0001
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 5   
 6                     BINGO ADVISORY COMMITTEE
 7                             MEETING
 8                                 
 9                           May 10, 2006
10   
11   ******************************************************
12   
13   
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15   
16   
17   
18   
19                   BE IT REMEMBERED that the BINGO ADVISORY 
20   COMMITTEE meeting was held on May 10, 2006, from 9:59 a.m. 
21   to 11:41 a.m., before Leigh Anne Williams, CSR, in and for 
22   the State of Texas, reported by machine shorthand, at the 
23   offices of the Texas Lottery Commission, 611 East 6th 
24   Street, Austin, Texas, whereupon the following proceedings 
25   were had:
0002
 1                           APPEARANCES
 2   
     Chairperson:
 3          Ms. Suzanne Taylor - Corpus Christi, Texas
 4   Committee Members
            Mr. Daniel Moore - Houston, Texas
 5          Mr. Larry Whittington - Dallas, Texas
            Mr. Mario Manio - Garland, Texas
 6          Mr. Jack Dougherty - Austin, Texas
            Ms. Kimberly Rogers - San Antonio, Texas
 7          Ms. Rosie Lopez - Odessa, Texas
     Charitable Bingo Director:
 8          Mr. Billy Atkins
 9   
10   
11   
12   
13   
14   
15   
16   
17   
18   
19   
20   
21   
22   
23   
24   
25   
0003
 1                              INDEX
 2   
 3   Appearances....................................     2
 4   AGENDA ITEMS
 5   ITEM NUMBER 1..................................     4
 6   ITEM NUMBER 2..................................     4
 7   ITEM NUMBER 3..................................     5
 8   ITEM NUMBER 4..................................     7    
 9   ITEM NUMBER 5..................................    15    
10   ITEM NUMBER 6..................................    17    
11   ITEM NUMBER 7..................................    23
12   ITEM NUMBER 8..................................    25
13   ITEM NUMBER 9..................................    52
14   ITEM NUMBER 10.................................    53
15   ITEM NUMBER 11.................................    54
16   ITEM NUMBER 12.................................    55
17   ITEM NUMBER 13.................................    56
18   ITEM NUMBER 14.................................    58
19   ITEM NUMBER 15.................................    61
20   ITEM NUMBER 16.................................    75
21   ITEM NUMBER 17.................................    78
22   
23   Errata Sheet...................................    79
24   Reporter's Certificate.........................    80
25   
0004
 1                           May 10, 2006
 2                 Bingo Advisory Committee Meeting
 3                   CHAIR TAYLOR:  It's ten o'clock.  We do 
 4   have a quorum.  So, we'd like to call the meeting to order. 
 5                   First thing I'd like to do is to recognize 
 6   Commissioner Clowe.  We do appreciate you being here and 
 7   being one of our audience.  If there's anything you want to 
 8   say to us or any words of wisdom, we'd love to hear them 
 9   throughout the meeting. 
10                   COMMISSIONER CLOWE:  Thank you. 
11                   CHAIR TAYLOR:  Agenda Item No. 1, Bingo 
12   Advisory Committee will call the meeting to order, which 
13   we've done. 
14                   Agenda Item No. 2, consideration of and 
15   possible discussion and/or action on the minutes of 
16   February 15th, 2006, Bingo Advisory Committee meeting.  Are 
17   there any changes? 
18                   These were posted online.  Does the 
19   Committee have any changes to these or additions? 
20                   Is there a motion to approve? 
21                   MS. ROGERS:  I motion. 
22                   CHAIR TAYLOR:  Second? 
23                   MR. MOORE:  I'll second the motion. 
24                   CHAIR TAYLOR:  All in favor?  Aye.  
25   Opposed? 
0005
 1                   Committee unanimously approved. 
 2                   Item No. 3, report and possible discussion 
 3   pertaining to the Price Fixing Work Group.  Sandy? 
 4                   MS. JOSEPH:  Good morning.  For the record, 
 5   I am Sandy Joseph, assistant general counsel. 
 6                   CHAIR TAYLOR:  Sandy, can I interrupt you 
 7   just one second?
 8                   MS. JOSEPH:  Certainly.
 9                   CHAIR TAYLOR:  Something I neglected to 
10   say, that in case anybody wasn't familiar, this is not 
11   Billy Atkins sitting here.  We do have Phil Sanderson 
12   sitting in for Billy until his arrival. 
13                   Thank you, Sandy. 
14                   MS. JOSEPH:  Yes.  On March 23rd, I 
15   circulated to the work group two drafts of rule language 
16   for consideration and comment.  One draft was prepared by 
17   Jaime McNally, addressing horizontal price fixing, and the 
18   second draft was prepared by Stephen Fenoglio.  
19   Mr. Fenoglio provided copies of his draft to you at your 
20   last meeting. 
21                   I asked that comment be submitted by 
22   April 21st.  Only one comment was received, and that was 
23   from a nonmember of the work group.  Mr. Stephen Hieronymus 
24   commented negatively on Jaime McNally's draft.  That was 
25   the only comment I had on the two drafts. 
0006
 1                   The staff is now in the process of 
 2   reviewing and evaluating all the information that's been 
 3   gathered, suggested language and comments received. 
 4                   Are there any questions? 
 5                   CHAIR TAYLOR:  Any questions, Committee?  
 6                   MR. MOORE:  Well, Sandy, do you think we 
 7   should have a meeting or -- whether it's ten minutes, just 
 8   to kind of see where we are? 
 9                   You know, just looking through the book 
10   today, I feel like we kind of fell off on getting people 
11   together on some of these topics.  So --
12                   MS. JOSEPH:  Well, what we hoped was, you 
13   know, rather than have people get together, that people 
14   would submit their comments on those drafts, and, I mean, I 
15   take that nobody really had anything to say about them.  I 
16   don't know.  Do you think maybe that's a mistaken 
17   conclusion? 
18                   MR. MOORE:  Well, if there's such a lack of 
19   interest, maybe we're looking at a rule that doesn't need 
20   to be changed, you know. 
21                   MS. JOSEPH:  Well, that's actually one 
22   thing that the staff is considering, and what we plan to do 
23   is for the staff to look it all over a little more and 
24   decide perhaps what we think might be a possible direction 
25   and then we'll get back with the work group and get some 
0007
 1   more input. 
 2                   MR. MOORE:  Okay. 
 3                   MS. JOSEPH:  But I would expect we'll have 
 4   another meeting before the next BAC meeting. 
 5                   MR. MOORE:  Okay.  Thank you. 
 6                   CHAIR TAYLOR:  Any additional comments?  
 7   Sandy? 
 8                   MS. JOSEPH:  No. 
 9                   CHAIR TAYLOR:  Okay.  Then Item No. 4, 
10   report and possible discussion pertaining to the 
11   Progressive Bingo/Alternative Styles of Play Work Group. 
12                   MS. JOSEPH:  Again, I'm Sandy Joseph.  The 
13   work group on alternative styles of play is continuing to 
14   gather information on the various styles of play.  Mario 
15   Manio has provided information on some progressive games 
16   that are being played in Texas and Oklahoma, and the staff 
17   is continuing to seek information from other jurisdictions 
18   on various styles of play. 
19                   We're considering drafting rules that would 
20   address specific games that can be played under the current 
21   law.  The rules are anticipated to address record-keeping 
22   and reporting for a specific game.  We'll also be looking 
23   at how to evaluate or judge the impact that any new rule 
24   might have. 
25                   The first game we plan to address is 
0008
 1   progressive bingo.  When completed, the draft rule will be 
 2   distributed to the work group for their comment.  I would 
 3   like to ask anyone that has any ideas or suggestions to 
 4   feel free to submit those to me or Phil or to any member of 
 5   the work group. 
 6                   We do plan to be coming up with a first 
 7   draft in the near future, and again, we will circulate that 
 8   to the work group and, in all likelihood, convene a meeting 
 9   to discuss and receive comments on that. 
10                   Do you have any questions? 
11                   CHAIR TAYLOR:  Approximately when do you 
12   anticipate that first draft? 
13                   MS. JOSEPH:  We're thinking within the next 
14   month, possibly sooner. 
15                   CHAIR TAYLOR:  Okay.  Any suggestions or 
16   any comments for Sandy? 
17                   MR. MANIO:  No suggestion, but there is 
18   something that I would like to present to the work group so 
19   that they can explore the possibility of this style of 
20   bingo.  And let me pass this around to the committee 
21   members. 
22                   This style of bingo is very popular outside 
23   the U.S., and there are two main differences from the bingo 
24   that we know in Texas today compared to this style of 
25   bingo.  First of all, there are only 16 squares instead of 
0009
 1   25, and second, instead of numbers, we have pictures. 
 2                   In the case of present day bingo, there are 
 3   75 numbers.  In this style of bingo, there are 54 
 4   numbers -- or 54 characters, and like I said, I'd like to 
 5   submit this to you for exploration.  I suspect that this 
 6   might be a popular game in some parts of the state or maybe 
 7   even in some neighborhoods within the city. 
