally make a mistake on that sheet as I'm writing
 4   stuff down and I can't imagine having to do this in
 5   ink.  What will end up actually happening is, at the
 6   end of the night, you'll recopy your form over in ink,
 7   which is silly because we've already done it in
 8   pencil, you know.
 9                 I mean, anything we're going to change
10   is going to be changed, because it has to all be rung
11   in before you leave for the night into the register.
12   So you've got the register record that is not
13   erasable, since it will disappear in four years
14   anyway, because it's all thermal paper and you're
15   lucky if a year from now you're going to be able to
16   read it.  So that's my very first one on the -- of the
17   first four.
18                 Does anybody else have any comment --
19   we'll just cut this into pieces.
20                 MS. WEAVER:  Instead of having to worry
21   about the non-erasable ink when you're done at the end
22   of the night, can you make a copy of it and initial it
23   who your hall manager is and bookkeeper, whoever is
24   there?  I mean, that way you don't have to -- because
25   we're not supposed to use White-Out for our
0162
 1   accountants and everything else; so we use pencil.
 2   But if we could just Xerox a copy and initial it with
 3   your head cashier or your hall manager, whoever, it
 4   would be easy to take care of and it would be
 5   verified.
 6                 MS. TAYLOR:  I mean, I think all of us
 7   do it in pencil.  I think there's very few -- Sharon,
 8   do you do your books in pen, non-erasable ink?
 9                 MS. IVES:  Pencil.
10                 MS. TAYLOR:  I mean, accountants do the
11   books in pencil.  I mean, you just don't use pen like
12   that.  So I think the non-erasable ink is my first
13   thing.
14                 On "(e), Licensed organizations must
15   maintain the following records for each bingo
16   occasion:  1)  Copy of the game program for the
17   occasion."  This goes to all of the papers that we're
18   going to have at the end of the night, because I think
19   most of us use the same program -- well, I know that
20   The Palace uses various programs throughout the week,
21   but there's an awful lot of halls like mine that we
22   use the same program every day for every session.
23                 MS. LOPEZ:  We use different programs
24   almost every night.
25                 MS. TAYLOR:  Just remember, you know,
0163
 1   you're going to have to keep that.
 2                 Anybody have anything all the way down
 3   through the rest of (e)?
 4                 MR. SILVER:  Well, (e)(4) is the same as
 5   going back to (g), your "Occasion Floor Sales by
 6   Usher."  It's just starting to get into micromanaging
 7   or sales tracking for your employees.  It just seems a
 8   little bit too much.
 9                 MS. ROGERS:  This is where I made my
10   comment earlier, where there is no way that the
11   Lottery can tell you if Joe or Tom or Suzie sold the
12   Lottery ticket, Serial Number 45821, but yet we have
13   to keep that.  Why?  I mean, I understand the other
14   part -- we've kind of skipped forward to (g).  Sorry.
15   But (1), (2), that's already there.
16                 MS. TAYLOR:  Don't skip to (g).
17                 MS. ROGERS:  Okay.  I'm going to hold my
18   comment.
19                 (Simultaneous discussion)
20                 MS. TAYLOR:  You know, I've got to say
21   one thing about Item No. (7), the "Occasion Balls
22   Called Sheet" --
23                 (Simultaneous discussion)
24                 MS. TAYLOR:  But read that.  That's for
25   when you -- the prize is determined by the number of
0164
 1   balls called.  And I've got to admit, you know, the
 2   staff changed this, because that's not what it
 3   originally said.  It was for every occasion and now
 4   they have taken it down to only if the number of balls
 5   has an effect on the prize that you're paying.  So, I
 6   mean -- you know, and I really appreciate --
 7                 MR. CORNWELL:  I'm sorry.  Where --
 8                 MS. TAYLOR:  -- that this is actually
 9   one thing --
10                 MR. CORNWELL:  -- are you reading that?
11                 MR. WHITTINGTON:  (e)(7).
12                 MS. TAYLOR:  Yeah, that the Staff
13   actually did change that after the last meeting.
14                 So anyway --
15                 MR. CORNWELL:  Well, you'd better go
16   back and look at (j) then.
17                 MS. TAYLOR:  Okay.  Well, we're just on
18   the first page here.
19                 MS. WEAVER:  On (e)(6), where it says
20   "Occasional Worker/Volunteer Log," we already have our
21   worker log.  Okay.  Now, do we need a volunteer log
22   also or can they sign in on the worker log?
23                 MR. WHITTINGTON:  As a volunteer.
24                 MS. WEAVER:  Can a volunteer sign in on
25   a worker log?
0165
 1                 MR. SANDERSON:  It's the same log.  We
 2   just -- we were wanting to make it clear that it was a
 3   worker or volunteer.
 4                 MS. WEAVER:  Worker or volunteer, one or
 5   the other.
 6                 MS. TAYLOR:  Okay.  On (f), does anybody
 7   have anything to say about (f)?
 8                 (No response)
 9                 MS. TAYLOR:  I was hoping somebody would
10   say (3), the "type of packages and selling prices for
11   sales using card-minding devices."  We do a total
12   sales because that's, you know, how it ends up at the
13   bottom on the receipt.  So now, in addition, I guess
14   we have to show all the different packs or how many of
15   each pack on the computer, but I don't see why we need
16   that if we've already got a cash register receipt that
17   shows the total number of sales.  I don't see the
18   difference -- pack -- the electronic package makes on
19   that.
20                 MR. SANDERSON:  The cash register
21   receipt Z-tape may be the detailed information that
22   supplements your cash report.
23                 MS. TAYLOR:  So if that's all that's
24   required, that's great, but it sounds like -- the
25   occasion cash summary sounds like, you know, the top
0166
 1   page that goes on top of all your paperwork that --
 2                 MR. SANDERSON:  There are some
 3   organizations that have a detailed cash summary
 4   report.  They've got it broken -- they've got their
 5   cash summary report broken out just like the cash
 6   register keys are broken out; so it's -- we're not
 7   precluding either one of them.
 8                 MS. TAYLOR:  So what you're saying here,
 9   like on Number (4) is that as long as we show that on
10   another piece of paper, that doesn't have to be on the
11   top page of the occasion cash summary?
12                 MR. SANDERSON:  That's correct.
13                 MR. WHITTINGTON:  Yeah, because I got
14   mine broken out 15, 25, 30s.  I want to know how many
15   25 or 30s I sold by looking at the tape.
16                 MS. TAYLOR:  On (5)(A) -- I'm talking
17   full-pay/half-pay halls, I think what this is saying
18   is that you can't just drill a hole in the paper and
19   that -- your half-pay paper, that you have to have
20   different colors or something on the paper.  Can you
21   tell me, is that what it means?
22                 MR. SANDERSON:  That's correct.
23                 MR. WHITTINGTON:  Can a distributor do
24   it, drill your holes, because they offer -- one of
25   them offered to drill the holes and tell you-all
0167
 1   exactly what side or way you drill?
