0001 1 2 3 4 * * * * * * * * * * * * * * * * * * * * * * * * * * * 5 6 BINGO ADVISORY COMMITTEE 7 MEETING 8 9 JUNE 28, 2002 10 11 * * * * * * * * * * * * * * * * * * * * * * * * * * * 12 13 14 15 16 17 18 19 BE IT REMEMBERED that the BINGO ADVISORY 20 COMMITTEE meeting was held on the 28th of JUNE 2002, 21 from 10:00 a.m. to 3:12 p.m., before David Bateman, 22 RPR, CSR in and for the State of Texas, reported by 23 machine shorthand, at the Offices of the Texas Lottery 24 Commission, 611 East 6th Street, Austin, Texas 78701, 25 whereupon the following proceedings were had: 0002 1 APPEARANCES 2 3 Chairman: 4 Ms. Virginia Brackett - Lubbock, Texas 5 6 Committee Members: 7 Mr. Daniel Moore - Houston, Texas 8 Mr. Larry Whittington - Dallas, Texas 9 Mr. Pete Pavlovsky - Rosenberg, Texas 10 Mr. Saleem Tawil - Austin, Texas 11 Ms. Suzanne Taylor - Corpus Christi, Texas 12 Ms. Marilyn Matthews - Odessa, Texas 13 14 Charitable Bingo Operations Director: 15 Mr. Billy Atkins 16 17 18 19 20 21 22 23 24 25 0003 1 INDEX 2 3 APPEARANCES..................................... 2 4 5 AGENDA ITEMS 6 Item Number 1................................... 4 Item Number 2................................... 5 7 Item Number 3................................... 7 Item Number 4................................... 45 8 Item Number 5................................... 53 Item Number 6................................... 86 9 Item Number 7................................... 100 Item Number 8................................... 102 10 Item Number 9................................... 106 Item Number 10.................................. 163 11 Item Number 11.................................. 183 Item Number 12.................................. 188 12 Item Number 13.................................. 193 Item Number 14.................................. 216 13 Item Number 15.................................. 110 Item Number 16.................................. 229 14 Item Number 17.................................. 232 Item Number 18.................................. 244 15 ACTION TAKEN 16 Approval of Minutes of March 20, 2002 Meeting... 5 Approval of Minutes of April 10, 2002 Meeting... 6 17 To Support Innovative Pull-Tab Technology....... 157 18 REPORTER'S CERTIFICATE.......................... 246 19 20 21 22 23 24 25 0004 1 June 28, 2002 2 Bingo Advisory Committee Meeting 3 AGENDA ITEM NO. 1 4 CHAIR BRACKETT: All right. It's 10 5 o'clock and we have a quorum, so we'll call the 6 meeting to order. 7 I want to welcome everyone who's here 8 today and especially the new members of the Bingo 9 Advisory Committee. And we appreciate your service. 10 And you are in the majority, the new members. 11 There are just three of us continuing. 12 So you will have work to do and will need to be active 13 participants. 14 Mario Manio is not here and Ricky Turman 15 is not here today. 16 We in courtesy to the court reporter 17 will try to have a break, a small quick break, 10 18 minutes in each hour. 19 And when -- we only have two witness 20 forms up here. If any of you plan to speak, would you 21 please fill them out and bring them up here? 22 And I want to point out to you I think 23 at one of our previous meetings at a different 24 location the people who were in attendance were 25 needing a place to get drinks or water or something. 0005 1 And if you go out this door and turn to your right, 2 you'll find another door on your left. Go in there. 3 There is a break room. There are vending machines 4 available in there. 5 AGENDA ITEM NO. 2 6 Okay. We need to approve some minutes. 7 We did not get the minutes of the March 20th meeting 8 approved or the April 10th meeting. I'm going to ask 9 for some motion on the March 20th meeting. 10 MS. TAYLOR: So made. 11 CHAIR BRACKETT: It's been moved. 12 MR. TAWIL: I second it. 13 CHAIR BRACKETT: Okay. It's been moved 14 and seconded. Suzanne Taylor moved and it was 15 seconded that we approve the minutes of the March 20th 16 meeting as they were posted on the Internet. 17 All those in favor please, say aye. 18 MR. MOORE: Aye. 19 MR. WHITTINGTON: Aye. 20 MR. PAVLOVSKY: Aye. 21 CHAIR BRACKETT: Aye. 22 MR. TAWIL: Aye. 23 MS. TAYLOR: Aye. 24 MS. MATTHEWS: Aye. 25 CHAIR BRACKETT: Any opposed? 0006 1 Okay. Then on the April 10th meeting, 2 they have also been posted on the Internet. Do I hear 3 a motion to approve those? 4 I have a correction. In the minutes, it 5 refers to Mr. Sanderson making some motions and 6 seconding some motions. And Mr. Sanderson would not 7 do that since he is an employee of the Lottery 8 Commission. 9 And I feel sure that those were done by 10 Bob Rinehart. If we can get that correction made on 11 those. 12 Are there any other corrections? Did I 13 get a motion? 14 MR. TAWIL: Yeah. I gave one. 15 CHAIR BRACKETT: You did? Okay. All 16 right. 17 All those in favor, please say aye. 18 MR. MOORE: Aye. 19 MR. WHITTINGTON: Aye. 20 MR. PAVLOVSKY: Aye. 21 CHAIR BRACKETT: Aye. 22 MR. TAWIL: Aye. 23 MS. TAYLOR: Aye. 24 MS. MATTHEWS: Aye. 25 All right. Thank you. The minutes are 0007 1 approved as printed on the Internet. 2 Also, I'm going to ask that we take -- 3 that Item No. 15 be moved up to come between Item No. 4 4 and 5. 5 The person presenting No. 5 and 6 is 6 at -- has another obligation and might be late. So 7 this will accommodate that plus accommodate the 8 agenda. 9 Okay. Mr. Clowe, we're ready to hear 10 from you. Mr. Clowe is the commissioner of the Texas 11 Lottery Commission -- chairman of the -- I was trying 12 to think of the word. Billy helped out here. 13 Chairman of the Texas Lottery Commission. 14 I didn't want to call you the head 15 commissioner. 16 AGENDA ITEM NO. 3 17 MR. CLOWE: That wouldn't be correct. 18 Thank you, Virginia. 19 Good morning, everyone. My name is Tom 20 Clowe. I'm commissioner on the Texas Lottery 21 Commission and serve as the chairman and also as the 22 designated bingo commissioner. 23 And I'm very pleased to be with you here 24 this morning and appreciate the opportunity to share 25 some of my thoughts about the tasks that you-all are 0008 1 undertaking and the duties that you're assuming and 2 what's ahead of you. 3 I'd additionally like to speak to you 4 about my view of the bingo industry currently and tell 5 you a little bit about the Texas Lottery Commission at 6 the same time. 7 Now I began on the Texas Lottery 8 Commission in November of 1998 and I was reappointed 9 in '99. My term expires in 2005. For your 10 information, Lottery commissioners are appointed by 11 the governor. And I was appointed by then-Governor 12 Bush. 13 Chairman Whitaker was appointed by 14 Governor Bush and reappointed by Governor Perry. And 15 we have a new commissioner, Commissioner Jim Cox, who 16 was appointed by Governor Rick Perry. 17 Commissioner's term is six years and 18 once a commissioner is appointed and sworn, the 19 commissioner must be affirmed by the Senate. 20 Commissioner Whitaker and I have been confirmed by the 21 Senate. 22 Commissioner Cox has yet to be confirmed 23 as the Legislature is not in session now. And his 24 confirmation will come before the Senate when they 25 convene in 2003. 0009 1 I think it's important for you to 2 understand that I'm speaking to you here this morning 3 as one commissioner. I do not represent the 4 Commission in its totality because we have not had a 5 public meeting and I have been not been authorized to 6 do so. 7 It is difficult for a commissioner to 8 speak for the Commission. It is impossible, as a 9 matter of fact, unless they are authorized by a motion 10 and a vote. So I'm really here this morning as a 11 single commissioner and as more importantly I think at 12 this time the designated bingo commissioner. 13 I'd like to talk to you about your 14 duties this morning as I see them, as I said, about 15 the bingo industry and then a little bit about the 16 Texas Lottery Commission itself. 17 First of all, you as individuals and 18 members of the Bingo Advisory Committee, there are 19 three of you: chairman, vice-chair and the 20 ever-faithful Suzanne, who has never missed a meeting, 21 who are -- I guess -- holdovers or who have served in 22 the past. 23 The others of you are all new members. 24 And you have an opportunity now to do something for 25 the State, for the people in the state, for members of 0010 1 your industry and for the Lottery Commission that 2 elevates you above those other members of your peer 3 group in the industry. 4 You are now designated and you've 5 accepted your role as a member of the Bingo Advisory 6 Committee. You will be looked to by the members of 7 the Commission and by the staff of the Bingo Division 8 for your opinions, your work, your productivity in 9 representing the bingo industry in matters of great 10 importance. 11 This committee in the past has had 12 significant accomplishments. It is currently, in my 13 opinion, very active and I hope it will continue to be 14 and fulfill that role in the future. 15 I as one commissioner look to the Bingo 16 Advisory Committee and to those people who appear 17 before you and make their comments to you as having 18 great importance. 19 In some meetings in the past, there has 20 not been a great turnout. There has not been a level 21 of interest that frankly, I'd like to see. In the 22 last few months because of the various issues I think 23 as much as anything else that have come before this 24 committee, we've had good public attendance. My view 25 is we have good public attendance here this morning. 0011 1 And I really like to see members of the 2 industry coming and listening to the business as you 3 conduct it and having comments to give to you so that 4 you can be guided in the public forum by what their 5 thoughts are. 6 You are governed by the Administrative 7 Procedures Acts. These meetings are open and they are 8 recorded. And that is in keeping with the way we do 9 business in this state. You have met historically 10 here in Austin for the most part. It was brought to 11 the Commission's attention some time ago that it might 12 be beneficial to meet outside in other areas in the 13 state. 14 And although initially I was not very 15 much in favor of that, frankly, I've changed my mind. 16 And I think that if, in fact, it will improve a level 17 of public interest and attendance in your meetings 18 that it would be beneficial for you to meet in other 19 cities in the state. 20 There are provisions for that. There 21 are certain things that have to be done, but it can be 22 accomplished. So I'd like as a matter of benchmarking 23 that to bring you up to date on that history and tell 24 you that, in my view, you have that option now and in 25 the future. 0012 1 I think that's really as much of a 2 charge as I'd like to give you this morning. Take 3 your job seriously. Read the minutes. Read the 4 material that you receive as a member of this 5 committee from the staff. Do your homework. 6 Please come to these meetings prepared 7 to discuss the issues that are going to come before 8 you and be a proactive member of this committee and 9 let your opinions be felt and be known. I would say 10 that to a commissioner or any other public officer of 11 any board of any agency in the state. 12 And I would like to welcome you and 13 congratulate you on your acceptance and your selection 14 and wish you a happy term as a member of this 15 committee. 16 You have an interesting time at which to 17 serve. The bingo industry is facing a number of 18 problems, as I see it. The revenue and the 19 contributions to charities are declining. And that 20 presents an opportunity and a challenge, as well as a 21 situation that you-all will be faced with, I think, 22 during your term on this committee. 23 As a business person most of my life, I 24 have been greatly concerned by how I've seen the 25 statistics trending in the bingo industry. And it 0013 1 appears to me -- from again, my business background -- 2 it's a matter of a shrinking market. 3 We've discussed this at length in 4 Commission meetings and there have been lengthy 5 discussions before this committee about what's wrong 6 with bingo. And my concern is focused on the 7 competition for the discretionary dollar that people 8 determine they have to wager at bingo. And that deals 9 with competitive forms of wagering: Internet 10 gambling, 8-liners, casino gambling across state lines 11 and it -- on the Indian properties, race track 12 gambling. 13 I'm concerned about the age of the 14 player. As I visit various bingo halls around the 15 state, I see people more my age -- and that's old -- 16 than I do young people. And as a market matures, and 17 as older buyers become fewer -- and that's the fate we 18 all are going to -- unless that segment is replaced by 19 a younger player, a younger purchaser of the product, 20 the total market size is going to diminish. And I 21 think that's a problem that the bingo industry faces. 22 I think the environment in bingo halls 23 is something that you should keep in mind. They're 24 smoky. And there are a lot of people today as opposed 25 to 30 years ago who don't smoke. And I'm not certain 0014 1 that the fact that there is generally a cigarette 2 smoke environment that is noticeable the minute you 3 walk into most bingo halls, that that's not turning 4 away younger people and people that don't smoke. 5 That may be a sensitive subject, but 6 since you're on the committee and I'm speaking to you, 7 I just thought I'd bring that up and let you think 8 about it. I don't know what other environmental 9 factors may come into play, but that's one that I've 10 noticed. I happen to be a nonsmoker and I've wondered 11 about that. 12 We face that kind of marketing problem 13 in looking at lottery players -- not so much the 14 scratch-off tickets as the on-line games -- and we 15 have found that the players like a larger jackpot. We 16 changed the matrix on Lotto Texas a couple of years 17 ago now and we found that the higher jackpots do 18 attract more players. 19 We just finished a $70 million jackpot 20 with Lotto Texas and we had a very, very high level of 21 interest, much higher than when the jackpot is $4 22 million or $6 million or $20 million. 23 And I think that relates back to another 24 problem that you have in bingo. I don't think the 25 games are as attractive to the players or the jackpots 0015 1 are high enough to attract the players. 2 Now in most cases, there isn't anything 3 the Texas Lottery Commission can do about it. If you 4 want those things changed, the industry being you, 5 your focus should be on the Legislature and the 6 government. 7 In the last session in the Legislature, 8 there was a bill passed by the Legislature for 9 progressive bingo gaming. The governor vetoed it. 10 You need to know that history. You need to understand 11 that the Commission must stay within the bounds of the 12 Charitable Bingo Act. 13 We can't do anything that isn't 14 authorized by law. My view is as a commissioner, my 15 responsibility is to see that the bingo industry 16 through the Charitable Bingo Division is regulated 17 according to the Act and that good taste, ethical, 18 legal and moral standards are established that are 19 acceptable to the people of the State of Texas, but we 20 must stay within the law. 21 So if you want to have a change involved 22 you must deal with the Legislature and you must deal 23 with the government who must sign the act. 24 So I think there are some real problems 25 in the bingo industry that you're going to have an 0016 1 opportunity to look at and deal with and hopefully to 2 make some positive changes. 3 And in that regard, I want you to know 4 that I am very much concerned along with you about 5 making positive changes. I will be supportive to 6 listening to what you're talking about, to the efforts 7 that you undertake. 8 I can't promise you how I'll vote. That 9 would be improper for me to do when issues come up. 10 But I want you to know you have in me, as the bingo 11 commissioner, a responsive and a listening, supportive 12 commissioner. 13 This brings me to the third item I want 14 to mention to you, and that is the Commission itself. 15 The Commission has two parts to it, really. One is 16 the lottery operation, which includes the on-line 17 games and the instant tickets and the scratch-off 18 tickets and the charitable bingo operation. 19 Clearly, the biggest part of that in 20 terms of revenue and contribution to the Foundation 21 School Fund from lottery operations is the Lottery. 22 The smaller portion of it is the bingo industry, the 23 revenue that it derives from bingo games and the 24 contribution to the charities which are authorized. 25 The question is constantly raised: Does 0017 1 the Commission care about it? Does the Commission 2 know that bingo is out there? Would it be better if 3 bingo had its own agency? Would it be better if bingo 4 had its own legal staff, it's own enforcement staff? 5 These issues have come up really most 6 actively within about the last six months. And it has 7 been, I think, some of the subjects that have caused 8 the good attendance we've had at these meetings and 9 the high level of interest that I'm so pleased to see 10 taking place. 11 I have suggested in presentations that 12 I've made to prior members of the Bingo Advisory 13 Committee and to individuals in the industry that I've 14 spoken with that now is a really good time to address 15 these subjects because the Texas Lottery Commission is 16 undergoing Sunset Review. 17 And that review has been ongoing for 18 some time this year. It will, as we go into the 19 summer, into the fall, be concluded and the report 20 will be issued to the session of the Legislature that 21 will convene in January of 2003. 22 You have a golden opportunity to address 23 the issues that you want to see dealt with and propose 24 changes that you want to make in a forum that is ideal 25 for addressing the make-up of the Texas Lottery 0018 1 Commission and the regulation of bingo in this state 2 in the Sunset Commission. 3 I've noticed that this morning those 4 staff members of the Sunset Commission are here. 5 They're present. And I want you to know that you can 6 address them informally. You do not have to have an 7 appointment with them. You don't have to give them a 8 letter. 9 You can walk up to them and introduce 10 yourself and say: I want to tell you something. And 11 I encourage you to do that because they will listen to 12 what you have to say and they will include your 13 thinking and your comments in the work that they're 14 doing to generating their report. 15 And then you can go to the Legislature. 16 And you can go to the leaders, the Speaker and the 17 Lieutenant Governor, the Governor and you can express 18 your thoughts as a citizen and as a member of an 19 industry. And I encourage you to do that. 20 As a member of a regulated industry in 21 this state by another agency for many, many years, I 22 did that proactively. And I want you to know as one 23 commissioner, that's a process that I believe is very 24 positive. 25 I want you to know as one commissioner 0019 1 that I'm very happy to have bingo at the Texas Lottery 2 Commission. I think it's an ideal place and I believe 3 it can be well-regulated within this agency. 4 But I am not trying to keep anyone from 5 expressing their opinion and I am not in any way 6 discouraging you from expressing yourself to the 7 Sunset Commission or to the Legislature or the 8 leadership. 9 If the Bingo Division stays in this 10 commission in the future, I again want to assure you 11 of my support and of my attention to the problems in 12 the industry, which I think are real and must be dealt 13 with in the future. 14 And I think to a certain extent, as much 15 as one commissioner can speak for other commissioners, 16 there will be a similar concern on the part of the 17 other two commissioners as they serve. 18 Commissioner Whitaker is an attorney. 19 She's from Dallas, Texas. I've served with her now 20 for almost two years. She is very bright. She is 21 quick and she has done a marvelous job. 22 Commissioner Cox is from Austin. He 23 probably has more institutional knowledge about gaming 24 than anyone I've ever met. He ran the Howard Hughes 25 Gambling Enterprises in Las Vegas, Nevada for a number 0020 1 of years. He is a CPA by training and career and his 2 knowledge of the gaming industry far surpasses, as I 3 said, anyone that I've ever met. 4 So I think we have two excellent 5 commissioners. We've just gotten back to having a 6 full complement this last month. And I know those 7 commissioners will look forward to meeting you and 8 visiting with you at their first opportunity. 9 I encourage you to come to commission 10 meetings. We meet once a month and we try to set the 11 date for the next month's meeting when we conclude the 12 current meeting. Your chairperson, Virginia Brackett, 13 will be making reports to the commission, I hope, 14 every month following your meetings. 15 We encourage you, if you agree with 16 Virginia, to express that, if you don't agree with 17 her, to express that as well. We want this to be an 18 open forum and we want everyone to have a voice. 19 That's pretty much everything that I 20 wanted to say to you this morning. I appreciate your 21 attention and the opportunity to visit with you. 22 Now I think we come to what's probably 23 the most important part of my appearance before you, 24 and that is when I would like to ask you to ask me any 25 question that you might have. 0021 1 MR. TAWIL: I've got a couple of 2 questions. 3 MR. CLOWE: Yes, Saleem. 4 MR. TAWIL: You're an inspiration 5 because your comments and procedure in outlining the 6 issues inspires us to really move forward. I've 7 outlined a lot of what you've said here about the 8 problems and the competition and declining industry. 9 Sir, would you support, if we made it a 10 significant effort on our part individually with our 11 own money as well as with the workings of the 12 industry, to support legislation that we would be able 13 by the time the Legislature reconvenes -- also, this 14 time around we need to work on the Governor in advance 15 because that took a lot of people by surprise when 16 progressive bingo was vetoed. 17 That was a big hope for a lot of people. 18 Would the commissioners, in an orderly fashion between 19 now and the end of year, endorse and support a bill 20 that would be proposed to the Legislature, which bill 21 would be passed through and identified and discussed 22 in the open meetings of the Legislature, to increase 23 the prizes, the game prizes and increase the 24 session -- to increase the amount of money that they 25 can allow to happen? 0022 1 You know what I'm getting at. 2 MR. CLOWE: Sure. 3 MR. TAWIL: Would you support that 4 individually, sir? 5 MR. CLOWE: Let me -- I'm going to try 6 to answer your question, Saleem. And let me first 7 explain the constraints that a Lottery commissioner 8 operates under. 9 We are prohibited by law from endorsing 10 a number of things. And one of those is a political 11 candidate. We cannot use our position to influence 12 anyone to vote for or against a political candidate, 13 for example. And I think there may be some 14 constraints -- although I'm not sure -- on a Lottery 15 commissioner insofar as the question that you've 16 asked. 17 I'm going to ask Billy to give us the 18 history on the Progressive Game Bill and help us 19 understand what the Commission's position was on that 20 because I think that will help us be guided. 21 The Commission as I see it, Saleem, 22 should act as a resource to the Legislature and to the 23 leadership. They constantly ask us questions about 24 gaming. And I want us always to be ready to answer to 25 them on here are what we found in other states, here 0023 1 are the pluses and here are the minuses, and always be 2 mindful that it is the Legislature's job to change 3 those laws and make those issues. 4 We are prohibited, for example, from 5 lobbying the Legislature. Now if you were to ask me 6 as an individual how I feel about a larger jackpot, my 7 response would be: It's got to be larger to be 8 attractive. 9 MR. TAWIL: I guess what I mean is would 10 you -- would the -- would the Commission, through its 11 staff, introduce legislation as they have in the past 12 to the Legislature like last session? Would the 13 Commission be willing to introduce legislation with 14 our efforts to help promulgate the proposed bills to 15 the Legislature to do just that? 16 MR. CLOWE: Let's ask Billy how the 17 progressive bingo bill got introduced -- 18 MR. TAWIL: Okay. 19 MR. CLOWE: -- and what our role was in 20 that and maybe that will guide us in trying to answer 21 your question. 22 MR. TAWIL: All right, sir. 23 MR. CLOWE: Billy, tell us the history 24 on that. Do you have a following question, Saleem? 25 MR. TAWIL: Yes, sir, but it's a 0024 1 separate issue. 2 MR. CLOWE: Okay. 3 MR. ATKINS: Thank you, Mr. Chairman. 4 The -- starting, I believe it was, sessions ago, there 5 were questions that were brought forward to the staff 6 that were discussed both with the Advisory Committee 7 and the Commission itself in preparation for 8 legislative sessions that dealt with issues that the 9 agency was facing, both the Lottery and Charitable 10 Bingo that dealt not just with the general functioning 11 of the agency, but issues specific to both lottery 12 games and bingo games. 13 And some of the discussions that were 14 held on the bingo side included declining revenues, 15 declining attendance and ways that those could be 16 improved or potentially improved. And one of the 17 things that the staff did is went out and looked at 18 other states, other jurisdictions and some of their 19 activities that they undertake in their jurisdictions 20 in relation to bingo. 21 And we did encounter a number of states 22 who had had for a period of time and who had recently 23 introduced a progressive bingo game. And the 24 progressive bingo game was being reported by those 25 jurisdictions as adding some element of excitement to 0025 1 the bingo games, generating interest among players, 2 both traditional players as well as some new players, 3 by allowing a jackpots to grow over a period of time. 4 So there were a variety of 5 recommendations that were discussed both in the Bingo 6 Advisory Committee and then put forward to the Lottery 7 Commission. And the Lottery Commission finally 8 approved those recommendations. 9 Staff of the Legislature then in holding 10 meetings with representatives from our oversight 11 committees, etcetera, would then be asked by those 12 members of -- of those oversight committees if there 13 were any issues that were facing the agency that we 14 needed to bring to their attention. 15 And so we would, in turn, provide those 16 with the issues that had been discussed from the 17 Advisory Committee through the Lottery Commission to 18 those members of the Legislature and they would decide 19 then at that time if there was any that they wanted to 20 take forward. 21 It would -- it would be the legislator's 22 decision if they want to do that. They would send 23 requests for legislative counsel in order to have 24 bills drafted and they would then become the sponsors 25 of those bills. The staff did serve as a resource to 0026 1 those legislators that filed that legislation. 2 MR. CLOWE: So the history of it is that 3 the Commission did recommend to the Legislature the 4 progressive bingo? 5 MR. ATKINS: I don't -- I would ask 6 Nelda Trevino to comment on the term "recommend." 7 Again, I don't know that the Commission either 8 advocated one way or another. The -- the Commission 9 put it forward as an issue. We would be asked what 10 could be done. And we -- 11 MR. TAWIL: I disagree with you, Billy. 12 MR. ATKINS: -- would respond, you know: 13 These are some issues that have been discussed within 14 our agency. 15 MR. TAWIL: I beg to differ with you, 16 Billy. At the -- at the Capitol, all over the side of 17 the House, the gentleman from El Paso said this is a 18 Lottery Commission bill. There were several of them 19 that were designated, presented by the Lottery 20 Commission. 21 Let's all be open with each other here. 22 It may be because of language and legalese, but in 23 reality, it wasn't anybody but the Bingo Division's 24 legislation. That's what it is spoken out around all 25 the -- you know, you can go from one committee meeting 0027 1 to another. This is the Bingo Division's bill. 2 Everybody knew that, including the legislators. 3 That's all I was asking, sir. 4 MR. CLOWE: Yeah. Well, you understand 5 what Billy is saying, Saleem? 6 MR. TAWIL: Yes, sir. 7 MR. CLOWE: The Commission is in a 8 position where it can put forth, apparently, based on 9 what happened on the progressive bingo game, the bill, 10 but it can't lobby for it. 11 MR. TAWIL: Mr. Haggerty told me 12 personally, he said: This is the Bingo Division's 13 bill. 14 MR. CLOWE: Okay. Nelda, have you met 15 the Bingo Advisory Committee? 16 MS. TREVINO: I've met some of the 17 members, not the new members. 18 MR. CLOWE: Would you introduce yourself 19 and then would you speak to this so that -- this is 20 good history we need to go over. 21 MS. TREVINO: Good morning. For the 22 record, I'm Nelda Trevino. I'm director of 23 Governmental Affairs for the agency. 24 And just to add to the comments that 25 have been made by Chairman Clowe and by Billy: You 0028 1 know, as Chairman Clowe, I think, is trying to say, 2 the agency has to be very careful in regards to us not 3 crossing a line in regards to either providing 4 information as a resource for this agency and actually 5 lobbying for any particular legislation because we are 6 prohibited from doing that. 7 All state agencies are required through 8 the legislative appropriations process to provide a 9 strategic plan. And in our past strategic plans, we 10 have outlined various -- various methods for both the 11 Lottery and for Bingo to be able to increase revenues. 12 And I think progressive bingo has been 13 something that has been mentioned in past strategic 14 plans. I think what you mentioned, Saleem, in regards 15 to a member maybe referring to this being an agency 16 bill, yes, the agency does work with members of the 17 Legislature to provide suggested language, to be a 18 resource to that particular member as they move 19 forward with a piece of legislation. 20 So I think maybe that is representative 21 of Haggerty's representation in regards to him making 22 reference to it being an agency bill. You know, the 23 agency cannot introduce legislation. It has to come 24 from a member of the Legislature. So it either has to 25 be a member of the House of Representatives or a 0029 1 member of the Texas Senate. 2 So they're the only ones that can 3 literally introduce legislation. I have worked in 4 state government for 20 years. And throughout those 5 20 years, I have seen members of the Legislature reach 6 out to agencies because they look at the agency to be 7 the expert in that particular field. 8 And so I think, you know, we are looked 9 at as the experts when it comes to lottery issues and 10 to issues related to charitable bingo. So again, I 11 think it's -- it's a mind that we have to be very 12 careful in how it's presented. But I think if you 13 look in past documentations -- again, the past 14 strategic plans, past legislative appropriations 15 requests, you'll see that we have mentioned various 16 methods to increase revenue both for the Lottery and 17 for Bingo using progressive bingo along with others 18 mentioned in those documents. 19 MR. TAWIL: I think I understand what 20 you're saying. I understand what you're saying, 21 Chairman Clowe. They can be proactive, but they can't 22 be a party to this. 23 MR. CLOWE: That's right, Saleem. And I 24 think you heard me say that I think one of the 25 problems the industry needs to deal with is larger 0030 1 jackpots to be more attractive. And progressive bingo 2 games, you know, gets you in that direction. 3 MR. TAWIL: Yes, sir. 4 MR. CLOWE: So you have to work within 5 the system. And you're going to make legislators 6 unhappy if you say: Well, we want to propose this 7 bill. And that's an understanding that I think from 8 what you said you have. 9 MR. TAWIL: Yeah. I think what we need 10 really is just to get the division's support in public 11 hearings at the Legislature because I'd like to get as 12 many of us proactive in doing that during this coming 13 session and work very closely with Billy and Nelda to 14 see that. 15 MR. CLOWE: Well, and I think that's a 16 good direction to go in. But you have to take the 17 steps. You've got to begin to get the industry 18 focused on what it wants. It's really a good path to 19 come here to you-all. Then get the staff involved. 20 Then come to the Commission. You know how you 21 progress this and you can't leap ahead. 22 MR. TAWIL: By the end of the year. 23 MR. CLOWE: Good. And you had a 24 following question? 