 8                   MS. JOSEPH:  Okay.  Do you have any 
 9   questions, Phil? 
10                   MR. SANDERSON:  The current rule that we 
11   have, 402.301, addresses Loteria.  Paragraph G, the symbols 
12   or pictures may be identified in Spanish subtitles, and 
13   each of the 54 cards contain a separate or distinct symbol 
14   or picture.  The 54 individual cards may be shuffled by the 
15   caller and randomly drawn and announced to the players. 
16                   The players use a Loteria card which 
17   contains a minimum of 16 squares, and each square has one 
18   of 54 symbols.  Loteria cards are not considered bingo 
19   equipment as defined by the Occupations Code.  So, it 
20   currently is a game that can be played. 
21                   MS. JOSEPH:  And what is this game called 
22   again?  
23                   MR. SANDERSON:  Loteria. 
24                   MS. JOSEPH:  Loteria?
25                   MR. SANDERSON:  Yes.
0010
 1                   MS. JOSEPH:  And, Phil, as I understand 
 2   what you're saying, you believe it's covered by the rules 
 3   presently? 
 4                   MR. SANDERSON:  Yes, I do. 
 5                   MS. JOSEPH:  All right.  Thank you.
 6                   MR. MANIO:  Right.  But it -- still there's 
 7   a possibility of it -- I realize that it might make quite a 
 8   change in the code to make this legal in the state of 
 9   Texas.  That's not impossible to do. 
10                   The thing for us to consider right now, is 
11   this something that might be popular in -- within the 
12   state. 
13                   MS. JOSEPH:  Well, we appreciate your 
14   bringing it forward, and we'll certainly take a look at it. 
15                   MR. MANIO:  That's another point.  We want 
16   to get this legalized.  I'm aware of that. 
17                   MR. SANDERSON:  And we have several places 
18   that are playing it now already currently. 
19                   MS. LOPEZ:  How is it played exactly? 
20                   MR. SANDERSON:  It's played with cards 
21   instead of balls.  You shuffle the deck of cards and then 
22   you call out the symbol. 
23                   MS. ROGERS:  They play that as one of their 
24   games within their session?  
25                   MR. SANDERSON:  Yes. 
0011
 1                   MR. MANIO:  But it's also possible that we 
 2   can find a manufacturer to manufacture the balls with 
 3   pictures instead of numbers. 
 4                   MS. ROGERS:  And make it sort of like an 
 5   event? 
 6                   MR. MANIO:  That's right.
 7                   MS. ROGERS:  Like an event tab, something 
 8   you play outside of the -- Got you. 
 9                   MS. LOPEZ:  Can be played as maybe your 
10   night owl game, could be, or something like that.
11                   MR. SANDERSON:  It would right now be 
12   considered part of our regular bingo games. 
13                   MR. MOORE:  So, it has to be under the 
14   2,500? 
15                   MR. SANDERSON:  That's correct. 
16                   MR. DOUGHERTY:  Does it go to 75 like bingo 
17   or is it --
18                   MR. MANIO:  54 characters. 
19                   MR. DOUGHERTY:  54 characters. 
20                   MR. MANIO:  Right.  And 16 squares instead 
21   of 25. 
22                   CHAIR TAYLOR:  Where are they currently 
23   playing this?  
24                   MR. MANIO:  In Mexico.  
25                   CHAIR TAYLOR:  No.  I meant, is there 
0012
 1   somewhere here in Texas they're playing it, too?  
 2                   MR. SANDERSON:  Majority of the ones that 
 3   are playing this in Texas are temporary locations, 
 4   temporary licenses, and down in the Valley in south Texas. 
 5                   They -- The reason we put this section in 
 6   the rule, there are currently no licensed manufacturers 
 7   that print these cards.  You buy them at Wal-Mart or, you 
 8   know, five-and-dime store. 
 9                   MS. ROGERS:  But if a manufacturer did -- 
10   We're just assuming here a lot.  If they did make this some 
11   type of, like, event tab, then it could be taken out of 
12   your regular games maybe?  No? 
13                   I'm just curious why it has to be played -- 
14   if it's Loteria, it has to be played within your regular 
15   session. 
16                   MR. SANDERSON:  Because it's considered 
17   regular bingo. 
18                   MS. ROGERS:  But if they took it out and 
19   made it an event tab, it could be taken out of there?  I'm 
20   just curious.  Maybe? 
21                   CHAIR TAYLOR:  Have you played an event 
22   tab? 
23                   MS. ROGERS:  I haven't played.  
24                   MS. JOSEPH:  We can certainly add this to 
25   look at and see if there's anything that we would want to 
0013
 1   do to enhance our rule to address the different situations. 
 2                   MR. MANIO:  Thank you. 
 3                   MS. JOSEPH:  Thank you, Mario. 
 4                   Any other comments? 
 5                   MS. LOPEZ:  Can you elaborate a little bit 
 6   more on, like, some of the progressive bingo and some of 
 7   the maybe systematic process of, like, how that would work 
 8   if, indeed, it did become a part of Charitable Bingo? 
 9                   MS. JOSEPH:  Do you mean how the game would 
10   be played? 
11                   MS. LOPEZ:  Sure.
12                   MS. JOSEPH:  I'm going to ask Phil to 
13   explain that. 
14                   MR. SANDERSON:  Currently we're looking at 
15   drafting a rule that would lay out the way the progressive 
16   bingo game would be played.  It would still have to fall 
17   within the price cap limitations of 750 per game or 2,500 
18   per session, and, so, it's really going to be like a small 
19   progressive.  You start out with maybe a $200 prize if you 
20   bingo within so many numbers, and if you don't, then you 
21   win $100, and the next night, the prize becomes 300 -- or 
22   the next session, it becomes 300.  Then it goes up to 750.  
23                   MS. JOSEPH:  Any other questions or 
24   comments, suggestions? 
25                   MR. MOORE:  Well, Rosie, I think the 
0014
 1   thought process behind this was, going forward, if we have 
 2   a rule in place for progressive bingo, that if there's any 
 3   legislation maybe in the future, because there has been 
 4   some, that we can point to that.  I think that was even -- 
 5   Billy might have mentioned that, but I could tell you 
 6   just -- I've been into the little VFWs, American Legions 
 7   that do it where they don't pay out 2,500, and their crowd 
 8   grows with these pots, you know.  They may only have a 250 
 9   top game, but if that one gets up to 500, you know, they -- 
10   it will help. 
11                   I mean, if -- I could foresee, you know, 
12   something where, if you had all four of your charities or 
13   whatever playing progressives -- this is in the future -- 
14   if caps were taken off, you would see an increased 
15   attendance, you know.  So -- I just -- I was just trying to 
16   reflect on what we've talked about in the past.  So --
17                   MS. JOSEPH:   All right.  Anything else?  
18   Appreciate y'all's input. 
19                   Mario. 
20                   MR. MANIO:  Yeah, my recollection about 
21   what Danny mentioned is we wanted to draft the rules for 
22   progressive bingo so that next year when the session 
23   begins, it's -- we can present them a fete a compli.  It 
24   will not hurt progressive bingo.  It's just a matter of 
25   raising the bar, the limits. 
0015
 1                   MS. JOSEPH:   I think that certainly has 
 2   been discussed.  We wanted to go ahead and draft rules that 
 3   would work within the confines of what the law is now, but 
 4   on the other hand, it would be in place in the event 
 5   legislature decided to raise the limit or whatever they 
 6   might choose to do.  Might make it even more attractive. 
 7                   CHAIR TAYLOR:  Any other discussion? 
 8                   Thank you, Sandy. 
 9                   MS. JOSEPH:   All right.  Thank you. 
10                   CHAIR TAYLOR:  Item No. 5, report and 
11   possible discussion on the 79th legislature. 
12                   You don't look like Nelda. 
13                   MR. HOSLA:  I am not Nelda. 
14                   Madam Chair, Good morning, Members.  I'm 
15   Colin Hosla from the government affairs staff substituting 
16   for Nelda this morning. 
17                   In your book behind Tab 5 is a copy of the 
18   speakers interim charges that were issued last October to 
19   the House Committee on Licensing and Administrative 
20   Procedures.  Charge No. 4 which related to the sale of 
21   lottery tickets at new alternative locations and the 
22   possibility of increased revenues from these sales was the 
23   subject of a committee hearing in Fort Worth last February. 
24                   Charge No. 2 relates to Texas pari-mutuel 
25   race tracks.  This could possibly impact both the Texas 
0016
 1   Lottery and the Charitable Bingo industry. 
 2                   Charge No. 6 is a broadly worded charge 
 3   that would appear to permit the Committee to address any 
 4   program or activity of the Texas Lottery Commission. 