 2                 MR. SANDERSON:  If they invoice you
 3   separately on it, I guess it's possible.
 4                 MR. WHITTINGTON:  Well, that's --
 5   really, we --
 6                 MR. CORNWELL:  We do it today.
 7                 MR. WHITTINGTON:  -- have that question.
 8                 MR. CORNWELL:  We do.  As a distributor,
 9   as a service, we will drill one.  We will drill it,
10   so --
11                 MR. WHITTINGTON:  So that way you-all
12   would know what side of what they drill.  Like 18 only
13   seven.  One side is half; one side is full.  On the
14   right side, it's drilled by the distributor; it's a
15   half.  So, you know --
16                 MR. SANDERSON:  All we're asking for is
17   documentation and accountability.
18                 MR. WHITTINGTON:  I mean, not from us.
19   Not from the charity, but from the distributor.  That
20   should verify the charity had nothing to do with the
21   holes.  The distributor did it and he can tell you-all
22   what side and et cetera.
23                 MR. CORNWELL:  Yeah, but he's going to
24   want me to invoice it separately to you.  See?
25                 MS. TAYLOR:  Also, of course, that means
0168
 1   we're going to have to double up on all of the paper
 2   that we have.
 3                 (Brief Pause)
 4                 MS. TAYLOR:  Okay.  Now we're going to
 5   Page 2 -- does anybody have anything else that they
 6   want to say more on -- anything on Page 1, all the way
 7   down through (f) (10)?
 8                 MR. CORNWELL:  Can I have -- a comment:
 9   The next -- you think you will have a rule ready
10   for -- by the next Lottery Commission Meeting, you'll
11   have a rule on this draft prepared for the
12   Commissioners to publish.  Right?
13                 MR. SANDERSON:  That's the ultimate
14   goal, yes.
15                 MR. CORNWELL:  Madam Chair --
16                 MS. TAYLOR:  Yes.
17                 MR. CORNWELL:  -- I know that this is a
18   very short time -- a little short -- very -- before
19   the -- when's the next Commissioners' Meeting?  Let me
20   just ask that question.
21                 MR. SANDERSON:  As far as I know, one
22   has not been set.
23                 MR. CORNWELL:  Are you talking about
24   this month or December?
25                 MR. SANDERSON:  I don't know.  They -- I
0169
 1   know it's not going to happen next Wednesday because
 2   we're already past the filing deadline for next
 3   Wednesday.
 4                 MR. CORNWELL:  Well, what I was -- have
 5   you thought about having some -- like yourself and Kim
 6   and Markey and you guys get together and have a formal
 7   work group and really have some input before that goes
 8   to the Commission?
 9                 MR. SANDERSON:  That's fine.  I mean,
10   it's -- you know, we're -- as a matter of fact, we're
11   still, you know, gathering information and other --
12   you know, still conducting further research, and
13   it's -- we're trying to come up with something that is
14   both beneficial to the organizations and --
15                 MR. CORNWELL:  Meets your needs.
16                 MR. SANDERSON:  -- and the regulator.
17   We're not trying to overburden the organizations with
18   anything.  It's just we're trying to say:  "This is
19   what you should have in place for good business
20   practices and this is what we need to verify the
21   sales, the prizes, the expenses, and so forth."
22                 MR. CORNWELL:  I think there's enough
23   substance in here that it requires some study and some
24   thought, Suzanne, and I think that the Bingo Advisory
25   Group would be well served to appoint an immediate
0170
 1   committee to start working on it and work with Phil on
 2   it, I think, and --
 3                 MS. TAYLOR:  Markey, do you agree with
 4   that?
 5                 MS. WEAVER:  Yes, Madam Chair.
 6                 MS. TAYLOR:  Do you want to Chair that
 7   work group?
 8                 MS. WEAVER:  Yes, ma'am, as long as I
 9   can bring my hall manager with me.
10                 MR. CORNWELL:  You can bring anybody --
11                 MS. WEAVER:  And you wanted to help,
12   didn't you, Mr. Bresnen, on this?
13                 MR. BRESNEN:  I'll either help or supply
14   somebody to help.
15                 MS. TAYLOR:  And Kim is going to be on
16   your work group.
17                 MR. CORNWELL:  I would like to make that
18   motion, if we need a motion.
19                 MS. TAYLOR:  No.  I'll just appoint the
20   work group.  That's cool.
21                 (Laughter)
22                 MS. TAYLOR:  I believe if you go in the
23   book, it actually says that that's --
24                 MR. CORNWELL:  You can.
25                 MS. TAYLOR:  -- one of the few things I
0171
 1   get to do.
 2                 MS. WEAVER:  Earl, did you want to help?
 3                 MR. SILVER:  Sure.  I'll help.
 4                 MS. TAYLOR:  Okay.  So we have a work
 5   group comprised of Markey Weaver, Kim and Earl.
 6                 Markey, you're Chairing that group.  And
 7   feel free to add any other non-BAC members that you
 8   would like to your work group.
 9                 MR. CORNWELL:  For Phil's benefit and
10   the time frame he's in, you've got to understand, your
11   work group needs to meet, be well organized and points
12   taken and --
13                 MR. SANDERSON:  One of the things that
14   would probably be the biggest help is to provide
15   examples of what your organizations in your locations
16   are currently keeping as documents.
17                 MS. TAYLOR:  Okay.
18                 MS. WEAVER:  If anyone else wants to
19   send their paperwork, we'd love to have it.
20                 MS. LOPEZ:  I send it to you, Markey?
21                 (No verbal response)
22                 MS. TAYLOR:  Okay.  Any -- besides the
23   work group, any other discussion the committee wants
24   to make at this time?
25                 MS. LOPEZ:  Are we looking at the other
0172
 1   draft on Page 2?
 2                 MS. TAYLOR:  Anything that -- well,
 3   yeah, on Page 2.
 4                 Anything on (g)?
 5                 MS. LOPEZ:  Oh, on (g).  I'm sorry.  I'm
 6   jumping ahead.
 7                 MS. TAYLOR:  Anything on (g)?
 8                 MS. LOPEZ:  I'm jumping ahead.
 9                 MR. SILVER:  I just don't think (g)
10   should be there.
11                 (Laughter)
12                 MR. SILVER:  It just seems like more
13   paperwork for the hall manager or whomever is
14   supervising for them to keep up with, because paper
15   goes around the hall.  I mean, each floor runner is
16   issued 50 or 100 floor sheets or -- and they got to
17   come back with 50 or $100.
18                 MR. CORNWELL:  Or the sheets.
19                 MR. SILVER:  Or the sheets or something
20   equivalent to it.  I mean, it's got to balance, and it
21   balances or somebody pays.  I mean, it just -- I don't
22   think it needs to be documented like right there
23   because it's going to show over and short on the daily
24   cash report.  And just when you start getting into
25   ushers -- I mean, not unless you're tracking some type
0173
 1   of incentive program or recognition program or
 2   something like that, it just should be left up to the
 3   hall manager to decide if they want to track the
 4   ushers individually to see if they're performing or
 5   maybe make changes with them.