25 MR. TAWIL: Yes, sir. I'm not 0031 1 pessimistic at all. I'm a very optimistic person and 2 I always think positively. I'm a business man for 3 over 30 years. I'm realistic. 4 I don't believe that the bingo 5 operations is going anywhere for a lot of reasons that 6 I don't want to get into besides money and so on and 7 size. I believe it's in the right place. 8 I believe if you read the -- the 9 Preamble of the Bingo Enabling Act says bingo or 10 lottery, a game of chance. It's in the right place. 11 I believe we have the commissioners looking for our 12 best interest. 13 We believe your heart is in the right 14 place. I think the best solution, in my mind, would 15 be -- and in reviewing some of the material that was 16 given to us today about the Charitable Bingo Division, 17 how it's divided, it's very conspicuous. 18 Security and legal is missing, okay? I 19 think the best thing that can satisfy everybody and 20 eliminate the perception of conflict of interest or 21 one of the colloquial remarks that was made to me by 22 one of the concerned industry members is: Get the fox 23 out of the chicken house. The fox being security and 24 legal. 25 I wonder if we can work very proactively 0032 1 with the commissioners to get the administrative law 2 or this legal period that relates to bingo operations 3 and security. Security of a $750 game is not the same 4 thing as a $70 million jackpot. They're totally 5 different. 6 It doesn't make common sense to use a 7 security officer that tries to protect $70 million to 8 worry about protecting $750. So for our division, it 9 makes common sense to have security as it relates to 10 our business, period. And that's all it needs to be 11 related. 12 And we can report through our division 13 director and executives to the commissioners. That 14 would be at arm's length and I think it would make 15 everybody happy without having to worry about trying 16 to get a new agency or anything like that. 17 Does that make plausible sense to you, 18 sir? 19 MR. CLOWE: Well, I will not say "yes" 20 or "no" at this point in time, as far as my personal 21 opinion is concerned, Saleem. But I've heard that 22 question. I've heard that argument. 23 And that's why I brought it up in my 24 remarks to this group. I want to put that issue on 25 the table to the new members of the Bingo Advisory 0033 1 Committee so you don't hear it informally and perhaps 2 incorrectly. 3 It is an issue that's being discussed in 4 the bingo industry and I want it discussed. And I 5 think again, Saleem, what you've got to do is take it 6 through the steps. You've got to discuss it within 7 the industry, within this committee. 8 And then if you have a recommendation, 9 you've got to bring it to the commissioners and let 10 the commissioners hear from you in open conference. 11 And I think again -- I said at the outset -- you know, 12 when I come to you like I am here this morning, I 13 cannot speak for the Commission. I want to 14 continually make that clear to you. 15 I attend just about every Bingo Advisory 16 Committee and I am not hesitant to try to answer 17 questions for you if I'm sitting out here in the 18 audience in helping you in your deliberations. But 19 you cannot reach out to one commissioner, as Saleem is 20 trying to do, and say: How do you feel? What do you 21 think? You know, will you support us on this? 22 I just -- I'm going to have to always 23 say what I'm saying now: I'm here to listen. I'm 24 here to give you some counsel and advice. But I 25 cannot say anything that's meaningful to you unless 0034 1 we're in an open meeting or all three or at least two 2 commissioners -- a quorum -- are there. And that's 3 when you get the real meaningful answer. 4 Saleem is good. He knows how to try to 5 get to where he wants to go. But I'm good, too. And 6 I'm going to always say what I've said here this 7 morning. I can counsel you. I can advise you. But I 8 can't give you the hard answer you're looking for 9 unless we're in open conference in a public meeting. 10 Yes, Larry? 11 MR. WHITTINGTON: The problem I face is: 12 In bingo, if you haven't been giving a $35 computer 13 away as a prize, it's over the $2500 limit that 14 session. And I just don't understand where the 15 stipulation come from, why you got to stop at 2500 on 16 a bingo game session. 17 If bingo is up, I think the lottery 18 would be up. Everybody will be up. I mean, I think 19 they coincide with each other, okay? And I can't sit 20 here and say that lottery is not down because I'm sure 21 it is. Everything's down. 22 And we need to come to some point that 23 we can say: Hey, we got a minimum and a maximum, 2500 24 to 4000 that you can give away within limitations, 25 okay? And I think that would really help bingo 0035 1 sessions a lot. 2 MR. CLOWE: Okay. Those are the kinds 3 of discussions I want you to have. I want you to 4 bring that subject up and I want you to get an 5 industry consensus on it, Bingo Advisory Committee 6 consensus on it. 7 And then if the answer is with the 8 Commission, we're going to give you an answer. If 9 it's with the Legislature, the Legislature hopefully 10 and the leadership will give you an answer. 11 MR. TAWIL: Thank you, sir. 12 MR. CLOWE: Anybody else? 13 Yes, sir, Pete? 14 MR. PAVLOVSKY: Chairman, could we get a 15 copy of the Act? 16 MR. CLOWE: Bingo Enabling Act? 17 MR. PAVLOVSKY: Yes, sir. 18 MR. CLOWE: You sure can. 19 MR. PAVLOVSKY: The one that was vetoed 20 by the governor. 21 MR. ATKINS: Progressive game? 22 MR. PAVLOVSKY: Progressive game, yes. 23 MR. ATKINS: We will provide all the 24 members a copy of the legislation, the legislative 25 history, as well as the governor's veto proclamation. 0036 1 MR. CLOWE: I'm glad you brought that 2 up, Pete because you know, I have a lot of compassion 3 for business people that are trying to improve their 4 business and increase revenues and go to a market, 5 things that Saleem's mentioned, that Larry's 6 mentioned. 7 But we're talking about something that's 8 different than selling soft drinks or my industry was 9 the trucking industry. We're talking about public 10 gaming. And that is a subject that is really out 11 there in the public domain. 12 And our governor has said he is not in 13 favor of the expansion of gaming in this state. And 14 so as business people, I think you-all need to be 15 cognizant of that position that he has taken and you 16 need to talk with him or his staff, you know, and 17 leadership in the Legislature about that position and 18 how you feel it affects your business and where there 19 may be room for compromise or the kind of things that 20 Larry mentioned or Saleem mentioned and what's 21 possible to work out. 22 I know one thing. If you don't talk and 23 you don't communicate, you'll never get to a common 24 ground. And that's why I'm so strong about talking to 25 the Legislature and talking to the leadership, talking 0037 1 to the Sunset Committee. Make your positions known. 2 MR. PAVLOVSKY: Thank you. 3 MR. CLOWE: Thank you, sir. 4 Yes, ma'am? 5 MS. TAYLOR: Well, a question that comes 6 up in my mind is: Where will the money come for 7 bigger prizes? Are we going to charge more? Will 8 there be less money to the charities, less money to 9 the vendors and the landlord? 10 MR. CLOWE: That's a good question. And 11 that's the kind of thing that you need to talk about 12 in this forum. And I think you need to get the 13 public, these folks sitting back here, to help you 14 answer those questions. 15 And if you put that on the agenda and 16 you say a month ahead of time this is what we're going 17 to be talking about, you'll get a nice turnout of 18 people who will come with opinions. 19 And they'll vary, but they'll express 20 themselves and they'll help you reach a consensus. 21 And that's a very business-like approach to dealing 22 with this issue. 23 And we dealt with that when we changed 24 the matrix in the Lotto Texas from 50 to 54. There 25 were those people who said if you raise the odds, 0038 1 people will stop playing. And there were people who 2 said well, we want a higher jackpot. That will bring 3 more players. 4 And there was a difference of opinion 5 about that. And we had to deal with that to get to 6 where we finally decided the issue. You've got those 7 same kind of opposing opinions that you're going to 8 have to deal with. 9 That's a responsibility of being on this 10 committee and making those decisions and coming to the 11 Commission with your recommendation. That's your 12 role. 13 MS. TAYLOR: Thank you. 14 MR. CLOWE: There's some heat attached 15 to this. 16 MR. WHITTINGTON: Well, what I was 17 trying to say -- excuse me -- is not to take it up to 18 4000, to have that opportunity to keep it at 2500, but 19 knowing that we can advertise one or two days come in 20 and win an extra one, okay? 21 That will attract more people by just 22 having that extra money, that -- that flow to deal 23 with to attract more people on a particular day of a 24 week or one a month or something where we can go up to 25 a certain amount. That will attract a lot of people 0039 1 to cover the cost. 2 MR. CLOWE: I can see this is going to 3 be a good discussion. 4 Daniel, did you have a comment or a 5 question for me? 6 MR. MOORE: Yes. Commissioner, you 7 talked about the decline of bingo. And in fact, over 8 the past five years, attendance is down 23 and a half 9 percent. That's pretty significant to me. 10 I'm in and out of halls all over the 11 state. It's incredible. I know Suzanne's talked 12 about the advertising to Billy, I'm sure a few times, 13 as she's mentioned it to me. 14 I really don't understand why there 15 can't be funds budgeted for marketing bingo, whether 16 we become a part of the Lottery advertising. Give us 17 a five-second trailer on those commercials. You know, 18 we don't have the funds. 19 You know, I can't charge -- I'm a 20 distributor. I can't charge charities extra money and 21 give it back to them. That's illegal. I just think 22 the tools are there. I don't understand the process, 23 I guess, and how do we get those funds delegated for 24 bingo. 25 I know the money goes to the general 0040 1 funds; is that correct? 2 MR. ATKINS: (Nodding) 3 MR. MOORE: How do we do it? 4 MR. CLOWE: Great question. 5 MR. MOORE: I could get everybody on 6 board on that. 7 MR. CLOWE: I've had that discussion 8 with a number of people and I want you to get into 9 that in a lot of detail. And I want you to get into 10 it with Billy and his staff members. 11 MR. MOORE: Sure. 12 MR. CLOWE: There's been a little bit of 13 kind of putting Lottery's arm around Bingo about, you 14 know, bingo instant scratch-off tickets and bingo in 15 various ways of exposure, but there hasn't been what 16 you're talking about, what you're asking for. 17 MR. MOORE: Right. 18 MR. CLOWE: And I think Billy will have 19 a lot to tell you about appropriations and where money 20 has to go that comes from the Legislature and how that 21 is different than the money that comes into the 22 Lottery itself and how its run as a percentage of the 23 revenue. Totally different funding. 24 MR. MOORE: Sure. 25 MR. CLOWE: I don't think I'm qualified 0041 1 or have the time this morning to get into that 2 subject, but I would like you to put it on the agenda. 3 And then again, if you have needs that you want 4 satisfied, if they can be dealt with by the 5 commissioners, we want to deal with them. 6 If it's a legislative issue, you've got 7 to go there. 8 MR. MOORE: Sure. 9 MR. CLOWE: That's to a business person 10 and a person, I think, like yourself who may be for 11 the first time entering into a public official 12 position, you got to do your homework. That's what I 13 think. You got to learn what the rules are and what 14 the practice is. 15 And then if you want to change it, you 16 got to go to where the change comes from. That's, I 17 guess, maybe my main message to you-all this morning. 18 You can be elements for change and you can help your 19 industry, but you can't just say: I want something 20 different than what I've got. 21 You've got to work at it and learn how 22 to be effective. And over my 35 years in the trucking 23 business, I spent a lot of time in Austin, Texas and 24 Washington DC creating change. I still had to run my 25 business while I was doing that. 0042 1 But you-all have accepted that 2 responsibility by taking this position. So you got to 3 give it one day a month. And to be effective, you got 4 to give a little more than that. And you got to get 5 these folks out here -- because let me tell you, if 6 there's any body that the legislature and an elected 7 official listens to, it's their constituents. 8 And you get folks writing letters and 9 making telephone calls and saying "I want this" and "I 10 want that," those folks listen to that. 11 Isn't that right, Saleem? 12 MR. TAWIL: Yes, sir. 13 MR. WHITTINGTON: Well, you know, I 14 think in the near future -- you know, I play the 15 Lottery quite a bit, okay? And I listen to the news 16 at 10 o'clock, 10:15, whatever time they read them 17 off. 18 And I -- I can hear in the near future 19 them saying: So and so and so and so. And then at 20 the end, it saying: Support your local charity by 21 playing bingo. I can hear that in the near future, 22 you know. 23 MR. CLOWE: Sounds good to me. Sounds 24 good to me. And I tell you, Linda Cloud, the 25 executive director of the Lottery Commission, would 0043 1 love to be able to say at the end of that: And the 2 money that's spent in the Lottery goes to the 3 schoolchildren of Texas. 4 MR. TAWIL: Chairman Clowe, I don't want 5 to interrupt you on that topic. 6 What he's talking about, at the time 7 that this issue came up when the Lottery was created, 8 we owned a television station here in Austin and -- 9 MR. CLOWE: "We" is who? 10 MR. TAWIL: Our -- my partners, my wife 11 and I, who was my partner. 12 MR. CLOWE: Okay. I wanted to make sure 13 it wasn't -- 14 MR. TAWIL: Okay. But what I was 15 getting at is that we -- at the time that they -- 16 someone in the broadcast industry proposed that they 17 sell exclusive rights to the drawing, the ball 18 drawing. 19 We were against it because of experience 20 over the years that the more stations that carry 21 something meant more value than the fact that one had 22 exclusive rights, particularly in Dallas and Houston, 23 the two major markets. 24 Our view prevailed and all the stations 25 got it. But I believe what sparked just a moment ago 0044 1 when the gentleman -- Larry mentioned the idea of the 2 comment, I think the Commission could impose a 3 blackout on the ball draw subject to them agreeing how 4 they announce it. 5 MR. CLOWE: You need to talk to Keith 6 Elkins. 7 MR. TAWIL: Do you know what I'm saying? 8 MR. CLOWE: I understand. And let me 9 tell you, we have worked so hard on getting a broader 10 coverage -- 11 MR. TAWIL: Yes, sir. 12 MR. CLOWE: -- and getting interest on 13 those drawings. And we've tried to figure out, you 14 know, can you sell time, you know, or can you give an 15 exclusive? And you will enjoy hearing Keith Elkins 16 tell you all the work that's gone into that. 17 So I think when you get him on your 18 agenda -- 19 MR. TAWIL: I'll talk to Keith. 20 MR. CLOWE: Well, get him here so the 21 whole committee can hear what he's done. He's a 22 former media man himself. He's a TV personality or 23 anchor, talking head. 24 He will help you understand from the 25 Lottery Commission's viewpoint everything they've done 0045 1 and where he is on that issue. One of the reasons 2 we've moved the drawings back from 9:59 to -- I 3 believe it's 10:12 now, is it? 4 No. Sales stop at 10:12. The drawing 5 is at 10:15 -- was to try to give the TV stations an 6 opportunity in their programming to be able to pick up 7 that uplink. 8 But that's -- that's a great subject and 9 one that I'd love to see you-all get into. 10 Virginia, I apologize. I've taken too 11 much time, but I think this is some history and some 12 opening dialogue that maybe will start the members of 13 your committee off with a feeling of positive 14 reinforcement from the Commission and I do want them 15 to have that and I want you to have that. 16 CHAIR BRACKETT: Don't apologize. I 17 appreciate everything you've said. And it's made the 18 next agenda item easier -- which was mine -- on a 19 little bit on an orientation. You've done a beautiful 20 job. Thank you. 21 MR. CLOWE: Thank you. 22 CHAIR BRACKETT: Thank you, sir. 23 AGENDA ITEM NO. 4 24 CHAIR BRACKETT: The next item on the 25 agenda is covering the organizational aspect of the -- 0046 1 of the Bingo Advisory Committee. 2 And I really hate to be saying anything. 3 I had originally planned to quote some things that the 4 Chairman had said that were in the minutes of the May 5 28th meeting of the Lottery Commission. But he's so 6 much better in person than he is just reading 7 something on the Internet. We've certainly covered 8 that beautifully. 9 I do have to remind you, though, that we 10 are what our name says. We are advisory. And that's 11 what we can do. But we can do a really good job of 12 advising. 13 And of course, the way that we're set 14 up, I think that this is pretty common knowledge -- I 15 hope it is, anyway -- that we are and people are 16 elected to the committee according to the industries 17 that they represent, which are: 18 The general public, which is Rudy 19 Turman -- 20 MR. ATKINS: Ricky. 21 CHAIR BRACKETT: Ricky, yeah. I thought 22 that was wrong. Ricky Turman, who was not able to 23 attend today. 24 And then the conductors, who are: 25 Larry, who is a very shy flower, you can tell. We're 0047 1 very glad to have you, Larry. 2 And Pete sitting there beside him. And 3 I am also a conductor. 4 And then the lessors are Suzanne Taylor 5 from Corpus Christi and Mario, who was unable to 6 attend. He had a prior commitment months before he 7 was even elected. 8 And Marilyn Matthews from Odessa. And 9 I'm very happy to have another West Texan on this 10 committee because most of Texas thinks that we don't 11 exist, that we're just way out there and can't get to 12 Austin for anything. 13 And then a manufacturer is Danny Moore, 14 Daniel Moore. 15 And then Saleem, who's the SSP person on 16 that. 17 I did pick up in the minutes of our 18 meeting, the Bingo Advisory Committee meeting of March 19 20th, I'm going to quote Saleem on this, that he says 20 that -- he said: 21 "We never put together an analyzed 22 vision of what we hope to accomplish and list these 23 items over a span of 12 months and then post this so 24 that everyone can see it and have subcommittees that 25 follow through with the action." 0048 1 And my question on this is -- I think 2 it's a very good idea. I really believe in plans of 3 action. Whether they get accomplished or not, 4 sometimes I believe in having them. 5 But I wondered, Billy, could this be 6 done in a work session or is this a public meeting 7 type thing? Could we have a work session and then 8 report back and post what we have set up as our goals 9 for our year? 10 MR. ATKINS: I don't believe there would 11 be anything that would prevent a group of less than 12 five -- which is a quorum for the Advisory 13 Committee -- to meet and hold work sessions and come 14 back and report to the Commission as a whole. 15 CHAIR BRACKETT: And we can ask for 16 public input by -- they could write us or call us. 17 MR. ATKINS: Uh-huh. You could -- you 18 could still post it as a meeting and invite people to 19 attend. 20 CHAIR BRACKETT: Okay. How does the 21 group feel about that? 22 MR. TAWIL: I think it's a great idea. 23 CHAIR BRACKETT: Since it was your idea. 24 Is there any opposition to doing that at 25 all? 0049 1 MR. MOORE: No. 2 CHAIR BRACKETT: Okay. Let's think on 3 this and before we adjourn today, let's have a time 4 set that we feel like we can get together and do this. 5 And so I really think that that -- I do 6 need to point out that of course, we are advisory and 7 we do make recommendations. And one thing that is 8 rather hard as a -- sometimes it can be hard as a 9 member of this committee is that we don't deal with 10 individual complaints, but we deal with policy issues. 11 You will have people that will call you 12 that will be wanting you to settle an argument that 13 they're having with a conductor somewhere or something 14 of this type. And do not try to deal with that. 15 Refer them back to the people here at the Bingo 16 Division. And that would be probably just about 17 anybody that answers that 1-800 number, right? 18 MR. ATKINS: Sure. Or call me. 19 CHAIR BRACKETT: It's usually a 20 complaint against the hall. They feel like they 21 weren't paid properly or something. I can't remember 22 what some of them are. Oh, one complaint that we used 23 to get a lot was that they didn't get paid the full 24 amount because the tax -- the prize fee was withheld 25 and that type of thing. 0050 1 So -- and also you can always tell them 2 to talk to Billy Atkins himself. He'd be happy to 3 take care of that. 4 Also, when you want to bring something 5 forward to place on the agenda, contact Billy. If 6 he's not available, you can talk to Worlanda, who just 7 left. She is his right arm. 8 MR. ATKINS: My right and left arm. 9 CHAIR BRACKETT: Right and left arm, 10 okay. And when you do present this, please present 11 your backup material for this so it can be printed and 12 in our books so we have done some homework before we 13 get here. And it makes the decisions better and also 14 it makes the meeting move a little bit better. And 15 it's really good to give a written copy of your motion 16 to the Chair. 17 MR. MOORE: Virginia, how far in advance 18 for something like this? 19 CHAIR BRACKETT: As far in advance as 20 you can do it -- 21 MR. MOORE: Okay. 22 CHAIR BRACKETT: -- as Clowe would say. 23 And we will set the date of our next meeting before we 24 leave today. 25 MR. MOORE: Okay. 0051 1 CHAIR BRACKETT: So that will help a 2 lot. And I believe that's all the comments I have to 3 make on that. 4 Yes? 5 MR. ATKINS: To kind of -- Danny and one 6 of our presenters will get into it a little more. 7 We're required under the Open Meetings Act to file the 8 meeting notice seven days prior to the meeting. 9 MR. MOORE: Okay. 10 MR. ATKINS: What we started trying to 11 do with this meeting is get that filed a little 12 earlier so we can get the notebooks together and get 13 it out to the members. 14 So -- we didn't get to do it this time 15 because I don't think we had all the contact 16 information. But another thing that we'll do is prior 17 to that meeting date, we'll send out a notice to all 18 of the members asking if you have any agenda items 19 that you want on it. 20 And then we'll collect all that and get 21 together with the Chair and formulate the final -- the 22 final agenda. 23 MR. MOORE: I appreciate it. This was 24 well done. It was helpful. 25 MR. ATKINS: Well, and we want to try 0052 1 one thing. Virginia talked about we set the next 2 meeting date. What we try and do is put out on the 3 Web site that date. We put it out as tentative 4 because it's not, you know, real until it's filed. 5 But we put that date out there. And we would like to 6 get those filed sooner if we can so we can get 7 together and get it out to the members. 8 CHAIR BRACKETT: And I was the cause of 9 the books getting to you a little bit late by adding 10 an agenda item this time. So it wasn't Billy and his 11 staff. 12 And these really are good, Billy. This 13 is exceptional. 14 MR. ATKINS: Thank you. 15 CHAIR BRACKETT: Does anyone have any 16 questions of me? 17 You'll get -- before this session is 18 over, you're going to have learned more than you want 19 the know about how to do things. 20 I would like to tell you -- I think I 21 failed to tell you that the name of our court 22 reporter -- our recorder -- I keep saying court 23 reporter -- recorder -- is David Bateman. And when 24 you speak, please speak one person at a time because 25 he can -- that's all he can record is one person at a 0053 1 time. 2 All right. Let's take a very fast 3 10-minute break and then when we come back, we will 4 take Item No. 15., which is consideration of possible 5 discussion of video pull tabs. 6 (Recess from 11:06 a.m. to 11:18 a.m.) 7 CHAIR BRACKETT: I'm sorry to seem so 8 loosey-goosey, but I had announced that we'd do Item 9 No. 15 at this point in time. But because of some 10 scheduling, we need to go ahead and do Item 5 and 6 11 from the Legal Division of the Lottery Commission. 12 AGENDA ITEM NO. 5 13 Yes, I'm sorry. Go ahead, please. 14 MS. MORRIS: That's all right. Good 15 morning. My name is -- I hope this is on. I'm not 16 too loud, am I? 17 My name is Diane Morris. I'm one of the 18 attorneys that work with the Texas Lottery Commission. 19 I'm an in-house attorney. The general counsel is 20 Kimberly Kiplin. Some of you -- most of you probably 21 know her. There are other attorneys in the Legal 22 Division and I am one of them. 23 If there are specialties among us, one 24 of my specialties is the public information: The Open 25 Records Act, the Open Meetings Acts, ethics laws, 0054 1 government law, generally the law that affects the 2 public employees as they perform their duties. And so 3 I think that's why I was asked to be here. Hopefully 4 I can answer any questions you have, but I'm sure 5 there will be some I can't answer right now. 6 By way of background, I have been an 7 attorney for -- well, since 1984. I've worked with 8 the Supreme Court for one year as a briefing attorney 9 for a judge on the Supreme Court and then went to the 10 Office of the Attorney General and worked there for 11 about 11 years. 12 In the last couple of years of the 13 Attorney General's office, I was the attorney who 14 represented the Lottery Commission when they started 15 as a commission. I have represented bingo in the 16 Bingo Division in court when I was with the Attorney 17 General's office. 18 I was lucky to be brought in-house and 19 I've been in-house almost six years with the Texas 20 Lottery Commission. You may not see me doing many 21 bingo cases or hear my name come up. I don't really 22 focus on the bingo practice in that sense. 23 I wanted to give y'all a chance to see 24 the information in the book and in your agenda. Are 25 there -- is -- I guess I'll -- you don't have to raise 0055 1 your hand, but if any of you have never served on a 2 public body, take the time to read what's in the book. 3 It is different. 4 Again, my name is Diane Morris. I'm 5 going to give you my phone number. You can call me 6 whenever you have these kind of questions. You may 7 not like the answer you get, but I think I'm right on 8 the answer I'll be giving you. You may not like it 9 and you are free to argue with me and explain why you 10 believe I'm wrong. And I will argue right back with 11 you why I'm really convinced I'm right. 12 MR. TAWIL: I've got a question for you, 13 Diane. 14 MS. MORRIS: Yes, Saleem? 15 MR. TAWIL: I have people complain to me 16 about the Open Records Act and typically how the 17 Commission -- not just the Commission, but any state 18 agency -- well, wait a minute. You can't have that 19 information. 20 So it becomes kind of a tug-of-war. And 21 it's difficult for us to evaluate what it is being 22 held back. Is the Commission's records open to us as 23 a member of the public body who had to go through a 24 security check and become part of the Advisory 25 Committee? 0056 1 MS. MORRIS: Huh. 2 MR. TAWIL: I figure you got all the 3 answers. 4 MS. MORRIS: And I don't want to get 5 personal with knowledge of lawsuits or litigation 6 pending or any pending enforcement actions. Your 7 question is very good one. It is a very good one. 8 There is a point where your public 9 service and your private interest can compete. 10 MR. TAWIL: It's got nothing to do with 11 you. 12 MS. MORRIS: Or you. 13 MR. TAWIL: It doesn't matter. 14 MS. MORRIS: Yeah. Because that's the 15 point. The point would be you, not really the 16 Lottery. I thought the question was more of if a 17 member of the BAC would like access. 18 MR. TAWIL: Are the BAC entitled to 19 access since agencies in general hide behind -- I can 20 cite you several -- I'm not a lawyer. 21 MS. MORRIS: Uh-huh. 22 MR. TAWIL: But typically, there's a 23 litany of elements that are rejected that says: Hey, 24 we're not going to give you this information for this 25 reason, this reason, this reason and that reason, you 0057 1 know. 2 So it really violates or destroys the 3 idea of an Open Records Act. So people shouldn't be 4 under the illusion to think that they can get what the 5 agency doesn't want them to have. 6 MS. MORRIS: And you know I don't agree 7 with you. I don't agree with you number one -- and to 8 really answer your question, some of the information 9 that people don't get under the Open Records Act is 10 attorney/client information. 11 MR. TAWIL: What does that mean? 12 MS. MORRIS: It's information that is 13 sent from the client, if you will, to the attorney, 14 where the attorney -- 15 MR. TAWIL: Well, but the attorney -- 16 the attorney is internal and the client is internal. 17 That's a bogus thing. It's not an outside attorney 18 out here practicing law. 19 MS. MORRIS: Well, the -- the Attorney 20 General's office -- 21 MR. TAWIL: The attorney is a staff 22 member. 23 MS. MORRIS: -- has had almost 20 years 24 of opinions in recognizing in-house counsel as proper 25 attorney. 0058 1 MR. TAWIL: Separate from the staff? 2 MS. MORRIS: Yes, sir. So 20 years of 3 AG opinion has disagreed with what you're saying. 4 MR. TAWIL: Maybe nobody took them to 5 task. 6 MS. MORRIS: Maybe. 7 MR. TAWIL: But the question still 8 remains -- 9 MS. MORRIS: I want to get back to -- 10 MR. TAWIL: Are we accessed to 11 information? 12 MS. MORRIS: Okay. And I'm going to get 13 back to the reasons many state agencies -- not only 14 the Lottery Commission or the Bingo Division -- seek 15 to withhold information is because it's 16 attorney/client information. 17 And that is the type of information that 18 no, I do not believe that a member of the BAC wanted 19 access to and they had no reason to know that 20 information. That is privileged information. And no, 21 I don't think you're entitled to it. 22 MR. TAWIL: Why is that? 23 MS. MORRIS: Because I don't -- as far 24 as the attorney/client privilege is concerned, we are 25 not rendering the members of the BAC legal advice. 0059 1 MR. TAWIL: Well, we're part of the 2 client. 3 MS. MORRIS: I disagree with you. 4 MR. TAWIL: I don't have any hidden 5 agenda, so it doesn't matter. I'm just trying to 6 clarify. 7 MS. MORRIS: That's all right. These -- 8 and now let's talk to the rest of the room. Do you 9 see the irritation that the public has when they can't 10 get documents? Do you see that? 11 He is no different than people I talk to 12 every day sometimes or not until like four months at a 13 time. Four months can go by and I don't talk to 14 someone like him. So -- and he and I know each other. 15 I'm fine. I think Saleem is fine, too. 16 So we're not -- we're not fighting. He 17 and I are not having harsh words. But I will tell you 18 something. The Open Records Act, number one, Saleem 19 is correct in his overall comprehension of the concept 20 that the documents and the information of a 21 governmental body belong to the public. 22 You are not sitting at this table right 23 now. You're not right now as private folks. You are 24 now something very different. You're wearing a real 25 different hat. You're a public official. 0060 1 And in that sense, please understand 2 that if you're holding your pencil in your hand right 3 now writing down what I'm saying and you're writing it 4 down on a piece of paper, there is a very good 5 likelihood that if we ever were to get an open records 6 request that said: 7 I want the notes taken by Pete during 8 the first board meeting that was held. If that were 9 to ever happen, I want you to know one thing that you 10 would expect to get from me -- because I am the 11 attorney in this agency that does process open records 12 requests. 13 What you would expect to get from me is 14 number one, a phone call, a letter, something saying: 15 Pete, this is Diane. Remember me? We have received 16 an open records request for -- fill in the blank. 17 Pete, please forward me any responsive documents. 18 I don't go to Pete's dining room. And I 19 don't go double-check Pete. I am holding him at that 20 standard of providing me the responsive documents. He 21 sends me the copy of his notes today. 22 Now arguably there may be things in his 23 notes that he wrote down today that he would be 24 mortified, mortified for anyone to see, like he and I 25 go to the same sex therapist. And he's now realized 0061 1 he's noticed me from the waiting room. He recognizes 2 me. And he puts that over in the corner: Need to 3 introduce myself to her later. He would be mortified. 