 5                   I'm sure you're aware that the 
 6   legislature's currently meeting in a special session which 
 7   can last no longer than May 16th.  Last Friday, May 5th, 
 8   House Joint Resolution 37 and House Bill No. 162 were 
 9   filed.  These would authorize the legislature to legalize 
10   the operation of video lottery games on Indian lands and 
11   also in counties and municipalities in which the voters 
12   have approved the operation of these games.  As of this 
13   morning, however, there's been no hearing scheduled to take 
14   up these bills. 
15                   And that's all I have prepared for this 
16   morning.  I'll be happy to try to answer any questions. 
17                   MR. DOUGHERTY:  Could you repeat the 
18   numbers on the bill, please?
19                   MR. HOSLA:  Sure.  House Joint Resolution 
20   No. 37 would amend the Constitution, is what would appear 
21   on the ballot, to amend the Constitution, and then the 
22   enabling legislation would be House Bill No. 162. 
23                   MR. DOUGHERTY:  Thank you. 
24                   CHAIR TAYLOR:  Are there any additional 
25   questions?  Comments?  Public comment? 
0017
 1                   MR. MOORE:  I haven't seen that these have 
 2   been linked to the school finance plan in any way, these 
 3   two bills.  Are they or --
 4                   MR. HOSLA:  My recollection of the reading 
 5   of the bill, House Bill 162, is that the revenue would go 
 6   to general revenue fund.  It's not specifically linked to 
 7   the foundation school fund.  That's the bill as filed, and, 
 8   of course, a lot of things can happen along the way. 
 9                   MR. MOORE:  I haven't even read it.  So, I 
10   was just curious. 
11                   CHAIR TAYLOR:  Thank you very much.  
12   Appreciate it. 
13                   MR. HOSLA:  Okay.  Thank you. 
14                   CHAIR TAYLOR:  Item No. 6, report and 
15   possible discussion on public service announcements. 
16                   Larry, thank you for arriving.  We didn't 
17   wait. 
18                   MR. HEITH:  Good morning, Madam Chair and 
19   Members.  My name is Bobby Heith, and I'm the director of 
20   media relations here at the Texas Lottery Commission, and 
21   as you remember, I came before you several months ago about 
22   the production and development of a public service 
23   announcement, which I think turned out very well.  A lot of 
24   that goes to the expertise of our staff in media relations. 
25                   We have run it a couple of times and intend 
0018
 1   to really kind of get on a schedule of more of a two-week 
 2   period.  It's not flood -- because, again, a lot of media 
 3   outlets look at this as free advertising, and they're a 
 4   little hesitant to put it up unless they've got something 
 5   that they can fill in usually at 2:00, 2:30 in the morning. 
 6                   Rosie has reached out to her local media 
 7   outlets in the Permian Basin.  They've asked for beta 
 8   copies of that PSA, which we provided her.  I would 
 9   encourage y'all to do probably the same in your area as 
10   well on more of a one-on-one personal basis as far as 
11   reaching out to them, and we will be glad, upon any of 
12   y'all's request, to furnish you with those tapes in that 
13   format. 
14                   In my meeting with Billy, we were -- we 
15   came up with an idea of how to move this one step further 
16   and doing radio PSAs, and what we can do, if we can create 
17   an audio file off of these PSAs or we can create a new PSA 
18   and -- into an MP3 file and send it out attached to an 
19   e-mail, which is very cost effective, and you can get that 
20   out there statewide. 
21                   So, again, I'm asking for y'all's input and 
22   help on this, any suggestions you have.  We're open to 
23   anything, any new ideas. 
24                   Again, back to Rosie's outreach in the 
25   Permian Basin, I think that's very effective. 
0019
 1                   We have still not been able to find a 
 2   program to track public service announcements.  We have 
 3   made some personal calls to programming people to find out 
 4   if they did run it.  Really have received no response. 
 5                   Now, that's not to say that we've called 70 
 6   people and spent a lot of hours doing it, but we have made 
 7   some personal calls just to reach out and see if we would 
 8   receive any response. 
 9                   So, again, I welcome any suggestion.  Any 
10   ideas that you may or may not have, we can help y'all, and 
11   we're always available.  So, I'd be happy to answer any 
12   questions. 
13                   MS. LOPEZ:  I'd just like to make a comment 
14   on the PSA.  I think it's a wonderful tool, again, to 
15   promote Charitable Bingo.  All of our major networks in the 
16   Permian Basin have actually seen the PSA and asked for a 
17   beta format. 
18                   I have a success story that I need to share 
19   with everyone.  I've conducted some live interviews with a 
20   couple of networks there locally related to the statewide 
21   PSA.  One of them was Univision 18 which is obviously a 
22   Hispanic nationwide and local station, and they have agreed 
23   to air our PSA indefinitely until December 31st, and, also, 
24   the neat thing about Univision in the Midland/Odessa area 
25   is that their sister station in San Angelo is a sister 
0020
 1   station, and, so, what they did was they just e-mailed the 
 2   PSA over to the San Angelo Univision station, and, so, it's 
 3   getting aired in San Angelo as well.  I didn't even have to 
 4   go to San Angelo.  It just went from Midland/Odessa to 
 5   San Angelo. 
 6                   So, again, I think that these are just a 
 7   valuable resource to all of us, and I -- you know, I'm in 
 8   agreement with Bobby that we need to do as much as we can 
 9   to get the message out, and I'm taking these over to the 
10   three local stations, and we're going to start airing them 
11   now through the end of the year. 
12                   Just meeting with the news directors of 
13   each station, that's all you have to do, just meet with 
14   them and tell them your story and tell them what it's 
15   about, and pretty much they agree. 
16                   MR. HEITH:  And I think once they see it, 
17   it's -- Yeah, I'm proud of it, just because of the work 
18   that I'm doing and from the staff perspective, and I -- You 
19   know, I think it's just going to take more of that, more of 
20   a personal outreach, than us putting up a media advisory 
21   with the satellite coordinates saying, at this time, pull 
22   it down. 
23                   So, that's good to hear.  That's very good 
24   to hear. 
25                   MR. DOUGHERTY:  For clarification, I heard 
0021
 1   you say -- Did you say you just broadcast them at 
 2   two o'clock in the morning?
 3                   MR. HEITH:  Usually that's when they 
 4   appear.  Not all the times, but what happens --
 5                   MR. DOUGHERTY:  I mean, how about you?  You 
 6   going to do it in prime time? 
 7                   MS. LOPEZ:  Well, any public service 
 8   announcement is at the discretion of that particular 
 9   television network, but they put it on what they call a 
10   rotating schedule.  6 a.m. to midnight is basically when 
11   they sometimes air PSAs, and, so, it's on a rotator 
12   schedule. 
13                   Obviously if there's -- if it's a -- during 
14   a season where there is a lot of political campaign 
15   advertisements or national advertisements of that type of 
16   nature, obviously PSAs get bumped off and don't get aired, 
17   but I was told by a couple of the networks that they have a 
18   lot of old PSAs from just -- like the Ad Council that 
19   they've been wanting to weed out and clean out, and, so, 
20   with something new like this coming in -- this is horrible, 
21   but they're going to throw out the Ad Council ad and put in 
22   the TLC -- you know, the Charitable Bingo PSAs, which is 
23   good news again. 
24                   So, that was really what I heard from a 
25   couple of -- especially the Univision 18 and the NBC 
0022
 1   station there said, hey, we've got a lot of old PSAs that 
 2   we need to clean out, this is great because we don't get a 
 3   whole lot of new PSAs that we can use, and, so, we're 
 4   definitely going to use it. 
 5                   MR. WHITTINGTON:  You said it's got to be 
 6   on a beta format? 
 7                   MS. LOPEZ:  It's what they call a dub, and 
 8   they are able to --
 9                   MR. HEITH:  And they can create their own, 
10   but we put it up on the satellites usually during the noon 
11   drawing or the drawings at night, excluding Tuesday and 
12   Friday because those are our -- we don't have any dead air 
13   at that time for our block of satellite time, and they can 
14   create their own -- if they pull it down, they can create 
15   their own beta, but in this particular case, it's just a 
16   convenience.  It's not that expensive to do. 
17                   MR. WHITTINGTON:  You know, I just 
18   appreciate the first step for bingo as far as through PSAs 
19   or however it may be.  I just appreciate the first step 
20   because that would definitely help, and, of course, we can 
21   take that and, of course, run with it and help ourself, but 
22   eventually I'm sure we're going to be part of everything in 
23   a couple years, just like the Lottery Commission, but as of 
24   right now, we'll take that.  I appreciate it.  I really do. 
25                   MR. HEITH:  And I appreciate hearing that 
0023
 1   because I'm very proud of the people in media relations 
 2   that put this together, and I think it's a very high 
 3   quality production, and they do such good work, but -- and 
 4   I think really the next step is radio, and that's cost 
 5   effective and very easy to do.  So --
 6                   MS. LOPEZ:  One of the stations in the 
 7   Permian Basin, which is the NBC news, they also have 
 8   Telemundo which is their Hispanic station, and they 
 9   actually asked for radio PSAs to air on the Hispanic 
10   station.  So, I think that's perfect maybe to get it on 
11   radio as well. 