 6                 MR. WHITTINGTON:  Well, like in my hall,
 7   my cashiers are responsible.  They give the paper to
 8   my ushers, and they better make sure that they bring
 9   the money or the papers back.  The usher don't even
10   have to be there.  Only my cashier, they control the
11   paper.  Not my ushers.
12                 MR. CORNWELL:  It's a common practice.
13                 (Simultaneous discussion)
14                 MR. WHITTINGTON:  That's just the way it
15   is.  I mean, signature and all this stuff, I don't --
16                 MR. CORNWELL:  They don't sign --
17                 MR. WHITTINGTON:  -- understand that.
18                 MR. CORNWELL:  -- an individual sheet.
19   Cashier keeps one number --
20                 MR. WHITTINGTON:  Right.  The cashier
21   signs it.
22                 (Simultaneous discussion)
23                 MS. TAYLOR:  Right.  The cashier
24   normally -- I mean, in the halls I've seen --
25                 MR. SANDERSON:  One person at a time,
0174
 1   please, for the court reporter.
 2                 MS. TAYLOR:  The cashier --
 3                 MR. SANDERSON:  This form is one that is
 4   for all ushers.  It's not a single form for each
 5   usher.  And the form is one that's used today by many
 6   organizations and it's what your cashier probably has
 7   written down, who got how many pieces of paper and --
 8                 MR. WHITTINGTON:  Yeah, but the usher
 9   doesn't sign -- print and sign signatory field.  Our
10   usher don't.  Our cashier signs the thing.  She's
11   responsible for it.  The usher sells them, but she
12   responsible to sign, and she signs it.
13                 MR. SANDERSON:  So your only concern is
14   Number (7)?
15                 MR. WHITTINGTON:  Yes.
16                 MR. SANDERSON:  Okay.
17                 MS. TAYLOR:  Okay.  (h)?  Does anybody
18   want to say anything about (h)?  Like (J), for
19   example.
20                 MS. LOPEZ:  Well, doesn't that go back
21   to your "Unless your bingo balls" --
22                 MS. TAYLOR:  No.  That means you keep a
23   computer printout of every winning card.
24                 MR. WHITTINGTON:  For that day.
25                 MS. TAYLOR:  For four years.  Only for
0175
 1   four years.
 2                 MR. WHITTINGTON:  No.  No.  No.  No.
 3                 MR. SILVER:  Yeah, like Mr. Bresnen was
 4   saying -- I think his analogy was just for one winner.
 5   I mean, if you have 5 winners or 10 winners or 67
 6   winners, then you have to keep all that paperwork,
 7   too.  It just -- it's going to become a nightmare.
 8                 MR. WHITTINGTON:  Who is going to check
 9   it?
10                 MS. TAYLOR:  This is not the balls
11   called sheet we were talking about.  This is a copy of
12   the winning card.  And if you're not a computer
13   card -- a hall with computers, that means you're going
14   to need to keep all of the papers.
15                 MS. LOPEZ:  Well, we post ours up
16   nightly for -- I mean, the winning -- you know, the
17   actual winning --
18                 MS. ROGERS:  That means keep it for four
19   years.
20                 MS. LOPEZ:  No, we don't.
21                 MR. WHITTINGTON:  Everything you post up
22   nightly, they want you to keep it for four years and
23   store it in boxes and stuff so that they can come in
24   and do an audit and say, "I want you to pull Box
25   Number" -- "You got 100.  Pull Box Number 50.  Let's
0176
 1   see those cards."  Okay.  Something like that.  Yeah.
 2   That's just the way it is, and they will ask.
 3                 MS. TAYLOR:  Well, my problem with this
 4   one is:  I know that the Lottery Commission has
 5   access -- anybody that is an electronic hall, that
 6   they can go back into those hard drives and pull up --
 7   Knowles, how far back can they go in that?
 8                 MR. CORNWELL:  They're supposed to be
 9   able to go back forever.
10                 MS. TAYLOR:  Okay.  So there is a way to
11   look at all of that information if they want to.  If
12   an auditor wants to see it, they can pull that
13   information.  Is that correct?
14                 MR. CORNWELL:  If operated correctly and
15   you do all your verification on your card-minding, I
16   believe that's 100 percent correct.
17                 MS. TAYLOR:  So --
18                 MR. CORNWELL:  So what is your point --
19   the legal point that says that the Lottery -- if
20   they're already in possession or have access to it,
21   their right to ask for that under audit is negated.
22   Is that what your point is?  That's the old federal
23   rule.  The old law of evidence.
24                 MS. TAYLOR:  Well, just like if you
25   already have that information is already kept
0177
 1   somewhere, why would we be --
 2                 MR. CORNWELL:  They can't subpoena
 3   something that they already have.
 4                 MS. TAYLOR:  That's it.
 5                 MR. CORNWELL:  That's what you, work
 6   group, you really -- we got two weeks.
 7                 MS. TAYLOR:  Anything else on (h)?  If
 8   not, how about Number (2)?
 9                 Markey, did you have anything on Number
10   (2)?
11                 MS. WEAVER:  No, ma'am.
12                 MS. TAYLOR:  Pat.
13                 MS. GIFFORD:  I want to ask a question.
14                 THE REPORTER:  I can't hear you.
15                 MS. GIFFORD:  You have a 12-On and only
16   one of those cards won, do you have to keep that whole
17   sheet or just one card?
18                 MR. WHITTINGTON:  Whole sheet.
19                 MS. TAYLOR:  Well, you would need to
20   know the series number, I would think.  So -- good
21   question.
22                 MR. SANDERSON:  The one face would be
23   fine.  The single face.
24                 MR. WHITTINGTON:  They can actually cut
25   it out and keep it, the one face?
0178
 1                 MR. SANDERSON:  Uh-huh.
 2                 MR. WHITTINGTON:  You-all allow that?
 3   You-all allow to tamper with the face of the card?
 4   That's what it will be.
 5                 (Laughter)
 6                 MR. WHITTINGTON:  You might get rid of
 7   them for that.  "Hey, you cut this out."
 8                 (Laughter)
 9                 MS. LOPEZ:  Imagine all those dauber
10   colors on there, too, after four years.  They probably
11   look --
12                 MR. CORNWELL:  All I can tell you is
13   your local fire departments are not going to be very
14   happy with you guys.
15                 (Simultaneous discussion)
16                 MS. TAYLOR:  Anything on the rest of
17   this rule?
18                 MS. ROGERS:  Isn't (i) the same as (6)?
19                 MS. LOPEZ:  I guess the only thing I see
20   on (i) now is that -- I mean, we keep a
21   worker/volunteer sheet, but now it's asking for the
22   registry number, which before, I think, was not on
23   there.  You know, you ask for badge number, the
24   registry number.
25                 MS. ROGERS:  So Number (6) can go away
0179
 1   because you have (i).