4 It has nothing to do with public 5 business, you know. He just wrote a note. But there 6 may be other pieces of paper on this that he's taken 7 notes. He's saying: Turns out we're subject to the 8 Open Records Act, maybe. Turns out we might be 9 subject to the Open Meetings Act, maybe. Good 10 briefing. 11 I want to make a point. The fact that 12 you may have pieces of paper and keep them in your 13 dining room does not make them any less -- am I 14 singing your song now? Are we talking now? 15 Now don't interrupt me yet. It does not 16 make it any less of an open record. It doesn't change 17 that. Don't -- oh, you're going to go buy your ream 18 of paper, aren't you? Is anybody thinking like that? 19 I'll go buy my own Big Chief tablet so then I didn't 20 use the State's paper to write my document on. 21 Bad thinking. Don't go there. These 22 are just silly examples. What I want to say about the 23 Open Records Act is: We don't have a precise AG 24 opinion on it, but I think you should all assume that 25 the BAC is subject to the Open Records Act. You are 0062 1 the body that should we ever get an open records 2 request -- and we don't get that many, but -- as far 3 as y'all are concerned. 4 But should we get any, information and 5 documents are more than just handwritten notes. 6 Documents can be e-mails. Documents can be an e-mail 7 that you printed off and then you wrote your own note 8 on it. Documents can be computer files. Documents 9 can be videotapes. 10 What I want to say about the Open 11 Records Act is -- and I know that Suzanne, you've been 12 on long enough that you know that it's very rare that 13 you have ever heard from me asking you for an open 14 records document. 15 But the point is: As a governmental 16 official, understand that the public, frankly, owns 17 you. They own me. They own the Commission. It's not 18 mine. And what I have and what I work on and a lot of 19 times what I say, other than the fact that I'm an 20 attorney and I have some privileges to my clients, 21 most of the government officials, you're not entitled 22 to keep so much of your secret papers, if you will. 23 So please understand that. You will 24 face outrage from the public that thinks that you are 25 not handing them over everything they're entitled to. 0063 1 The presumption under the Open Records Act is: 2 Information is open. The public owns us. We don't 3 own them. 4 Does any of this sound familiar or 5 workable? Yes? 6 MR. PAVLOVSKY: I just want to say 7 Saleem, you haven't been served with a subpoena until 8 you get one for a criminal case. And you get on that 9 stand and try to defend those notes that you have in 10 there about yeah, you want to meet that lady after -- 11 you know, after-hours or -- been there, it's not fun. 12 MS. MORRIS: And I appreciate the fact 13 that I can be so familiar with y'all. I hope I'm not 14 insulting. 15 Yes, sir? 16 MR. WHITTINGTON: What's your phone 17 number? 18 MS. MORRIS: 512-344-5132 is the office 19 phone number. My e-mail here at the Texas Lottery 20 Commission is Diane, D-I-A-N-E, dot Morris, 21 M-O-R-R-I-S at Lottery, L-O-T-T-E-R-Y, dot State, 22 S-T-A-T-E, dot T-X dot U-S. 23 MR. WHITTINGTON: Good enough. 24 MS. MORRIS: It may be that y'all wish 25 to ask me questions separately. A lot of folks do 0064 1 because you're not really applying it until it 2 happens. Generally, though, understand about the Open 3 Records Act is: Unless and until there is an open 4 records request and absent a -- what we call a 5 retention schedule, you're free to take notes and 6 you're free to use them. 7 And when you're done with them, you 8 throw them out. You're free to have something come 9 from Billy that is -- I don't know, maybe a proposed 10 rule that y'all may be considering. And you write all 11 over it, write your hand notes. 12 And you have a trash can and you put 13 your papers in the trash can and you throw them out. 14 I think even Enron has made us all believers that once 15 you know somebody wants your documents, you never 16 throw them out. 17 And under the Open Records, don't 18 misunderstand me. You don't have to go out and buy a 19 huge file cabinet. But in those moments when -- and 20 that's why within probably four hours when we receive 21 an open records request, I turn around and within 22 about four hours -- we have another employee in the 23 division that is the open records coordinator, 24 Kathleen Reyes. 25 Within one working day of receiving an 0065 1 open records request if it's about what we think you 2 will have, you will be notified to prevent any 3 inadvertent destruction of a document you had no idea 4 was even wanted. 5 I can tell you from the six years I've 6 been here I really don't remember any time that a 7 destruction of a document has occurred after we knew 8 something was wanted. It just -- you know, we're 9 pretty fortunate. But we try to go very fast. 10 The Open Records Act -- and I would be 11 remiss to not say so -- has penalties to it if you 12 don't comply. So I asked them to put in your notebook 13 the Open Records Act summary that the Office of the 14 Attorney General has on their Web page. 15 On their Web page -- you'll see down at 16 the bottom at the WWW site, you'll see that they get 17 all these sites. Here's their Open Records handbook 18 right here. Years have been made litigating open 19 records. 20 When I was at the AG's I had the 21 privilege to represent the AG's in court on numerous 22 open records litigation. So it's a well-developed 23 area of law. There's never an answer to everything, 24 but get on their Web page. 25 If you start downloading it, this is 0066 1 what you're going to get. So be careful. Do a search 2 and be careful. Otherwise, if you are interested in 3 this, we can get you copies of this or you can call 4 the AG's and they'll send you the hard copy. 5 Is there -- are there any questions? 6 Oh, come on. 7 MR. TAWIL: What if they found out that 8 you withheld something that you weren't supposed to 9 withhold? 10 MS. MORRIS: Well, there are penalties 11 in the Act. 12 MR. TAWIL: On an individual basis or 13 agency? 14 MS. MORRIS: Generally, if you sue, it's 15 naming of the agency. 16 MR. TAWIL: But the individuals are 17 still immune? 18 MS. MORRIS: I don't know about that. 19 MR. TAWIL: Well, because you made the 20 decision. 21 MS. MORRIS: No. I don't know if 22 they're immune. Saleem, I don't know about that. 23 MR. TAWIL: Because you have -- what you 24 have here is the attorney being the sole authority to 25 decide whether Billy gives something out or not. 0067 1 MS. MORRIS: Who being the sole 2 authority? 3 MR. TAWIL: Well, I mean like -- here's 4 a -- this is a fictitious example: You're the 5 attorney. Billy's the client. And I support Billy's 6 position trying to protect his division. 7 But if he says "I don't want this to be 8 used," you say "Well, Okay. We'll just hold that 9 against attorney/client privilege." 10 And you know, those kinds of things. 11 I'm not arguing. I'm just pointing out the things. 12 And then so the decision is made by the attorney: You 13 know what. We're not going to give that information 14 out because of attorney/client privilege. 15 I guess you got to get an opinion from 16 the Attorney General whether -- 17 MS. MORRIS: Okay. I was hoping you 18 would get to my answer. And you do have an answer and 19 you know the answer. 20 MR. TAWIL: Okay. 21 MS. MORRIS: If you think I'm sitting 22 here and I've just been crowned queen, you're wrong. 23 When we get an AG thing like this and there's 24 attorney/client and it's -- I'm feeling in good faith. 25 I've got my ethics standards. I'm going to assert it. 0068 1 I'm not going to waive that privilege. 2 MR. TAWIL: Yes. 3 MS. MORRIS: We go to the AG. 4 MR. TAWIL: Yes. 5 MS. MORRIS: And their law requires -- 6 although Saleem, I'm the first to say that they don't 7 get it out as fast. But their law requires them to 8 render an opinion within about 45 days. 9 But the point is: We are not the bottom 10 line. The Attorney General is. If you don't like the 11 way the Open Records Act is interpreted through the 12 Office of the Attorney General, you need to be talking 13 to the Office of the Attorney General because -- and 14 that's the safety net for the public. 15 It is not the very agency that can 16 control it at all. That would be wrong. And we are 17 not. When we withhold information, we don't get to 18 just say: We're not giving it to them. Put it away. 19 Put it in that locked file cabinet back there. 20 We have to make copies of it and we have 21 to send it to the Attorney General's office. That's 22 why if you work for me, one of the questions on the 23 interview is: Do you know how to put toner in a Xerox 24 paper (sic) and do you know how to undo a paper jam? 25 Because within 10 days, I have to get 0069 1 documents over to the Office of the Attorney General. 2 And when some requesters -- some people love to 3 request four and five boxes of information. They love 4 to. So what? They're allowed to. Remember, it's 5 theirs. It's not mine. 6 And as I'm busy making boxes of copies 7 within 10 days -- so number one, what I want you to 8 know is: I'm thinking you should assume you're 9 subject to the Open Records Act; and number two, when 10 you get something from me that says "Forward me your 11 documents," don't be leaving for a week somewhere and 12 saying "I'll just let Ms. Morris wait until a week 13 from now before I even start looking for those 14 documents." 15 I want you to treat them with priority 16 because we're going to try to protect you if we can. 17 Elsewise, you're going to hear from me -- which you 18 don't want to hear -- but you're going to follow and 19 this is the advice you're going to do, you're going to 20 hear. 21 We have to release it. Too bad. And 22 you're going to say to me: But it's not right. I 23 wrote something, but now I disagree with it. 24 And I'm going to say to you: It says 25 what it says. It just says what it says. 0070 1 There is no part of the Open Records 2 Act, though, that makes us create things. Like if 3 somebody were to write me an open records request and 4 say: I want to know all about the goals that you have 5 in the Legal Division, Diane, for the next one year 6 and how you plan to implement that. 7 Well, I haven't done that yet, see. I 8 have not done that yet. The Open Records Act cannot 9 make me sit down with a piece of paper and start 10 creating documents. 11 So we're talking about what is already 12 in existence. Are there any other questions? 13 Okay. I'm going to go on to the Open 14 Meetings Act. Another law. Another law about public 15 information, public input. I'll say it again. You 16 don't own here. We don't own it. 17 These people behind me, they own it. 18 And they own what you're doing. They get to hear and 19 watch you. Some agencies have real watchdogs and they 20 come in and they set up a video camera over there. 21 They even run a little line and have taped 22 microphones. Oh, you know it. Have little taped 23 microphones because they're going to make their own 24 records of you. As long as they are not disruptive, 25 they may do so. 0071 1 Have you ever watched TV when you watch 2 the working sessions of like the -- here in Austin, we 3 see it. I watch it. See I enjoy watching these 4 things. I hate to let people out there know that 5 about me. But late at night while y'all may be 6 watching other things, I am watching the City of 7 Austin. 8 I love to do that. All their work 9 sessions and their -- oh, yeah. I know it. Their 10 briefing sessions, it's -- it's just fascinating to 11 me. Have any of y'all seen those on TV? Anybody see 12 the school district? I watch the TV on the school 13 district. 14 Saleem, I knew you would. 15 Anybody else? 16 MR. TAWIL: They're pretty boring. 17 They're pretty boring. 18 MS. MORRIS: Well, I don't know. You 19 know what I'm saying? 20 Yes? 21 MR. WHITTINGTON: Let me ask you. You 22 said these people here, these beautiful people behind 23 you -- 24 MS. MORRIS: Let me see them. Who are 25 they? 0072 1 MR. WHITTINGTON: They are the owners, 2 right? That's what you're saying? 3 MS. MORRIS: Yes, sir. 4 MR. WHITTINGTON: How come they never 5 make the final decision on anything? 6 MS. MORRIS: Well, we can't have a 7 hundred thousand people making the decision. 8 MR. WHITTINGTON: Well, I understand, 9 but -- 10 MS. MORRIS: It's got to be you. You're 11 supposed to listen to them. 12 MR. WHITTINGTON: Right. 13 MS. MORRIS: You're supposed to receive 14 their input. 15 MR. WHITTINGTON: Right. 16 MS. MORRIS: Part of the function of an 17 open meeting is when an item is on the agenda -- 18 MR. WHITTINGTON: Right. 19 MS. MORRIS: -- you can receive their 20 input -- 21 MR. WHITTINGTON: Right. 22 MS. MORRIS: -- on the agenda item, you 23 know. You can do that. 24 Now maybe some of these people were just 25 too gabby. You know, it's not that they're 0073 1 troublemakers. I mean, nobody out here is a 2 troublemaker. But let's say somebody out here wants 3 to have this microphone and talk for two hours. 4 You're allowed to say: No, five 5 minutes. Make your point. 6 MR. WHITTINGTON: Okay. 7 MS. MORRIS: So you're allowed to limit 8 the public input. But it's like you're really still 9 out there. But now you're one of them and they're one 10 of you. So what that means is your meetings have to 11 be -- oh, now where did he go? 12 MS. MORRIS: Your meetings have -- 13 MR. PAVLOVSKY: He didn't want to listen 14 to it, either. 15 MR. WHITTINGTON: So basically, what 16 you're saying is we can get things done together -- 17 MS. MORRIS: Say what? 18 MR. WHITTINGTON: -- by listening to 19 each other. Is that what you're saying? 20 MS. MORRIS: I think. I think 21 absolutely. I think it would be a shame for you to -- 22 and I'm not talking you, but it would be a shame for 23 any governmental body to think that they can 24 accomplish anything without hearing from the public. 25 I don't know of that ability of any 0074 1 governmental body to proceed in such a crystal tower. 2 But that's what -- you know, when you look at your 3 agenda and when she said I'm coming up to this agenda 4 item, it may be that when I'm done, somebody out here 5 might pop up and say: I want to talk about that. 6 And she, as the chairman, might say: 7 All right. It's an agenda item. What do you have to 8 say? 9 I'm not familiar, but do you have the 10 sheet where people sign and say they want to offer 11 public comment? 12 CHAIR BRACKETT: Uh-huh. 13 MS. MORRIS: Okay. Somebody already out 14 there may know they're going to disagree with whatever 15 I say because they just believe I'm not believable or 16 whatever. Or they just want to have their own two 17 cents. 18 So they might have already given her a 19 sheet of paper that says: I want to speak on agenda 20 item whatever. I think far more likely there's other 21 items on your agenda people want to talk about today. 22 That's -- that's when they need to get 23 up here and talk to you. You know, a lot of folks 24 will talk to you like in the hallway or you know, on 25 the way to the bathroom. And that's not -- I 0075 1 understand why people do that. They're going to find 2 one of you and talk to you. 3 And you really may establish a rapport 4 with one or two members of the public that you just -- 5 you just already know and you talk to them and you 6 seek their guidance or something. 7 But the point is: The whole public 8 is not really done a good service when that one human 9 can almost have access to just you instead of -- 10 instead of here. I mean, getting things out in the 11 open and the Open Meetings Act and the Open Records 12 Act are embodied about government in the sunshine. 13 It talks about government in the 14 sunshine. You are not supposed to sit in here and 15 have a room alone. And you're not supposed to be 16 sitting all alone crafting up what you think is good 17 for everybody out here. You're supposed to hear from 18 everybody out here. They're going to tell you what's 19 good. 20 And then you may not -- you may disagree 21 with them. You actually may. Sometimes it helps the 22 interchange of information. You've just always 23 misunderstood what they've said. Sometimes you knew 24 exactly what you were doing and you just can't find it 25 in good conscience to go with what they want you to 0076 1 do. 2 You're allowed to disagree with them. 3 Even if they had a hundred people in here voting 4 against you and you're sitting there and you're the 5 sole dissenter and you already know it, you're allowed 6 to stand up and say: No, I'm not -- I cannot agree 7 with them. They can't make you agree with them. 8 The Open Meetings Act -- and Billy had 9 kind of alluded to it. You have to have an agenda. 10 You just can't come in here and say: Wow. This is 11 great. Today we're going to talk about this and oh, 12 that reminds me. We need to talk about this as well. 13 You have an agenda. You stay on your 14 agenda. That's why if one of you thinks the other 15 one's getting off the agenda, one of you ought to pop 16 up and say: Madame Chairman, I think he's off the 17 agenda. 18 Is -- is she going to use that as a 19 sword to shut him down, to shut him up and make him 20 stop? Well, in a sense yes for that day. That's 21 correct. 22 And if that ever happens to you, the 23 next thing out of your mouth ought to be: I want that 24 on the agenda next meeting. 25 But don't take it personally. Don't 0077 1 take what I'm saying personally if I were to be here 2 saying to y'all: Man, you were way off the agenda. I 3 wouldn't say it like that. I would be a lot politer 4 to you. 5 I'd say: Now wait a minute. I'm 6 looking here and trying to figure out what agenda item 7 you're on. You tell me where you think you're going. 8 But do not be offended if you hear that in your fellow 9 board members. 10 I think it's happened before that people 11 have said: This is not on the agenda. We're not 12 going to talk about it. Now the public doesn't want 13 to hear that. And see, they're going to put in 14 something on one item on an agenda item and they're 15 going to say they want to talk. 16 And they're going to stand up here and 17 they're going to say -- and I'll tell you, you can 18 look back some days and you can see it. And they're 19 going to say: I'm here to talk on oh, the 20 discussion -- let's see, let's pick one -- on the 21 first quarterly financial information. I'm here to 22 talk about that. 23 And then the next word out of their 24 mouth out of the public is usually: But what I really 25 wanted to talk about was blah, blah, blah. And boom, 0078 1 what's that? What is that? What do you mean you 2 really want to talk about that? 3 Unfortunately, the public doesn't seem 4 to appreciate it as much as y'all do when you say to 5 the public: I'm sorry. We can't talk about it. It's 6 not on the agenda. But you're duty-bound to do that. 7 And do you know why? 8 There's people in this room that are not 9 here. There's people that read this agenda and they 10 took the basic assumption that you were going to stay 11 on your agenda so they didn't bother to come to listen 12 to whatever else it was going to be when they wanted 13 to get off the agenda to talk about it. 14 You owe the -- all the public the duty 15 to stay on your agenda and to don't get off. And even 16 though it may irritate that one person who came who 17 finally had a free day to come talk, you owe them the 18 duty to stay on that agenda. 19 At the bottom of everybody's agenda, it 20 always says public comment. You see that? You see 21 that thing saying public comment, No. 16? You may 22 think that is the biggest loophole of the world. It 23 is not. 24 And if the public has public comment, 25 that's pretty much the area where nothing else has 0079 1 been on the agenda that kind of hit what they wanted 2 to talk about. They're really wanting to talk about, 3 you know, the new conference room. This new room. 4 And how much -- whatever -- whatever 5 they want to know about it, the public comment section 6 of any public agenda is for you to receive what the 7 public says, you to hear it in your ears, you to think 8 about it in your brain, and if it can be answered in 9 the form of a question, one of you to answer back the 10 question. 11 That's the end of the scope of a public 12 comment section. If it requires deliberation, further 13 discussion amongst yourselves -- wow, we never thought 14 about that, maybe pull tabs should blah, blah, blah, 15 whatever -- you need to stop and put it on your next 16 agenda because if it's not already on the agenda, 17 you're being unfair to the ones not in the room who 18 were not here to hear what it was that you were going 19 to deliberate. 20 And you understand this word 21 "deliberate?" It means to talk to each other. It 22 doesn't mean to even reach a decision. It's more. 23 It's broader. 24 Executive sessions, those are the things 25 that are in private. They are not open to the public. 0080 1 You may hear "going into executive session." I think 2 it's very rare that the BAC has gone into executive 3 session. I would not expect you to have many 4 executive sessions. 5 The Texas Lottery Commission has 6 executive sessions every meeting. They have 7 litigation. They have pending litigation. And there 8 are certain other areas within the Open Meetings Act 9 that they are allowed to go into executive session. 10 Earlier I heard the comment about can we 11 have a work session, can we work through some things. 12 You know, what can we do? And I guess this is where I 13 need to ask y'all to do a little bit of math. 14 Does everybody know what a quorum is of 15 nine? It's five, right? Are we correct? Is today's 16 quorum -- one, two, three, four, five, six, seven. 17 The quorum today, what do you think it still is? 18 MS. TAYLOR: Five. 19 MS. MORRIS: Five. Trick question. 20 It's still five. The board is nine. If five of you 21 were here, you could have proceeded. There are areas 22 under the Open Meetings Act that talk about committees 23 or subcommittees. And if you're in a committee of 24 three, is there a quorum of two? Generally, yes. 25 In this work session, if the concept 0081 1 was: Can four or five of us get together in a room 2 and kind of work together, not -- I like this part 3 because it's always said: We're not really going to 4 decide anything. We're just going to talk. My -- my 5 recommendation would be to post that meeting. 6 How many times have you -- well, okay. 7 Maybe y'all don't, but I do. How many times have you 8 turned on the TV and watched the Planning Commission, 9 the Zoning Commission, you know, all these little 10 board groups: the budget working group of any city 11 council. 12 You're seeing what's called their work 13 sessions. A while back there was a thing called a 14 briefing exception two, three years ago. And anybody 15 who's been around city or state government uses that 16 word. The Legislature changed the law. 17 Don't be trapped in that. If you're in 18 a quorum, you need to be having a meeting. And that 19 means you need to have posted it. So that means that 20 10 days prior to the time you're having your meeting 21 you should have known that you had an agenda and it 22 was a properly posted agenda. 23 Under the Open Records Act like the open 24 record -- under the Open Meetings like the Open 25 Records, there are penalties for violation. I would 0082 1 be remiss to not say that to you. I don't anticipate 2 any violations whatsoever. 3 But sometimes when I give this talk to 4 other agencies and things in the past, I used to take 5 copies of newspaper articles. Have you ever seen 6 or -- now you might be thinking: Local DAs enforce 7 violations of the Open Meetings Act. And it's really 8 not unheard of to have a small city being charged with 9 violations of the Open Meetings Act because they've 10 met in numbers. 11 And this is the most common violation 12 that DAs really are eager to listen to: meeting in 13 numbers less than a quorum to circumvent the Open 14 Meetings Act. Now how would that happen? 15 Well, these two would talk. And 16 Suzanne's got a plan. She's got a plan. She's got a 17 thought in her mind for some future rule for 18 something. And so she visits with Marilyn first. And 19 she's got Marilyn on board. And she's explained it 20 all to Marilyn. 21 So the next thing does, Suzanne goes to 22 visit Saleem. And now there's just the two of them. 23 No quorum, right? No quorum. No quorum. And she and 24 Saleem twist it out a little bit and she added some 25 things to it. 0083 1 And she's still got a good idea, so now 2 she goes over to Pete. She's up to four, isn't she? 3 One, two, three, four because we're going to count 4 her. I'm counting her, too. Before she knows it, is 5 she circumventing the Open Meetings Act? Yeah. 6 She really is. Be very careful. You 7 know, y'all seem like nice folks. But let's be real. 8 The only reason you really know each other right now 9 is because you're on the same board, okay? These 10 aren't the folks you went out to dinner with two weeks 11 ago. Right? You know, let's be real. 12 You have a professional duty right now. 13 You're going to treat each other professionally. You 14 are different. I hope you're different. I hope 15 everybody brings something different to the table. 16 But in reality, these are not really your new best 17 friends. 18 Treat each other with professional 19 courtesy. The public has a real hard time 20 understanding why five of you really want to go to 21 lunch together and just talk about your kids. They 22 don't think that. They don't believe that. I'm 23 telling you right now they don't believe that. 24 They believe you're talking about bingo. 25 And I don't want you to be in a position of proving 0084 1 otherwise, that apparently you have such little other 2 life that you really do just talk about your kids with 3 your other members. You don't want to be there. 4 Your duty is to spend so much time and 5 energy on bingo. I know Chairman Clowe said one day. 6 He said he hoped more, a lot more. I know he spends a 7 lot more than one day. But your duty is also to 8 realize how very important it is that you stay 9 centered in your own world because you're supposed to 10 be of nine people to be vastly different in your 11 knowledge and representations. 12 It is okay to be the stand-out. It is 13 okay to be the person who says: No, not going with 14 it, not doing it, no way am I doing that. 15 Are there any questions under open 16 meetings? 17 Is this okay with y'all? I'm checking 18 my notes for what I knew I had to talk about. Just a 19 minute. Are there any questions out there? Does 20 everybody want to just look at me and stare me down? 21 Okay. 22 There's also an Open Meetings handbook. 23 It's a lot thinner. It's on the Attorney General's 24 Web page. You can download it. You can get into it, 25 look around. It's just a lot thinner. There's not a 0085 1 lot of litigation under Open Meetings law. 2 Well, let's go to the next item on your 3 agenda. You called me for 5 and 6 and I've been 4 talking on Agenda Item 5. I'm now shifting to Agenda 5 Item 6, ethics. 6 MR. TAWIL: So you didn't answer the 7 question. What are the restrictions of open records 8 for the Advisory Committee from the Division? 9 MS. MORRIS: And I have to say 10 generally, I think there will be some restrictions. I 11 think that you do not have an absolute right as a 12 member of the BAC to access of all -- 13 MR. TAWIL: As a body, what are those 14 restrictions? 15 MS. MORRIS: I don't know. 16 MR. TAWIL: How do we find out? 17 MS. MORRIS: I don't know. 18 MR. TAWIL: Just ignore it? 19 MS. MORRIS: No. No. I think that I 20 need to discuss it with Kim some more and ask her for 21 some wisdom. But I don't know the answer off the top 22 of my head. 23 MR. TAWIL: But I think it's good for 24 all of us to know. 25 MS. MORRIS: Yes, sir, I do. And I 0086 1 don't know the answer. 2 MR. TAWIL: Thank you. 3 AGENDA ITEM NO. 6 4 MS. MORRIS: Okay. That was back on 5 Agenda 5. So now I'm going -- I'm definitely going to 6 6. I'm going to ethics. 7 There is an Ethics Commission for the 8 State of Texas. It has a Web page. I don't -- I'm 9 thinking that on this item that I didn't have anybody 10 print off their Web page for you. 11 There is the Chapter 571 that is the 12 ethics law, their chapter. I'm not sure as helpful to 13 you -- 14 MR. ATKINS: Diane? 15 MS. MORRIS: Yes? 16 MR. ATKINS: I'm sorry. Chapter 571 is 17 in the notebook. 18 MS. MORRIS: Okay. There was that 19 chapter? Okay. Thank you. 20 If you get on their Web site, it's 21 pretty impressive. It's very impressive. What the 22 Ethics Commission used to hand out were pamphlets. I 23 think they still do, but their Web site has taken over 24 a lot of it. 25 You are now -- and you're wearing your 0087 1 other hat again. You are now a person who has been 2 asked to perform a public duty. So the first thing 3 that usually pops into folks' mind is: Okay, that 4 sounds great. I'm honored. That's good. That's 5 good. 6 And I think that you get some travel 7 paid for, don't you? You get travel and expenses, so 8 it shouldn't cost you too much to do this, right? You 9 have to take off from work. We don't pay your daily 10 wages. 11 But the point is: It's an honor and 12 you're here and so -- you know, we're paying you, 13 though, right? We're paying your expenses. But once 14 you get kind of used to this concept of now you're a 15 member of the Bingo Advisory Committee -- and it is an 16 important function. 17 And even if you had never heard about it 18 before, it is an extremely important function. And 19 these folks out here, they believe you're important. 20 I believe you're important. And the commissioners of 21 the Lottery Commission believe you're important. 22 And all of a sudden, you might start 23 feeling like you're important. You know what I'm 24 saying? You may wake up one morning and say: I am 25 now who I am. 0088 1 Ethics laws are supposed to remind all 2 of us -- even me -- that actually I'm just a public 3 servant. I'm not really that important. I'm not 4 allowed anything extra. I'm not allowed to get paid 5 extra. I'm not allowed to take things extra. 6 I'm supposed to do my job and accept the 7 salary that I'm getting. And that's my payment. So 8 I'm not allowed to sit at my desk or to be here and 9 have one of you to say to me: You know, you were the 10 most clearest speaker I've ever heard on these 11 topics -- for a variety of reasons this would be 12 wrong, but you're the most clearest speaker and I'm 13 going to send you 12 passes to get into my bingo 14 parlor free. 15 Now there's a variety of problems with 16 that, but the point is: If you find yourself wearing 17 your Bingo Advisory Committee member hat and at the 18 very same time you find your hand accepting something, 19 drop it. Drop what you're taking because in the 20 performance of your duties, your higher ethical 21 standards are to not take anything to perform your 22 duties. 23 Kind of like -- and it goes without 24 saying, but let's just be obvious: If you vote to 25 propose this rule, maybe you and I can combine our 0089 1 business and blah, blah, blah. If you do -- when you 2 hear this word "if," if you hear these words -- and I 3 don't anticipate you will, but I'm just -- I'm giving 4 the -- I'm giving the generals. 5 I'm giving the basic discussion. If you 6 hear words that have to have you do something so 7 somebody else does something and if you see it as a 8 chain reaction, stop what you're doing and think to 9 yourself: Wait a minute. I owe the independent duty 10 to them. 11 They all need to be in the room and this 12 needs to be in a public meeting and we're not trading 13 votes and we're not trading favors. Ethical standards 14 for all government officials are to just be aware of 15 what you're doing and why you're doing it and don't 16 mix it up. 17 I do have to say that as a member of the 18 BAC -- and I think -- you know, I just have to say 19 this: I think that you should never think Billy 20 Atkins will treat you any different. Billy Atkins is 21 supposed to treat you as a member of the public just 22 like any of them in his enforcement actions as he sees 23 best and fit. 24 Do not -- and I don't think anybody 25 here, but do not expect to be treated different. Do 0090 1 not expect to call him up on the phone and say: Hey, 2 I don't know why my renewal is taking so long. Well, 3 I guess people do that, but you'll get the same 4 answer. 5 You won't be put to the top of the pile. 6 Actually, you probably -- you know, it's not going to 7 be any different. So if you were thinking it might be 8 different, which I don't think you were, it's not 9 going to be any different. 10 Likewise -- and this is really the more 11 reality: When you get up today and walk out, 12 someone's going to walk up to you and they're going to 13 say to you -- one of the members of the public here -- 14 maybe not -- someone's going to say to you: I tell 15 you what needs to be changed. I'll tell you right now 16 what needs to be changed. 