12                   MR. WHITTINGTON:  I'm sure the testimony 
13   from the charities themselves, along with the PSA, when you 
14   go to talk to these people will really help a lot, too. 
15                   MS. LOPEZ:  It does. 
16                   MR. WHITTINGTON:  That's great. 
17                   MR. HEITH:  Thank y'all. 
18                   CHAIR TAYLOR:  Thank you very much. 
19                   Item No. 7, report on the implementation of 
20   the new administrative penalty guideline rules. 
21                   MR. SANDERSON:  I'm going to give this 
22   report for Billy since he's absent this morning. 
23                   The Item No. 7, implementation of 
24   administrative penalty rules.  Members, we wanted to give 
25   you an update on the implementation of the two new 
0024
 1   administrative penalty rules that the Commission adopted at 
 2   their April 5th meeting.  Those rules were filed with the 
 3   Texas Register on April the 5th, 2006, were published in 
 4   the April 21st issue of the Register, and were effective as 
 5   of April the 25th. 
 6                   Bingo Division staff held their initial 
 7   meeting regarding the implementation of the rules on April 
 8   the 10th.  At that meeting, the following actions were 
 9   identified and plans made to follow through on them:  One, 
10   the identification of existing procedures that need 
11   updating and new procedures that need to be written; the 
12   identification of internal forms that need to be updated or 
13   developed; enhancements that need to be made to the 
14   automated Charitable Bingo system and other operating 
15   systems used by the Division; methods of notification to 
16   the bingo industry regarding these new rules, including 
17   announcements in the Bingo Bulletin and on the Division Web 
18   site, a letter to all licensees, special inserts in regular 
19   Division mailings, and the addition of information to the 
20   operator training program; also, notification and education 
21   of agency staff on these rules and their implementations 
22   and coordination of meetings with staff from Legal and 
23   Enforcement relating to the implementation. 
24                   Bingo Division staff met with Legal and 
25   Enforcement on April 13th and with staff from Internal 
0025
 1   Audit on April 25th.  As a result of those meetings, 
 2   additional action items have been identified that are being 
 3   addressed by staff.  At their initial meeting in early 
 4   April, Bingo staff set a target implementation date of 
 5   July 1st.  This date will be monitored and, based on the 
 6   results of staff's meetings with other divisions, as well 
 7   as their progress on Division preparations, adjusted if 
 8   necessary. 
 9                   I'll be happy to answer any questions you 
10   may have. 
11                   CHAIR TAYLOR:  Any question from committee 
12   members?  Any other public comment?  If not, we'll move on 
13   to the next item. 
14                   Item 8, report and possible discussion 
15   and/or action on the fourth quarter 2005 and 2005 Bingo 
16   conductor information. 
17                   Phil is moving over to put on a different 
18   hat. 
19                   MR. SANDERSON:  Members, my name is Phil 
20   Sanderson, assistant director of the Charitable Bingo 
21   Operations Division.  I'm here to present to you the fourth 
22   quarter calendar year of 2005 financial information as 
23   reported by licensed authorized organizations. 
24                   As previously presented by the members of 
25   the Office of the Controller, this analysis covered the 
0026
 1   years 2000 through 2005 for gross receipts, prizes, net 
 2   revenue, expenses and reported charitable distributions.  
 3   Further analysis has been completed on the quarterly trends 
 4   for gross receipts, attendance, occasions, conductors 
 5   reporting, and the graphs have been updated to include 
 6   fourth quarter of 2005 information. 
 7                   As shown on this graph, gross receipts for 
 8   any given year continue to be the highest in the first 
 9   quarter.  The gross receipts for 2005 are the highest for 
10   each quarter of this five-year period. 
11                   Additionally, this is the first time since 
12   2002 from the fourth quarter that fourth quarter receipts 
13   have exceeded third quarter receipts.  Additionally, gross 
14   receipts are the highest during this five-year period.  In 
15   fact, they're the highest since 1995. 
16                   The average amount spent by a player has 
17   been continually increasing over the past five years.  
18   During the fourth quarter of 2005, the average player 
19   spent -- spend was $32.72. 
20                   Attendance is also the highest in the first 
21   quarter of each year.  However, unlike gross receipts, 2005 
22   is the lowest reported attendance during this five-year 
23   period. 
24                   Like gross receipts and attendance, the 
25   average number of players per occasion is the highest in 
0027
 1   the first quarter of each year, and in 2005, it declined to 
 2   the lowest of this five-year period of 136.1 individuals 
 3   per occasion. 
 4                   The number of occasions has been decreasing 
 5   relatively each quarter over the past five years.  For each 
 6   particular year, the first three quarters remain fairly 
 7   constant.  Then there is a drop in the fourth quarter. 
 8                   The number of occasions per conductor still 
 9   remains fairly constant each quarter, somewhere between 24 
10   and 26 occasions per quarter on average.  The number of 
11   conductors reporting tends to increase each quarter 
12   throughout each year, but continues to decrease from year 
13   to year. 
14                   Here's a slide that's showing an analysis 
15   of gross receipts and attendance.  As gross receipts 
16   increases and attendance decreases, the average spend per 
17   player has increased.  Number of occasions continue to 
18   decline, as well as the number of players per occasion.  
19   However, the average number of occasions per conductor 
20   remains fairly constant, as the number of conductors 
21   reporting each year continues to decline. 
22                   Fewer conductors are conducting the same 
23   number of occasions, resulting in total occasions 
24   declining.  Fewer individuals are attending fewer 
25   occasions, resulting in a decline in attendance, average 
0028
 1   attendance per occasion.  However, those individuals 
 2   attending are spending more per occasion, resulting in an 
 3   increase in gross receipts. 
 4                   Now for the fourth quarter data as reported 
 5   by the conductors.  Prize payouts for regular bingo in the 
 6   fourth quarter were 75.5 percent.  Prize payout percentages 
 7   for instant bingo was 73.2 percent. 
 8                   Here is a chart indicating disbursements 
 9   other than prizes as a percentage of gross receipts: the 
10   highest being rent payments at 6 percent; salary for 
11   callers, cashiers and ushers at 5.9 percent; charitable 
12   distributions at 4.5 percent; lease payments to 
13   distributors, 3.1 percent; with the remainder of other 
14   expenses all under 2 percent each. 
15                   This pie chart is a graphic indication of 
16   what percent each expense is as it relates to total 
17   expenses, once again not including prize payouts.  Salaries 
18   for janitorial, callers, cashiers, ushers, security, legal 
19   and accounting account for almost 55 percent of total 
20   expenses.  When you include rent payments, the amount 
21   represents over 92 percent of the total expenses. 
22                   Commissioner Cox had asked at a previous 
23   Commission meeting where we were discussing the third 
24   quarter information to see something on average attendance 
25   per occasion.  The previous slide did show you the average 
0029
 1   attendance per occasion, and that number is declining as 
 2   well. 
 3                   However, I would like to give you some 
 4   additional information on averages per occasion.  The 
 5   average net receipts, which is gross minus prizes, per 
 6   occasion has been increasing since 2002.  Total expenses 
 7   have been increasing as well. 
 8                   Net revenue has shown an increase from $214 
 9   per occasion to $226 per occasion.  This is the amount that 
10   the organization should have available to distribute for 
11   charitable purposes. 
12                   And here is the average charitable 
13   distribution per occasion.  All of these items, for the 
14   most, part have been increasing, and now here's your 
15   average attendance per occasion, and it has decreased from 
16   almost 152 to 140 percent per occasion. 
17                   An additional comparison was performed on 
18   the information reported in 2005 to information reported in 
19   1994, and I guess the reason being is that gross receipts 
20   and prizes paid for these two years were almost identical.  
21   If you look at the table, you can see gross receipts -- it 
22   shows a 0.2 percent increase, while prizes were less than a 
23   tenth of a percent increase. 
24                   The number of conductors reporting 
25   decreased 33.9 percent.  Number of occasions decreased 21.3 
0030
 1   percent.  Rent payments decreased 0.7 percent.  Your 
 2   mortgage payments had an increase of 135 percent.  Total 
 3   expenses increased 17.8 percent.  Charitable distributions 
 4   decreased 38 percent, while required distributions 
 5   decreased 48 percent, and the average amount spent per 
 6   player increased 68.3 percent, and the average number of 
 7   players per occasion decreased 27.3 percent. 
 8                   After seeing this table, the commissioners 
 9   requested that the 1994 dollars be adjusted for inflation 
10   and then compared to the 2005 dollars.  Items of interest 
11   are as follows:  The 1994 amounts for gross receipts, 
12   prizes, rent payments, mortgage payments, total expenses, 
13   charitable distributions, required distributions and 
14   average spend per player have been adjusted to reflect 2005 
15   dollars.  That will be -- The first column is the actual 
16   reported information for '94.  The middle column or second 
17   column is the adjusted dollars compared to the reported 
18   amount for 2005. 