 2                 MS. LOPEZ:  In other words, it's just
 3   one addition to your actual payroll sheet to make sure
 4   that your employee's I.D. badge number is on that
 5   payroll sheet.
 6                 MR. WHITTINGTON:  What does it matter?
 7                 MS. LOPEZ:  That's what they're asking
 8   for --
 9                 MR. WHITTINGTON:  I know.
10                 MS. LOPEZ:  -- your badge number has to
11   be on --
12                 MR. WHITTINGTON:  They might not even be
13   there.  Just write a number down any night you want, I
14   guess.  My workers better show up with their badge.
15   If Texas Lottery Commission come in, they know they're
16   going to be sent home or we're going to close our
17   session.  They know that.  And I think these people
18   are pretty smart.  They don't want that to happen,
19   because --
20                 MS. LOPEZ:  I guess for auditing
21   purposes, maybe the auditor wants to look at, "Okay.
22   Was" -- "you know, Rosie Lopez worked Session 1.
23   What's her badge number?"  And then maybe it's easier
24   to just from that point key it in and see if,
25   obviously, if you're on the approved registry of
0180
 1   workers.  I mean -- I don't know.  That's what -- I'm
 2   assuming that's what it's for.
 3                 MR. SANDERSON:  It's a verification
 4   process to make sure they're on the registry.
 5                 MS. LOPEZ:  Okay.
 6                 MR. WHITTINGTON:  What about all the
 7   rep, registration number of the rep that's over that
 8   charity that -- the officer for the charity that night
 9   that's supposed to be there to make the bingo session
10   go, his number to be on it instead of just any number?
11   Since that's what they're going to be looking at first
12   anyway.  That's what -- who they're going to be asking
13   for when they walk in, is that person.
14                 MS. WEAVER:  You want us to put more
15   paperwork on this?
16                 MR. WHITTINGTON:  No.  No.  I'm talking
17   about, they got it on there anyway, the registry
18   number -- registration number -- okay -- of the
19   person.  That means hall person.
20                 MS. LOPEZ:  I just have a question.
21   Like once, obviously, the rules are approved, is this
22   going to be a part of the operator -- the mandatory
23   operator's training program, that all of this
24   information will be given out to -- what -- 1,200
25   charities -- is there 1,200 charities?  So everyone is
0181
 1   going to know that they have to --
 2                 MR. SANDERSON:  Most definitely.  It's
 3   definitely going to be probably a --
 4                 MS. LOPEZ:  Very lengthy.
 5                 MR. SANDERSON:  -- very special operator
 6   training program session.
 7                 (Laughter)
 8                 MS. ROGERS:  Markey, one thing I'd like
 9   to be sure we note and make sure that we can take (6)
10   out; (i) is the same.
11                 Did you go over (j)?
12                 MR. SANDERSON:  Well, let me -- Kim.
13                 MS. ROGERS:  Yes.
14                 MR. SANDERSON:  Paragraph (e) outlines
15   the records that have to be maintained.
16                 MS. ROGERS:  Okay.
17                 MR. SANDERSON:  (f) through (j) identify
18   what should be on those records.
19                 MS. ROGERS:  So -- okay.  So (e)(6) is
20   just saying a broad and then you specifically name
21   what has to be on  there in (i).
22                 MR. SANDERSON:  It's not redundant.
23                 MS. ROGERS:  Okay.
24                 MR. SANDERSON:  (e)(6) is --
25                 MS. ROGERS:  Is breaking it down.
0182
 1                 MR. SANDERSON:  (e)(6) is the log.
 2                 MS. ROGERS:  Is a definition.
 3                 MR. SANDERSON:  And (j) is -- or (i) is
 4   the information that's on that log.
 5                 MS. ROGERS:  So (j) is -- okay.  I get
 6   it now.
 7                 MS. TAYLOR:  Any other comments from the
 8   committee?
 9                 Mr. Bresnen.
10                 MR. BRESNEN:  My name is Steve Bresnen
11   and I'm here to help.
12                 (Laughter)
13                 MR. BRESNEN:  I'm with the Bingo
14   Interest Group.
15                 I think -- I'm going to just skip around
16   a little bit, if we can.  The information on the
17   bottom of Page 2, "Occasion Worker/Volunteer sheet"
18   seems to also be required in Proposed Rule 402.506
19   that has been published for comment.  If it's not
20   identical, it's pretty close.  So I'm assuming this is
21   a -- this volunteer sheet -- this is an example, Phil,
22   where I don't think people are going to be able to
23   tell whether these are two different things or they're
24   one thing.  And why it needs to be in two rules if
25   it's one thing, I don't understand.
0183
 1                 I think if we can get these common
 2   references out of -- into one rule and not have them
 3   in multiple rules, you're going to have less potential
 4   for conflict between the rules, conflict between
 5   auditors and licensees and conflict between husbands,
 6   wives, bookkeepers and hall managers, things like
 7   that.
 8                 Item Number (e)(7) seems to say that
 9   this ball call sheet is only going to be for certain
10   bingo games, that being those in which the prize
11   awarded is determined by the number of balls called,
12   but Item Number (j) seems to say that you'll be
13   keeping these for every game.
14                 MR. SANDERSON:  As I mentioned earlier,
15   (e) is the records that are required for the bingo
16   occasion.
17                 MR. BRESNEN:  Right.
18                 MR. SANDERSON:  (f) through (j) is the
19   information that's required on those records.
20                 MR. BRESNEN:  All right.  (e) seems to
21   be sort of in the nature of a definition section.
22   "You've got to keep these and here's a short
23   description of what it is," but you've got a
24   regulation embedded in the definition when you have --
25   well, first of all, you've got the word "certain bingo
0184
 1   games" in Item Number (e)(7).  It says you're going to
 2   make "a record listing the balls called for certain
 3   bingo games."  That implies to me certain other bingo
 4   games there is no ball call listing.
 5                 MR. SANDERSON:  That is correct.
 6                 MR. BRESNEN:  Okay.  Then in what
 7   should -- what looks to be a definition section, you
 8   have a regulation which says "A ball call sheet must
 9   be maintained for bingo games in which the prize
10   awarded is determined by the number of balls called."
11   It seems like that sentence is more appropriately
12   placed over in Subsection (j).  That would have the
13   effect of limiting it, and my guess is people are
14   going to be reluctant to ever have another game where
15   the prize is determined by the number of balls called
16   because they'll have to keep this thing -- this list,
17   and it will be a whole lot simpler just to say "We
18   don't do it."  Do you see what I mean?
19                 MR. SANDERSON:  I understand.  Yes.
20                 MR. BRESNEN:  Which would have the
21   effect of a rule driving a marketing practice in the
22   bingo hall which is perfectly benign and might serve
23   to make the charities more money, and I'm opposed --
24   we are opposed to rules that drive the market
25   decisions on some basis other than what will make them
0185
 1   money, unless, of course, there's some, you know,
 2   integrity issue that's readily apparent.