17 Billy Atkins does blah, blah, blah and 18 that's his business, but it's wrong and right now I'm 19 going to -- I'm in a lawsuit with him and we're going 20 to try to sue him or we're in a contested case and 21 we're over trying -- he's trying to yank my license. 22 And we're fighting him and I'm tired of him taking 23 that position. 24 It's going to happen. I think so, 25 right? I think that's real. That happens. You, as a 0091 1 member of the BAC, you're not involved in these 2 enforcement actions. Stay out of it. What you should 3 be saying to whoever -- anybody who says that: You 4 know what? You're wasting it on me. Call Billy. 5 Please do not involve yourselves in the 6 individual enforcement actions that Billy is doing. 7 The Bingo Division of the Lottery Commission is 8 required by law to proceed as they see best and fit. 9 So therefore, when they want you to do something, 10 don't even give them the impression that you have that 11 much power because you don't. 12 In that sense, you don't. In another 13 way, you do. In another way in a more general sense, 14 you have somewhere, somehow as a member of the BAC, 15 you say: You know, I just -- I don't understand what 16 we do with whatever -- pull tabs, whatever -- and I 17 want to talk about it. But you're not an individual 18 person representing someone. And don't let someone 19 convince you of that. 20 Along those lines, let's talk about 21 lobbying. Lobbying: We're coming up to a legislative 22 session. This board is no different than the Texas 23 Lottery Commission, which is no different than any 24 other state agency in Austin, Texas. Around this 25 time, y'all all start thinking about how the law could 0092 1 be better, how it could be different because the 2 legislative session is coming up. 3 By law, you as members of the BAC, are 4 not supposed to lobby legislators. In that sense, I 5 mean don't put on your hat and say: I'm here for the 6 BAC. The law needs to be changed so that we can 7 advertise bingo at the end of lottery draws. That 8 would be a conflict of interest. State funds are not 9 allowed to be used to lobby. 10 As individuals, you have every right of 11 representation to talk to your representatives. But 12 you have no such right under lobby laws in the use of 13 state funds. It's meant to protect the public and to 14 make sure that all of us as state agencies that are 15 creatures of legislators and legislative laws that we 16 follow them. 17 We're not really in the process, if you 18 will, of making them, which is kind of a hard concept 19 for a lot of folks to understand because it would seem 20 like we're involved in making them. But no, we really 21 don't. Legislators make laws. You are individually 22 allowed to have input. That's called free speech. 23 Travel: Please understand that your 24 travel expenses, if you're submitting them, we're 25 getting them, right? So don't do what Mr. Morris does 0093 1 whenever I travel, say to me: Hey, do you think we 2 can run some of these X-rated movies on the travel 3 budget? The Lottery will never know. No, of course 4 not. Your travel expenses have to be accurate and 5 precise. It's a criminal offense to put in travel 6 expenses that are erroneous. 7 Finally, Billy Atkins, in cooperation 8 with the executive director, Linda Cloud, has issued a 9 memo to all Lottery Commission employees, Bingo 10 employees. It is the ethical standards that our 11 employees have to abide by. We do training -- we are 12 required by our commissioners to do training every 13 year. 14 Generally, I've done it. We do it in 15 January. If any of you wish to attend that training 16 session, tell me and I'll tell you when it is if 17 you're curious to know what our employees are told. 18 I can tell you this much, that our 19 employees are held to the -- as far as I know, the 20 highest standards of any state agency or any state 21 employees. That is so because of the provisions of 22 the State Lottery Act. And Billy has voluntarily 23 imposed those same high standards on the employees of 24 the Charitable Bingo Division. 25 Particularly to avoid confusion, all 0094 1 members of this agency are held to a very high 2 standard. We're proud of that. 3 Are there any questions? Well, let me 4 see. Look at them all. God love them. I don't think 5 there's any questions out here. Did I say anything 6 that anybody wanted to comment on? Now look at -- 7 whoa. Thank you. 8 You need to come up and tell me your 9 name because you can come up, but I just can't have -- 10 you can't have people from the audience just say 11 something. We're going to protect your record and 12 he's going to have something to say. 13 MR. HEINLEN: My name is David Heinlen. 14 I'm with Jetta Management. My question is about what 15 you said about lobbying. I'm a little confused about 16 that. 17 For instance, Daniel Moore mentioned 18 something about advertising. Was that lobbying? Is 19 that what you were saying? 20 MS. MORRIS: I don't know if I 21 understand what he was saying about advertising. Our 22 point is: As state officials and as a public employee 23 in the sense that you are -- you're not truly an 24 employee. 25 But from a public official point, this 0095 1 organization should not take it upon itself to lobby. 2 In other words, you're not supposed to go over and go 3 to legislators and as a public organization lobby, 4 lobby, lobby. I will say quite clearly that many 5 legislative offices, many legislators call you and 6 they want information. And you're supposed to 7 respond. 8 That's a resource. But you're not 9 supposed to take it upon yourselves to change law and 10 to lobby to have law changed. It is on a constant 11 basis that other legislative branches call any of us 12 over here at the Lottery Commission and they want to 13 know what we're doing and why we're doing what we're 14 doing. 15 And they may say to us: Well, why would 16 -- how would that work better? And we might say: 17 I'll tell you how it would work better, to do blah. 18 But we are not actively lobbying. That is against the 19 Appropriations Act or the law. 20 MR. MOORE: Right. But I can hire Joe 21 Garcia to lobby all I want. 22 MR. TAWIL: He's got no time left. 23 MR. ATKINS: I think -- can I address 24 that real quick? 25 MS. MORRIS: Are you talking from your 0096 1 personal -- yeah. 2 MR. ATKINS: Let me -- let me try and 3 address that, Diane, and David, your question. 4 MS. MORRIS: Okay. 5 MR. ATKINS: I think what she's saying 6 is Daniel is free to go over to his legislator, to any 7 member of the Texas Legislature and say: My name is 8 Danny Moore. I'm in the bingo business. I'm also a 9 member of the Bingo Advisory Committee. Here's what I 10 think. Here's what I want you to do as Danny Moore. 11 He can't go over there and say: I'm 12 Danny Moore with the Bingo Advisory Committee. The 13 Bingo Advisory Committee is telling you to do this. 14 MS. MORRIS: You know, Billy, the only 15 thing I would add is -- even under the first example, 16 I would say: I'm a member of the Bingo Advisory 17 Committee, but I am not here as a member of the Bingo 18 Advisory Committee. 19 MR. MOORE: Right. 20 MS. MORRIS: I'm not purporting to act 21 as one or all of them. 22 CHAIR BRACKETT: Well, Diane pointed out 23 to me a while ago, too, that what I can do and have 24 done is I write -- I write Senator Robert Duncan a 25 whole lot, but it's always on the South Plains 0097 1 Children's Shelter letterhead and I sign it as 2 executive director of the South Plains Children's 3 Shelter. 4 MS. MORRIS: Yes, ma'am. And that's 5 something that's called free speech. And it's 6 important to that process. And I don't think there's 7 any denying that your very involvement here and your 8 offer of service to the state, you may know more. 9 You may have better input in the sense 10 of more exacting input if that's the case. But it's 11 your free speech and you can choose to do nothing with 12 it. 13 Well, finally, I want to say thank you. 14 Thank you for offering to serve. Thank you for being 15 here. You know, it's -- it is a true privilege to 16 serve in a governmental agency. I'm proud to be an 17 employee of this agency. But thank you because I know 18 you're really not getting paid. At least I get paid. 19 Thank you for being here and thank you 20 for the work that you'll be doing. 21 CHAIR BRACKETT: Thank you, Diane. 22 Let me ask you what your pleasure is as 23 a group. At 12:25, there's going to be a ball drawing 24 for the Lottery. 25 MR. ATKINS: Over in the broadcast 0098 1 studio. 2 CHAIR BRACKETT: Right across the patio 3 here or whatever it is. 4 Billy, why don't you speak to this? 5 Do we want to go see this, go witness 6 this or do we want to go to Item No. 15? 7 How long -- about how long does the 8 drawing take, about two seconds? 9 MR. TAWIL: Who bought a ticket? 10 MR. ATKINS: How long does the draw 11 take, about two minutes? 12 CHAIR BRACKETT: Is this exciting to 13 anyone? Y'all tell me what to do. 14 MS. MATTHEWS: I would like to go. 15 CHAIR BRACKETT: Okay. 16 MS. TAYLOR: So if Larry says "bingo" 17 during the drawing, everybody would hear it, right? 18 CHAIR BRACKETT: Okay. Well, that was 19 another thing I wanted to ask. 20 Then do we want to reconvene and have 21 Item No. 15 and take a lunch break after that? 22 MS. TAYLOR: I would prefer to work 23 through my lunch break. 24 CHAIR BRACKETT: Okay. 25 MS. TAYLOR: I would rather we just keep 0099 1 going, or else maybe Worlanda could do what she's done 2 before and take an order and bring some sandwiches in. 3 CHAIR BRACKETT: How does that sound? 4 Because we do have a long agenda. Okay. 5 MR. MOORE: I'm all for that. 6 CHAIR BRACKETT: All right. So 7 Worlanda, if you could take some lunch orders. 8 Actually, bring us -- as far as I'm concerned, bring 9 us whatever you get your hands on. 10 MR. TAWIL: That's too broad. 11 MS. TAYLOR: She'll need you to make 12 donations. 13 CHAIR BRACKETT: Oh, yeah. We'll make 14 donations. 15 MR. ATKINS: And it may -- I mean, 16 unless she just goes across the street, it may take 17 some time. 18 MR. TAWIL: Just let her go across the 19 street. 20 MR. ATKINS: Okay. That's fine. Okay. 21 We'll get y'all a menu and it will have it on there. 22 If you'll just let her know what you want and give her 23 the money. 24 MR. TAWIL: What time is the drawing? 25 MR. ATKINS: It's at 12:27. 0100 1 CHAIR BRACKETT: It's 12:27, and it's 2 12:15 right now. 3 So if we walked right over there -- it 4 won't take us 10 minutes to walk over there. 5 MR. TAWIL: Can we take care of Item No. 6 7 in 10 minutes? 7 MR. MOORE: Yeah. Let's knock it out. 8 CHAIR BRACKETT: Yeah. 9 MR. TAWIL: Because the other one -- 15 10 is going to take longer than that. 11 CHAIR BRACKETT: Yeah. Okay. Item No. 12 7? 13 MR. ATKINS: I will -- 14 CHAIR BRACKETT: Is that by you, Billy? 15 MR. ATKINS: I will -- no, it's not. 16 CHAIR BRACKETT: Okay. 17 MR. LEMOS: I'll be quick. 18 CHAIR BRACKETT: Okay. I was going to 19 ask you if were comfortable with that time frame. 20 AGENDA ITEM NO. 7 21 MR. LEMOS: Hello. My name is Dan 22 Lemos. I'm with the accounting department here at the 23 Texas Lottery Commission. 24 And all I'm here to report is under 25 travel. We are the ones who process your travel 0101 1 vouchers on these trips. And it's just real simple. 2 $80 is the maximum on the lodging. That does not 3 include the taxes on it. So you can stay at a 4 hotel -- we prefer that you stay at a contracted hotel 5 rate, a contracted hotel. And you can call our office 6 and we can tell you which ones around Austin are the 7 ones that are contracted. 8 The same with the airlines. If you are 9 flying in, we prefer that you use the contracted state 10 rate. We do have a travel agent that's listed in the 11 book. If you call them up, they can make the 12 arrangements for you at the contracted rate. 13 And the food -- or per diem, it's $30. 14 And we don't ask for receipts, just actual expenses, 15 whatever you spend. The maximum is $30 per day on 16 that. 17 And mileage: If you do decide to drive 18 in, we do ask either the odometer reading or point to 19 point. And just indicate how much miles you used and 20 it's 34 and a half cents for that. 21 MR. WHITTINGTON: How much is your 22 contract air flight? 23 MR. LEMOS: It varies from city to city. 24 MR. MOORE: Is there a form for the 25 mileage? 0102 1 MR. LEMOS: There is a travel voucher 2 form and allowance. 3 MR. MOORE: I don't have one. 4 MR. ATKINS: If you will get your 5 information to Worlanda. 6 MR. MOORE: Okay. 7 MR. ATKINS: We'll actually complete 8 that for you and send it to you for you to sign. 9 MR. MOORE: That's fine. 10 MR. LEMOS: And it will take about a 11 week to process, as long as there's no mistakes on it. 12 Any questions? 13 MR. WHITTINGTON: Good and quick. Thank 14 you. 15 MR. LEMOS: Thank you. 16 CHAIR BRACKETT: Okay. Well, Billy, you 17 can't do your report in two seconds, can you? 18 MR. ATKINS: Which one? 19 CHAIR BRACKETT: No. 8. 20 MR. ATKINS: I can. It's just going to 21 depend on the questions. But I can do it in two 22 seconds. Do you want me to start? 23 CHAIR BRACKETT: Yeah. 24 AGENDA ITEM NO. 8 25 MR. ATKINS: All right. 0103 1 You have, Members, in your notebook, a 2 memo that Gary Grief has compiled that lists the 3 meetings that we've held so far with the Sunset staff. 4 Gary Grief is the Lottery operations director and he 5 is the project manager for Sunset for us. 6 Just to let you know, particularly the 7 new members, the agency submitted a self-evaluation 8 report to Sunset on August 17th. It's located on our 9 Web site or if you'd like, we can get you hard copies 10 for you to review. 11 The Sunset staff began their review in 12 March. They're -- as I mentioned -- in the agency 13 now. They're expecting to issue their report in 14 August. A public hearing on that report is scheduled 15 in September with the Sunset Commission scheduled to 16 make their decision in November. 17 And I think as Chairman Clowe mentioned 18 earlier, the Sunset staff is here today. Karen Latta 19 is the project manager for the Sunset staff. And 20 she's joined by Michelle Luera and Chloe -- and I will 21 have to get the spelling -- Lieberknecht. 22 I will have to get the spelling for the 23 court reporter later. 24 CHAIR BRACKETT: Okay. No questions on 25 that? 0104 1 MR. MOORE: So this is all published? 2 It's out on our Web site? We can look these over? 3 Because I looked at these dates here and I just made 4 some notes that they actually visited bingo hall, the 5 observations and what they took from that will be on 6 the site and everything like that? 7 MR. ATKINS: No. No. No. What's on 8 our Web site is our self-evaluation report. 9 MR. MOORE: Okay. 10 MR. ATKINS: Now when they issue their 11 report, that will be available on their Web site. And 12 I would assume that we would more than likely have a 13 link to them. 14 MR. MOORE: Okay. 15 CHAIR BRACKETT: Okay. Have the new 16 members been provided with your self-evaluation 17 report? Didn't we get it -- the other -- so can you 18 get it? 19 MR. ATKINS: And we can -- we can either 20 give you a hard copy or like I said, it is on the Web 21 site, whatever you prefer. 22 MR. TAWIL: Let's have a hard copy, I 23 guess. That way you can read it while you're laying 24 down in your bed. 25 CHAIR BRACKETT: Okay. Does that 0105 1 conclude your report, Billy? 2 MR. ATKINS: Yes, ma'am. 3 CHAIR BRACKETT: One comment that I do 4 want to make while we're talking about reading things 5 on the Internet. It's very, very difficult to read 6 these minutes. And when I was reading it and 7 suffering through it, I ran across one comment that I 8 could not let go. And that was from Suzanne. 9 You said that she volunteered to go 10 through and take the action items out so that we would 11 have our action items, things that we took action on. 12 And she remembered -- today when I asked her about 13 that, she remembered making that offer. And she will 14 be doing that for us. 15 MS. TAYLOR: Well, it actually will be a 16 short thing where we just have the motions so that we 17 have our motions and things we decided to take action 18 on. Instead of reading through 500 pages, then we can 19 get it down to, you know, two pages, so that we can 20 read -- have a brief outstanding items that we talked 21 about, motions that were made and approved. 22 CHAIR BRACKETT: This is not an agenda 23 item. It's something that I forgot to say at the very 24 beginning, and thank Suzanne for doing this. And then 25 after you see what the action was, that's taken -- if 0106 1 you want to see what the discussion was regarding it, 2 you can go back and dig through on that. 3 You can't do your report in two seconds, 4 can you? 5 MR. PITCOCK: I'm like Billy. If they 6 got questions, you know. With no questions, we can 7 try. 8 CHAIR BRACKETT: Mike's report is in 9 your notebook. 10 AGENDA ITEM NO. 9 11 MR. PITCOCK: Real quick on the -- thank 12 you. I'm Mike Pitcock, director of Security, Texas 13 Lottery Commission. As you go out the door, you need 14 to sign in, register when you go into the waiting 15 room. 16 So real quick, my report is in your 17 booklet. It's for the period of March 1st, 2002 18 through the period of May 31st, which is our third 19 quarter. 20 To help you understand, Region 1 is West 21 Texas. Region 2 is the Dallas area. Region 3 is 22 Houston. Region 4 is San Antonio. And Region 5 is 23 Austin. 24 What you see there is complaints 25 received, 43; complaints closed during that quarter is 0107 1 32. And down further, it says totals actions taken or 2 referred to Legal, which is our Legal administrative 3 section, the DA or the county attorney of the 4 division. 5 And warnings, we had a total of seven, 6 which equals 29 percent. Then it breaks down further, 7 referred to the DA Legal Audit Division, two, which is 8 6.3. And down at the bottom, we break down that. It 9 indicates what regions those were from. 10 The warnings issued were five at 15.6 11 percent. And it breaks that down into the regions. 12 There was three in Region 2 and one in Region 3. 13 And for the top complaints, that's based 14 on the total number -- we don't break down the single 15 ones, but the top complaint is failure to pay prize to 16 winners, which was seven and house rule violations, 17 which were three. 18 For the new members, we have a 1-800 19 number where we take complaints, which is answered by 20 an investigator. He takes both Bingo and Lottery at 21 the same phone, the intake. We call it intake 22 investigator. Those cases are reviewed by him and 23 reviewed by our process and sent out for 24 investigation. 25 If it's a case needing audit or 0108 1 financial, it's referred to audit. If it's dealing 2 with others, then we take those investigations and 3 investigate it. I invite you, if you wish to have a 4 tour and look at our investigative section, we will 5 gladly do that if you give me enough time to set that 6 up and we'll be glad to further explain what our 7 process is. 8 Any questions? 9 MR. TAWIL: I think we ought to take you 10 up on that so we become more familiar with that part 11 of the division. 12 MR. PITCOCK: Yes. Any time you -- 13 you're welcome to come up and we will -- you have to 14 give me a little notice so I can set it up. 15 MR. TAWIL: We're telling you right now. 16 MR. MOORE: Maybe we can do it before 17 one of our -- maybe our next meeting or something. 18 MR. TAWIL: Or something like that, 19 yeah. 20 MR. MOORE: What do we need, half hour? 21 MR. PITCOCK: Half hour. If you have 22 questions -- 23 MR. TAWIL: I just feel so sensitive 24 because we were caught so ineffective and we were 25 beaten down and that we really got to energize and 0109 1 exercise. 2 MR. MOORE: Let's do it before because 3 everybody is always cutting out after the meeting. 4 MR. PITCOCK: Just let me know. Thank 5 you. 6 MR. TAWIL: One question, Mike. What 7 about these house rule violations? Well, I'll ask 8 you. 9 MR. PITCOCK: I'll cover that real 10 quick. House rule violations are each bingo house has 11 rules set up. If they post before they have a bingo 12 session -- 13 MR. TAWIL: Okay. 14 MR. PITCOCK: -- you have a rule about 15 bingoing and when you bingo or how you do it. That's 16 a house rule set up by that house. 17 MR. TAWIL: It's their discretion? 18 MR. PITCOCK: Their discretion. 19 MR. TAWIL: Yeah. They play bingo based 20 on their house rule -- 21 MR. PITCOCK: That is correct. 22 MR. TAWIL: How they -- whether they 23 holler "bingo" or not, is up to the house? 24 MR. PITCOCK: That's right. 25 MR. TAWIL: Okay. 0110 1 CHAIR BRACKETT: Okay. Well, let's 2 adjourn for a minute -- not adjourn. We'll run over 3 to see the drawing. 4 (Recess from 12:24 p.m. to 12:46 p.m.) 5 CHAIR BRACKETT: If we could call back 6 to order, we'll have Item No. 15, which is a 7 demonstration. 8 Okay. Suzanne, do you want to go ahead 9 with this? 10 MS. TAYLOR: Yes. 11 CHAIR BRACKETT: This is Item No. 15 on 12 your agenda. 13 AGENDA ITEM NO. 15 14 MS. TAYLOR: I asked for this item to be 15 placed on the agenda because previously in this 16 meeting, we've talked about that we're limited on the 17 amount of money that can be paid out at a bingo 18 session. 19 But in reality, that is really not true 20 because we can pay out unlimited amounts of money in 21 instant bingo, which is why it's very exciting that we 22 finally have extra pull tabs, that event tickets and 23 sealed cards, which are going to be coming into our 24 halls in the very near future. 25 So there is a way we can make more 0111 1 money. And I truly think by going to other states and 2 looking at their bingo programs, they don't make their 3 money off of bingo. The bingo games get people into 4 the hall. Where the money lies is in the instant 5 bingo. And I think that that is something that we, as 6 a state and as charities need to be looking at. 7 And into that, I also think that one of 8 the things that we need to be looking at -- we're all 9 very aware with the 8-liners or slot machines or 10 charity sweepstakes, any number of names. We've all 11 seen them. We've watched them work and we've seen how 12 much Texans love to play those machines and how many 13 of our Texans are willing to hop on a bus and go to 14 another state to play those machines. 15 And because of that, I was shown a new 16 machine that would be a video pull-tab reader and 17 there are video pull-tab machines. And I think 18 instead of stopping there, I'm really exciting about 19 all the new tabs we're going to have. But it's not 20 time to stop. 21 We need to continue to be innovative and 22 bring new tools to the bingo market for bingo players 23 to play and get these people into the halls. Get the 24 young people into the halls, but get people into the 25 halls. And one way to do that is to allow the 0112 1 charities to have use of these machines. 2 We've asked a couple -- I think Danny 3 Moore has somebody. Did your person show up today? 4 MR. MOORE: Yeah. 5 MS. TAYLOR: Great. So we have a couple 6 of people that are here to show the BAC and show you 7 people that are here what a video pull-tab reader is 8 and what video pull-tabs are, not that we can do 9 anything today, but so that we start understanding 10 that this is technology that's out there and it's 11 tools that we could have along with the other tools 12 that have been approved. 13 So I would like to have somebody come 14 up. Yeah. That would be great. Ken Griffith from 15 Good Time Bingo is here to let you know about a system 16 that they have. 17 Ken is here not because I'm a great fan 18 of Good Time Bingo. And I don't mean that in a mean 19 way. Yeah, I do. Anyway, but he -- nobody's asked 20 here because one person is being favored over another, 21 but they happened to be able to come to this meeting 22 to show us. 23 And so I'm not saying: You know, here's 24 the flag and I'm supporting Ken and everything that 25 Ken says. But Ken has something that I think could 0113 1 help me. And I think that we need to look at whoever 2 is here and whoever has the tools that we need. 3 We need to let these people tell us 4 about these tools because everybody doesn't have the 5 right screwdriver that we're looking for. We need to 6 look to those people that have what we need now. 7 So thanks, Ken. 8 MR. GRIFFITH: Thank you, Suzanne. 9 I'm Ken Griffith with Good Time Bingo in 10 Dallas. I'm a distributor. The way that I view my 11 job as a distributor is to bring new products to the 12 market, new and innovative products that will work to 13 help the game of bingo in any way possible. 14 Since 1997, we've been very diligent in 15 going to other states, going to manufacturers, and 16 trying to find products that may work here, products 17 that maybe we could get in to the state of Texas. 18 This -- we've been to, I think, now a 19 total of seven -- or eight companies, actually -- that 20 have products related to bingo. We asked those 21 companies to try to bring their products to Texas or 22 to research and develop a product that we could use in 23 the state of Texas or to bring a product that might 24 require a law change. We've gone down the entire row. 25 In order for these companies to come to 0114 1 Texas, they must do a lot of research and development 2 in order to fit the Texas state laws or to change the 3 laws. And we've been down all of those avenues: 4 changing rules, changing law, changing everything. 5 What -- about a couple of years ago -- 6 and what I want to do is give a very brief -- and my 7 comments will be brief. We tried a product for a door 8 prize that didn't seem to work because of the way the 9 law was written. 10 So we still are in search of something 11 because we have a law on the book. We -- we are still 12 in search of something that will accommodate that. 13 That's -- that's the way I see my job. Three years 14 ago, we started working on a promotional satellite 15 bingo that is still in the works. 16 I bring these things up because 17 companies have to invest a lot of money just to get to 18 a point where you can develop the product, you can 19 show the product. And we're still not there on the 20 promotional side of the bingo yet. 21 We ran into some -- after a considerable 22 amount of money and time on behalf of a lot of people, 23 we ended up running -- running up against some -- some 24 legal problems that we're addressing still today. 25 So these are the -- these are the ones 0115 1 that are -- that are on our -- that are still on our 2 agenda today. The progressive bingo, as you know, 3 which was vetoed by the governor, we have met with two 4 different companies on products that we felt would be 5 very beneficial in regards to progressive bingo. 6 That's still out there. But the idea is 7 here that we have to continuously search out for 8 these. We thought we would get progressive and we 9 didn't. The event and sealed card tickets that 10 started a while back, the companies that are coming 11 with them today have that technology. 12 And it was good that we got the rule 13 passed. But we're really looking for the 14 entertainment and the environment. And as Chairman 15 Clowe said, when you walk into the halls, they're a 16 little different, the smoke-filled halls and things 17 like that. 18 We're looking for an entertainment 19 venue. About -- and I feel -- and these comments are 20 obviously my own. With a legislative session coming 21 up, I think there's the possibilities that from -- 22 from the people that I've talked to, I think the 23 possibility is that the Lottery may want VLTs in their 24 locations, which if I'm the Texas Lottery is what I'd 25 say, too, in order to further their game. 0116 1 Whether or not they're successful in 2 doing that, we don't know. The racetracks, people 3 have always wanted some sort of VLT in their venue. 4 There's a question on -- I know the Native American 5 casinos in Texas, which now have been shut down, I 6 think that's been combined. 7 MS. TAYLOR: If I can interrupt you. I 8 was just asking if Marilyn knows what a VLT is, but 9 she doesn't. 10 MR. GRIFFITH: Video Lottery Terminal. 11 So one of the things that we asked the manufacturers 12 was that -- and there's some manufacturers here that 13 have machines that would require a law change. 14 There's lots of manufacturers who have machines that 15 if we brought them in would require a law change. 16 We are committed to working in that 17 behalf. We are committed to working to change the 18 laws to allow for some different things. But the 19 reason I'm here today is one manufacturer who will 20 show this product put a lot of research and 21 development into the pull-tab area of the bingo. 22 We actually started on this machine back 23 in 1998, late '98. And this is probably four or five 24 generations later. The -- the thing about this is 25 that the manufacturer, through technology and through 0117 1 working with their counsel has developed a way, they 2 believe, that they can put a pull-tab ticket in for 3 approval and then utilize this machine. 4 Whether or not that's -- that maintains, 5 we don't know. But the purpose here is that we do 6 have companies out there that the companies who do 7 spend the money for the R and D, the people who do the 8 work, the people who hire attorneys to -- to at least 9 in the attorney's mind of the companies feel that 10 these products are legal in the state of Texas. And 11 that's basically what we have here. 12 So my point was that it's very difficult 13 to -- people are always wanting new and innovative 14 products. They want us to bring things, but we're 15 very limited by the laws and the rules, unless we 16 change the laws and we change the rules. I don't 17 believe we need a law change. 18 CHAIR BRACKETT: Let me ask you a 19 question. 20 MR. GRIFFITH: Yes, ma'am. 21 CHAIR BRACKETT: Is this the machine 22 that you're going to demonstrate? 23 MR. GRIFFITH: Yes, ma'am. 24 CHAIR BRACKETT: And it -- you said that 25 it would require no changes in any of the rules or 0118 1 laws? 2 MR. GRIFFITH: I would defer. Actually, 3 I really wanted just to introduce Multimedia because 4 their outside counsel and all the counsel that are 5 helping them with the Bingo Enabling Act, they've made 6 their own determination as to what they think is the 7 legality of the product. 8 Ultimately, something has to be approved 9 by the Texas Lottery Commission. But I would leave 10 the legal side of it to their outside counsel. But 11 that's -- this is just -- we want more companies to 12 come in. It's difficult to convince companies. And 13 we've asked them to develop a machine. And it's 14 very -- it's time-consuming, as you well know, Saleem, 15 in the development of your equipment and your system. 16 It's very intense. And if you have to 17 lobby at the same time, then there's a lot of money 18 involved. 19 MR. TAWIL: Yeah. It ended up in court. 20 MR. GRIFFITH: Well, and that's why a 21 lot of companies, when people say: Why don't we have 22 five or six come on in? 23 Some of them will come in, but some of 24 them won't. Multimedia has spent a lot of time, 25 effort and money on this. And then with that said, 0119 1 I'll just turn it over to -- 2 MR. MOORE: Ken, let me just say 3 something about this. 4 MR. GRIFFITH: Yes, sir. 5 MR. MOORE: The whole idea behind 6 this -- and tell me if I'm not correct -- is that 7 we're trying to increase the revenues for the 8 charities here. This isn't for lessors. It's -- this 9 is another income stream for the charities. And it is 10 out in other states. 11 I personally feel that we were on the 12 tail end of the event tickets and sealed cards. I'd 13 like to be on the forefront of this. So I think it's 14 just an extension of what -- we just need to keep 15 moving forward with these products. 16 MR. GRIFFITH: Well, I think that we 17 want -- and you're right. We want to bring the idea 18 behind this and because it is directly to the charity. 19 It's a new and innovative product that -- 20 MR. MOORE: I don't think we want to 21 forget that. You know, that's the key here. 22 MR. GRIFFITH: It's definitely for the 23 charities, for their purposes. And it's a new way to 24 play a game that we currently have and devise a system 25 to do that. 0120 1 So basically, they've kind of taken -- 2 we've had several approaches over a couple of years 3 now being to change the law or change the rules. 4 Through technology and through other means, now we fit 5 something into at least what their attorneys think 6 would be a legal product. 7 MR. WHITTINGTON: Well Ken, I think if 8 anybody's spending any money in the bingo hall doing 9 anything, it definitely should be for the charities. 10 MR. GRIFFITH: Absolutely. I agree with 11 you a hundred percent. 12 MR. WHITTINGTON: I don't care what it 13 is. And that's been the big problem that happens for 14 the charities that other stuff is in the bingo halls. 15 So I'm for anything that we do. If it's in the bingo 16 hall and it's money being spent by a customer, it 17 should be for the charities. 