19                   The reported amounts for conductors 
20   reporting, occasions, attendance and average number of 
21   players were not adjusted.  According to the 
22   U.S. Department of Labor, the 2005 Consumer Price Index, 
23   CPI, average is 195.3, and in 1994, CPI average was 148.2.  
24   This results in an average decrease of 24.12 percent from 
25   '94 to 2005. 
0031
 1                   Although actual gross receipts, prizes and 
 2   rent payments were relatively flat from '94 to 2005, once 
 3   adjusted for inflation, the 2005 amounts reveal a decline 
 4   of approximately 24 percent.  Total expenses for 2005 were 
 5   17.8 percent higher than the 1994 actual.  However, when 
 6   the '94 dollars are adjusted, the 2005 total expenses had 
 7   decreased by 10.6 percent. 
 8                   The average amount spent per player remains 
 9   higher than in 1994.  The revised presentation reveals an 
10   increase of 2005 by almost 28 percent over the adjusted 
11   1994 amount.  The average amount spent per player was 
12   previously reported as an increase of 68.3 percent. 
13                   Charitable distributions and required 
14   distributions for 2005 still remain lower than 1994 
15   adjusted amounts, although the reported distributions are 
16   consistently greater than the required distributions. 
17                   Additionally, Commissioner Cox wanted to 
18   know whether or not the decline in the conductors was 
19   attributed to attrition.  We looked at the same time 
20   period, and as a result of unit accounting being 
21   implemented during the -- at the beginning of 2005, data at 
22   the conductor level does not adequately compare with the 
23   1994 data.  So, we only looked at the time period 1994 to 
24   2004. 
25                   Here you have 1,060 conductors that 
0032
 1   continuously operated between 1994 and 2004.  This number 
 2   is an average, and the number of conductors that are 
 3   reporting as it declines -- and, like, there were 2,186 
 4   conductors reporting in 1994.  Of those, 2,017 stayed in 
 5   operation the next year, 1,854 continued operation, 1,557 
 6   continued in '98, and it decreases down till, in 2004, 
 7   there were 1,060 conductors that remained in operation 
 8   throughout this 11-year period. 
 9                   This is the number of -- the actual number 
10   of conductors reporting each year.  In 1994, there were 
11   2,186 conductors reporting.  It increases to 2,207 in 1995, 
12   and then it begins its decrease down to 1,682 conductors 
13   reporting bingo operations in 2004. 
14                   This slide shows the length of operation of 
15   a bingo operation.  Over this 11-year period, there were 
16   282 organizations that were in operation for one year, 
17   which would be four quarters or less.  There were 299 
18   organizations that were in operation for two years or less, 
19   and then 292 organizations for three years.  So, basically 
20   almost 900 organizations were in bingo only for a 
21   three-year period, and then the number starts to decline a 
22   little bit each year after that. 
23                   Now comparing the organizations that -- the 
24   1,060 that continuously operated through the 11-year period 
25   to the actual amount reported each year of the 11-year 
0033
 1   period, you can see that the gross receipts for the 
 2   organizations that operated during the period increased 
 3   11.4 percent from 338 million to 377 million, while the 
 4   operations during this period for all conductors reporting 
 5   decreased 4.5 percent.  Total prizes for the conductors 
 6   continuously operating increased 11 percent, while the 
 7   prizes for all conductors reporting decreased 5.7 percent. 
 8                   The net receipts, which is gross minus 
 9   prizes, decreased for all -- for both organizations that 
10   reported during this period.  For the organizations that 
11   were in continuous operation, it was a 9.1 percent 
12   decrease, and for all organizations reporting, it was a 
13   20.2 percent decrease. 
14                   The total expenses for the continuous 
15   operation increased 39.62 percent, while the total expenses 
16   for all operations increased 17.7 percent.  The net revenue 
17   for the continuous operations had a decrease of 36 percent, 
18   while the net revenue for all operations decreased 39 
19   percent.  And charitable distributions for this period for 
20   the continuous operations declined 30.6 percent, while the 
21   distributions for all operations declined 38.3 percent. 
22                   At the April 5th, 2006, Commission meeting, 
23   questions were posed regarding the stability of 
24   organizations conducting Charitable Bingo.  Specifically, 
25   it was asked if the stability of the organization is 
0034
 1   related to the hall rather than the organization itself. 
 2                   Additionally, staff was asked about the 
 3   turnover in the, quote, better halls, unquote, and if new 
 4   organizations are, quote, doomed to failure because they're 
 5   at marginal locations and can't really penetrate the good 
 6   locations because those charities are not turning over, 
 7   unquote. 
 8                   We put in a request to Information 
 9   Resources to have the location information extracted out of 
10   the ACBS database.  Due to data conversion, the way 
11   organizations report their location address, 911 emergency 
12   system implementation, address changes as a result of 
13   honoring an individual or a group, this information had to 
14   be reviewed on a line-by-line basis. 
15                   Just to give you some of the information 
16   that was obtained as a result of this research, over the 
17   11-year period from 1994 and 2004, there were 1,358 
18   different locations where bingo was conducted.  Of which, 
19   1,021, or 75 percent, had two or less organizations 
20   conducting bingo. 
21                   Charitable Bingo was conducted in 455 
22   different cities, and of the 455 cities, 70 percent of 
23   those had only one or two locations.  The vast majority of 
24   these one and two organizations and/or one or two locations 
25   were veterans or religious organizations, as well as a few 
0035
 1   fraternal organizations. 
 2                   During this same time period, 477 of the 
 3   locations were in continuous operation, and there were 231 
 4   cities that had at least one of those locations in 
 5   continuous operation.  As of Monday, May the 1st, 2006, 
 6   there were 575 different locations and 258 cities and 134 
 7   counties.  It is interesting to note that 77.5 percent of 
 8   these cities have one or two locations, while 53 percent of 
 9   the counties have one or two locations. 
10                   The top six cities and the number of 
11   locations in each are San Antonio with 41, Houston with 29, 
12   Dallas and Fort Worth each have 17, Austin has 12, and 
13   Corpus Christi has 9. 
14                   Here is the graph of the 477 locations 
15   where bingo was in continuous operation.  This graph shows 
16   the number of locations each year during this 11-year 
17   period.  As you can see, the number of locations where 
18   charitable is conducted each year has been on a decline 
19   from 1,053 locations in 1994 to 627 locations in 2004, for 
20   a little more of a 40 percent decline.
21                   In 2004, of the 627 locations, 447 had one 
22   or two organizations and 180 had three or more.  When you 
23   compare this to the 477 locations that were in continuous 
24   operation, 358 had one or two organizations and 119 had 
25   three or more.  In both instances, over 70 percent of the 
0036
 1   locations had one or two organizations. 
 2                   Now to put a little different perspective 
 3   on this information.  These numbers are graphed for the 
 4   number of locations each year.  The yellow line represents 
 5   one to two organization locations and the red line with 
 6   three or more organizations or locations. 
 7                   You can see that in 1994, 834, or 
 8   79 percent, of those locations had one or two 
 9   organizations.  That number has declined over the years to 
10   447 or 71 percent of the locations with one or two 
11   organizations.  This represents a decline of more than 46 
12   percent.  However, for organizations with three or more -- 
13   for locations with three or more organizations, that number 
14   has only declined from 219 in 1994 to 180 in 2004 or just 
15   under 18 percent. 
16                   This chart shows the number of locations 
17   and their respective length of operations.  As you can see, 
18   the success rate for a location is very similar for that of 
19   the individual organization.  As previously reported, 28.6 
20   percent of the organizations conducting bingo were only in 
21   operation for three years or less, while this chart shows 
22   31.2 percent of the locations where bingo is conducted was 
23   only in operation for three years or less. 
24                   So, with all of this information, we have 
25   come to the following conclusions:  The vast majority of 
0037
 1   the organizations conducting bingo during this period 
 2   stayed at the same location.  The one or two organization 
 3   location is still in the majority, but they are declining 
 4   at a higher rate, and the multi-organization halls tend to 
 5   have the same organizations over the years and appear to be 
 6   more stable. 
 7                   So, in answer to the three questions:  Is 
 8   the stability of an organization related to the hall rather 
 9   than the organization itself?  Research on this question is 
10   inconclusive.  The majority of the halls in operation over 
11   the 11-year period did have the same organizations 
12   conducting bingo. 
13                   Is there a turnover in the better halls?  
14   The research indicates that there appears to be little 
15   turnover at these locations. 
16                   And third, are new organizations doomed to 
17   failure because they're at marginal locations and can't 
18   really penetrate the good locations because those charities 
19   aren't turning over?  New organizations may be, quote, 
20   doomed to failure, unquote, if they cannot acquire a slot 
21   in an existing location.  There are several organizations 
22   over this period of time that attempted to start a new 
23   location and only lasted one to three years. 