 3                 Now, Paragraph (f)(5)(A) seems to be
 4   doing a lot of work.  First of all, I'd say that that
 5   (A) is just kind of hanging out there by itself since
 6   there is no (B), but the last sentence in that
 7   paragraph -- I think you-all better read this
 8   paragraph really carefully, because it starts out
 9   talking about that you have to have documentations for
10   specials, discounts or changes in a pricing or payout
11   structure.  Then it says it has to include the
12   following, but embedded in what it has to include is
13   more regulation.  What starts out describing
14   documentation is really a bunch of regulation embedded
15   in a paragraph.
16                 When you get to the last sentence, it
17   says "A selling price designation must be determined
18   upon receipt of the inventory and may not be changed
19   once the price determination has been set."  By the
20   way, you need a period --
21                 MR. SANDERSON:  Period.
22                 MR. BRESNEN:  -- at the end of that
23   sentence.  It seems to say that when the inventory
24   comes in the door of the bingo hall from the
25   distributor, it's received, and that I have to set the
0186
 1   price and attach that price up to these identifying
 2   characteristics at that time and may not change it.
 3   Otherwise, if it doesn't say that, I have no idea what
 4   the words "determined upon receipt" mean.  Receipt by
 5   whom?
 6                 MR. SANDERSON:  By the organization.
 7                 MR. BRESNEN:  So when it comes in the
 8   door, I have to decide right then what the price is
 9   going to be.  I must charge that price.  And if I need
10   a special that night -- this documentation for
11   specials, discounts or changes, I guess specials and
12   discounts could apply, but changes can't apply because
13   I can't change the price, according to that last
14   sentence.
15                 That seems to me to be an unwarranted
16   intrusion by the State into a basic fundamental
17   practice that goes on everywhere.  Target put me
18   through half of undergraduate school and I'd like to
19   have a -- you know, a nickel for every time they came
20   in and said "Come up with a special" --  you know,
21   "You've got the manager's special today."
22                 So what -- I don't understand that.
23   What's -- that is the -- it's at places like that that
24   people question what we're trying to get at.
25                 MR. SANDERSON:  The -- you know, and
0187
 1   I'll -- the ultimate goal is that -- you know, we have
 2   to look at the operations of the bingo games and the
 3   financial aspects of the games and how the money is
 4   received, the gross receipts reported, the inventory
 5   tracking to make sure that the operation is not being
 6   jeopardized by some, you know, unscrupulous type
 7   individuals.  So that's the -- whatever -- you know,
 8   and it goes back.  Whatever can work for both sides
 9   that allows us to verify the gross receipts that
10   should be, you know, reported or should have been
11   received by the organization and the organizations can
12   maintain the documentation necessary to ensure or
13   assure that the -- you know, the reports that they
14   filed have got accurate information on them is the
15   ultimate goal in all of these rules.
16                 MR. BRESNEN:  Well, I appreciate that.
17   I just don't see what that sentence does to advance
18   the goal.  I think it comes close to saying that --
19   you know, "Make your decision now and just forever
20   hold your peace regardless of what happens out there
21   in the market."  And I don't think it's cheating or
22   unscrupulous to decide on a given night what you're
23   going to charge for a retail product that's in your
24   inventory.
25                 MR. SANDERSON:  And, you know, there may
0188
 1   be something that we can look at adding in this that
 2   would allow for a notification of some sort that --
 3   either maintaining it or notifying us or somehow
 4   that -- for a particular night or occasion that that
 5   price was changed or was a different price.
 6                 MR. BRESNEN:  I think it's completely
 7   unrealistic.  I think we will work as hard as we can
 8   possibly work over keeping the Commission from
 9   imposing something that's so rigid, that makes no
10   sense in the real world marketplace.  I would defy
11   anybody -- except maybe on the Lottery side.  Those
12   people have paid -- as I understand, the retailer pays
13   for that product at a significant amount and the price
14   structure of the game and everything is determined for
15   the tickets -- right -- the scratch-offs and
16   everything.  It's probably not feasible for them to
17   change a price at that point because of the way the
18   system is set up.
19                 But I just don't see any basis for
20   you-all to do that whatsoever.  It has -- it should
21   have nothing to do with tracking the money.  What the
22   product actually sold for and that they got the money,
23   it seems to me is within your purview, but to tell
24   somebody "You decide the price when it comes in the
25   door" back there on any given day is grossly
0189
 1   over-rigid.
 2                 Yes, ma'am.
 3                 MS. ROGERS:  I have a question.  And I'm
 4   sure we can discuss this in the work group, but -- to
 5   Mr. Bresnen or Phil.  So what you're proposing by this
 6   last sentence in here -- or thought about proposing,
 7   the Lottery is going to keep up with what each set of
 8   paper is sold for?  Did I miss something or am I off
 9   track or am I on track?  Is that what I heard?
10                 MR. SANDERSON:  Yes.
11                 MS. ROGERS:  You-all have enough to do,
12   don't you think?
13                 (Laughter)
14                 MS. ROGERS:  Golly-gee.
15                 MR. BRESNEN:  It's not only that.  I
16   mean, I -- I understand you have to have some way of
17   knowing what came in, but this is requiring you to
18   make a decision in your individual operation -- how
19   long does paper sit --
20                 MS. ROGERS:  How can you do that?
21                 MR. BRESNEN:  -- shelf in your --
22                 MS. ROGERS:  Sometimes it will sit there
23   two nights; sometimes it will sit there for a month.
24   How do you know?
25                 MR. BRESNEN:  Okay.  That's my point.
0190
 1   You've got to make a pricing decision when it comes in
 2   the door that's good for as long as the paper is.
 3                 MS. ROGERS:  But there's no way to do
 4   that.  There's no rhyme or reason to -- you may have
 5   100 people, you may have 500.  There's no --
 6                 MR. BRESNEN:  Well, that's why I'm
 7   raising the issue.
 8                 MS. ROGERS:  I agree with you.
 9                 MS. TAYLOR:  I think that one of the
10   problems -- let's say even if you brought the paper in
11   because you're having going to have a special because
12   it's your anniversary so it's going to be half price
13   tonight or $2 off.  You might not sell it all.  So
14   what do you do with the rest of the paper?  It has to
15   sit there for ever and ever because you can never sell
16   that for the price of $4 or whatever you normally sell
17   it --
18                 MS. LOPEZ:  If you bought it for a
19   different price, then you set a price for it.
20                 MS. ROGERS:  But even beyond that, I'm
21   now looking at -- I'm now not only going to have to
22   keep up with quarterlies and daily cash reports and --
23   which all is necessary, now I have to fill out a form
24   to let the Lottery know, "Oh, today we bought a
25   pack" -- "50 packs of 9-Ons and we're going to think
0191
 1   about selling those for $1."
 2                 MR. BRESNEN:  No.  You're going to sell
 3   it for $1.
 4                 MS. ROGERS:  Do you know how much added
 5   paperwork that would be?