18 MR. GRIFFITH: Yes, sir. I agree a 19 hundred percent on that. 20 MR. TAWIL: I support what y'all are -- 21 your goal, your objective. What I would like to -- 22 being a disinterested party, as far as the technology, 23 but yet an interested party for what we're doing for 24 everybody is let's not ignore the fact that the 25 pull-tab industry would like -- at least what I was 0121 1 told, they would like whoever supplies machines like 2 this that that comply and have equal efforts expended 3 on what they make. 4 I don't have any problem -- to me, this 5 is a benign piece of equipment that sits there. It's 6 got to be -- it's got to compel the individual to go 7 over there to use it. So I don't think that that 8 machine requires anything, as far as permission with 9 the exception of one issue is an intangible. 10 What has happened here is you've got 11 game rooms that are part of bingo halls and those -- 12 let's call it what it is and lay it out here and help 13 us get this done in a legal way. I would rather see 14 the bingo industry have these machines than somebody 15 else. 16 Because if you recall the last 17 session -- the last session, the people that are in 18 the horse racing industry tried to get a deal done 19 where they would put 8-liners on the tracks under the 20 control of the tracks, okay? 21 So here what I'm going to say is: Let's 22 get the people that are bringing this to come out and 23 explain to us how it impacts the pull-tab industry and 24 the pull-tab manufacturers. The company that makes 25 this machine is not in the pull-tab industry. 0122 1 I'm assuming they're going to go in that 2 direction and become a part of it; is that right? 3 MR. GRIFFITH: I'll defer that to legal. 4 MR. TAWIL: So really. And we're all 5 saying the same thing. 6 MR. GRIFFITH: Right. 7 MR. TAWIL: But I'm just trying to do it 8 within the guise of what we're dealing with. 9 MR. GRIFFITH: Well, I think what we're 10 trying to do is do it today with adherence to the 11 Bingo Enabling Act, to comply with the Bingo Enabling 12 Act. 13 MR. TAWIL: So I guess, you know, I'd 14 like to ask some questions about it. 15 MS. SIEGRIST: Thank you. Good 16 afternoon. I'm Valerie Siegrist. I'm the 17 vice-president of the conglomerate of Multimedia. 18 MR. TAWIL: Name and a face. 19 MS. SIEGRIST: I'm here to demonstrate 20 the equipment to you and to show you how it works. 21 And as Ken said, we did spend a lot of 22 time and energy in going through the statute and rules 23 item by item and developing a product that we believe 24 and our outside counsel believes fits within the 25 standards as required by the statute. 0123 1 Before I demonstrate it, I want to 2 reiterate what Ken said in listening to Chairman 3 Cloud's comments this morning is that the industry 4 needs to try to reverse the trend of declining 5 revenue, come up with products that compete with the 6 8-liners and that could be attractive to younger 7 audiences. 8 And that's what I believe this -- what 9 we believe this product does. It will generate 10 revenues for the charities. It will -- and it also is 11 attractive to younger players and hopefully can stop 12 the trend of -- not stop the trend, but increase the 13 players that do come to play bingo. 14 And this really is a product that 15 enhances the winning experience. And that's kind of 16 how we're billing it. It's an entertaining product. 17 Now as Ken said, this is a prototype that I'm showing 18 you. We will be ready next week to submit ticket 19 artwork to the Texas Lottery Commission for approval. 20 If you don't mind, I'm going to stand up 21 because I can't demonstrate it here. Before I 22 demonstrate the product itself, I want to show you the 23 ticket -- 24 MR. ATKINS: Valerie. I'm sorry. 25 You're going to have to talk loud enough for the court 0124 1 reporter to hear you. 2 MS. SIEGRIST: That's not possible. 3 MR. WHITTINGTON: Take the mike off the 4 stand. Just pull it out. 5 MS. SIEGRIST: I am. Got it. Okay. 6 What I have in my hands are -- it's not 7 going to let me walk -- are the tickets itself that 8 we'll be selling. It's a prototype. And you can see 9 it's a -- it's a two-piece card with a break-open 10 cover on it. 11 And underneath that cover -- underneath 12 that cover are the -- these are -- they don't have a 13 cover. I just have a few samples of the ones with the 14 cover. But when you -- when you tear open that cover 15 or break open that cover, the combination of symbols 16 is underneath it. And it will indicate if you're 17 winning a prize or not. 18 Now the tickets that you have, we've 19 printed the pay-out information on the back -- or on 20 the back. That will actually be printed on the front 21 of the ticket. This is just a prototype. So that's 22 what the player will get when they walk up to the 23 point of sales. 24 MR. TAWIL: This is a pull-tab right 25 here? 0125 1 MS. SIEGRIST: Yes. 2 MR. TAWIL: So now what? It tells you 3 whether you won or not? 4 MS. SIEGRIST: Okay. Those are the 5 combinations. 6 MR. TAWIL: So why would I want to go 7 over there? 8 MS. SIEGRIST: Because you can 9 purchase more than one play. In fact, that actually 10 has 10 plays on it. You can then take your card -- 11 and you're right, Saleem. You know instantly upon 12 opening the ticket if you have a winner or not by a 13 combination of symbols. 14 This device that I'm showing you is not 15 necessary in order to play this game. But you can, 16 after you purchase your ticket, walk over to the 17 machine -- do you have a ticket? 18 You know, it was working fine this 19 morning. So after you purchase the ticket, you can 20 walk over to the device, insert the ticket, and it 21 will read the codes, also. And it will show you the 22 combination of the symbols. 23 That particular one wasn't a winner. 24 And this one won. It -- the machine will only track 25 the number of games that you've purchased on the 0126 1 ticket. It does not add credits. You can't get 2 money -- put money in or take money out of the device. 3 All it does is translate the winning combinations into 4 symbols on the device. 5 MR. TAWIL: What does the device read? 6 Can you go through this step by step for us? Let's 7 talk about this machine. Now what does it read? 8 MS. SIEGRIST: The machine reads the 9 information that's encoded on the magnetic strip. 10 MR. TAWIL: So you don't see them as a 11 player? It's encoded here on the magnetic device? 12 MS. SIEGRIST: Right. 13 MR. TAWIL: Okay. And I'm looking at 14 the front of my ticket here. You say I got 10 games 15 on here? 16 MS. SIEGRIST: Yes. 17 MR. TAWIL: But this is more than -- 18 this is supposed to be a single pull-tab. Are you 19 telling me there's 10 pull-tabs? 20 MS. SIEGRIST: No. It's one pull-tab 21 with multiple plays. 22 MR. TAWIL: Okay. But a pull-tab by 23 definition is not multiple plays. It's a single play. 24 MS. SIEGRIST: A pull-tab can have six 25 break-open windows and each break-open window is a 0127 1 play. 2 MR. TAWIL: I don't see break-open 3 windows on this. 4 MS. SIEGRIST: You broke open -- 5 MR. TAWIL: I broke open one. 6 MS. SIEGRIST: Right. 7 MR. TAWIL: But you're telling me I'm 8 breaking open 10? 9 MS. SIEGRIST: Uh-huh. 10 MR. TAWIL: Okay. So I should be able 11 to see all 10 on here? 12 MS. SIEGRIST: Right. 13 MR. TAWIL: Okay. I don't understand 14 it. All it has is alphanumeric characters. 15 MS. SIEGRIST: Right. Those are the 16 combinations -- 17 MR. TAWIL: How do I know that I'm a 18 winner? 19 MS. SIEGRIST: Because if you see three 20 alphanumeric in a row like a ZZZ or an NNN, that would 21 indicate that it's a winning ticket. 22 MR. TAWIL: And so I'm supposed to 23 translate these three alphanumeric sequences to this 24 table that's here? 25 MS. SIEGRIST: Right. 0128 1 MR. TAWIL: That's a lot of work. 2 That's why I would want the machine. 3 MS. SIEGRIST: But you can do that. And 4 that's what you do in a pull-tab, anyway. You have to 5 translate lemon-lemon-lemon and look at the front of 6 the ticket to determine how much that combination 7 gives you. 8 MR. TAWIL: All right. Okay. Let me 9 take you back about two, maybe three sessions ago at 10 the legislature, maybe four, when we -- when did we 11 have cardminders, Joe? When were the cardminders 12 passed, what year? No, '95. 13 There was a lot of consternation amongst 14 all the parties that was there. And in the Senate, 15 the final decision to allow cardminders, Senator stood 16 up and said: None of this means that we're going to 17 allow any form or a semblance of a VLT as approval, 18 that this State is against VLTs. 19 And we have to make a leap of faith to 20 say that that is not. So this is the opposition that 21 we're going to be facing. How do we get around that? 22 MS. SIEGRIST: And there again, our 23 legal counsel has taken a look at the tickets and 24 we're submitting the tickets for approval. 25 MR. TAWIL: Okay. This is totally 0129 1 different than what the pull-tab industry produces. 2 MS. SIEGRIST: It is. 3 MR. TAWIL: 100 percent different. 4 MS. SIEGRIST: It is. 5 MR. TAWIL: But it doesn't even fit. 6 MS. SIEGRIST: But it fits within the 7 statutory definition and the regulations. 8 MR. TAWIL: That I can buy 10 and then 9 translate codes to mean a winner? This makes it very 10 difficult for the player. 11 With the break-open, you immediately 12 know whether you won. Here you have to go and take 13 these alphanumeric characters, look at them against 14 these characters and then decide whether you won or 15 not. 16 To be safe, you should go to a machine. 17 MS. TAYLOR: Saleem, I personally -- 18 looking at it, I know how much the players like 19 playing the machines. So what you're actually doing 20 is letting the charity use a pull-tab reader to allow 21 customers to play the machine. 22 MR. TAWIL: What's the difference 23 between this and an 8-liner? 24 MS. TAYLOR: Because this -- you don't 25 have to. The 8-liner is doing it -- this one is 0130 1 already giving you winners or losers. 2 MS. SIEGRIST: The 8-liner will dispense 3 credits. It will increase credits. It will -- you 4 have to put money into it. 5 This game can be played without that 6 device. It is not integral to the operation of this 7 game. 8 MR. TAWIL: Tell me how this machine 9 works, okay? I've got a card here. None of these 10 characters match any of these characters. So -- now 11 I've got one that says W17, whatever, three arrows 12 W17. What does that mean? 13 There are three arrows that say W17. 14 Because this is really complicated. I think it's more 15 complicated -- 16 MS. SIEGRIST: Each -- 17 MR. TAWIL: Look at those three arrows. 18 What does that mean? 19 MS. SIEGRIST: That you won two dollars. 20 MR. ATKINS: Hey Valerie, are you set up 21 to start at the beginning of the process over there? 22 MS. SIEGRIST: Yes. 23 MR. ATKINS: Maybe you should do that. 24 MS. SIEGRIST: Okay. When a player 25 comes in, the first thing they do is they go to the 0131 1 point of sale and they ask the cashier to give them 2 $20 worth of pull-tabs. So the cashier puts in 25 3 cents -- wants 20 pull-tabs and the ticket is created. 4 It's printed out at this machine. And 5 this machine is a prototype and there's a cover that 6 will actually be put on with a perforated break-open. 7 It's just not working properly today, so we don't have 8 that. 9 MR. TAWIL: So they're manufacturing 10 pull-tabs on site? 11 MS. SIEGRIST: No. The pull-tabs are 12 actually manufactured by us and put onto a CD ROM. 13 They're manufactured electronically. 14 MR. TAWIL: They're not pull-tabs then. 15 MR. WHITTINGTON: Could I ask a 16 question? 17 MR. TAWIL: The definition of a pull-tab 18 is not electronic. 19 MS. SIEGRIST: This is paper. 20 MR. TAWIL: So you're producing that on 21 site? 22 MS. SIEGRIST: Yes. 23 MR. TAWIL: So you're not -- it's not a 24 manufactured pull-tab. You're making it in real-time 25 as the customer buys. 0132 1 MS. SIEGRIST: But the operator couldn't 2 print the ticket without the information that we 3 provide to them on the CD ROM. 4 MR. TAWIL: This is a leap. I'll tell 5 you what, it's going to be hard to defend that. 6 MR. WHITTINGTON: What happens -- you 7 got a hour, basically about an hour and a half of sale 8 or hour of sales per session. What happens to the 9 other pull-tabs like them old pull-tabs? 10 I mean, do you have time to sell those 11 others? I mean, I don't know. It seems like it takes 12 a lot of time. I mean, what happens to the other 13 pull-tabs that we're trying to sell during that 14 session? 15 MS. SIEGRIST: The players still buy and 16 sell -- or play those pull-tabs. 17 MR. WHITTINGTON: What I'm saying is -- 18 MR. ATKINS: Talk in the microphone, 19 please. 20 MS. SIEGRIST: I'm sorry. The player 21 will be able to continue to play the other. 22 MR. WHITTINGTON: What if they go -- 23 which has happened for 20 years -- that time is so 24 precious when it comes to having a pull-tab sale done 25 through one of the employees to a customer. 0133 1 MS. SIEGRIST: Right. 2 MR. WHITTINGTON: And going through that 3 process, I could see the other pull-tabs sales going 4 way down if they give them this pull-tab. Understand 5 what I'm saying? 6 MS. SIEGRIST: Uh-huh. 7 MR. WHITTINGTON: Because it seems like 8 there's not enough time to go through all the process 9 and buy -- and buy the other whole card pull-tabs that 10 we got coming up, which is probably going to be the 11 best thing in pull-tabs that ever happened is the 12 whole card pull-tabs. 13 And I can see that being there and kind 14 of like fighting against the other pull-tabs. And the 15 other pull-tabs sales has not been done the proper way 16 like they should be because -- 17 MR. TAWIL: This will put them out of 18 business. 19 MR. WHITTINGTON: Yeah. 20 MR. TAWIL: This will put all the 21 pull-tab people out of the business. 22 MR. WHITTINGTON: I can see that 23 happening. 24 MR. TAWIL: That's why they're all 25 against it. And to me, this is not a pull-tab because 0134 1 pull-tabs are -- there's a form number. There's a 2 deal. There's a complete package. They're already 3 made. The tabs are in it. They are physical. 4 They're made of paper. 5 And I mean, it's totally described. And 6 this is a way to try and circumvent that. So to me, 7 this is not a pull-tab. What does the machine over 8 there do? 9 If you got the pull-tabs on a CD ROM, 10 that means you're tracking everything electronically? 11 MS. SIEGRIST: You can. 12 MR. TAWIL: How do you get -- how do you 13 get around tracking and registering those, as far as 14 the system service provider? 15 MS. SIEGRIST: Again, we have had our 16 outside counsel look at these things. And we can make 17 them available to you, but that isn't the 18 question that -- 19 MR. TAWIL: There's nobody here -- 20 there's nobody here that can answer those questions? 21 MS. SIEGRIST: Not in this forum, no. 22 If you want to talk to our counsel, you're welcome to. 23 MR. TAWIL: I think -- I think there's 24 more here than you're really presenting because you're 25 violating other licensees' methods and rights. 0135 1 MS. SIEGRIST: All this is -- it 2 dispenses the tickets and tracks the sale of the 3 tickets. It's my understanding from the Lottery 4 Commission's viewpoint that a system service provider 5 provide player tracking and inventory. 6 This doesn't do -- 7 MR. TAWIL: No. That's not -- 8 MS. SIEGRIST: -- either of those 9 things. 10 MR. TAWIL: That's not true. 11 MR. MOORE: Valerie, is it a finite set 12 of tickets? 13 MS. SIEGRIST: It is finite. 14 MR. TAWIL: Is that true, Billy? She's 15 claiming the Lottery Commission says a system service 16 provider tracks the player. We don't track the 17 players. 18 MR. ATKINS: We would say what the Act 19 includes. I think there's something in the Act that 20 says provide for player tracking. I would -- I would 21 think you're -- 22 MR. TAWIL: To track and register. 23 MR. ATKINS: Track and register. 24 MR. TAWIL: That's what I was saying. 25 And that's what she's claiming this is doing. 0136 1 We've got a train wreck that's going to 2 happen, looks to me like. Your outside counsel is 3 there for fees, anyway. They make their money by 4 giving you advice. They don't really know what 5 happens. 6 CHAIR BRACKETT: Well, let's look on 7 this as an educational process for us to see what can 8 be on the horizon and then let them worry about 9 getting it legalized or approved or whatever it is. 10 MR. MOORE: I agree with Virginia. I 11 think it's something that we need to look into. And I 12 appreciate that they've come over to share -- 13 MR. TAWIL: I agree with him, but I had 14 a call -- 15 MR. MOORE: Saleem, yeah, we don't want 16 to fight this right now. 17 MR. TAWIL: I know, but I had a call 18 from the pull-tab association -- 19 MR. MOORE: Don't worry. They'll get -- 20 they'll get their dibs in. 21 MR. TAWIL: Yeah. They -- the pull-tab 22 industry feel like that this is something that is 23 totally off in left field trying to circumvent what 24 their part of the industry is by finding a way around 25 it and that they were very concerned about it. None 0137 1 of them support it. Is that right? 2 MR. MOORE: I would probably agree with 3 that, but -- 4 MR. TAWIL: So I don't know. I'm asking 5 the questions open because that's what our job is to 6 try to get all this flushed out and be fair about it 7 to everybody and not try to put the screws to one part 8 of the industry. 9 MR. MOORE: But it's not our job to 10 fight their battles, Saleem. You know, make them show 11 up here and -- 12 MR. TAWIL: They're not asking the 13 questions. 14 MS. TAYLOR: I absolutely agree that. I 15 don't care which part of the manufacturers, 16 distributors don't like it. All I'm caring is if it's 17 good for the charities, then it's something that we 18 need to be looking at. 19 This -- I mean, this is the future. I 20 mean, that's just the way it is. I mean, things are 21 going to video. And we either become aware of what's 22 going on or five years from now, we're going to say: 23 My God, what happened to bingo? 24 Because we're going to be left just like 25 we got left the last five years. 0138 1 MR. WHITTINGTON: Well, Suzanne, what we 2 need to do is we need to -- 3 MS. TAYLOR: But you know, everything 4 that's out there, we need to know what could be 5 available to us so that we can make some intelligent 6 decisions and not worry about if it's going to step on 7 a manufacturer or a distributor's toe. If it's good 8 for charities, if it's good for bingo, then we need to 9 be looking at it. 10 MR. TAWIL: Well, okay. 11 MR. WHITTINGTON: That's not going to 12 compete with 8-liners, no way. I'm telling you right 13 now. Too many game rooms around take too many bingo 14 customers I know personally and they -- 15 MS. TAYLOR: We need to pull them right 16 back into the bingo halls. 17 MR. WHITTINGTON: That ain't going to do 18 it. 19 MR. TAWIL: What's going to happen is 20 the minute this thing's approved for use, you're going 21 to open up the door in all district courts for 22 8-liners, period, because this is not even -- when you 23 sit down and let somebody intelligent examine what's 24 happened. 25 MS. TAYLOR: But I think, Saleem, you're 0139 1 focusing -- you're focusing on legal problems that 2 aren't our problem. Our problem is: If they submit 3 this and the Lottery finds that that meets the 4 definition of a pull-tab, then that's not our worry. 5 If the Lottery Commission finds it does 6 meet the definition of a pull-tab, that's not our 7 worry. It's their worry. But if they're willing to 8 try and bring something new and innovative to bingo, I 9 can't -- I can't see saying: Oh, no, we're not 10 interested, and turning our faces away from it. 11 MR. TAWIL: Can we get more detail, 12 Valerie, about that portion that dispenses this so 13 we'll learn more about it? 14 MS. SIEGRIST: Sure. 15 MR. TAWIL: Just all the details on 16 that. 17 MS. SIEGRIST: Do you want to come over 18 and look at it? 19 MR. TAWIL: Well, no. I just -- it 20 doesn't have to be done right now because I don't want 21 to take up everybody's time. But I'd like to better 22 understand the fact of how do you get a deal. 23 What is a deal? If I look at statutes 24 that says there's a deal the operator buys, how do 25 they buy their deal? 0140 1 MS. SIEGRIST: The operator will buy a 2 CD ROM along with these tickets that will be packaged 3 into a box and sealed with a flair on top and shrink 4 wrapped. The distributor will hand it to the operator 5 and the operator will put the tickets into the printer 6 and sell the tickets as the customer comes up. 7 MR. TAWIL: So they would buy -- okay. 8 The CD ROM mimics the deal package? 9 MS. SIEGRIST: Right. 10 MR. TAWIL: I'm with you. So that CD 11 ROM presides in the process here. So what do they get 12 in terms of the cards? 13 MS. SIEGRIST: They get the -- 14 MR. TAWIL: They get blanks. 15 MS. SIEGRIST: No. They won't be blank. 16 The front of the ticket will contain the payout 17 information, Texas Lottery Commission seal, the 18 information that's required to be printed on the face 19 of the ticket. 20 MR. TAWIL: Okay. So what happens when 21 they -- now how do they -- what's on the front? Does 22 it have the tape on it already? 23 MS. SIEGRIST: No. When it's spit out 24 of the printer, it will have the cover on it. 25 MR. TAWIL: Does it come with a cover on 0141 1 it? 2 MS. SIEGRIST: The printer will have the 3 covers in it. And so as the card is ejected from the 4 printer, it will cover the pay code information. 5 MS. MATTHEWS: Since it is so difficult 6 to understand this, why is it even on here? Is there 7 some requirement that it be on here? 8 MS. SIEGRIST: Yes. 9 MR. TAWIL: Yeah. They're trying to 10 circumvent the pull-tab. 11 MS. SIEGRIST: We're trying to make -- 12 develop a product that will fit what the rules are. 13 MR. TAWIL: Why don't you -- why can't 14 we have a product that will read anybody's pull-tab? 15 Why don't you just read -- there's seven or eight 16 people in the industry that make pull-tabs. 17 Why don't you read all -- why don't we 18 have a -- this is the answer that I gave Valerie in 19 that -- the national association on this was: Look, 20 the communications industry, the way the manufacturers 21 work together is they work with a set of standards 22 instead of fighting each other. 23 What's happened right now is a fight 24 between Multimedia and the pull-tab people. If you 25 don't understand that, that's what I perceive. You 0142 1 can talk to them. And my answer to the pull-tab 2 industry was: Why don't we create through the 3 Advisory Committee a set of standards that everybody 4 makes a pull-tab complies with the same standards? 5 And then Multimedia Games and everybody 6 else who wants to have readers and verifiers can read 7 anybody's pull-tabs. That doesn't shut anybody out. 8 The way you're moving in this direction -- this is 9 proprietary, only to Multimedia and nobody else. 10 You're shutting out all the other 11 pull-tab people. That's all I'm saying. And if you 12 get through the rules and past the definition and the 13 Commission approves that, then you have a barrier to 14 competition because the pull-tab people don't do this. 15 But you're trying to use the pull-tab 16 rules to do what you're trying to do. Do you see what 17 I'm trying to say? Maybe we can have a standard for 18 pull-tabs for everybody. 19 Billy, is that conceivable that 20 everybody makes pull-tabs the same way? If you're 21 going to have a machine to read them, it ought to read 22 everybody's pull-tab. 23 MR. ATKINS: There's actually an 24 association called the North American Gaming 25 Regulators Association and they've developed standards 0143 1 on pull-tabs that -- 2 MR. TAWIL: Do these -- 3 MR. ATKINS: -- most of the current 4 manufacturers that I'm aware of follow those standards 5 at a minimum. I mean, those -- I don't think those 6 standards are meant to be all-encompassing, but a 7 minimum standard. 8 MR. TAWIL: I don't think they need the 9 approval for that machine. That machine is a benign 10 piece of property that sits there and anybody can use 11 it. It doesn't do anything, right? 12 MS. SIEGRIST: Thank you for making my 13 argument. 14 MR. TAWIL: But the argument is that 15 you're -- what you're doing, though, is you're trying 16 to create a pull-tab that is not a standard like 17 everybody's elses. 18 You're creating a -- this is not even a 19 pull-tab. And you're trying to tell me that this is a 20 10-play. So now we're talking about playing as 21 opposed to truly making a pull-tab that really is 22 because literally, the words, the way they're written 23 in the statutes, you're saying: Okay. I don't 24 violate anything. 25 And how do you get around the definition 0144 1 of VLTs? You say: Oh, well, this is not a lottery 2 terminal. It's just a verifier. So it seems to me 3 like it's a long stretch. 4 And probably the operator at the end of 5 a session, the way they reconcile their stuff is they 6 read the CD ROM and see how many they sold and it 7 spits out a report, right? 8 MS. SIEGRIST: And that's the other 9 thing that this product brings to an organization is 10 the accountability. There will be no doubt on how 11 much that ticket is worth. You won't be able to pay 12 out more than you're supposed to in a deal. 13 You know if it's long -- there's -- you 14 know, with a traditional pull-tab deal, operator 15 that's not paying attention, you could inadvertently 16 pay out too much in a prize. That's not going to 17 happen with this device. They could -- they could 18 accept -- 19 MR. TAWIL: They have that already on 20 the system, the pull-tab portion that shows you how 21 you pay out, but it reads anybody's pull-tab. That's 22 what I'm trying to say, regardless of which vendor 23 makes it. 24 And we're departing here by going to 25 whole new line that's proprietary to one company under 0145 1 the pull-tab rules. So I guess the burden is up to 2 the Lottery Commission to approve it. 3 But is it mainly the ticket, Billy? Is 4 that what y'all are going to have to approve? What 5 does the approval process require on this, just the 6 pull-tab ticket? 7 MR. ATKINS: Companies generally submit 8 artwork prior to submitting the deal. Once approval 9 for the artwork has been submitted then the companies 10 submit the deals for testing. 11 MR. TAWIL: Do you have to approve their 12 machines, also? 13 MR. ATKINS: Don't know. 14 MS. SIEGRIST: It's our intention when 15 we submit, Saleem, to allow the operator -- 16 MR. TAWIL: How do you get around the 17 tracking rules, Billy? 18 MR. ATKINS: Don't know. This is -- I 19 don't have a lot prepared for this, Saleem, because 20 there wasn't a lot of information provided to me 21 beforehand. 22 Now I will tell you I have had the 23 opportunity -- some of us did go over to Multimedia's 24 office and look at this device earlier. And at the 25 time -- correct me if I'm wrong, Valerie -- it was 0146 1 referred to as a pull-tab validator? 2 MS. SIEGRIST: Right. 3 MR. ATKINS: And I think you referred us 4 to Colorado that had legislation authorizing pull-tab 5 validators? 6 MS. SIEGRIST: Right. 7 MR. ATKINS: I'm not -- I think we're 8 going to be interested in seeing where your counsel 9 has found pull-tab validators referred to in the Bingo 10 Enabling Act. But that's something we'll look at when 11 the time comes. 12 MS. MATTHEWS: What about the costs of 13 these machines? I mean, how are we paying for 14 something like that? Is it extra? 15 CHAIR BRACKETT: Let me ask the 16 reporter: Are you able to hear these people? 17 THE REPORTER: Barely. I need all of 18 y'all to speak into the mike, please, and one at a 19 time. 20 MS. MATTHEWS: My question was: Is 21 there an additional cost because there's a machine 22 involved? 23 MS. SIEGRIST: There will be. It will 24 be priced different than a traditional pull-tab game. 25 Traditional pull-tabs are charged, you know, two or 0147 1 three cents each. The pricing will be costed 2 differently, but we believe that we'll be competitive 3 with what instant pull-tabs are now. 4 MR. TAWIL: I'm going to take you up on 5 a close-up technical demonstration, but not take 6 people's time up on that. Is that okay? Thank you. 7 CHAIR BRACKETT: All right. We have -- 8 are you finished? Is it time for witness testimony? 9 Mr. Young just -- Mr. Young, you can speak now. 10 This is Robert young. He's with the 11 AMVETS No. 77. 12 MR. YOUNG: That's AMVETS, all capital 13 letters. I got interested. I was going to sit back 14 there and watch today. I wasn't going to get up here 15 and say anything, but y'all intrigued me. 16 I see this -- like I say, I didn't -- 17 most of you know me. I've came -- been here before. 18 I'm just kind of an old country boy that sit there and 19 like everything simple. But to me, this is like 20 saying we don't want the automobile because we might 21 put the people out of business that sells horses. 22 You know, I think we've got to look at 23 stuff like this. And I've got to agree with Suzanne 24 that we need to look at innovative. This is the 25 future. Young people, they like the machines. And as 0148 1 was stated earlier, our clientele, our people that we 2 generate the money for, the charities are older 3 people. 4 If you go to these places where they've 5 got the 8-liners and do all that, you'll notice 6 there's older people in there, of course, but the 7 majority of them are some of your younger people. To 8 say that this is going to put everybody that sells 9 pull-tabs or whatever out of business, I don't think 10 so. 11 But I think this would be a choice you'd 12 have. If you don't want them, you don't have to get 13 it. I think we need to look at everything we can look 14 at and see it. I've -- you know, I've -- you know, 15 like I said, run up the flag and see who salutes it. 16 So that's basically all I got to say. I 17 just like -- I think as Advisory Committee, I think 18 you need to keep an open mind and see what -- see 19 what's presented and I'm not -- I'm for this. I'm 20 not -- I'm not opposed to anything that's innovative 21 and could possibly get -- generate more monies for the 22 charities. 23 And I thank you for your time. 24 CHAIR BRACKETT: Thank you, Mr. Young. 25 MR. PAVLOVSKY: Virginia, if I may? 0149 1 CHAIR BRACKETT: Yes. 2 MR. PAVLOVSKY: One -- one comment. 3 I've heard a lot about for charities, for charities, 4 for charities. And I represent charities on this 5 board. 6 And I agree with that, with every one of 7 those. But it's not like the charities are the only 8 ones that's going to make any money. So I want -- you 9 know, keep that in the back of your mind, too. We 10 need -- we need the new tools out here. 11 I think -- I think about 80 percent of 12 what Saleem said should have been argued, you know, 13 with the manufacturer's legal counsel, not in this 14 forum. 15 The last thing that I want to point out 16 is that every time I walk into a convenient store and 17 where there's -- where Lottery tickets are sold, 18 there's a new product there, especially the 19 scratch-off. There's a new one, a new one every time 20 you walk in. There's a whole bank of rolls up there 21 now. 22 Bingo has got to keep up with that, 23 also. We've got to change. We've got to keep up with 24 it. I'm not going to sit here and argue with anybody 25 about the legal definition because that's not our job, 0150 1 at least that's not the way I see it. 2 But I agree we need to look at change. 3 And I totally agree with what you're saying. We got 4 to keep up with them. Coming from our area over in 5 the Greater Houston area, there's a lot of buses going 6 to Louisiana and there's a lot of entertainment dollar 7 going in that direction. And we've got to do 8 something to keep some of that money in Texas. 9 MR. TAWIL: Why don't we get bingo 10 totally deregulated? 11 MR. PAVLOVSKY: Go see your legislator. 12 MR. TAWIL: That's the problem with this 13 industry, see. There's barriers and there's 14 regulations and people don't see all the nuances of 15 what's happening. 16 MR. PAVLOVSKY: There's regulations in 17 every industry in the world, Saleem. 18 MR. TAWIL: Yeah. This is a free 19 country. 20 CHAIR BRACKETT: Danny, did you want to 21 say something? 22 MR. MOORE: No. I just -- you know, 23 Multimedia isn't the only one out there. I just want 24 to reiterate that. I mean, Gameco has got a product 25 and they're licensed in this state as a pull-tab 0151 1 manufacturer. 2 Bingo King has got the ability to put 3 pull-tabs on video screens. I don't necessarily think 4 we have to put them in stand-up 8-liner-looking 5 machines, either. They could be on the tabletops on a 6 monitor. 7 Maybe the -- you know, there's things to 8 think about and I think everybody better sit down and 9 all the manufacturers need to talk about these things. 10 We do have a session coming up and we -- some of us 11 have talked. 