24                   The overall analysis is inconclusive as to 
25   the relevance of whether the stability of an organization 
0038
 1   is related to the organization or the hall.  Single or 
 2   two-organization locations appear to be able to survive in 
 3   both the urban and the rural environment. 
 4                   Close to half of the 41 locations in 
 5   San Antonio are one to two organization locations.  We 
 6   think this is relevant because there has been an assumption 
 7   that single organization locations could not survive in the 
 8   urban environment.  The assumption was that large halls 
 9   could draw bigger crowds because they were conducting bingo 
10   seven days a week, while the one to two organization 
11   locations could only conduct three to six days.  This 
12   research has indicated that the majority of the locations 
13   are one to two organization locations and that even in the 
14   larger metropolitan areas, they are able to successfully 
15   operate. 
16                   Currently, Information Resource staff is 
17   writing a program to validate the addresses not only for 
18   playing locations, but all addresses in the database.  Once 
19   this program has been developed, tested and implemented, we 
20   will be able to perform this analysis again and may be able 
21   to get down to an even more detailed level. 
22                   That concludes my report, and I'll be glad 
23   to answer any questions you may have. 
24                   CHAIR TAYLOR:  Before any questions, we'd 
25   like to welcome Billy Atkins. 
0039
 1                   And now if the Committee has any questions.  
 2   Phil, this is really interesting automation.
 3                   MR. SANDERSON:  There's a lot to absorb. 
 4                   CHAIR TAYLOR:  I wish that we could get a 
 5   copy of it, if that's possible, so that we could really 
 6   look at it, but it's very, very interesting information. 
 7                   MR. ATKINS:  We have, Madam Chairman, 
 8   Members, had the opportunity, as you can tell, the way 
 9   that -- and I believe Phil mentioned this in his 
10   presentation and was primarily responsible for the 
11   compilation of putting this information together, and I 
12   appreciate that. 
13                   This shows, I think, the level of interest 
14   that the Commissioners have in the Charitable Bingo 
15   industry because, as you can see, each successive 
16   presentation that we have given has prompted additional 
17   questions from them, and, for example, I know at the 
18   Commission meeting last week, there was an additional 
19   question on -- Help me out, Phil. 
20                   MR. SANDERSON:  The profile of the top five 
21   organizations or locations as it relates to distributions, 
22   I believe was the question. 
23                   MR. ATKINS:  That's correct.  Thank you. 
24                   Commissioner Cox has asked for, again, what 
25   he's called a profile of -- he said the top five and the 
0040
 1   bottom five charitable organizations, top and bottom being 
 2   defined by charitable distributions, and he's asked us to 
 3   look at it two ways, one on a straight dollar amount of 
 4   distributions made, and then a percentage amount of 
 5   distributions made on adjusted gross receipts, and then he 
 6   has also -- I thought there was one other thing that he had 
 7   asked for. 
 8                   I don't have those notes in front of me, 
 9   but I know Phil has been working on that, and we've been 
10   working with a research staff from the Lottery Commission, 
11   and, so, that will be another presentation that we're 
12   hoping to give to the Commission at their first meeting in 
13   June on that information, and, of course, you know that 
14   very likely could result in additional questions from them 
15   that we will research, and as we gather this information, 
16   we'll also bring it back to you. 
17                   There was -- In doing this research, I 
18   think it's appropriate under this item to go ahead and 
19   mention this:  In doing this research, some discussions 
20   that Phil and I have had with other staff at the agency 
21   have looked at some possible economic factors within the 
22   general market and what impact they could have on bingo, 
23   one being the increased cost in gasoline and if that's 
24   going to have any type of discernible impact on bingo play, 
25   and the other is -- As you know, the legislature has 
0041
 1   proposed a $1 increase in cigarette tax, and also, as you 
 2   know, a great many bingo players are smokers as well. 
 3                   So, we have been aware of that.  We have 
 4   been conscious of that, and we'll be looking to see if we 
 5   see any kind of changes that can be attributed to either of 
 6   those functions.  
 7                   MS. LOPEZ:  I have a question with this -- 
 8   I mean, this is an awesome data and report.  What is the 
 9   next step? 
10                   We've -- You know, obviously this is 
11   awesome information, and what is the next step?  I mean, 
12   what's the implementation of the report?  What is the next 
13   step for Charitable Bingo from the data that's been 
14   derived?
15                   MR. ATKINS:  Well, from the staff 
16   perspective, I don't know that we've formulated any type of 
17   action specific to the information that we've gained from 
18   the report.  I get a sense that what the commissioners are 
19   trying to do is get a true genuine picture of all of the 
20   many different factors in the bingo industry and then, of 
21   course, you know, any action that did result of that, of 
22   course, you know, that's going to be based on what the 
23   parameters are in the Bingo Enabling Act, any measures that 
24   the commissioners themselves would take. 
25                   CHAIR TAYLOR:  Commissioner. 
0042
 1                   COMMISSIONER CLOWE:  Tom Clowe, a member of 
 2   the Lottery Commission.  Just a couple of comments, and 
 3   then I'd like to try to answer your question, Rosie. 
 4                   In the slide you had, Phil, on the 
 5   percentage of expenses, was that for 2005? 
 6                   MR. SANDERSON:  The percentage of expenses 
 7   for --
 8                   COMMISSIONER CLOWE:  Various expense 
 9   categories. 
10                   MR. SANDERSON:  Oh, yes, that was for the 
11   fourth quarter of 2005.
12                   COMMISSIONER CLOWE:  Okay.  You need to 
13   label that.  There wasn't a time period on that slide that 
14   I saw.  So, you couldn't tell by looking at it on your 
15   slide. 
16                   It may be in the report or covered 
17   generically in the report, but on that page, it would be 
18   helpful if you could label what period that is.
19                   MR. SANDERSON:  Yes, sir.  
20                   COMMISSIONER CLOWE:  And then I received a 
21   copy of a letter from Mr. Fenoglio asking for some data.  
22   Was that applicable to this report? 
23                   MR. SANDERSON:  An open records request, I 
24   believe is what it probably was, yes, sir. 
25                   COMMISSIONER CLOWE:  Was it net 
0043
 1   contributions? 
 2                   MR. ATKINS:  Oh, I'm sorry.  Mr. Chairman, 
 3   if I can answer that.  He had sent a letter in response to 
 4   the presentation we gave on the Division's annual report, 
 5   and he was questioning whether or not there was going to be 
 6   information on there on net proceeds, and that information 
 7   is in there. 
 8                   COMMISSIONER CLOWE:  So, that is available? 
 9                   MR. ATKINS:  Yes, sir. 
10                   COMMISSIONER CLOWE:  Thank you. 
11                   For my part -- and Commissioner Cox will be 
12   here later in your meeting and you can ask him.  My hope is 
13   that we can get, as a result of this kind of information 
14   being prepared and available, a more accurate picture of 
15   what is happening in the bingo industry. 
16                   I think we hear from people who are 
17   associated with the industry what their viewpoint is, and 
18   to a certain extent, it's a personal, somewhat fragmented 
19   comment on their personal experiences, but this kind of 
20   data pulls together the picture and puts it in focus, in my 
21   opinion, that we have fewer operators, we have fewer 
22   people, we have people playing more, and it shows what -- 
23   When I say fewer people playing more, that means more 
24   dollars per person.  And it shows that there's a shrinking 
25   market that is the essence of the problem with the 
0044
 1   Charitable Bingo contributions.  There are other factors 
 2   that come to play there. 
 3                   My hope is that the Commission can be a 
 4   resource to those who asked the question, what needs to be 
 5   done to the Bingo Enabling Act, and I think that when you 
 6   have factual information and you say, now, here's what's 
 7   happening to this industry, and it comes from the 
 8   Charitable Bingo Division, it has more weight, it has 
 9   validity, as opposed to somebody just saying, well, here's 
10   what I think is wrong. 
11                   So, my hope is that all this information 
12   gives credibility to an accurate appraisal of what's 
13   happening to this industry, this market, and then if 
14   someone says, well, what needs to be done in the future, 
15   you can rely on this data for whatever action you might be 
16   considering.  And I think it's very valuable, you know, 
17   when you're dealing with an industry that is headed in the 
18   way that the -- this industry is headed, you got to know 
19   what are the facts, and I think this goes right to the 
20   heart of it.  That's my interest as a commissioner. 
21                   CHAIR TAYLOR:  Thank you so much. 
22                   MR. SANDERSON:  I remember what 
23   Commissioner Cox's other question was.  He wanted to know 
24   the counties that bingo was conducted and counties that 
25   were legal where bingo was not conducted on a map, 
0045
 1   graphical representation. 