 6                 MR. BRESNEN:  Hey, that's why I'm here.
 7   I said I was going to help.
 8                 MR. WHITTINGTON:  Well, basically what I
 9   see is, yeah, we've got a few bad apples that might be
10   doing stuff like that or might be changing numbers and
11   stuff, but the majority is just trying to make it,
12   these charities.  And the only way the Lottery
13   Commission is going to catch anything like that, they
14   actually have to go to the hall and see it in
15   operation.  And that's the only way they're going to
16   know about any price change anyway.  Simple as that.
17                 You can write it in all you want to, but
18   the only way you-all are going to know it is if
19   you-all walk into the hall, and that person doing
20   wrong, they should be chastised; something should be
21   done.  But that's the only way you're going to know.
22                 Looking at a piece of paper, what
23   you-all did a month ago, "Oh, you changed your prices
24   in that" -- you-all aren't going to know.  How you
25   going to know?  No way.  If somebody is doing
0192
 1   something wrong, you-all are going to know because
 2   you-all are going -- hey, eventually get some
 3   complaints and you-all are going to walk up on them
 4   and catch them.  And that's the only way.  Not on the
 5   paper where it's saying "The price was changed last
 6   month, two months ago."  They can do that all day long
 7   if you-all don't come in the hall and catch it.
 8                 MS. ROGERS:  Well, I can say the work
 9   group has a lot of work to do, and, hopefully, staff
10   is willing to work with us on this.  So I look forward
11   to it.
12                 MR. BRESNEN:  I guess I'll just hold my
13   comment -- the rest of my comment for the work group,
14   but I -- with one exception.
15                 There's two places in this rule where it
16   says that a computer printout can be generated to
17   document, in one case, the listing of the balls in
18   order called, and another case, the winning card
19   faces.  And I would submit to you that those rules
20   could have the effect of inducing people to use
21   computers more than they do right now, because if I
22   can print it out and store it in the computer and
23   print it out upon demand, it will be a whole lot
24   better.
25                 And by the way that 25,000 number -- I
0193
 1   appreciate you brining up -- there may be multiple
 2   winners.  But that's 25,000 per year.  You have to
 3   have four years' worth.  That's 100,000 records that
 4   you're going to have on hand in any full -- any hall
 5   that's full, and that's using all the allottable
 6   sessions.
 7                 If this rule forces organizations to use
 8   more of one kind of equipment, it should be revised
 9   not to do that so people are making market choices out
10   there and not choices that are forced by the
11   regulation.
12                 Thanks.
13                 MS. ROGERS:  Thank you.
14                 MS. TAYLOR:  Any other discussion?
15                 (No response)
16                 MS. TAYLOR:  Okay.  Work group, if
17   you'll let everybody know when you're meeting so that
18   if there's other interested parties, they could
19   attend, that would be great.
20                     AGENDA ITEM NO. 13
21                 MS. TAYLOR:  Then we'll move on to Item
22   No. 13, Report and possible discussion on the
23   activities of the Charitable Bingo Operations
24   Division.
25                 MR. SANDERSON:  Members, in your
0194
 1   notebooks is a report of the activities of the Bingo
 2   Operations Division.  We have posted for seven --
 3   eight positions.  Quarter reports were due for the
 4   third quarter on October the 25th.  The website, as I
 5   mentioned earlier, has been updated to add a menu item
 6   for policies and procedures, which is where we've
 7   placed the guidelines for internal controls as well as
 8   the additional books and records.
 9                 Also, we are conducting a survey as
10   organizations are placing their license in
11   administrative hold, trying to gather information as
12   to the reasons for going into administrative hold.  I
13   believe, also, the survey will ask those organizations
14   that are coming out of administrative hold similar
15   questions so that we can see if there's some trend
16   that we can address.
17                 I've also included the allocation report
18   for the second quarter showing the State's and the
19   County's portion of the prize fees that were collected
20   along with the top five cities and counties, and the
21   press release for allocations that was sent out in
22   August of 2007.
23                 And that is all I have for this report.
24                 MS. TAYLOR:  Any questions?  Comments?
25                 (No response)
0195
 1                     AGENDA ITEM NO. 14
 2                 MS. TAYLOR:  Moving on to Item No. 14,
 3   public comment.
 4                 Yes, sir.
 5                 COMM. COX:  For the record, Jim Cox,
 6   Chairman of the Texas Lottery Commission.
 7                 I've heard an awful lot about rules
 8   today that has been helpful to me.
 9                 You know, on the one hand, it would seem
10   that it's a very worthy goal to do what our internal
11   auditors have told the bingo group to do with their
12   audit situation, which is to create a fair and
13   consistent regulatory experience.  I don't think
14   anybody here would disagree with that goal.  And one
15   of the things that has become very clear to me here
16   today is that that goal is not an easy goal.
17                 You know, one of the things that we
18   were -- that our auditors criticized the bingo
19   auditors for doing was writing people up for things
20   that weren't in the rules and saying "You can't do
21   this."  "Well, why not?  It doesn't say that
22   anywhere." "Well, we just say you can't do it."  And
23   so that means that to provide a fair and consistent
24   regulatory experience, you're going to have to have
25   more rules that you would have if you weren't going to
0196
 1   provide a fair and consistent regulatory experience.
 2                 So we ask you to work with us -- to
 3   continue to work with us toward this goal because we
 4   think it is a good goal for everybody at the end of
 5   the day, but there are going to be some times when it
 6   is painful getting there for all of us.
 7                 One thing I've observed is that there
 8   are work groups that work on rules before they come to
 9   us, and it seems that -- this may be an uneducated
10   guess, but it seems like we still disagree on more
11   things than I think we should when the rule comes to
12   the Commission.  For instance, Phil, on this rule that
13   you've talked about bringing to the November meeting,
14   I've asked that the November meeting be the Wednesday
15   after Thanksgiving rather than the Wednesday before,
16   but I really think that it would be good if you gave
17   the work group a little more time than that.  It
18   wouldn't bother me if we didn't see this rule until
19   December or January, if that will help you-all get on
20   the same page better.
21                 MR. SANDERSON:  That would be great.  I
22   would appreciate that.
23                 COMM. COX:  Okay.  Because one of the
24   things Phil is working with is Chairman Clowe and I
25   want very much to get the fair and consistent
0197
 1   regulatory experience in place as soon as we possibly
 2   can, and he set out with a very ambitious schedule in
 3   getting rules to us, and, frankly, it's been very
 4   tough on Sandy.  It's been tough on the legal
 5   department.  And it's even been tough on the
 6   Commission, because we've had a lot of rules come
 7   before us and there's a lot of them hanging out there
 8   yet that we're going to have to act on again.  And the
 9   more you-all can get together before they ever get to
10   us, the better the process is going to work.