12 So I just -- I think that we'd be 13 foolish not to pursue this avenue because if we don't 14 and -- well, we could fail if we do it legislatively, 15 but -- 16 MR. TAWIL: If you recall, we had in 17 1995 a company called Diamond or something like that, 18 don't you? 19 MR. MOORE: Diamond Games. 20 MR. TAWIL: They offered a similar 21 product, but it had bar codes on it. I don't -- 22 apparently, I'm coming across in the wrong -- what I'm 23 not intending. And that is that I'm not intending to 24 obstruct this. 25 What I would like to say then -- you 0152 1 mentioned Gameco. Why don't we have -- why don't we 2 go ahead and try to go through the process of making 3 rules that -- or help propose rules that would allow 4 all of them to have this, not just one? 5 Just open it up for everybody. Anybody 6 that makes a pull-tab that wants to have a verifier 7 ought to be able to have one. 8 MR. MOORE: Sure. 9 MR. TAWIL: Period. And it wouldn't 10 take hardly anything to do that because when they make 11 those pull-tabs, they could easily put a bar code on 12 the outside of it. And you read -- that's what 13 Diamond offered us. 14 So do y'all want to move in that 15 direction? 16 MR. MOORE: Absolutely. 17 MR. TAWIL: And try to open it up for 18 everybody? 19 MS. TAYLOR: Saleem, I don't think that 20 bring -- I mean, Multimedia coming here today wasn't 21 trying to close anybody out, as far as I was 22 concerned. 23 Like I told you, I'm not a big fan of 24 any particular person at this point. My point was the 25 same as the first time when I asked Susan Schultz to 0153 1 show us about sealed cards and event tickets. And she 2 got slammed when she got here. 3 And I really appreciate Multimedia for 4 coming and taking the heat today because she got in a 5 lot of -- there was a lot of rudeness towards her. I 6 felt embarrassed that she had come this far because I 7 had asked her to. 8 And yet look at what -- I mean, it 9 started something that -- now today -- I mean, two 10 months from now, we should have this stuff in our 11 hall. But I didn't invite her because I even knew 12 Susan Schultz. 13 But she was somebody that was willing to 14 come to the meeting and show the BAC what sealed cards 15 and event tickets were. If she hadn't done that and 16 hadn't come to help us get started and get a little 17 bit knowledgeable about the subject, we probably 18 wouldn't have them today. 19 So it's not because I'm a fan of any 20 particular company, but you've got to start somewhere. 21 And these people were willing to come today to show us 22 a product that is out there. Whether they can pass it 23 through the Lottery Commission now or not, I don't 24 care. 25 I just want us to continue to move 0154 1 forward with getting new products into our bingo 2 halls. And we have to take that baby step somewhere, 3 somehow to start talking about it. And just trying 4 to -- in fact, I just realized today that we have 5 members on the committee now that don't know what a 6 sealed card or an event ticket is. 7 Do you know that? Do you know what it 8 is, Pete? 9 MR. PAVLOVSKY: I do now. 10 MS. TAYLOR: Only because I told him. 11 Marilyn didn't know what it was. I mean, this is -- 12 we've got to continue to educate the committee and to 13 educate the people that come to the meetings and 14 everybody in bingo in this state if we're going to 15 keep having bingo or we will be down like some of the 16 other states are and we won't have to worry about 17 bingo because there's not going to be very many of us 18 left. 19 So that was my point. It's not because 20 I'm promoting any particular person. 21 MR. TAWIL: You're putting machines in 22 the hall. Now let's -- let's call reality what it is. 23 When legislators or other people look at that -- look 24 at that. I'm looking at it right now. It looks like 25 a slot machine. You and I see the sevens across 0155 1 there. 2 MS. TAYLOR: And do the customers not 3 love that stuff? 4 MR. TAWIL: Let's -- well, let's get 5 proactive and say what we want to do as a committee 6 here is support the process where all of the people 7 that make this stuff ought to be able, free and open 8 to compete to do that. 9 MS. TAYLOR: Go for it. That's all I'm 10 asking. 11 MR. TAWIL: Okay. Let's do it. 12 MS. TAYLOR: I just want us to move 13 forward with this. 14 MR. TAWIL: Make a motion. 15 MS. TAYLOR: Okay. I make that motion, 16 Saleem, what you just said. Do you second that? 17 MR. TAWIL: Sure, I'll second it. I 18 think -- I'm pro-competition. I'm pro everything that 19 you can imagine. I against somebody creating 20 something that's proprietary only to them. 21 CHAIR BRACKETT: Okay. If a motion has 22 been made and seconded -- 23 MR. TAWIL: What was the motion? 24 CHAIR BRACKETT: Could you possibly read 25 the motion back to us? 0156 1 (Motion read back) 2 MS. TAYLOR: Okay. Here goes. 3 CHAIR BRACKETT: Please reword your 4 motion. 5 MS. TAYLOR: I can reword my motion. I 6 make the motion that the BAC supports innovative 7 technology and pull-tabs in bingo. Any other words 8 you want to add? 9 MR. TAWIL: Well, before you go that 10 far, let me just suggest this: The best thing to 11 do -- 12 CHAIR BRACKETT: Wait a minute. 13 MR. TAWIL: Well, the thing is it's not 14 quite complete. 15 CHAIR BRACKETT: Okay. 16 MR. TAWIL: It's not quite complete. 17 Let me -- let me articulate to you what the objective 18 is and you can say it any way you want to. 19 CHAIR BRACKETT: Okay. 20 MR. TAWIL: The objective is to have a 21 set of standards which is the rules that we spent so 22 much time creating, the pull-tab rules. The pull-tab 23 industry is out over here in left field. 24 Multimedia Games is over here all by 25 itself. What I'm trying to say is: Let's open it up 0157 1 where they all come together, they have a set of 2 standards for creating pull-tabs that are read by 3 verifiers, period, no matter whose verifier it is, no 4 matter whose pull-tab it is. 5 An let's get it opened up and let's get 6 it going as quickly as we can. 7 CHAIR BRACKETT: Okay. Well, Saleem, 8 the way this motion is worded, it really does. It 9 just says: Bingo Advisory Committee supports 10 innovative technology in the pull-tab industry. 11 MR. TAWIL: Yes. I do support that 100 12 percent. 13 CHAIR BRACKETT: Okay. So you're going 14 to second the motion of Suzanne? 15 MR. TAWIL: I second the motion. 16 CHAIR BRACKETT: All right. I hope that 17 we're okay parliamentary-wise on this. 18 Does everyone understand the motion? 19 MR. TAWIL: Danny, jump in and help us 20 with this because I don't know whether you support it 21 or not. 22 CHAIR BRACKETT: The motion is that the 23 Bingo Advisory Committee supports innovative 24 technology in the pull-tab industry. 25 MR. MOORE: Are you asking me? 0158 1 CHAIR BRACKETT: No. I'm just rewording 2 -- restating the motion. And I think Saleem was 3 asking for you to -- 4 MR. TAWIL: If you had any comments on 5 it. 6 CHAIR BRACKETT: If you had any 7 comments. 8 MR. MOORE: No. I agree that we should 9 support this wholeheartedly. The battle is going to 10 happen outside this room right here. It's going to 11 happen through legislation. I strongly believe that. 12 MR. TAWIL: No, not necessarily, Danny. 13 Because I think what Billy is saying here is if it -- 14 the form, fit and function, he can't do anything but 15 approve it. 16 MR. MOORE: I understand. 17 MR. TAWIL: Isn't that what you said, 18 Billy? 19 MR. ATKINS: Yeah. We looked at the 20 statute. 21 MR. TAWIL: That's right. And they're 22 saying that they have it within the statutes to fit. 23 MR. ATKINS: But let me try and clarify. 24 Just because they say it is, that doesn't necessarily 25 mean it's true. 0159 1 MR. MOORE: Exactly. 2 CHAIR BRACKETT: And also, it's not our 3 job to decide, correct, how it fits? 4 MR. TAWIL: No, it's not. 5 CHAIR BRACKETT: No one is paying 6 attention to me. The sandwiches have arrived. 7 MS. TAYLOR: I am. 8 CHAIR BRACKETT: All right, so... 9 MR. WHITTINGTON: All I'm saying is if 10 we're going to have something like this, we got to 11 make sure it works. We got to make sure when the 12 customers go up and put that pull-tab ticket in it, it 13 works. 14 And on the other hand, you've got to 15 have quite a few of different pull-tab people to go up 16 and check their pull-tab. If you've got one, you got 17 people standing in line. They're going to get 18 disgusted. Then you're going to lose more customers. 19 I mean, you got to think about 20 everything. 21 MS. TAYLOR: Well, this comes -- this 22 comes in to using your four hours of your bingo 23 session. You're given four hours. How much do you 24 utilize? 25 MR. WHITTINGTON: Right. Right. And 0160 1 that's another thing: How much can we use? 2 MR. TAWIL: Larry, the way this is made 3 right now when you look at it -- now if you're dealing 4 with average public, nobody's going to read that whole 5 series of alphanumeric characters. 6 MS. TAYLOR: But Saleem, they wouldn't 7 be purchasing -- 8 MR. TAWIL: They're going to go to the 9 machine. They're going to - 10 MS. TAYLOR: Exactly. They wouldn't be 11 purchasing this particular pull-tab because they want 12 to read these characters. 13 MR. TAWIL: No. No. 14 MS. TAYLOR: They like the idea of that 15 machine. 16 MR. WHITTINGTON: Okay. Why deal with 17 the pull-tabs? Why not just deal with the machines, 18 just have the machines? Why the pull-tab? 19 MS. TAYLOR: Because right now the 20 company is trying to create something -- and I would 21 love to see us go to the video pull-tabs and heck with 22 pull-tab readers. But maybe this is something that we 23 could have. But we need to look at everything that's 24 open and everything that's out there. 25 MR. WHITTINGTON: I understand what 0161 1 you're saying. I understand. I understand that. 2 What I'm saying is: Number one is when you're dealing 3 with game rooms, this and that, they're going to be 4 around forever. 5 Why not give them the same playing field 6 and deal with that part of it because we've had them 7 before, we don't have them anymore and now -- 100 8 percent because people are in the game rooms. 9 Why not deal with hey, regulate this. 10 50 percent go to the charity. Five percent tax and 11 everybody would have money. 12 MS. TAYLOR: I think the chances of 13 getting a reader -- at this point, a video tab reader, 14 a video pull-tab is going to be a lot greater than 15 getting the Legislature to say that we can have 16 8-liners in the bingo halls. 17 MR. WHITTINGTON: Not really. 18 MS. TAYLOR: We'll see. 19 MR. WHITTINGTON: I don't think so. 20 MS. TAYLOR: We'll see. We'll see what 21 happens. 22 MR. WHITTINGTON: I think it's -- it's 23 two in one hand and one hand in another. That's what 24 I think. 25 MS. TAYLOR: So -- 0162 1 CHAIR BRACKETT: Okay. So the only 2 business that we have to attend to here and the only 3 authority that we have is to say that we support 4 innovative -- 5 MR. WHITTINGTON: Yes, we do. 6 CHAIR BRACKETT: We support innovative 7 technology. 8 MR. WHITTINGTON: Yes. 9 CHAIR BRACKETT: All right. Are you 10 ready for the question? 11 All in favor of the motion as it was 12 made and seconded? Do I need to reread it or do you 13 understand it? All those in favor, please say aye. 14 MR. MOORE: Aye. 15 MR. WHITTINGTON: Aye. 16 MR. PAVLOVSKY: Aye. 17 CHAIR BRACKETT: Aye. 18 MR. TAWIL: Aye. 19 MS. TAYLOR: Aye. 20 MS. MATTHEWS: Aye. 21 CHAIR BRACKETT: Is there any 22 opposition? 23 There is none. Okay. 24 Thank you for bringing the equipment and 25 for showing it to us. And I think it's kind of fun 0163 1 looking. That was Item 15, which would move us back 2 then to -- 3 MR. TAWIL: 10. 4 CHAIR BRACKETT: 10? No. We need to go 5 to 8, I think. 6 MS. TAYLOR: We did it. 7 CHAIR BRACKETT: We did it. Okay. I'm 8 sorry. I'm sorry, Billy. I'm sorry I didn't remember 9 your report. 10 MR. ATKINS: That's fine. 11 CHAIR BRACKETT: Oh, and Mike Pitcock 12 made his report, okay. 13 So now we're back to you again, Billy. 14 MR. ATKINS: Okay. 15 CHAIR BRACKETT: Make it long so we can 16 eat our sandwiches. 17 MR. ATKINS: I will do my best, Madame 18 Chairman. Thank you. 19 AGENDA ITEM NO. 10 20 This is primarily for the new members. 21 As courtesy to the new members and of course, 22 refresher for the old members, I'd like to start off. 23 One of the things we've provided you with is this 24 notebook containing a copy of the Act, as well as 25 other information about the Bingo Division and bingo 0164 1 in the state of Texas. 2 We hope that you find that useful and 3 informative. And there is a place in there for you to 4 keep, for example, copies of the Bingo Bulletin. So 5 as those come out, we would suggest that you might 6 consider bringing this with you to future meetings 7 because again, I think it will become a useful 8 reference tool for you. 9 Another thing that we did pass out, 10 Pete, that you had asked for was the copy of the 11 progressive game. And we also put that on a 12 three-ring format so that you can keep it in your 13 notebook if you want to. 14 What I'd like to do today is -- I call 15 it my 25-cent tour of the Bingo Division on kind of 16 how we operate, how we fit in to the division here. 17 I'm going to talk medium fast, Madame Chair, if that's 18 okay. But feel free to interrupt me and ask me any 19 questions you have at any time. 20 The first thing I'd like to show you, as 21 all of you know, this is the 20th anniversary of 22 Charitable Bingo. And we have some activities in the 23 office that we're working on to call the attention to 24 that, some things that we've already been doing. 25 If you've been out to our Web site, you 0165 1 might have noticed that there are another -- a number 2 of local jurisdictions that have issued proclamations 3 around the state congratulating Charitable Bingo on 4 their activities for the past 20 years. 5 This is our mission statement and this 6 is what the staff and the Bingo Division strive for: 7 Giving authorized organizations opportunity to raise 8 money for the charitable purposes. Of course, we're 9 very -- we're very interested in sharing. The 10 Charitable Bingo funds are used for authorized 11 purposes and we're open to promote and maintain the 12 integrity of Charitable Bingo throughout Texas. 13 To give you an idea, this is how we're 14 structured. I think Diane referenced it earlier. I 15 report directly to the three commissioners. I don't 16 go through the executive director. I answer to them 17 at commission meetings. If you haven't been to one 18 before, I'm up here with them and I report on all 19 bingo-related activities that may come before the 20 Commission. 21 I am assisted by a very capable 22 assistant director, Phil Sanderson. He has been in 23 and out throughout the day. He -- depending on how 24 far we get, I told Virginia earlier I have to leave by 25 three o'clock today. If we're not through, he will 0166 1 come in and fill in for me. 2 The division is made up of three 3 sections. And this will show you kind of how they're 4 spread out. What I'd like to do is go through each 5 section individually. 6 The Licensing section, as the name 7 implies, is responsible for all licensing activities 8 that go on in the state of Texas. They process all 9 original applications. As all of you know, licenses 10 are renewed on a annual basis. They process all of 11 the temporary licenses, all of the amendments, whether 12 they're fax, phone or through regular mail. 13 Our Licensing section works really 14 closely with licensees and applicants to clear up any 15 deficiencies before a license is issued. 16 These are all of the types of licensees 17 that we have, as well as the number. I believe that 18 this figure is accurate as of the first part of June. 19 We have about 1450 charities conducting bingo, just 20 under 500 commercial lessors, 16 distributors. I 21 think that should say 14 manufacturers and two system 22 service providers. 23 Again, real briefly, just the different 24 types of applications they process: original 25 applications for someone who's never had a license 0167 1 before or whose license has expired and they want to 2 come back in. They process the annual renewals, 3 application types, the amendments and the temporaries. 4 And as a -- as a lot of you know, I'm 5 sure you know, you don't have to have an annual 6 license in order to get a temporary license. And we 7 have on average probably 350 to 400 organizations a 8 year who don't have an annual license that get a 9 temporary license to conduct bingo games, say during 10 the fall festival or in conjunction with some other 11 activity that they're having. 12 Our largest class of licensees are 13 fraternal organizations. They make up about half of 14 our licensing base -- I was afraid that was going to 15 happen -- at about 50 percent. You know, fraternal 16 organizations are often referred to lot of times as 17 the big hairy animal groups: the Moose lodges, the 18 Elks, the Lions, things like that. 19 It could also be youth sports 20 activities, Kiwanis, Knights of Columbus, etcetera. 21 They're followed by veterans organizations. Churches 22 or other religious organizations make up just over 12 23 percent. Volunteer fire departments, almost five 24 percent. And then medical research groups, about 25 three and a half percent. 0168 1 Next is our Accounting Services section. 2 They process all of the quarterly reports that 3 organizations submit to our agency. For those 4 organizations that fail to file their quarterly 5 returns, they refer those to the Audit Services 6 section for collection. 7 Just like the Licensing section commutes 8 with -- communicates with organizations about 9 deficiencies associated with their licensing, 10 Accounting Services works with organizations who may 11 have outstanding liabilities or tax issues. They 12 monitor the charitable distributions. 13 Organizations, as a lot of you know, get 14 a letter quarterly informing them what their 15 charitable distributions should be. They prepare the 16 bond payment demand notices and collecting remittance 17 on delinquent accounts. They process loan 18 applications that organizations submit. 19 And they process the allocation checks, 20 the local jurisdictions that we make on a quarterly 21 basis. And finally, the Accounting Services section 22 processes all of the incoming mail and money for the 23 entire division. 24 Now something new for Accounting 25 Services section is the Specific Projects section that 0169 1 we've recently formed. And their primary 2 responsibility right now is to conduct the testing of 3 the -- we have the bingo equipment products. Right 4 now the biggest part of that, of course, is the 5 pull-tabs and the new pull-tabs that we're getting in. 6 And I'll talk a little bit more about 7 that later on. They also coordinate between the 8 Security and Legal divisions on both investigations 9 and hearings that are ongoing. They assist with the 10 development and implementation of all of our 11 publications, such as the Bingo Bulletin. 12 They assist with the development and 13 maintenance of the Operator Training Program. I'll 14 talk a little bit more about that later on. That's 15 actually conducted by the Audit Services section, but 16 they assist with keeping that updated. 17 They're looking into other gaming and 18 bingo trends around the nation and North America. And 19 they also monitor all of our rules and procedures and 20 make sure that they stay current. 21 Finally, our Audit Services section, 22 again kind of like the name implies, they perform 23 location verification inspections and pre-licensing 24 interviews. Depending on how long most of you've been 25 licensed, you'll know that, you know, before the first 0170 1 bingo ball is drawn, we sat down with organizations. 2 We go over the Act. We go over the 3 rules. We go over the licensing requirements, the 4 recordkeeping requirements. Audit Services performs 5 all of those functions for us in the pre-licensing 6 interviews. They also perform educational books and 7 records inspections for each licensee. 8 They do the tax reviews. That's part of 9 what I mentioned earlier in association with the 10 Accounting Services section. They conduct compliance 11 reviews and audits on the organizations. They also 12 conduct financial audits if in one of their client's 13 reviews or serious discrepancies are found in an 14 organization's records. 15 They may assist the Security Division 16 with investigations. They assist with the testing of 17 the electronic cardminding devices, pull-tab 18 dispensers and SSP software. And as I mentioned 19 earlier, the Audit section is primarily responsible 20 for operating and actually conducting the Operator 21 Training Program. 22 We have essentially five regions 23 throughout the state where we have audit staff. We 24 have the Odessa region, which is the largest area 25 land-wise but the smallest in number of organizations. 0171 1 Dallas is our largest region in order of 2 number of licensees. We have offices in Houston, San 3 Antonio. And then the immediate area surrounding 4 Austin makes up our Austin region. And we have staff 5 here. Each region has a regional manager. The 6 regional manager in Austin is also responsible for 7 oversight of the Odessa office. 8 I wanted to talk real quickly about the 9 different roles that the different divisions within 10 the Lottery Commission provide for the Bingo Division. 11 Security Division conducts all of the background 12 checks, both on employees here at the agency, as well 13 as bingo applicants. 14 They assist with our manufacturer and 15 distributor inspections. And all of the incoming 16 complaints first go to the Security Division where 17 they're analyzed and if necessary then referred to, 18 say the Bingo Division or Bingo Audit. 19 The Legal Division conducts all of our 20 administrative hearings. As Diane mentioned earlier, 21 they process all of the agency's open records. They 22 assist with the development and formulation of our 23 administrative rules and agreed orders, and they also 24 provide legal opinions to the Bingo Division. 25 The Financial Division, much like they 0172 1 do for the rest of the agency, they assist us with 2 budgetary matters, purchasing issues or payroll 3 issues, the development -- I think Nelda referred 4 earlier to the legislative appropriations requests. 5 You'll hear us refer to the LAR -- and all of the 6 division's performance measures. 7 The one thing that they will do specific 8 to the division is they also assist with the 9 processing of the allocations that we make to local 10 jurisdictions. 11 The Marketing Division assists us. They 12 actually do the graphic layout for the publications 13 such as the Bingo Bulletin and they have research 14 staff up there that assists us. 15 The Human Resources Division just 16 provides the same services for Bingo that they do for 17 the rest of the agency. 18 Again, the IT department provides the 19 same support services for us that they do for the rest 20 of the agency. They are also closely involved, just 21 like Financial is, with the allocation process. 22 Even the Lottery Operations Division 23 provides a lot of support to the Bingo Division 24 because that's where the Facilities section is 25 within -- within the agency. So they're responsible 0173 1 for maintenance of all of our facilities both here in 2 Austin, as well as the regional office. And they 3 operate the mail room and copy center. 4 Before I go any further, one of the 5 things I want to point out, Nelda Tevino, who you met 6 earlier, was nice enough to remind me that we don't 7 have a slide for her up here. And that's my fault. 8 But Nelda's group is very active in assisting the 9 Bingo Division any way they can. 10 Our Communications Division writes and 11 issues for us news releases. Those usually occur in 12 conjunction with the allocations to local 13 jurisdictions. They produce video news releases that 14 are put up through the agency's satellite feed to all 15 of the television stations in the state. And they're 16 also responsible for maintaining the agency's Web 17 site. 18 Real quickly to give you an idea of how 19 we are funded -- I think Larry, you might have 20 mentioned earlier the amount of money that's brought 21 in and the amount of money that's spent. Bingo will 22 through the price fees that's collected, the gross 23 rental tax that's collected, the license fees, all of 24 the funds that we collect, we'll deposit to the 25 General Revenue Fund on an annual basis probably about 0174 1 $25 to $30 million, somewhere in that area. 2 And we have additionally then -- as you 3 can see on this chart -- allocated about $2.6, $2.7 4 million annually in order to fund our operations. 5 This spike that you're going to see here in the FY2000 6 is a result of the temporary fee increase that the -- 7 that was imposed in order to pay for the development 8 of the new CBS system. 9 And I'll talk a little bit more about 10 that in a minute. But as you can see, again the 11 appropriation for the division has remained relatively 12 stagnant throughout the years. 13 These are the budgeted bingo FTEs. We 14 started out at approximately 49. Throughout the 15 years, back in -- looks like -- fiscal year '97, '98, 16 two vacant FTE positions were reallocated throughout 17 the Lottery Commission as a whole. This year, those 18 positions have been reallocated back to the Bingo 19 Division. 20 Those two positions are what make up 21 essentially the Special Projects section that I 22 referred to earlier and all of the responsibilities 23 that they've assumed. What I have done is two of 24 those vacancies in the Special Projects section were 25 filled internally. 0175 1 And I have -- I've transferred one of 2 those vacant FTEs from the Licensing section to the 3 Special Projects section. So that's where those three 4 positions in Special Projects come from. 5 MR. TAWIL: Billy, I think you've told 6 me this before. The FTEs requires legislative 7 approval, right? 8 MR. ATKINS: Yes, sir. 9 MR. TAWIL: Would it -- wouldn't it be 10 compelling for all of us to get behind the idea to get 11 the commissioners' approval -- or support -- not 12 approval, I guess support to go to the Legislature and 13 maybe increase the staffing requirements by at least 14 10 percent or more because we can show that the 15 revenue generated far exceeds the -- do you follow 16 what I'm trying to drive at? 17 MR. ATKINS: I -- I -- 18 MR. TAWIL: Any logical business would 19 say -- we'd go to the chairman of the board and the 20 board of directors would say: Look, we're putting $10 21 million in the pot. Why can't you let us have 15 more 22 employees? I mean, it makes logical sense. 23 Isn't that something worthwhile that we 24 can work on? 25 MR. ATKINS: I think -- I think that 0176 1 would probably be a legitimate item for y'all to 2 discuss. 3 MR. TAWIL: I'd like to see us do it 4 because -- like how hard. And it is the number of 5 things that got to be done versus the number of people 6 that are here. 7 MR. ATKINS: Well, we have assumed a 8 number of responsibilities over the years. And you 9 know, I try to every chance I get -- and I can't do it 10 enough -- give the staff credit for the work they do. 11 You know, I -- I'm one of those -- I joke with them 12 and I tell them they're now qualified to do anything 13 with nothing because they're a very talented group of 14 people. 15 This chart will kind of show a little 16 more along the lines of what Saleem was talking about, 17 those additional responsibilities that the division 18 has assumed throughout to year. You can see there's 19 been an increase in the number of licenses over the 20 years that we process, as well as responsibilities 21 that we've assumed either because they've been 22 transferred from the Bingo Division from other 23 divisions or changes to the Operator Training Program 24 or changes to the Bingo Enabling Act, such as the 25 Operator Training Program. 0177 1 Now I'd like to talk a little bit about 2 the new Charitable Bingo system. Again, a lot of you 3 know for several years the staff went to the 4 Legislature and we -- we asked for a new system 5 because the one we have is essentially the system that 6 was developed at the Comptroller's office and 7 transferred from the Comptroller's office to TABC, 8 from TABC here, over to the Lottery Commission. 9 And every time Bingo transferred and the 10 system transferred, it transferred into an environment 11 that wasn't -- that it wasn't compatible with. So it 12 had to be made compatible with the -- with the new 13 environment that it was going into. 14 So finally when the Bingo Division went 15 through a management audit, they looked at it. And 16 one of their recommendations is that we -- the Bingo 17 Division conduct a needs assessment on there and 18 consider the replacement of the CBS. So subsequent to 19 that audit recommendation, we did that. 20 We had the needs assessment. We took 21 that needs assessment to the Legislature. They -- 22 they authorized the appropriation contingent upon us 23 able to raise an equivalent amount of funds through 24 the license fees. So that's what prompted that 25 one-time, 25 percent license fee increase. 0178 1 Those funds have been collected and that 2 Rule, 402.572, has since been appealed. We issued a 3 request for offers on November 19th, 1999 and we 4 signed a contract with the company named Keane 5 Incorporated in January of 2000. The RFO, the request 6 for offer required the system to be fully operational 7 by July 1st of 2001. 8 In their original submission to us, 9 Keane informed us that they could have the system 10 completed by February 23rd, 2001. Now this slide as 11 of today is now outdated. It is now out of date. 12 Keane has not been working on the project or been on 13 site since Monday, June 3rd. 14 The Lottery Commission and Keane legal 15 representatives have held a conference call on June 16 7th in order to reach a resolution. Keane and the 17 Texas Lottery Commission have reached an impasse on 18 the negotiation of the disputed items that remain on 19 the contract. 20 The Lottery Commission is subsequently 21 working with and being represented by the Attorney 22 General's office regarding this matter. The Lottery 23 Commission sent a letter to Keane dated June 12th 24 informing them that the Lottery Commission is going to 25 proceed with the understanding that Keane has 0179 1 abandoned performance of their contract that the 2 Lottery Commission is going to pursue all available 3 remedies. 4 Keane's also been informed that the 5 Texas Lottery Commission intends -- does not intend to 6 put the completion of the project on hold pending the 7 outcome of the Chapter 2260 of the proceeding that's 8 currently pending. 9 While we're hopeful that the resolution 10 can be reached, the Lottery Commission is going to 11 seek again, all available remedies there are to 12 complete the development of the new Charitable Bingo 13 system. 14 MR. TAWIL: How much money have you paid 15 them, Billy? 16 MR. ATKINS: To date, we've paid them 17 about $500,000. 18 MR. TAWIL: That's about what, 80 19 percent? 20 MR. ATKINS: There's about $240,000 21 remaining. 22 MR. TAWIL: How much work, 20 percent? 23 MR. ATKINS: I'd rather not say. And 24 I'll tell you why. All of what I have been saying has 25 been scripted by the attorneys. And normally, I would 0180 1 say because -- because we're in a contract dispute 2 resolution proceeding -- you know, normally, I would 3 say: Do you have any questions? 4 I wasn't going to say that after this 5 because you know, this remains our major priority. 6 One of the things as we talked about in the past is we 7 want to be able to do is afford the organization the 8 opportunity to conduct a lot of their business on-line 9 real-time, get away from as much paper as we can. 10 This was our avenue to do this. 11 Unfortunately we're not there yet, but we are working 12 every way we can -- 13 MR. TAWIL: I don't know what kind of -- 14 MR. ATKINS: -- to bring this to a 15 resolution. 16 MR. TAWIL: I don't know if this would 17 be any help to you, but I'm willing to put our 18 resources and our technology, as well as software 19 including -- I don't know -- we have NT operating 20 system. 21 But I'm willing to come in here and roll 22 my sleeves up and help you solve this problem for 23 free. I can't imagine this happened. 24 MR. ATKINS: I'm going to -- I'm going 25 to pass that along to our folks. 0181 1 MR. TAWIL: I'll be glad to do it. 2 MR. ATKINS: Okay. 3 MR. TAWIL: From the engineering side. 4 Do you know what I'm saying? 5 MR. ATKINS: Yeah. Well, one of the 6 things that we're looking at, they have mirrored the 7 work that's been done so far. And our IT staff is 8 analyzing that and they're going to make what they 9 believe to be the appropriate recommendations. 10 You know, those could be -- right now, 11 you know, one of -- one of three things. You know, we 12 could either use in-house staff or contracted 13 programmers to continue to build on what's been 14 created so far. 15 We could develop a new system starting 16 from beginning using in-house staff or contracted 17 programmers. 