 2                   MR. ATKINS:  That's correct. 
 3                   MR. WHITTINGTON:  What I got out of the 
 4   presentation, Phil -- It was great.  I mean, I really knew 
 5   a lot about the presentation, what you was giving.  I mean, 
 6   I had my ideas, but the facts is we just got to get about 
 7   20 more people per session spending $31 a day, and that 
 8   would put us right where we need to be. 
 9                   Of course, that comes through advertising 
10   and getting these people back in the halls, and that's what 
11   we need to work on.  I don't know how, but we get 20 more 
12   people and they're spending $31 average, that would be 
13   about $600 a day more, and I think we can make it on that.  
14   Charities definitely have more contributions. 
15                   MR. DOUGHERTY:  Madam Chairman, I'd like to 
16   bring out something that sort of jumped out at me at the 
17   data to discuss, and that was the chart that Phil showed of 
18   expenses up and down.  The thing that jumped out to me was 
19   that the mortgage payments were up 78 percent, mortgage 
20   payments.  Yet, the rent payments were down 24 percent, and 
21   that seems very odd, and it seemed like, to me, a target. 
22                   Why are the mortgage payments up so high?  
23   What does that mean?  Borrowing more money or building or 
24   what?  Yet, rent is down. 
25                   Any way to analyze that, Phil? 
0046
 1                   MR. WHITTINGTON:  I can answer that 
 2   question.  Most charities -- When you're dealing with a 
 3   charity, the rent means they're paying a certain amount per 
 4   session.  In the daytime, if you're a commercial lessor, it 
 5   would be charities are paying four or $500 a session.  
 6   Number one, they ain't going to be in bingo because they're 
 7   not making that much money.  So, the rent go down for them 
 8   to keep the bingo hall open.  Okay?  For the charities.  
 9   Okay? 
10                   But if you're on a balloon rate as far as 
11   mortgage, it goes up every year.  So, you got to pay more.  
12   Like every three years, every five years, they're going to 
13   come back and say, you owe me more money, because our rent 
14   increases as far as mortgage almost every three years. 
15                   MR. DOUGHERTY:  Because of inflation.
16                   MR. WHITTINGTON:  Yes, yes, but the rent go 
17   down because we got to keep these organizations -- In 
18   bingo, if you don't drop their rent, they don't make no 
19   money, they can't be in business no longer, and that's why 
20   we're losing so many charities. 
21                   CHAIR TAYLOR:  I agree with the reasons for 
22   the rent going down because I watch that personally, also, 
23   but perhaps there was an awful lot of one to two 
24   organizations which makes me think those are VFWs and 
25   smaller organizations that have their own locations, and 
0047
 1   possibly their mortgage payment going up is because they're 
 2   paying the mortgage payment through bingo.  There was a 
 3   huge amount of one to two organizations at a location.  So, 
 4   you know those are small. 
 5                   MR. SANDERSON:  Well, we saw the 
 6   mortgage -- Mortgage payments really started increasing 
 7   after, I think, House Bill 2519, the one that adjusted some 
 8   of the use of proceeds.  So, that's when we started seeing 
 9   the mortgage payments increase. 
10                   MR. ATKINS:  And we had looked at that 
11   also, Jack, and it was a large percentage increase, but the 
12   total dollar amount, you know, didn't appear to us to 
13   really be statistically significant. 
14                   MR. DOUGHERTY:  Is it something that we can 
15   work on or is it just a sign of the times where inflation 
16   is just eating us up?  Is that right?  Is it something that 
17   could be reduced, is what I think I'm driving at? 
18                   MR. ATKINS:  Mortgage payments? 
19                   MR. DOUGHERTY:  Mortgage payments.  Such a 
20   big expense. 
21                   CHAIR TAYLOR:  I would guess that the 
22   mortgage payment -- the reason that you've got a mortgage 
23   payment -- I mean, it's going to be in one column or 
24   another.  They can either pay rent for the location or they 
25   can just put it on the report as their mortgage payment. 
0048
 1                   MR. SANDERSON:  And also mortgage payment 
 2   was really less than 1 percent of all the expenses. 
 3                   MR. DOUGHERTY:  Oh, was it?  Okay. 
 4                   MS. LOPEZ:  Could that also be attributed 
 5   that maybe some mortgage payments would be -- maybe if 
 6   there had been -- I don't know if this was -- was not 
 7   included in the report, but might be some statistical 
 8   information where maybe charities had also branched out and 
 9   become their own unit and have left a commercial lessor's 
10   hall.  Would that be --
11                   MR. WHITTINGTON:  Charity-run hall.
12                   MS. LOPEZ:  Okay.  But maybe some of that 
13   data which relates to that, which I don't believe that was 
14   included in the report, that maybe that's some statistical 
15   information that should also be included as to, you know -- 
16   There might be some charity-run halls and then some are 
17   commercial-lessor-run halls. 
18                   MR. WHITTINGTON:  Well, you know, a lot of 
19   these shopping centers that has these bingo halls and the 
20   shopping center -- believe me, if you don't go in and 
21   really negotiate with these people, especially if your rent 
22   payment increased -- I mean, mortgage, you can go ahead and 
23   tell them, hey, we ain't doing that great, and believe me, 
24   they don't want you to leave if you pay them rent every 
25   month, a big amount. 
0049
 1                   As a matter of fact, I've had a couple of 
 2   my mortgage people go down a couple hundred dollars a month 
 3   because I went in and said we can't pay no more, we can't 
 4   go up $400 more a month, we got to go down, we need help to 
 5   stay here. 
 6                   And they agreed.  Of course, they got a 
 7   good tenant.  We pay on time.  So, they say, okay, we'll 
 8   drop it a couple hundred dollars a month.  So, I saved the 
 9   charities $1,200 every year. 
10                   MS. LOPEZ:  I guess what my question was, 
11   maybe because there are more mortgage payments maybe 
12   because there are more and more charities that were 
13   becoming their own charity-run halls.  I don't know.  Would 
14   that -- Am I clear as mud? 
15                   MR. ATKINS:  What I think I heard you say, 
16   Rosie, is what we can do is we can look and see if we can 
17   do this same type of analysis, but focus on units. 
18                   MS. LOPEZ:  Pretty much, yes.  That's why, 
19   you know, there's a difference in the mortgage and the 
20   rents because of that. 
21                   MR. WHITTINGTON:  Well, somebody came to me 
22   and said, oh, it's really easy to get into bingo and open a 
23   bingo hall.  I said go for it.  If you think it's so easy, 
24   go for it, because it's not easy, and they usually find out 
25   after one or two years when they got to make the payouts.   
0050
 1   You still got to make 1,600 and $2,500 a session payout.  
 2   If you can't make it, you're not going to be in business, 
 3   and they find that out.  It's not easy. 
 4                   MS. LOPEZ:  No, it's not. 
 5                   CHAIR TAYLOR:  Is there any other 
 6   discussion on this topic?  
 7                   MR. MOORE:  I just -- I want to say 
 8   something.  I think it's a great report.  I think it really 
 9   supports what everybody's been saying, and I would keep 
10   answering those questions that they're asking because I 
11   think it will be helpful for a lot of reasons. 
12                   Obviously there will always be the 
13   intangibles.  I mean, I look back over the last ten years 
14   of the little VFWs, American Legions I've done business 
15   with, and, you know, a lot of reasons they're not around 
16   are they didn't have anybody to take over when the one guy 
17   that ran it for the last eight years finally decided he 
18   couldn't do it anymore, and, I mean, I see that more than 
19   anything, and I'm sure a lot of people can expand on that, 
20   but, you know -- and those are the things that you can't 
21   really put into a report.  So, the numbers are important, 
22   and, you know, that's -- It was a great job, Phil. 
23                   CHAIR TAYLOR:  There is one number, though, 
24   that I would like to look at.  Commissioner Cox had asked 
25   before if we could see reports that start with the adjusted 
0051
 1   net or the gross minus the payouts and then show the 
 2   expenses and everything with that money that's left over, 
 3   and I do think that's an important thing because the 
 4   prizes -- I mean, as the reports go to the legislature, it 
 5   just sounds like there's this huge, huge amount of money, 
 6   and it's all just being spent. 
 7                   And Commissioner Cox made -- at one of the 
 8   Commission meetings that I was at, said that he would 
 9   really like to see it after the prizes were out, that when 
10   he was in Las Vegas, that nobody starts with the gross, 
11   that that's a number that you really can't even use.  You 
12   need to start after the payouts have been paid, and I 
13   agree.  I think that that would be interesting to see the 
14   reports in that way and give them to the legislature, 
15   whoever's looking at them, show them this is after the 
16   prizes. 
17                   I mean, we can't run the business without 
18   paying the prizes.  It's never money that we've had in our 
19   pocket to spend.  So, I would love to see the reports -- I 
20   mean, these are great reports, but I would like to see 
21   reports that show after prizes what percentage of 
22   expenses -- what does the ball look like -- or the graph, 
23   I'm sorry, look like after the prizes have been paid. 
24                   MS. LOPEZ:  I agree. 
25                   MS. ROGERS:  I agree on that because the 
0052
 1   prize money is never ours.  You know, it's not anywhere -- 
 2   You don't take that into consideration, but it was a 
 3   wonderful report. 