11   By "you-all," Phil, I'm meaning you and the industry.
12                 MR. SANDERSON:  Yes, sir.
13                 COMM. COX:  Now, as Chairman Clowe often
14   says, he spent a lot more time working in a regulated
15   industry than he has as a regulator, and the same is
16   true for me.  I spent 20 years in the gaming industry
17   in Nevada.  And I will tell you that what you've got
18   here when you're describing these daily specials and
19   this abated rent and variable rent and all these kinds
20   of things, you have a much more difficult industry to
21   regulate an audit than the gaming industry in Nevada
22   because there aren't those kinds of exceptions.  You
23   know, Black Jack is Black Jack, and it's played the
24   same way every day, 365 days a year from now on.  And
25   bingo doesn't have a daily manager special.  It
0198
 1   doesn't have "You can sell tickets for this one time
 2   and this another time."  You sell all the tickets for
 3   the same price.
 4                 And so what you've got here is a
 5   situation that is getting -- is permitted to have a
 6   lot of flexibility that you would never get in Nevada,
 7   but at the end of the day, Phil, one of the most
 8   important things that I've heard was what Larry said
 9   when he said, "Unless you're there, you don't know."
10                 So unless you're there in plain clothes
11   watching how the game is played on November 7th,
12   you've got nothing to audit against when you go in on
13   November 8th.  All you've got is that they said that
14   they had a manager's special.  You don't know whether
15   they had a manager's special or whether somebody took
16   that much money out of the till unless you're there
17   watching.
18                 So I ask you to think about doing more
19   of that, the discreet observations, if you will.  What
20   went on, discreetly making notes, and then audit to
21   see if that's what the books look like.  That's the
22   way the casino industry is audited.  And I worked on
23   the American Institute of CPA's committee that
24   developed the audit guide for casinos, and that's how
25   you have to audit an operation like that, because so
0199
 1   many of the controls are not capable of being tested
 2   unless you're there watching them.
 3                 For instance, in a casino, you don't
 4   know whether there's a floorman watching a dealer
 5   unless you're there to see if there's a floorman
 6   watching a dealer.  You don't know if the dealers
 7   don't make moves like this (indicating) unless you're
 8   there watching to see if the dealers are wearing their
 9   aprons, and, thus, can't make moves like that.
10                 So I encourage you-all to recognize that
11   you're working in an industry that you've been allowed
12   to make very complex so that it could be more
13   profitable and recognize that that puts a tougher
14   burden on Phil for record-keeping requirements and it
15   requires him to do more innovative kinds of things in
16   his audits.
17                 So I'm sympathetic with both sides of
18   the table and I hope we can get around a round table
19   and make these things work better.  And I'll take any
20   questions if you-all have any.
21                 MS. TAYLOR:  Just an observation from
22   me.  I'm so appreciative of you being on the
23   Commission, because I feel that this year and the
24   several preceding years, that we have a Commission
25   that really cares whether or not bingo does well, and
0200
 1   from my heart, I love you being there.
 2                 COMM. COX:  Well, thank you very much,
 3   and, you know, Commissioner Clowe started that and I
 4   plan to continue it.
 5                 I will tell you that we do have a new
 6   Commissioner who attended his first Board Meeting last
 7   month.  His name is David Schenck.  He is an appellate
 8   lawyer with Jones Day firm in Dallas, and he's a very
 9   quick study.  He was right into things before I
10   thought he would even know where he was sitting.  And
11   so I'm very pleased that we have David and now we've
12   got three people sitting on the chairs up there.
13                 David is in Dallas.  He is very busy.  I
14   don't know how many of his meetings he'll be able to
15   make, but we have encouraged him to try to get as
16   familiar as he can with bingo as soon as he can.
17                 Thank you-all.
18                 MS. TAYLOR:  Thank you.
19                 MS. WEAVER:  Lady Chair, may I ask a
20   question?
21                 MS. TAYLOR:  Yes, Markey.
22                 MS. WEAVER:  Mr. Bresnen said something
23   about Target.  And I remembered that there is called
24   "secret shoppers."  If anybody wants to throw
25   something at me, it's okay, but a commercial lessor
0201
 1   that runs a hall properly isn't scared when the
 2   Lottery Commission comes in.  Have you ever thought of
 3   having secret shoppers, so to speak, come in and just
 4   take notes and play bingo and see how it's ran and
 5   then come back and audit accordingly?  Because that's
 6   in line with what he said and you're invited into our
 7   hall every day.
 8                 MR. SANDERSON:  I don't know if we've
 9   actually thought of the "secret shopper" idea, but --
10   I mean, something along that lines.
11                 The only thing that -- one of our
12   biggest restrictions is the appropriation itself and
13   the number of FTEs that we can have.  Right now
14   there's around 550 bingo locations and we only have 47
15   FTEs, total, 25 of which I believe are in the audit
16   section.  So it's -- and it's areas -- and Chairman
17   Cox, we have been looking at doing more of those
18   observation type inspections under the new audit plan.
19                 MR. SILVER:  That wouldn't be a problem.
20   I mean, just send one person in and maybe just take
21   notes for five minutes and leave.  Just grab a flyer
22   on the table of what games are being played, get a
23   play schedule.  I'm sure some of the POS systems have
24   a button you could print that has all the prices on it
25   or something to that effect and just print it out and
0202
 1   they could take it with them and just save it for a
 2   future audit.
 3                 MS. ROGERS:  Well, I will say the first
 4   time in seven years that I've been with bingo, about
 5   six months ago we had an investigator come in.
 6   San Antonio Lottery apparently had had a complaint
 7   from a customer, which it's not unusual.
 8                 And it was wonderful.  He came in.  He
 9   sat down.  And I told him -- I said what she's
10   complaining about, goes on right over there.  We have
11   an individual who buys an enormous amount of tabs.
12   "Sit over there, have a hay day."  He sat there, took
13   notes, watched what all was played, took a schedule
14   from me.  About 30 minutes, got up and said "I've seen
15   all I need to see."
16                 So, I mean, San Antonio does do that, I
17   think, you know, which should be encouraged.  Halls
18   that are not doing anything wrong that are those good
19   apples that don't want to be, you know, in trouble, no
20   problem.
21                 MS. TAYLOR:  The problem is I think that
22   there are some halls, when they know the Lottery
23   Commission is there, don't do things the way they
24   would do them normally without the Lottery Commission.
25                 So back to the secret shopper, they need
0203
 1   to go in there the way they used to years ago when you
 2   didn't even know the Lottery was in your hall, and
 3   that's how it should be, because we should all be
 4   running bingo just like as if the Lottery is sitting
 5   there every day watching us.
 6                 I mean, I'm right with you there,
 7   Markey.  I think that people need to -- they need to
 8   be undercover.  You know, not walking in with suits.
 9   They need to walk in with --
10                 MR. SILVER:  Badges and guns.
11                 (Laughter)
12                 MS. TAYLOR:  Exactly.  With no badges.
13   They need to come in undercover and watch, and
14   especially, they need to go in those halls where
15   you've got the bad players and catch those people and
16   get rid of them.
17                 MR. SILVER:  They can bring their
18   families.  We can use the business, too.
19                 (Laughter)
20                 MS. TAYLOR:  And the families could
21   probably even call bingo, couldn't they?