18 Or we could issue a new procurement. I 19 more than likely will be assessing liquidated damages 20 against the company. And we also have a $700,000 21 performance bond. So we're going to be moving forward 22 on this. 23 And that is again, as I referred to the 24 25-cent tour. If any of you have questions, I'd be 25 happy to try and answer them. 0182 1 MR. MOORE: Billy, can I just ask, this 2 Accounting Services section, that's been -- that's the 3 division or the part of the Commission that looks at 4 tabs and bingo equipment and also the -- the video 5 bingo, right, like Game Tech and those things? 6 MR. ATKINS: The cardminding devices, 7 the electronic equipment is currently reviewed by the 8 Audit Division, by the Audit section. 9 MR. MOORE: Okay. 10 MR. ATKINS: The -- really right now 11 what Accounting Services is doing is primarily paper 12 and pull-tabs. 13 MR. MOORE: Okay. I can't remember what 14 meeting I was at, but you guys were talking about 15 possibly farming that out, I think to GLI. Is it GLI? 16 MR. ATKINS: GLI is one company that 17 performs testing. 18 MR. MOORE: Yeah. 19 MR. ATKINS: There are several. 20 MR. MOORE: Where is that at right now? 21 MR. ATKINS: It's still on the table for 22 discussion. 23 MR. MOORE: So it's a possibility? 24 MR. ATKINS: Uh-huh. 25 MR. MOORE: Okay. 0183 1 MR. TAWIL: It's hardware only, though, 2 Daniel. 3 MR. MOORE: I think it's a great idea, 4 personally. 5 CHAIR BRACKETT: Okay. There are no 6 other questions for Billy on this report, this agenda 7 item? That's a slick report on that. 8 Item No. 11 is also Billy Atkins. It's 9 a report on implementation of 402.554 regarding 10 pull-tab bingo. 11 AGENDA ITEM NO. 11 12 MR. ATKINS: Thank you, Madame Chairman. 13 This was requested, I believe, at the last BAC 14 meeting. 15 Particularly for the new members who may 16 not know, the Lottery Commission at their June 10th 17 2002 meeting adopted a new pull-tab rule, which has 18 many changes to it, including the authorization of a 19 variety of different styles of play. 20 The adopted rule was filed with the 21 Texas Register on June 11th. On the 12th, we sent a 22 letter to all manufacturers along with a copy of the 23 rule. And a copy of that letter is in your notebook. 24 We kind of laid out for them the time line that we 25 were going to be following for the approval process, 0184 1 etcetera. 2 We have -- we have also sent copies of 3 the rule to all licensees. It's on the Web site. It 4 is available. The rule becomes effective July 1st. 5 We are kind of surprised. To date, we have only 6 received two submissions for games that would fall 7 under the new rule. 8 We -- we were kind of anticipating 9 getting some more games in, that those manufacturers 10 would want to get those games tested and approved so 11 they could get on the market. But so far, they've 12 been very slow to come in. 13 MR. MOORE: I think -- and maybe I'm 14 nervous. Honestly, I think they're all trying to hold 15 their cards a little bit close to the rest of us. 16 Just they don't want to -- I mean, they all want a 17 competitive advantage on the new games, honestly. 18 MR. ATKINS: Well -- 19 MR. MOORE: It doesn't help us getting 20 it done. 21 MR. ATKINS: Right. 22 MR. MOORE: You know. 23 MR. ATKINS: And the discussion we've 24 had is that -- I think if you look at the letter, 25 we're going to hope that they would submit them 0185 1 simultaneously so they could be tested and approved at 2 the same time. 3 If we have a situation where, you know, 4 I guess for lack of a better word, some folks don't 5 want to play right now, you know, we may have to go 6 back and rethink that and move ahead with our process. 7 MR. WHITTINGTON: Well, the new 8 pull-tab, it should -- that's coming up -- is really, 9 I think is going to increase revenues in the hall 10 quite a bit from what I've seen of the whole tickets. 11 We're really going to have a lot of interest. Having 12 people -- we should have a big crowd. 13 THE REPORTER: Can you speak into the 14 microphone, please? Thank you. 15 MR. TAWIL: This is a new first. We 16 have no visitors. 17 MR. MOORE: Hey Billy, can I make at -- 18 I don't know if this has been suggested by the 19 manufacturers or anybody, but actually, a hall 20 operator brought it up to me. 21 Obviously, we know there's been an 22 urgency on this matter, been discussed mainly by the 23 charities themselves. And with the approval process, 24 it's -- I understand you're going to have maybe 18 new 25 games, three versions of each game. That's 54 0186 1 different games to look at, maybe more. 2 I don't know if there's another 3 manufacturer in there or not. I'm just wondering, 4 because you want to release all at the same time, 5 wouldn't it make more sense to release one game of 6 each manufacturer? 7 I can say from a distributing 8 standpoint, it would help me from the fact that I 9 don't have to bring in 54 different games that I don't 10 know what's going to work or not. I'm just -- this is 11 just an idea that was brought to me. And I don't 12 think -- I think it would help the process. 13 I don't know if the manufacturers would 14 agree, or if they wanted to select -- you know, it's 15 kind of a guessing game which one they would want. 16 Obviously, they'd want their best seller. But 17 nobody's going to know until any actually get in the 18 market. 19 But I think it might help expedite the 20 matter when you're talking about 54 games or 18 games, 21 I would think that there's a time -- does everybody 22 understand what I'm getting at here? 23 MR. ATKINS: Well, and we've asked them 24 to do that. 25 MR. MOORE: Okay. 0187 1 MR. ATKINS: We've asked them to 2 identify the games they want tested. 3 MR. MOORE: Right. 4 MR. ATKINS: You know, we've told them 5 that, you know, when we were going to approve at least 6 one for every manufacturer. 7 MR. MOORE: Okay. 8 MR. ATKINS: When we approved all. 9 MR. MOORE: Okay. 10 MR. ATKINS: But I think right now we're 11 more in a position that we'd just like to have them 12 submitted. 13 MR. MOORE: Right. 14 MR. ATKINS: You know, what you say is 15 exactly right. 16 MR. MOORE: Okay. 17 MR. ATKINS: There was this, you know, 18 tremendous urgency to get it done. And we -- you 19 know, we shifted a lot of stuff in our shop so that we 20 could handle it. 21 MR. MOORE: And we appreciate that, too. 22 MR. ATKINS: So that's really all I have 23 on that was to give an update on where we are. 24 CHAIR BRACKETT: Okay. Are there any 25 other questions of Billy? 0188 1 All right. So you're still on, though. 2 MR. ATKINS: Okay. 3 THE REPORTER: Can I take a minute to 4 change my paper real quick? I'm out of paper. 5 CHAIR BRACKETT: Uh-huh. 6 (Brief recess) 7 AGENDA ITEM NO. 12 8 MR. ATKINS: The Chair has called Item 9 12, report on first quarter figures. The first thing 10 I wanted to do before I did that, Madame Chair, if I 11 can. You don't have to come around here, Phil. But 12 if you haven't met him, this is Phil Sanderson, the 13 assistant director of the division. Thank you, Phil. 14 One of the things that we will provide 15 you, Members, on a regular basis is updates on 16 quarterly figures as we get them. The last complete 17 quarter we have is for the first quarter of 2002. 18 These figures were due in our office April 15th of 19 this year. 20 You have a variety of graphs behind the 21 spreadsheet that will show you the same quarter for a 22 variety of years for different measures, such as the 23 first one is gross receipts for the first quarter from 24 1997 to 2002, followed by total prizes, charitable 25 distributions and attendance. 0189 1 And I think as there has been a lot of 2 discussion about today, you will see that those 3 figures across the board have been declining. I would 4 like to have you go back to the spreadsheet very 5 quickly and show you something that came up which we 6 thought was a little unusual. 7 If you will look in the bottom, right 8 log of the figures for the first quarter, one of the 9 things we noticed that we hadn't seen in a while was 10 an increase in instant bingo. For the first quarter 11 of 2001, instant bingo receipts were $22.2 million. 12 For the first quarter of 2002, they were $22.8 13 million. 14 That's a small increase, but it's an 15 increase that hasn't been around for quite some -- 16 quite some time. 17 MR. TAWIL: Starting a trend. 18 MR. ATKINS: There was -- yeah. There 19 was a total decrease in gross receipts of about five 20 percent from the first quarter of 2001 to the second 21 quarter -- for the first quarter of 2002. But that's 22 because of the -- of the big decrease in bingo paper. 23 There were increases again, although small increases, 24 in both electronic and instant bingo. 25 MR. TAWIL: Yeah. The decrease on paper 0190 1 is greater than this increase on electronic. 2 MS. MATTHEWS: The increase of instant 3 bingo and the prizes in instant bingo are about the 4 same difference. 5 MR. PAVLOVSKY: I didn't hear that, 6 Marilyn. What? 7 MS. MATTHEWS: The increase in instant 8 bingo and the expenses -- or the prizes, rather, in 9 instant bingo are about the same difference. 10 MS. TAYLOR: I don't know this for a 11 fact, but I think one of the reasons that instant 12 bingo could have gone up is we have been talking so 13 much about instant bingo and manufacturers have been 14 here talking about instant bingo. 15 And I think they're talking to their 16 customers more and they're doing some different 17 promotional things, different tab things in the halls 18 right now that I think are helping halls sell more 19 instant bingo because I think for years we just kind 20 of ignored instant bingo. 21 And all the sudden, we're actually 22 taking a look back at it and saying: This is where we 23 need to make our money. So -- because I've seen them 24 going to the halls now. And I have never seen them 25 before this last four months going to bingo halls 0191 1 selling people -- telling their customers to show them 2 how to sell instant bingo. But I've seen it now. 3 MR. WHITTINGTON: Yeah. 4 MS. TAYLOR: Which I think you have too, 5 Larry. 6 MR. MOORE: And I think -- I think your 7 approval process has been much better, which means 8 we're getting more tickets to the charities and 9 probably a shorter time in between them. 10 I've just noticed that every two weeks I 11 get something new on my desk that I have to think 12 about ordering from the manufacturers, obviously. And 13 that process goes through you guys, so I think you 14 guys have been doing a good job of getting these 15 things through to us. 16 MR. ATKINS: One of the things -- in 17 case you weren't aware of, the testing of pull-tabs 18 transferred from the Security Division over to Bingo 19 in -- 20 MR. SANDERSON: February. 21 MR. ATKINS: February? In February of 22 this year. So when that happened, we reviewed top to 23 bottom that process, how it's done, what we wanted to 24 achieve. So we've been able to rewrite that process 25 and we've seen some time, too. We're still working on 0192 1 it. 2 MR. MOORE: Yeah. I bet. 3 MS. TAYLOR: I think the instant 4 bingo -- personal opinion only, but my feelings are: 5 The more instant bingo we sell, the more winners we're 6 going to have in our hall. The more winners you have 7 in your hall, the more people are going to come back 8 to your hall. 9 Because as we've increased our prizes on 10 the games to the 750, which you need big prizes to 11 attract the players. 12 But at the same time, we're creating 13 fewer winners because most of us have decreased the 14 number of games that we offer in our hall. So you -- 15 the people don't win as much. 16 So when you talk to the customers and 17 say "Why don't you play bingo," they say "We don't 18 play bingo because you never win. You know, I can go 19 time after time and I never win anything." 20 So I think the instant bingo winners are 21 going to help us create more winners during our 22 sessions. 23 MR. ATKINS: That's all I had. 24 CHAIR BRACKETT: That's all your report? 25 MR. ATKINS: Yes, ma'am. 0193 1 AGENDA ITEM NO. 13 2 CHAIR BRACKETT: Okay. Item No. 13. 3 MR. ATKINS: What you have in your 4 notebook, Madame Chairman, Members, is a very rough 5 draft of the new rule 402.558 relating to bingo cards. 6 And kind of by way of background for the new members, 7 something that's been discussed in the past was the 8 amount of time that both the Advisory Committee and 9 the public had to review proposed rules, new rules or 10 amendments to rules. 11 They wanted that expanded so they had 12 the time to look at what was being proposed, to 13 analyze it and to make comments on that. So what I 14 had suggested at one of the earlier meetings and what 15 I would suggest for your consideration today is -- 16 again, this has been labeled draft for discussion 17 purposes. 18 I would not either on this item or the 19 next item, Madame Chair, be seeking the Advisory 20 Committee to recommend these to the Commission for 21 consideration of publication. I would be asking to 22 put these out for discussion for the members to be 23 able to take this back to look at it, to analyze it, 24 to talk with our constituency and to then come back to 25 the next meeting and hopefully at that meeting through 0194 1 discussions that staff has been able to have during 2 this interim period then be able to have a rule for 3 discussion for proposal to the Commission. 4 So if I could, what -- what staff is 5 proposing with draft 402.558 is very similar to what 6 we have done with the pull-tab rule. We have taken a 7 lot of our current existing processes, put them into 8 rule format so the public is more accurately advised 9 of expectations, etcetera. 10 But then we have also tried to account 11 for in there, just as we did with the pull-tab cards 12 and the variations and the style of play is to allow 13 for variations in style of play and paper. So again, 14 we have done the research that we can on different 15 types of paper that's available. 16 We would put this forward. Some 17 conversations that I have already had, for purposes of 18 full disclosure is in the definitions, particularly 19 with terms such as "card" or "face." I think we need 20 to be very careful with those so that we don't 21 inadvertently affect another game. 22 The one that I'm thinking of that most 23 readily comes to hand is the electronic cardminders. 24 There are references to cards and faces there. But 25 staff does believe that there is a need for those 0195 1 definitions in this rule. 2 MR. TAWIL: Billy, is this rule proposed 3 at the last meeting or maybe the one before the last 4 meeting we had where you had a list of all the rules 5 we're going to review over a period of time and you 6 listed all of them? 7 Is that what's going on here? Is that 8 why this has come up? Why was this rule being 9 proposed now? Is this part of the housecleaning, 10 we're going to review all of the rules? 11 MR. ATKINS: Is was -- yeah. We are. 12 We were -- 13 MR. TAWIL: Okay. That's what we're 14 doing? 15 MR. ATKINS: -- going to review all of 16 the rules. That's one of the reasons. 17 MR. TAWIL: Okay. 18 MR. ATKINS: Another one of the reasons 19 is: If you'll recall, Saleem, during the discussions 20 that were held on -- during the pull-tab rule and the 21 need for getting new products out there -- 22 MR. TAWIL: Okay. 23 MR. ATKINS: -- and the necessity of 24 doing that -- 25 MR. TAWIL: Here's -- here's the current 0196 1 paper rule right now. 2 MR. ATKINS: Uh-huh. 3 MR. TAWIL: See it in my hand? It's one 4 and three-quarter pages long. What your proposing 5 here is 12 pages long. So this is all new 6 information. This is all new information. 7 MR. ATKINS: Uh-huh. 8 MR. TAWIL: So first of all -- well, 9 there's several things in here that appear to me -- 10 they're very subtle, but they're really encroaching on 11 the rights and uses of operators subtlely and putting 12 more regulation on people here than what might appear. 13 And I'd like to point out a few of them 14 if you don't mind, Billy. I mean, I'm trying to help 15 you. 16 MR. ATKINS: Sure. 17 MR. TAWIL: Okay. The first one is the 18 series number. The series number shall be displayed 19 in the center square. 20 CHAIR BRACKETT: Okay. What page are 21 you on? 22 MR. TAWIL: Page two. 23 MR. PAVLOVSKY: Item No. 15? 24 MR. MOORE: Yeah. 25 MR. TAWIL: No. No. I see what you're 0197 1 talking about, Pete. No. Look, this is under draft 2 rule 402.558. 3 MR. ATKINS: No. 15? 4 MR. TAWIL: Yeah. 5 MR. ATKINS: Series number? 6 CHAIR BRACKETT: Uh-huh, page two. 7 MR. TAWIL: Okay. Yeah. Series number. 8 Okay. That's one. First of all, on the very small 9 cards like I hold in my hand, you can't do that. So 10 we don't want to create a rule that would destroy 11 existing approved paper. 12 So anyway, we're going from one and 13 three quarters to 12 pages. And so I scanned through 14 it real quickly. The next one was on the next page. 15 On page three is: Now you're requiring 16 manufacturers, when they introduce paper for approval, 17 you're asking them to tell you how and the style of 18 play they're going to use. Now you're inquiring into 19 how it's going to be played. That's really under 20 house rules. 21 MR. PAVLOVSKY: Excuse me, Saleem. What 22 number is it? Where are you at on the page? 23 MR. TAWIL: On the second item here. 24 CHAIR BRACKETT: Page three. 25 MR. TAWIL: Page three, number two. 0198 1 MR. PAVLOVSKY: Okay. Thank you. 2 MR. TAWIL: Okay. And Billy, how big is 3 this 20 point -- 26 point diameter circle? 4 MR. ATKINS: There are -- there are 5 graphic tools -- 6 MR. TAWIL: For the seal? 7 MR. ATKINS: -- that measure that. 8 That's currently what it is. 9 MR. TAWIL: This is smaller than that. 10 No. It's not current because there's not one in here. 11 MR. ATKINS: On the current rule? 12 MR. TAWIL: Here's the rule. I'm 13 holding it in my hand. 14 MR. MOORE: Saleem, what are you holding 15 in your hand? 16 MR. TAWIL: I'm holding a Texas Lottery 17 Commission-approved bingo card that has bar code on it 18 and has three faces, okay? It's licensed and approved 19 and has been used down in Kingsville, Texas. 20 CHAIR BRACKETT: At that size or is that 21 just -- 22 MR. TAWIL: This is it. This is the 23 card. 24 CHAIR BRACKETT: They must have teeny 25 tiny -- 0199 1 MR. ATKINS: You're correct, Saleem. 2 And let me -- let me address something. That's part 3 of the reason that we have this. And that's exactly 4 right because a lot of what happened with this is cut 5 and paste. And this was cut from other rules. The 6 current rule does only reference -- doesn't reference 7 that. 8 MR. TAWIL: I just wanted the Chairman 9 to listen to what we're talking about here. We're 10 going from 1.75, almost two pages, to 12 pages. And 11 when you read all of this, you see the subtlety of 12 more controlled regulation of what's happening rather 13 than trying to find ways to be efficient and help 14 everybody out. 15 MR. MOORE: But, Saleem, I see that 16 he's -- I see a game in here that's right now not 17 approved in the state and -- 18 MR. TAWIL: Which one? 19 MR. MOORE: Double number. I know Arrow 20 makes a game that you have two numbers on each space. 21 It's just a different form of bingo. It can be added 22 as an extra game. 23 MR. TAWIL: Okay. Those -- those are 24 all under house rules. The only way the Commission -- 25 MR. MOORE: That paper isn't approved 0200 1 right now. 2 MR. TAWIL: The only reason it's not 3 approved is because the paper hasn't been approved. 4 So it's up to Billy and his staff to approve paper 5 that funnels through. If the paper comes through, 6 you're free to use it however you want to as an 7 operator. 8 And so let's stay focused here because 9 to create two pages of nothing but definitions -- I'm 10 telling you from just pure business experience. 11 Suddenly we're going from this to all these 12 definitions. Now you're creating situations where 13 they say: Well, if it's not a definition, it's not 14 allowed, where there are no definitions right now. 15 MR. PAVLOVSKY: Everybody makes up their 16 own and that's not good. 17 MR. TAWIL: What isn't good about it? 18 MR. PAVLOVSKY: Make up your own 19 definition? There's no uniformity to it. 20 MR. TAWIL: No. Nobody's making up 21 their own definition. 22 MR. PAVLOVSKY: Well, then why are you 23 opposed to a printed definition? 24 MR. TAWIL: Because once you start 25 putting definitions in, then if there's no definition 0201 1 here, it's not allowed. 2 MR. PAVLOVSKY: It makes everybody 3 equal. Everybody adheres to the same definitions. 4 MR. TAWIL: What's wrong with not having 5 any definitions to date? This thing's been operating 6 for 20 years. 7 MR. PAVLOVSKY: It just improves it. 8 Everybody -- it allows everybody to understand that 9 the definition of defective to be the same thing. 10 MR. TAWIL: No, look. Let's just stay 11 focused. Let's go on to the other points. 12 Why do we now have to have them tell you 13 how they're going to play the game before you approve 14 the paper they use? 15 MR. ATKINS: It -- 16 MR. TAWIL: Why do we have to know the 17 style when they never have before? All the sudden now 18 people have to tell you -- to get a paper approved, 19 you have to explain to the Commission how the style of 20 play is? I'm just asking. I'm getting these things 21 out in the open so we can discuss them. 22 MR. ATKINS: Because it's the exact same 23 thing that we did with the pull-tab rule. 24 MR. TAWIL: But it's not in the old 25 paper rule. 0202 1 MR. ATKINS: It wasn't in the old 2 pull-tab rule, either, because we didn't authorize 3 different styles of play. Now we're authorizing 4 different styles of play. 5 So all we're asking a manufacturer to do 6 is when they submit it, if the paper is the double 7 number is that they say it's a double number. Just 8 like now when the pull-tab manufacturers, now when 9 they submit a ticket, they say: This is a pull-tab 10 ticket. It's an event ticket. 11 MR. TAWIL: Well, I think you're taking 12 instead of a proactive, positive approach, it's just 13 the opposite. It's like enforcement. 14 Here's an example here down the same 15 page, down to Item No. F. And I'm speaking from the 16 position of a business person. The Commission may 17 require re-submission of an approved paper at any 18 time, period. 19 So here you're trucking along operating 20 and suddenly the Commission decides the approved paper 21 you have right now can't be used anymore. You've got 22 to bring it back and re-submit it. No defect or 23 anything, just decided they didn't want to do that. 24 MR. ATKINS: And let me go back again, 25 Saleem. That's just like the language that's in the 0203 1 newly-adopted pull-tab rule. And why you didn't raise 2 the issues in the pull-tab rule, I don't know. 3 But now we have it in the paper rule. 4 And all we're trying to do, the primary purpose of 5 this rule is to put the public on notice of what's 6 required and to authorize -- 7 MR. TAWIL: That's required right now. 8 MR. ATKINS: -- additional styles of 9 games. 10 MR. TAWIL: It's not required right now. 11 MR. ATKINS: You know, I might disagree 12 with some of that. It might be that we would have 13 trouble if we were challenged on it, you know, proving 14 it in court. But you know, now we're not going to 15 have that problem. And people are going to be coming 16 to us saying -- 17 MR. TAWIL: No. You're putting more 18 regulations on people. 19 MR. ATKINS: People aren't going to be 20 coming to us and saying, you know, what do we have to 21 do to get this approved? It's all going to be right 22 here. 23 MR. TAWIL: Well, but you're -- what 24 you're doing is you're narrowly -- you're bringing 25 people into here in a narrow, controlled focus, which 0204 1 is really not right. 2 MS. TAYLOR: Okay. Let me interject 3 something really quickly, Saleem. 4 MR. TAWIL: There's several other things 5 here. 6 MS. TAYLOR: I just want to say two 7 things because -- anyway. The only thing that I worry 8 about this -- I love giving us additional styles of 9 play because -- the double numbers and everything, I 10 always look at those in the magazines and then the 11 person that supplies us stuff says: No, you can't 12 have that because that's not something that Texas 13 approves. 14 There's only two problems I have in 15 here. And that just has to do with cost. And it's 16 some cost items on page five, number four, the 17 packaging. They told me that this would raise the 18 cost. 19 Page seven -- 20 MR. ATKINS: Wait. I'm sorry, Suzanne. 21 Page five? 22 MS. TAYLOR: Page five, number four, the 23 very bottom of the page, packaging. They said that 24 would raise the cost of the paper to the charities. 25 So I would just like you to take a look at that. I'm 0205 1 not a manufacturer or distributor. I don't know this 2 for a fact. I'm just telling you that's what they 3 just finished telling me. 4 The other is on page seven under 5 distributor, B5. The serial number for each sheet -- 6 and this I do understand what they're saying. They 7 said this is very, very costly for two of the three of 8 the paper manufacturers because the top sheet and -- 9 if you have a four-up, that doesn't necessarily mean 10 it all has the same number. 11 You know, the top sheet is the serial 12 number we've gone from. They'd have to list every 13 single serial number on all four pages. They're going 14 to charge us more. And who's going to pay that? It's 15 the charity. 16 Those are the only two problems I have 17 with this. But if I could just address one other 18 thing, Saleem. Earlier you're biggest gripe was there 19 was no format, there was no rule so that everybody 20 could be in this game together. But now you're 21 arguing exactly the opposite. 22 MR. TAWIL: No. What's happened here 23 suddenly is that the control -- right now all the ways 24 that operators play is under house rules, no matter 25 what. And the Commission, through its wisdom, decides 0206 1 what paper funnels out into the Texas industry. 2 And I think that's the best way to 3 control it because if you don't want them to have the 4 paper, you either discontinue it and announce that 5 you're going to discontinue that paper for whatever 6 various reasons, but let the operators be free to 7 compete and do the best they can. 8 MS. TAYLOR: And I agree. Let the 9 operators compete and do the best they can. 10 MR. TAWIL: So that's all I'm saying. 11 So okay. The other item is beginning on page five. 12 Well, here's what I have. I would like to be certain 13 that there's no way with your proposal that this card 14 is excluded, which is already approved. 15 MR. ATKINS: Okay. That's a good point. 16 MR. TAWIL: Okay. That's all I have. 17 MR. ATKINS: Okay. 18 MR. TAWIL: The others, I'm lobbying on 19 behalf of the industry in general. I don't have a dog 20 in that hunt. If you end up putting more constraints 21 on them, that's fine. I think Pete's comments were 22 well-taken. 23 Yeah, you need to have definitions 24 people understand. But also, your goal is we want to 25 authorize a lot of different styles of play. But 0207 1 instead of saying just play, we're going to tell you 2 what styles you can play. 3 I understand where you're going with 4 this. But parts of it are not usable in -- I have 5 a -- like I say, I don't want this paper excluded 6 because the very basis of the automated bingo service 7 operates on this paper. 8 MR. ATKINS: And you bring us a good 9 point, Saleem. And the purpose for this process that 10 we're laying out is to address those issues before it 11 ever even gets to the Commission. 12 MR. TAWIL: Yes. 13 MR. ATKINS: So that we can have the 14 same level of excitement about this rule as we did for 15 the pull-tab rule. 16 MR. TAWIL: Okay. 17 MR. ATKINS: This ain't just, you know, 18 blanket statements like: We've gone from one page to 19 12 pages: You know, that's -- 20 MR. TAWIL: Yeah. That's a lot of 21 information. 22 MR. ATKINS: That doesn't tell me 23 anything. 24 MR. TAWIL: That's scary. It scares 25 people that are being regulated. 0208 1 MR. MOORE: Can I -- real quick. 2 MR. ATKINS: It doesn't tell me 3 anything. But if you have specific information like 4 that paper, that's helpful. 5 MR. TAWIL: Okay. And that was one 6 other question. This one has the series number up 7 here in the corner. 8 MR. ATKINS: Okay. It's on -- okay. 9 MR. TAWIL: And the serial number is 10 here. But the point is it can't be put in the center. 11 The 26 points can't be met. 12 MR. ATKINS: 26, yeah. Right. 13 MR. TAWIL: So other than that, the rest 14 of it, I don't have a problem with it. But don't come 15 and tell me later about what the Lottery Commission is 16 doing. 17 MR. MOORE: My point is: A lot of these 18 games that you mention that you read in the bingo game 19 or the Arrow catalogs, they're out there. This is 20 sitting in their warehouses in Cleveland. And the 21 reason we don't have them is because of the seal, the 22 Texas seal. 23 They're not going to produce these 24 specialty games -- and I know you've heard the 25 argument. They can't afford to put that seal on. 0209 1 They're not just going to make 10 boxes for your bingo 2 hall. They have to run so much to make it because of 3 the time constraints on the presses. 4 And what happens is they can't afford to 5 take the chance. I know the Gallaghers aren't going 6 to take that chance. They don't spend money unwisely. 7 If I as a distributor committed to 1000 cases, they 8 might do it. But whose shelf is it going to sit on if 9 it doesn't work? 10 MR. TAWIL: Okay. Okay. And I think 11 that's fine. But see this right here? This is custom 12 made by Bizarre Novelty. Would you like to order 1000 13 of them with seals on them? So that blows a hole in 14 that argument. 15 The story that I got was Arrow was 16 pushing because they have some of the stuff that's in 17 here, Billy. And I can't substantiate it. It is 18 second-hand. But what I'm telling y'all is that I got 19 called on this particular bill last night. 20 And they said what it's doing here is 21 their addressing one manufacturers of paper, cutting 22 the other ones out, okay? So we don't want to get 23 caught up in the in-fighting amongst -- same thing 24 with the machine over there. People are complaining 25 because -- 0210 1 Chairman, can you help us in that aspect 2 when those kind of things arise? 3 MR. MOORE: Hey, Saleem, I don't have 4 any loyalty to either one of those two. I don't -- I 5 hope you understand. 6 MR. TAWIL: But do you know what I'm 7 talking about, Chairman Clowe? So it gets down to an 8 issue of what's right. 9 MR. ATKINS: Let me try again. This is 10 the reason we're doing this today so that everybody 11 that has something -- 12 MR. TAWIL: Yes. 13 MR. ATKINS: -- can offer it. 14 MR. TAWIL: Good. I'm with you a 15 hundred percent. I support you. 16 MR. ATKINS: Okay. Great. 17 MR. TAWIL: And as long as you don't 18 exclude something like this, you got my hundred 19 percent support. 20 MR. ATKINS: And it's great that you 21 raised that. 22 MR. TAWIL: Thank you. 23 MR. ATKINS: You need to -- you need to, 24 you know, identify to me, preferably in writing, all 25 of those specifics. 0211 1 MR. TAWIL: Okay. But they're on the 2 record. I'll do it. When would you like me to do 3 that, next time around? 4 MR. ATKINS: Well, hopefully by the next 5 meeting. 6 MR. TAWIL: I need to write you a memo 7 on that? 8 MR. ATKINS: That would be great. 9 MR. WHITTINGTON: Well, one thing about 10 paper compared to pull-tabs, I mean, there's only so 11 much paper you can make, so little style, as far as 12 I'm concerned for bingo players in Texas, especially 13 the old kind. 14 They want the old fashioned. They want 15 to come in and play bingo. That's all they want to 16 do. I don't want the computers. I want the paper, 17 the simple paper. Now the older people would need the 18 big numbers now. We're selling more big number paper 19 now because they can't see the small print anymore. 20 So as far as paper, I wouldn't compare 21 it to pull-tabs in the style, in the different styles 22 because we -- pull-tabs need to be more innovative. 23 We need more styles. The paper, I can't see that we 24 need a lot of styles in paper. 25 I think it's great, something different. 0212 1 But you can't hardly get too much other than that on 2 paper when it comes to bingo, you know. 3 MR. TAWIL: What about jackpot bingo in 4 terms of definitions? Do we just ignore the jackpot 5 bingo by definition? 6 MR. ATKINS: Is that -- yeah, we 7 probably do need a definition because I'm not sure if 8 I know what jackpot bingo is. 9 MR. TAWIL: Or Lotto bingo. 10 MR. ATKINS: Probably. I'm not sure if 11 I know what Lotto bingo is. 12 MR. TAWIL: You don't know what Lotto 13 bingo is? 14 MR. PAVLOVSKY: Yeah. I'm afraid that's 15 going to add another page to this thing. 16 MR. TAWIL: That's my point. When you 17 start making definitions, you start thinking: What 18 did I leave out, what definitions? So you put in a 19 whole cadre of definitions. 20 I guess we'll just do the best we can. 21 MR. WHITTINGTON: Well, everything needs 22 to be simplified, shorthand. 23 MR. TAWIL: You don't go from two pages 24 to 12 as simplification. 25 MR. WHITTINGTON: I hear what you're 0213 1 saying, too. 2 MR. TAWIL: We'll work with you, Billy, 3 to make it right. 4 MR. MOORE: Well, I would think that 5 Mary will get her hands on this and have something to 6 say before long. 7 CHAIR BRACKETT: It's not three yet. 8 You can't leave. 9 MR. ATKINS: That's fine. I would guess 10 real quickly, the one other thing that I might point 11 out: We probably -- I think I was told maybe twice a 12 year -- get phone calls from a visually impaired 13 individual wanting to know about the use of braille 14 cards. And again, that's not addressed anywhere. 15 So we've gone to other jurisdictions, 16 looked at what they've done. We've put that in here. 17 We'd be especially interested in hearing from 18 conductors that they're comfortable with what we put 19 in here regarding the use of braille cards. 20 MR. MOORE: Would the vendor need to be 21 licensed then by you guys by the TLC? 22 MR. ATKINS: I don't know that we've 23 addressed in this rule if they would be. 24 MR. MOORE: Okay. 25 MR. ATKINS: It would be -- I believe 0214 1 that braille cards would be exempt from testing and/or 2 approval process, but it would be the conductor's 3 right and responsibility to inspect the cards. And if 4 they were comfortable with the cards, then they could 5 allow the use in their hall. 6 MR. MOORE: So the player would actually 7 purchase -- 8 MR. ATKINS: Right. 9 MR. MOORE: Would give their phone 10 number to them. 11 MR. ATKINS: Right. 12 MR. MOORE: So maybe you could provide 13 that information to -- 14 MR. ATKINS: Well, for instance, one of 15 the things we plan on doing for that section is 16 providing it to the Texas Commission For The Visually 17 Impaired. 18 MR. MOORE: Okay. 19 MR. WHITTINGTON: Well, one time we had 20 somebody come in our hall with some braille cards. 21 And we made sure that it didn't off-set anything 22 compared to our regular cards. And it matched the 23 system that we played. 24 MR. ATKINS: Uh-huh. 25 MR. WHITTINGTON: So we -- of course, we 0215 1 weren't going to tell these people you can't play. So 2 we let them play. And she won a game. And as we 3 called it back, sure enough the numbers she had 4 matched the system. So it came through with flying 5 colors. 6 And I think that's -- it's very 7 important, as far as to make sure we cover everybody, 8 whether they're handicapped or physically impaired, 9 whatever, whatever the cause may be. If people want 10 to play bingo and they feel that they can, there 11 should be some kind of a way for them to play bingo. 12 If it's braille cards, we need to 13 definitely look at that. Very important. 14 Another thing, I guess, is strictly a 15 handicapped day where everybody come in handicapped 16 and play bingo and just let them play bingo as charity 17 function, just raise money through -- through 18 different organizations just to take care of the 19 cards. I think that could be great if we implement 20 that, you know. 21 I mean, people need to be catered to. 22 And people are looking to us to do that. We're 23 charity. And hey, I'm part of charity. Come help me. 24 CHAIR BRACKETT: Okay. Are you finished 25 with that portion? 0216 1 MR. ATKINS: Yes. 2 CHAIR BRACKETT: All right. We can move 3 on then to Item 14, which is this 402.567. 4 AGENDA ITEM NO. 14 5 MR. ATKINS: Item 14, I also believe, 6 Madame Chairman, was on an earlier Advisory Committee. 7 I requested that this be put on there. It's 8 amendments to the existing BAC rule. It further 9 clarifies the BAC's purpose and responsibilities. 10 It -- I'm sorry. This is not the one 11 that I -- that I marked up. It further identifies the 12 positions individuals are authorized to serve. It 13 calls for the BAC to select from its membership the 14 officers of the Advisory Committee. 15 In terms of duties and responsibilities, 16 it calls for the Committee to report to the Commission 17 annually on specific areas such as gross receipts, 18 distributions, etcetera. It talks about 19 qualifications and disqualification. 20 And it also includes the amendment to 21 authorize one meeting outside of Austin on a quarterly 22 basis. I'm sorry, I'm -- 23 CHAIR BRACKETT: It's on the 24 next-to-the-last page. 25 MR. ATKINS: Yeah. There it is. One 0217 1 quarterly meeting shall be held in a location other 2 than Austin. 3 MS. TAYLOR: Let me ask you a question 4 about that, Billy. 5 MR. ATKINS: Uh-huh. 6 MS. TAYLOR: I know that BAC is supposed 7 to have a meeting each quarter. And now we're saying 8 one of those quarters needs to be outside of Austin. 9 But if we have meetings -- more meetings than 10 quarterly, which we can do, does that mean that those 11 meetings can be held outside of Austin? 12 I mean, is that saying that three 13 meetings have to be held in Austin but the rest can be 14 held outside of Austin if we have six meetings through 15 the year? How does that -- 16 MR. ATKINS: It's a good question. My 17 initial reading of it was one meeting in a year would 18 be outside of Austin. And I think that that 19 assumption on my behalf probably comes more from 20 budgetary -- 21 MS. TAYLOR: Okay. 22 MR. ATKINS: -- issues than this rule 23 itself. 24 MS. TAYLOR: Okay. 25 MR. ATKINS: But you raise a good point. 0218 1 And that's something we can look at further in this 2 discussion period. 3 MR. TAWIL: You know, when we had a 4 pending proposal that was left by Chairman Neinast -- 5 do you remember that about staggered terms? 6 MR. ATKINS: Oh, that's right. Yes. 7 Yes. 8 MR. TAWIL: It's not in this. 9 MR. ATKINS: It's not in there. 10 MR. TAWIL: Yeah. 11 MR. ATKINS: You're right. As a matter 12 of fact, I printed that out and that's my fault that I 13 didn't -- 14 MR. TAWIL: That's okay. 15 MR. ATKINS: I didn't note that 16 beforehand. 17 MR. TAWIL: I'll tell you where to 18 start, Billy: on page two, the fourth line from the 19 bottom. Each member will be appointed for a one-year 20 term. This is the way it has been. 21 MR. ATKINS: Okay. 22 MR. TAWIL: Mr. Chair, would you like to 23 have the general discussion on how you would like to 24 mold the committee, as far as how we should move 25 forward? Do you know what I'm getting at? 0219 1 CHAIR BRACKETT: Uh-huh. 2 MR. TAWIL: In keeping with having those 3 objectives by having staggered terms, we're never 4 short of having people -- 5 CHAIR BRACKETT: Right. 6 MR. TAWIL: -- to serve. 7 CHAIR BRACKETT: Excuse me. Well, there 8 are a lot of ways it could be started. But I think 9 Billy can come up with that, you know, as far as the 10 first committee draw is going to get a one-year term 11 and then a two-year term. And then after that, it 12 would take care of itself. But -- 13 MR. TAWIL: Each member should -- three 14 years, is that what we decided? Is three years too 15 long? 16 MR. ATKINS: I can't -- I can't remember 17 if it was two or three. 18 MR. TAWIL: He had three and he had it 19 staggered. 20 MR. ATKINS: I have the recommendation 21 that he made to the Commission. 22 CHAIR BRACKETT: Well, three is not too 23 long for a committee that just meets quarterly. 24 MR. ATKINS: Right. 25 CHAIR BRACKETT: Now lately, we have met 0220 1 more than quarterly. 2 MR. ATKINS: Right. 3 CHAIR BRACKETT: But that's probably 4 good. And we might as the Legislature continues in 5 session doing things. 6 MR. ATKINS: Yeah. 7 CHAIR BRACKETT: So -- 8 MR. ATKINS: Well, again it's -- you 9 know, it's one of the items that could be flushed out 10 during this process. 11 CHAIR BRACKETT: Well, somewhere maybe 12 you could look at -- 13 MR. ATKINS: I will do that as the 14 starting point. 15 MR. TAWIL: The problem was some 16 members -- like for example, for charities, there was 17 three of them. You couldn't have them all staggered. 18 They couldn't all get off at the same time, so they 19 had to stagger them. 20 CHAIR BRACKETT: So you couldn't just 21 draw against a whole. It would have to be each 22 category. 23 MR. TAWIL: Danny and I would be okay 24 because we're only one serving three years and the 25 next person serving. 0221 1 MR. MOORE: Right. 2 MR. TAWIL: But for lessors and 3 charities, it had to be staggered. And the other 4 item -- well -- 5 MR. MOORE: As far as moving the 6 meetings around, since Pete and I are from the Houston 7 area, I suggest that the first one be there. 8 MR. WHITTINGTON: I suggest that 9 Galveston is the largest licensee, so it ought to be 10 there. 11 MS. TAYLOR: I think you ought to come 12 to Corpus to the beach. 13 MR. ATKINS: I want you to go back and 14 look at a previous transcript where I said on the 15 record: Staff wasn't going to have anything to do 16 with deciding where the meeting is. 17 CHAIR BRACKETT: Well, Marilyn and I 18 think you ought to come out and visit the largest 19 region geographically. 20 MR. ATKINS: They could see the world's 21 largest jackrabbit, too. 22 CHAIR BRACKETT: Well, we have 23 jackrabbits here. 24 MR. TAWIL: Okay. I noticed also we're 25 doing away with the vice-chair, which to me never -- 0222 1 one way or the other didn't really matter. We 2 proposed to do away with the vice-chair and just let 3 the chairman designate someone to preside in their 4 absence. 5 CHAIR BRACKETT: Well, you're listed as 6 vice-chair. 7 MR. TAWIL: I know. But that's the way 8 it is right now. 9 CHAIR BRACKETT: Oh. 10 MR. TAWIL: But this is a whole new 11 proposal, legislation -- or new rule. And the rule's 12 going to be where the Commission appoints the chairman 13 to do away with the vice-chair and then the presiding 14 officer designates as member to conduct meetings in 15 their absence. 16 MR. ATKINS: And that is consistent, I 17 believe, Saleem -- 18 MR. TAWIL: With other agencies. 19 MR. ATKINS: -- with other -- well, with 20 other legislation relating to advisory committees. 21 MR. TAWIL: Yeah. The only thing that I 22 have a problem is a person is ineligible to serve as a 23 member of the BAC if they represent an organization 24 licensed by the Commission that is delinquent in its 25 ability to state -- or if their organizational license 0223 1 has been denied, suspended or revoked. 2 And keep in mind here now when a person 3 is appointed to the Advisory Committee, they're the 4 ones that go through the FBI investigation and the 5 background investigation as individuals. So you're 6 evaluating the individual to serve. 7 And I don't have a problem with it for a 8 one-year term. But if we're talking about longer, I 9 get the feeling about this kind of thing. Do you know 10 what I'm saying? One year isn't too long. If a 11 person screws up after six months, they ain't going to 12 be over there very long, anyway. 13 But it's easy for an organization to be 14 delinquent. There's a lot of charities that are 15 delinquent and others. I get these delinquency 16 reports all the time. They're several pages long. 17 MR. ATKINS: We're not talking about 18 delinquencies. We're talking about tax liabilities. 19 MS. TAYLOR: Any liability to the State. 20 MR. ATKINS: Yeah. That's not a 21 liability to the State. A delinquency is if an 22 organization is delinquent in payment to a 23 manufacturer or distributor. 24 MR. TAWIL: How do you get the liability 25 to the State, not paying your taxes? 0224 1 MR. ATKINS: Uh-huh. 2 MR. TAWIL: And what other ways? That's 3 it? 4 MR. ATKINS: That's it. 5 MR. TAWIL: Okay. How about on 6 suspensions? Who suspends the person or the 7 organization? 8 MR. ATKINS: Commission. 9 MR. TAWIL: Well, then will you do it? 10 You can do it yourself without the Commission's 11 support? 12 MR. ATKINS: No. 13 MR. TAWIL: What do you suspend an 14 organization for? 15 MR. ATKINS: Violations of the Act, a 16 rule. 17 MR. TAWIL: Well, okay. 18 MS. TAYLOR: Billy, a question on that. 19 I'm sorry. 20 MR. TAWIL: That's all right. 21 MS. TAYLOR: What if it's an operator 22 for two charities? Like let's say what if Larry 23 represents five charities and one of his charities 24 becomes delinquent? Are you going to throw him off? 25 MR. ATKINS: Well -- 0225 1 MS. TAYLOR: Can you -- can you hear me? 2 THE REPORTER: Yes. 3 MR. ATKINS: We don't know. That's 4 actually already a question that came up to us. We 5 don't know because -- because there are people that, 6 as you know, represent multiple organizations. 7 MR. TAWIL: Do you remember we were 8 dealing with a guy from San Antonio? We were talking 9 about what may happen. 10 MR. ATKINS: Uh-huh. 11 MR. TAWIL: Those are the kind of things 12 that I'm wondering about. 13 MR. ATKINS: And this clarifies it more 14 and I think this says when it does happen -- 15 MR. TAWIL: A suspension is pretty 16 serious, isn't it? 17 MR. ATKINS: Oh, yeah. I think so. 18 MR. TAWIL: It's not something you just 19 say: Okay, I'm suspending you for a week. What do 20 you normally suspend them for? 21 MR. ATKINS: We usually suspend them for 22 a number of occasions. 23 MR. TAWIL: Oh, well then that's not a 24 serious violation. 25 MR. ATKINS: Well, to the person who's 0226 1 had their license suspended, they think so. 2 MS. TAYLOR: Yeah. 3 MR. TAWIL: Yeah. But I mean, what 4 they're doing, it could be the guy running the hall. 5 And their representative is one -- for example, either 6 Larry or Pete. 7 Somebody screws up back there while he's 8 here today and tomorrow he gets a letter saying: 9 You're no longer on this committee. 10 MR. ATKINS: Uh-huh. 11 MS. TAYLOR: So is that something that's 12 going to be further clarified? 13 MR. ATKINS: Yeah. I think it needs 14 more work. 15 MR. TAWIL: I think -- I would go along 16 with revoked or denied. But suspension, Billy, is a 17 little too harsh. Don't you think so? 18 MS. TAYLOR: Well, I'm not worried so 19 much because the thing is, if they're suspended and 20 they don't have a license to operate bingo, I 21 understand why. That's why you're on the Committee 22 because you're -- you're in the public. 23 But if you're here as a charity rep and 24 your charity is no longer playing bingo, I understand 25 the problem with him being on the Committee as a 0227 1 charity rep. 2 I just have the problem with people like 3 Larry that are a rep for multiple organizations that 4 it needs to clarify that one of his organizations 5 needs to be in good standing for him to remain on the 6 Committee. 7 MR. TAWIL: Or clarify -- qualify 8 suspension. 9 MR. WHITTINGTON: Well, anything -- if 10 you're involved with organizations, charities, 11 especially like I am, that's one of the things. No 12 matter what, we have never lost a charity in 10 or 12 13 years. No matter what, we come up with some kind 14 donations if we are losing money at bingo. And we 15 will always do that and before -- 16 MS. TAYLOR: You better stop talking. 17 MR. WHITTINGTON: That's not going to be 18 a reason for me getting thrown off this committee, I 19 promise you that because we'll never be delinquent, 20 never. 21 MS. TAYLOR: But this is not just 22 talking about you, Larry. We're talking other people 23 in the future that will have to serve and live by 24 these rules. 25 MR. WHITTINGTON: Right. 0228 1 MS. TAYLOR: So because you're in a 2 luckier situation than other people and having had 3 that problem doesn't mean that, you know, somebody 4 down the road that we're not putting a very hard thing 5 for them to bear. 6 MR. WHITTINGTON: Oh, yeah. I 7 understand that. 8 MS. TAYLOR: So that's all I'm looking 9 at. 10 MR. PAVLOVSKY: I agree, Suzanne. That 11 person would -- that committee member would have to 12 have at least one organization in good standing. 13 MS. TAYLOR: Right. 14 MR. WHITTINGTON: Yeah. 15 MR. TAWIL: Well, I think the revocation 16 and denial is fine, but the suspension ought to be 17 deleted from this issue because it's such a -- you 18 could be suspended for a month or two months, whatever 19 revocation. 20 And Billy says you're back in good 21 standing. And here's a guy who gets thrown off. He 22 or she can't come back. Do you see what I'm saying, 23 Billy, in terms of that? 24 MR. ATKINS: Uh-huh. 25 MR. TAWIL: And the other one I pointed 0229 1 out was three-year staggered terms. 2 MR. ATKINS: She already got that one. 3 CHAIR BRACKETT: Any other comments? 4 Okay. All right. We have Joe Garcia 5 who would like to -- under public comment, would like 6 to make some comments. 7 Before he gets up here, Billy, are you 8 going to leave at three? 9 MR. ATKINS: (Nodding) 10 CHAIR BRACKETT: Do you know when the 11 next Lottery Commission meeting will be, the date? 12 MR. ATKINS: It is tentatively scheduled 13 for July 23rd. 14 CHAIR BRACKETT: July 23rd, okay. 15 MR. TAWIL: 8:30, Billy? 16 MR. ATKINS: Yes. 17 CHAIR BRACKETT: July 23rd, 8:30 a.m.? 18 MR. ATKINS: Yes, ma'am. 19 CHAIR BRACKETT: I just needed to know 20 that. 21 Okay. And this is Joe Garcia. 22 AGENDA ITEM NO. 16 23 MR. GARCIA: Right. My name is Joe 24 Garcia and I'm here representing Game Tech 25 International, the manufacturer. I didn't have 0230 1 anything else to do so I thought I would come and 2 visit with y'all. No, just briefly -- 3 CHAIR BRACKETT: Well, we're glad to 4 have someone here. We feel lonesome. 5 MR. GARCIA: Well, I apologize I had to 6 miss about an hour of it, but it's been pretty 7 interesting. 8 No, just some general comments on behalf 9 of Game Tech. We believe as you go through the bingo 10 card rules and the whole works, keep in mind 11 electronic faces. We don't want to confuse electronic 12 faces with paper faces. And that's one of the things 13 that we wanted to point out. 14 And as a result, I don't know if the 15 Advisory Committee will be looking at the cardminding 16 rules, if there's any plans. But we would welcome an 17 opportunity to do that, and also look at some of the 18 issues regarding cardminding in terms of the approval 19 process. 20 We think out-sourcing may be a good 21 idea. There's various companies throughout the state 22 -- I mean, throughout the country that we utilize in 23 other states. And we think it may be time for Texas 24 to maybe look at that possible source of -- of going 25 to the approval process. 0231 1 And I think there's many methods and -- 2 and ways that we can work with the Lottery Commission 3 and Billy and his staff to make that a smooth 4 transition. But we just think that some of the issues 5 that need to be looked at. 6 The other issue obviously involves some 7 system issues within the cardminding devices that 8 could be utilized by charities and back office 9 operations that we think maybe seem fitting. But we 10 were hoping that maybe y'all could look at those rules 11 sometime in the future. 12 MR. TAWIL: Are you talking about 13 accounting, in terms of the back office? 14 MR. GARCIA: Well, I'm talking, you 15 know, right now in the system service provider 16 language, there are some exemptions for accounting 17 programs. 18 MR. TAWIL: Well, no. Anything off the 19 shelf is exempted. Obviously, I support your point of 20 view. 21 MR. GARCIA: Right. 22 MR. TAWIL: We've never been at odds 23 with that. 24 MR. GARCIA: Right. 25 MR. TAWIL: But I just feel like if they 0232 1 wanted to track a player independently of the game -- 2 MR. GARCIA: Yeah. That's not a 3 problem. 4 MR. TAWIL: Player tracking. 5 MR. GARCIA: Yeah. 6 MR. TAWIL: Because tracking the process 7 is different than tracking the player. 8 MR. GARCIA: Yeah. 9 MR. TAWIL: Tracking the player, if a 10 guy comes to your hall and spends 50 bucks, it's a lot 11 different than tracking the integrity of the game. 12 MR. GARCIA: Yeah. I certainly 13 understand. 14 MR. TAWIL: Okay. That's where we are. 15 MR. GARCIA: We certainly are in sync 16 with that. 17 MR. TAWIL: We'll support you. 18 CHAIR BRACKETT: Any questions of him? 19 Thank you. 20 MR. GARCIA: Thank you, ma'am. 21 AGENDA ITEM NO. 17 22 CHAIR BRACKETT: Okay. We need to 23 consider our next meeting date and the items for the 24 agenda of that meeting. 25 Some of the things that I have jotted 0233 1 down today that have come up for agenda items: 2 Okay. Saleem mentioned getting the 3 Lottery Commission more employees, right? Was that 4 correct? 5 MR. TAWIL: That's something we could 6 look at, I guess. 7 CHAIR BRACKETT: Okay. Encourage them 8 to get more employees. And we need to include Rule 9 No. 402.558 of the agenda; is that correct? 10 MR. ATKINS: Yes, ma'am. Both of them. 11 CHAIR BRACKETT: All right. And the 12 other one, too? 13 MR. ATKINS: And 402.554? 14 MR. GARCIA: 555. 15 MR. ATKINS: 555, cardminding rule. 16 MR. MOORE: Is the -- is the 40 percent 17 usage, is that a rule or is that statutory? 18 MR. ATKINS: Statutory. 19 MR. TAWIL: I've got a couple of them 20 here. 21 CHAIR BRACKETT: Okay. 22 MR. TAWIL: One of them was to have 23 Mr. Keith come before the Committee to discuss bingo 24 advertising with the Lotto. I'd like to tell them a 25 little bit about how we leverage carriers of 0234 1 broadcasts. They all use those tactics to get the 2 message out. 3 CHAIR BRACKETT: Okay. 4 MR. TAWIL: And the other one I had was 5 a -- 6 MR. MOORE: Saleem, can you say that 7 again? What was that? 8 CHAIR BRACKETT: Mr. Keith Elkins -- 9 MR. TAWIL: Keith Elkins. I didn't know 10 the gentleman's name. 11 CHAIR BRACKETT: -- to come and discuss 12 bingo advertising with Lottery advertising. 13 MR. MOORE: Absolutely. 14 MR. TAWIL: Danny, just a second. The 15 other one, Virginia, that I had written down was a 16 subcommittee and our goals and objectives. 17 CHAIR BRACKETT: Yes. I have that down, 18 too. And we probably need -- I think we really need 19 to meet separately in a work session and do that. 20 MS. TAYLOR: I had a couple of items, 21 Virginia. 22 CHAIR BRACKETT: Okay. 23 MS. TAYLOR: I think that -- I would 24 like to talk about the 1-800 bingo number. 25 CHAIR BRACKETT: Okay. 0235 1 MS. TAYLOR: I would like to talk about 2 report on the funds that the bingo -- that the Lottery 3 Commission receives from bingo and how they're spent 4 and maybe we could get a quarterly report showing what 5 the costs are to run the Lottery and how much is going 6 to the local jurisdictions, how much is going into the 7 State Treasury. 8 On Saleem's theme, I would like to talk 9 about advertising and promotion of bingo. I'd like to 10 have a demonstration on sealed cards and event 11 tickets, which I'm sure that we will have somebody 12 here to show our new committee members that are not 13 familiar with these items what they are so that we can 14 just let them see what they are again. 15 I'd like to discuss satellite bingo and 16 linked bingo, talk about that with the BAC. I'd like 17 to talk about progressive bingo, talk about the 18 automated charitable bingo system. 19 MR. TAWIL: Billy's system? 20 MS. TAYLOR: Yeah. 21 MR. MOORE: We only got one day. 22 CHAIR BRACKETT: Okay. You said 23 automated charity bingo? 24 MS. TAYLOR: Automated, the ACBS. 25 MR. TAWIL: The division's computer 0236 1 system. 2 MS. TAYLOR: Automated charitable bingo 3 system. 4 CHAIR BRACKETT: Oh, okay. You're 5 talking about the computer system? 6 MR. ATKINS: Yeah. She's talking about 7 the computer. 8 CHAIR BRACKETT: I'm slow. 9 MR. WHITTINGTON: I got two of them. 10 Really one, two in one. 11 CHAIR BRACKETT: Okay. 12 MR. WHITTINGTON: I'd like to talk about 13 bingo certificates and game, as well as advertising, 14 regulating. 15 CHAIR BRACKETT: Bingo gets 10 percent 16 and? 17 MR. WHITTINGTON: And gaming of the 18 industry and talk about the way we have done it in the 19 past. 20 MS. TAYLOR: Are you talking about 21 8-liners? 22 MR. WHITTINGTON: If you want to say 23 8-liners, yes. 24 MR. ATKINS: I'm sorry. Madame Chair, I 25 have to leave. 0237 1 CHAIR BRACKETT: Okay. 2 MR. ATKINS: I'm sorry. Mr. Sanderson 3 is here. If I could just point out for everyone's 4 benefit. I don't know if you've seen this. This is 5 what Larry's given me on his agenda item. 6 So Suzanne, if you'll be providing 7 similar documentation on all of your items, that will 8 be great. 9 Thank you-all very much. I'm sorry I 10 have to cut out. 11 CHAIR BRACKETT: Okay. And Larry you 12 said also? 13 MR. WHITTINGTON: Advertising. 14 CHAIR BRACKETT: And also advertising, 15 okay. 16 MR. WHITTINGTON: And ways we can fund 17 the advertising. 18 CHAIR BRACKETT: Okay. 19 MR. WHITTINGTON: Is basically what that 20 refers to. 21 CHAIR BRACKETT: Do you have some 22 suggestions? 23 MR. WHITTINGTON: Yeah, I do. 24 CHAIR BRACKETT: Good. And it's not a 25 garage sale? 0238 1 MR. WHITTINGTON: No. 2 CHAIR BRACKETT: All right. Any other 3 suggestions? 4 MR. TAWIL: I've got a suggestion here. 5 What about the idea -- we talked about it last time -- 6 the concept of having subcommittees that oversee the 7 different segments of the division? Do you know what 8 I'm talking about? 9 MS. TAYLOR: Yeah. I do. 10 MR. MOORE: Virginia, we better talk 11 about video pull-tabs again. 12 MS. TAYLOR: I think so, too. That's on 13 my list. 14 MR. MOORE: I'm just -- I know there's 15 some things brewing. And I think by the time we meet 16 again, it's going to be a bigger, bigger issue, okay? 17 MR. TAWIL: Do you mean it's not worked 18 its way out of our emotion? 19 MR. MOORE: No. I mean, there's people 20 that are going to sit down between now and September 21 when we sit down and I'll have a lot more to say about 22 it then. 23 CHAIR BRACKETT: Okay. Let me back up 24 to Saleem. Your concept of subcommittees to -- 25 MR. TAWIL: Subcommittee's review of the 0239 1 division components. 2 CHAIR BRACKETT: Okay. By "division," 3 do you mean the Bingo Division? 4 MR. TAWIL: Yes. One person like over 5 the -- 6 CHAIR BRACKETT: That's all I need to 7 know is the Bingo Division of the Lottery. 8 Anything else? You've been here a 9 while. 10 MR. MOORE: Who do I owe for lunch? 11 CHAIR BRACKETT: I think Worlanda. 12 MR. MOORE: No. She said somebody paid 13 too much. 14 MR. TAWIL: I paid 10 dollars, but I 15 think somebody else paid 10 dollars. Pete paid 10 16 dollars. 17 MS. MATTHEWS: Here's the bill, but it's 18 not broken down. 19 CHAIR BRACKETT: Yeah. I would like for 20 our record to show that we appreciate Chairman Clowe 21 staying and being with us such a long length of time 22 today. 23 Now let's talk about a time, a date to 24 continue. 25 Gentlemen. 0240 1 MR. PAVLOVSKY: We're buying lunch next 2 time. 3 MR. TAWIL: Does your system meet once a 4 quarter or -- 5 MR. WHITTINGTON: Every two months would 6 be fine. 7 CHAIR BRACKETT: We're required to meet 8 no less than once a quarter, but really -- let's see. 9 What is this -- this is June. And then the Lottery 10 Commission is meeting again in July. 11 MR. WHITTINGTON: August. 12 CHAIR BRACKETT: So August would be a 13 good time? Okay. Can anybody say -- what's -- 14 MR. TAWIL: Do you prefer Fridays 15 because we used to meet on Tuesdays. 16 MS. TAYLOR: Or Wednesdays. 17 CHAIR BRACKETT: What I prefer is later 18 in the month because the board of directors for whom I 19 work meets on the second Thursday of each month. When 20 we're meeting on the second Wednesday, that almost 21 killed me trying to -- 22 MR. WHITTINGTON: Well, the third one of 23 August. 24 MR. MOORE: Last week of the month. 25 CHAIR BRACKETT: Who said the last week? 0241 1 MR. MOORE: I did. 2 MR. WHITTINGTON: Last week of August. 3 CHAIR BRACKETT: Okay. Now school starts 4 on the 20th. 5 MR. TAWIL: Everybody should be back in 6 town. 7 CHAIR BRACKETT: So that would be the 8 28th. 9 MS. TAYLOR: There's two of us here that 10 would prefer to meet toward the end of the week like 11 on Fridays. 12 CHAIR BRACKETT: Yeah. End of the week 13 is really -- how about Friday, August the 30th? It 14 would be really hot. 15 MR. SANDERSON: That's the Friday before 16 Labor Day weekend. 17 CHAIR BRACKETT: Oh, yeah. 18 MR. WHITTINGTON: What about the 23rd? 19 CHAIR BRACKETT: The 23rd? Anything 20 wrong with that? 21 MR. SANDERSON: No. 22 CHAIR BRACKETT: It's not a state 23 holiday, is it? 24 MR. SANDERSON: No, the 27th is and I 25 just wanted to -- 0242 1 CHAIR BRACKETT: The 27th is? What on 2 earth is that? 3 MR. SANDERSON: LBJ's birthday. 4 CHAIR BRACKETT: Oh, I forgot. Okay. 5 23rd, Bingo Advisory Committee. 6 MR. TAWIL: August 23rd. 7 CHAIR BRACKETT: I think something else 8 I would like to add to this agenda is a discussion of 9 our one precious out of Austin. And we've got to make 10 it a really big show biz thing to make all of our 11 people happy that this is good we're doing this. 12 MS. TAYLOR: Absolutely. One of the 13 people was talking to me about that we ought to do a 14 little Texas thing. Whenever we do our meeting out of 15 the city, we ought to try and do like a little -- you 16 know how they do the Las Vegas thing? 17 We ought to try and actually get the 18 manufacturers, distributors to help us put together 19 something that makes it a little bit neater. 20 MR. WHITTINGTON: Good idea. 21 CHAIR BRACKETT: It does need to be a 22 big deal, fun thing. 23 MS. TAYLOR: A little mini convention. 24 MR. WHITTINGTON: Virginia, that's -- 25 even bingo is boring now. We need excitement. And I 0243 1 think everything we do should be exciting. 2 CHAIR BRACKETT: Well, we saw a place 3 that a tornado hit. So that was really exciting, but 4 I was so glad it wasn't my charity's night, I didn't 5 know what to do. I could hardly be nice about it. 6 MR. WHITTINGTON: That kills. You 7 don't -- any little thing just kills the crowd. 8 CHAIR BRACKETT: Oh, yeah. And the very 9 next week on our session on Wednesday night, we 10 deposited $300. That was -- I can't talk about it 11 without crying. 12 So anyway, Mr. Sanderson, say something 13 so you'll get your name on the record. 14 MR. SANDERSON: I already said 15 something. 16 CHAIR BRACKETT: I missed it. Okay. 17 Well, thank you for being available for 18 us. And so we are adjourning at -- is there any other 19 business? I should ask about that. 20 MS. MATTHEWS: Do you need our travel 21 vouchers? 22 CHAIR BRACKETT: That's the lady to talk 23 to about -- she had a question about the travel 24 vouchers. 25 MS. NEAL: Yes. And I will take care of 0244 1 that as soon as y'all close the meeting. 2 CHAIR BRACKETT: Okay. She'll discuss 3 travel vouchers then. 4 AGENDA ITEM NO. 18 5 We're adjourning at about 3:12 and I 6 want to thank all of you. I think we have -- I tell 7 you what, you need to look at us three. We put this 8 committee together and we did a good job. Didn't we, 9 Phil? 10 MR. SANDERSON: We did an excellent job. 11 MS. TAYLOR: Really. We really did. We 12 picked -- I mean, believe it or not, we don't all hate 13 each other. 14 CHAIR BRACKETT: And you would be amazed 15 at how many, many applicants we had. This committee 16 draws a lot of interest. And I'm very pleased about 17 that. I think it's wonderful that we do. 18 Okay. Then we will see you in August, 19 August 23rd, just a month after the Lottery Commission 20 meets. 21 (Meeting adjourned at 3:12 p.m.) 22 23 24 25 0245 1 CHANGES 2 PAGE LINE CHANGE REASON 3 ______________________________________________________ 4 ______________________________________________________ 5 ______________________________________________________ 6 ______________________________________________________ 7 ______________________________________________________ 8 ______________________________________________________ 9 ______________________________________________________ 10 ______________________________________________________ 11 ______________________________________________________ 12 ______________________________________________________ 13 ______________________________________________________ 14 ______________________________________________________ 15 ______________________________________________________ 16 ______________________________________________________ 17 ______________________________________________________ 18 ______________________________________________________ 19 ______________________________________________________ 20 ______________________________________________________ 21 ______________________________________________________ 22 ______________________________________________________ 23 ______________________________________________________ 24 ______________________________________________________ 25 ______________________________________________________ 0246 1 REPORTER'S CERTIFICATION 2 3 STATE OF TEXAS ) 4 COUNTY OF TRAVIS ) 5 6 I, David Bateman, RPR, Certified Shorthand 7 Reporter for the State of Texas, do hereby certify 8 that the above-captioned matter came on for hearing 9 before the BINGO ADVISORY COMMITTEE as hereinbefore 10 set out, that I did, in shorthand, report said 11 proceedings, and that the above and foregoing 12 typewritten pages contain a full, true, and correct 13 computer-aided transcription of my shorthand notes 14 taken on said occasion. 15 16 Witness my hand on this the ____ day of 17 ______________, 2002. 18 19 20 _________________________________ David Bateman, RPR, CSR #7578 21 Expiration Date: 12-31-03 1609 Shoal Creek Blvd, Suite 202 22 Austin, Texas 78701 (512) 474-4363 23 24 25 JOB NO. 020628DPB