22                 (Laughter)
23                 MS. TAYLOR:  Anyway, I agree with you,
24   Markey.
25                 MR. WHITTINGTON:  Bingo is dying.  We
0204
 1   sure don't need -- we got to think about how many
 2   charities left?  Couple -- 1,100, something, Larry, or
 3   1,200.
 4                 MR. SANDERSON:  1,250.
 5                 MR. WHITTINGTON:  1,250.  We don't need
 6   ten charity halls out of those 1,250 charities messing
 7   up and everybody else trying to make a living --
 8   trying to do right and making donations for the
 9   charities.
10                 MS. TAYLOR:  I think we all feel like
11   that.  The people that are trying -- those of us that
12   are trying really hard, the reason we cringe at these
13   rules is because they're created for a few bad apples
14   and they're making life miserable for all of us.
15                 Okay.  That is public comment.  Any
16   other public comment?
17                 MR. SANDERSON:  I have one thing I would
18   like to announce, and I don't see her here, but last
19   week -- or maybe the beginning of this week, we
20   received notification that Terry Shankle is going to
21   refire from Bingo effective November 30th, and I know
22   a lot of you-all have worked with her over the years.
23                 So I just wanted to make that
24   announcement and let you-all know.  I was trying to
25   get her to come back in here, but, apparently, she's
0205
 1   busy working in her office.
 2                 MR. BRESNEN:  We need a rule against
 3   that.
 4                 (Laughter)
 5                 MS. ROGERS:  I second that rule,
 6   whatever -- I agree.
 7                 MR. SANDERSON:  So the presentation she
 8   gave today will be the last financial presentation
 9   that she'll be giving to the BAC.  So I just wanted to
10   let you-all know that.
11                 Twenty-eight years of service.  She's
12   been with Bingo since 1987, and she was then informed
13   by the late Bob Bullock to go to Bingo and take it
14   over.  So --
15                 MS. ROGERS:  She has been one of the
16   most helpful individuals when you call up on the other
17   end, going, "Oh, my gosh.  I just messed this up."
18                     AGENDA ITEM NO. 15
19                 MS. TAYLOR:  Okay.  Let's go on to Item
20   No. 15, Consideration of and possible action on future
21   Bingo Advisory Meeting dates and/or items to be
22   considered for future meetings on the Bingo Advisory
23   Committee Work Plan.
24                 MR. SANDERSON:  If you stay with the
25   practice that you've had in the most recent past, it
0206
 1   would be the first Wednesday of February, May, August,
 2   and November.
 3                 MS. TAYLOR:  The question is we've got
 4   several work groups working on rules and some of the
 5   rules are going to be presented at the Commission
 6   Meeting and it would be really nice, I think, if the
 7   committee can meet after the work groups have done
 8   this work before the Commission Meeting.
 9                 MR. WHITTINGTON:  He said until
10   January -- he'll give us until January.
11                 MR. SANDERSON:  Well, let me --
12   statutorily, you're only required to meet once a
13   quarter.  And, of course, you can meet at any time at
14   the call of the Commission.  And I think Chairman Cox
15   has indicated he would like your input on these rules,
16   and I don't think there would be any opposition -- not
17   speaking for you, Chairman, but that if you-all wanted
18   to have a meeting earlier than February and -- you
19   know, to discuss the progress of the work groups, you
20   know, that would be clearly, I think, appropriate.
21                 COMM. COX:  Or if you wanted to give --
22   Jim Cox, Chairman of the Texas Lottery Commission.
23                 If you wanted to give more time, Phil --
24   you know, these people are volunteers and they travel
25   here with their own funds and they devote their time
0207
 1   without getting any compensation and I think we need
 2   to be cognizant of that.
 3                 Their input is very variable to us, and
 4   if it means another month or so before it gets to us,
 5   well, maybe it would be that much better.
 6                 MS. ROGERS:  So we can keep it to
 7   February.
 8                 MR. SANDERSON:  If you would like, we
 9   could keep with the February, May, August and November
10   time frame.
11                 MS. ROGERS:  So it would be
12   February 6th.
13                 MR. SANDERSON:  February 6th would be
14   the next meeting.  We'll get these posted to the
15   website and they will all start at 10:00 a.m.
16                 There was some discussion about the
17   meetings beginning at 9:00 for today, and that was in
18   anticipation of having a public hearing after the BAC
19   Meeting.  So there may be an instance where we may ask
20   the meetings to begin at 9:00 so that we could have a
21   public hearing as we move through the rulemaking
22   process so that you're here only one time instead of
23   having to come back next week.
24                 So we'll work with that.  And, of
25   course, if there's any other times that Suzanne,
0208
 1   Chair, would like to maybe call a meeting, we can get
 2   with the Chairman and see if it's permissible to have
 3   a called meeting before that February meeting.  That's
 4   up to you-all.
 5                 MS. ROGERS:  Thank you, Commissioner,
 6   for giving us more time.
 7                 MS. LOPEZ:  Thank you.
 8                 MS. TAYLOR:  As for the items, make sure
 9   that you get them to -- up here to the Lottery
10   Commission and make sure that they appear somewhere
11   within the work plan.
12                 If there's nothing else, then we'll go
13   ahead and -- wait.  We're not going to.  We're going
14   to go ahead and have the presentation for those that
15   can stay and we'll adjourn the meeting after the
16   presentation, but we'll take a brief five-minute
17   break.
18                 Markey, did you need to say anything
19   else right now?
20                 MS. WEAVER:  No, ma'am.
21                 (Presentation on behalf of Gamco, Inc.,
22   presented by Donnie Freeman, on video conferencing,
23   was not recorded and not transcribed for the purposes
24   of this record.)
25   
0209
 1                     AGENDA ITEM NO. 16
 2                 MS. TAYLOR:  This meeting is now
 3   adjourned.
 4                 (Meeting concluded at 2:25 p.m.)
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0210
 1                    C E R T I F I C A T E
 2   
 3   STATE OF TEXAS    )
 4   COUNTY OF TRAVIS  )
 5   
 6                 I, Patricia Gonzalez, a Certified
 7   Shorthand Reporter in and for the State of Texas, do
 8   hereby certify that the above-mentioned matter
 9   occurred as hereinbefore set out.
10                 I FURTHER CERTIFY THAT the proceedings
11   of such were reported by me or under my supervision,
12   later reduced to typewritten form under my supervision
13   and control and that the foregoing pages are a full,
14   true and correct transcription of the original notes.
15                 IN WITNESS WHEREOF, I have hereunto set
16   my hand and seal this 21st day of November 2007.
17   
18   
                            _______________________________
19                          PATRICIA GONZALEZ
                            Certified Shorthand Reporter
20                          CSR No. 6367-Expires 12/31/08
21                          Firm Certification No. 276
                            Kennedy Reporting Service, Inc.
22                          Cambridge Tower
                            1801 Lavaca Street, Suite 115
23                          Austin, Texas 78701
                            512.474.2233
24   
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