 4                   CHAIR TAYLOR:  So, anyway, if that's a 
 5   possibility, I would like to see that, too. 
 6                   Anything else? 
 7                   MS. LOPEZ:  I have to agree with Danny, 
 8   also, the comment that he made about your little 
 9   organizations out there.  The why -- Some of the factors 
10   may be that they are no longer in the bingo industry is 
11   obviously because a lot of organizations are volunteer run. 
12                   You're right.  Once that one person that 
13   has been involved in the business for several years is no 
14   longer there, that leaves that void.  It leaves -- and no 
15   one -- Bingo is totally unique because someone coming in 
16   can be very overwhelmed with this industry and totally say 
17   back off, I don't want to do this.  That happens. 
18                   CHAIR TAYLOR:  Any other comment? 
19                   Item No. 9, report and possible discussion 
20   on the status of nominations for filling vacant bingo 
21   advisory positions. 
22                   MR. ATKINS:  Madam Chair, Members, this is 
23   just an updated report.  We've been working to schedule 
24   times convenient that are both -- that are convenient for 
25   both the nominees and the commissioners for them to meet 
0053
 1   individually.  We haven't been able to do that yet, but we 
 2   are hoping to be able to schedule something for next week. 
 3                   MS. LOPEZ:  Who are the individuals?  Can 
 4   you make that known? 
 5                   MR. ATKINS:  The nominees were Markey 
 6   Weaver, Knowles Cornwell and Suzanne Taylor. 
 7                   CHAIR TAYLOR:  Is there any other 
 8   discussion on this topic? 
 9                   Then, we'll go on. 
10                   MR. DOUGHERTY:  What was the third one, 
11   Billy? 
12                   MR. ATKINS:  (Indicates.) 
13                   MR. DOUGHERTY:  Oh, I'm sorry. 
14                   CHAIR TAYLOR:  Okay.  Item No. 10, report 
15   and possible discussion on the status of the bingo caller 
16   of the year. 
17                   MR. ATKINS:  This is also an update, 
18   Members.  We don't have anything to report on this item.  
19   Rosie Lopez and staff are going to meet after today's 
20   meeting and further review the presentation that was given 
21   at your last meeting and consider some additional issues 
22   that have arisen since that time. 
23                   CHAIR TAYLOR:  Rosie, did you have anything 
24   to add to that?  
25                   MS. LOPEZ:  Well, I'll just be honest.  
0054
 1   First quarter of this year has been just extremely 
 2   overwhelming for me, and obviously I've not had an 
 3   opportunity to invest any time in this particular agenda 
 4   item, and, so, I have basically nothing to report at this 
 5   time. 
 6                   CHAIR TAYLOR:  Okay.  No other discussion. 
 7                   Item No. 11, report on the 2006 Bingo 
 8   Advisory Committee Work Plan.  2005 -- there's a slight 
 9   mistake on the agenda here.  And our goal -- I'll just -- 
10   If I could remember Rosie's exact words, I would say those 
11   exact words. 
12                   I know that we had scheduled to meet 
13   several times on the phone, and one or the other of us or 
14   more than one of us was unavailable at that meeting.  So, 
15   we are going to be meeting after this meeting for our 
16   committee meeting. 
17                   Did anybody have any other discussion on 
18   this item? 
19                   MR. ATKINS:  A post-meeting meeting. 
20                   CHAIR TAYLOR:  That is correct, a 
21   post-meeting meeting. 
22                   We'll go on to Item No. 12, report and 
23   possible discussion and/or action on the 2005 Bingo 
24   Advisory Committee Annual Report. 
25                   You know, let me go back to Item No. 11.  
0055
 1   We totally have that wrong. 
 2                   MR. ATKINS:  My mistake. 
 3                   CHAIR TAYLOR:  Okay.  Item No. 12 is the 
 4   previous discussion, the work -- the actual work -- the 
 5   annual report.  Now we're going to go back to the work 
 6   plan. 
 7                   The work plan was presented to the 
 8   commissioners, and they did approve it.  So, that will be 
 9   the basis of our agenda for this next year.  Committee 
10   members had this work plan at our last meeting, and at this 
11   time, the commissioners did not add any additional items to 
12   the work plan.  They could in the future if there's 
13   something that they see the need for and would like us to 
14   address. 
15                   Our agenda actually comes off of this work 
16   plan.  So, any items that you are looking at for the 
17   agenda, you need to see where they fit within the work plan 
18   approved by the commissioners. 
19                   Now --
20                   MR. ATKINS:  And it has been posted to the 
21   Web site. 
22                   CHAIR TAYLOR:  And it has been posted to 
23   the Web site. 
24                   Now if there's any other comment on our 
25   2006 work plan. 
0056
 1                   MR. ATKINS:  I would also just add, 
 2   Members, that I think the Commission would be receptive if 
 3   there was an item that you felt needed to be added to it, 
 4   that you could bring that forward to them for their 
 5   consideration.  They have indicated in the past that they 
 6   consider that document to be a living document and one that 
 7   can be subject to change. 
 8                   CHAIR TAYLOR:  Okay.  Any other discussion? 
 9                   Then, we'll go on to Item No. 13, report 
10   and possible discussion and/or action on the 2005 
11   Charitable Bingo Annual Report. 
12                   MR. ATKINS:  Thank you, Madam Chair, 
13   Members.  One of the item actions for the agency's 
14   2005-2007 comprehensive business plan was the publication 
15   of an annual report on Charitable Bingo activities. 
16                   The staff is in the process of finalizing 
17   the 2005 Charitable Bingo Annual Report at this time.  This 
18   report will be an additional element of the Division's 
19   educational elements for licensees and the general public. 
20                   The report contains useful information 
21   necessary to remain in compliance with the Bingo Enabling 
22   Act and Charitable Bingo Administrative Rules, as well as 
23   historical and current conductor information.  
24   Additionally, the report contains information on many 
25   recent initiatives implemented by the Division. 
0057
 1                   You have in your notebook under this item a 
 2   copy of the table of contents for the report, and our 
 3   purpose in bringing this matter to you today is to see if 
 4   there is any additional information that you'd like to see 
 5   in the report.  This same item was presented to the 
 6   Commission at their last meeting, and they didn't have any 
 7   suggested changes.  Our intent is to publish this document 
 8   electronically on the Web site, and, of course, we'll be 
 9   able to produce any hard copies should those be requested. 
10                   I would just, you know, go back and point 
11   out one thing that you raised earlier, Suzanne, and that 
12   was the reference to the net proceeds or the adjusted gross 
13   receipts, and that is captured in this report. 
14                   And, otherwise, I'd be happy to answer any 
15   questions any of you may have. 
16                   CHAIR TAYLOR:  Rosie, did you have a 
17   question? 
18                   MS. LOPEZ:  My question is, is the Bingo 
19   Bulletin newsletter part of the annual report or is that 
20   not included in that? 
21                   MR. ATKINS:  Say your question again. 
22                   MS. LOPEZ:  Like, you know, the Bingo 
23   Bulletin newsletter that goes out, would that meet -- would 
24   that not be included as part of maybe your media or press 
25   releases, activities? 
0058
 1                   MR. ATKINS:  Are you referring to something 
 2   on the table of contents? 
 3                   MS. LOPEZ:  Yes.  Yes, on the table of 
 4   contents.  You know, we had press releases in 2005.  Would 
 5   your Bingo Bulletin newsletter be a part of that so that it 
 6   could be, I think, an addition -- I mean, I think the Bingo 
 7   Bulletin newsletter is very informative.  I mean, I know 
 8   that I read mine thoroughly. 
 9                   MR. ATKINS:  Well, this may respond to your 
10   question:  The way that we have described this annual 
11   report internally is kind of as a collection of Bingo 
12   Bulletins. 
13                   MS. LOPEZ:  Oh, okay. 
14                   MR. ATKINS:  It's a lot of the same 
15   information that you see in there, only on an annual level. 
16                   MS. LOPEZ:  Okay.  Okay.  Okay.  Good. 
17                   CHAIR TAYLOR:  Any other questions, 
18   comments?  Any public comment? 
19                   Item No. 14, possible discussion on the 
20   activities of the Charitable Bingo Operations Division. 
21                   MR. ATKINS:  Thank you, Members.  Just a 
22   couple of things that I wanted to point out on the report 
23   that's in your notebook.  First I'd like to call your 
24   attention to the filing of quarterly reports for the first 
25   quarter of 2006. 
0059
 1                   As you know, this was the first quarter 
 2   when conductor and lessor organizations could file their 
 3   quarterly returns electronically.  We had for this 
 4   inaugural quarter a total of 46 organizations take 
 5   advantage of this feature.  44 were conductors and 2 were 
 6   lessors. 
 7                   We have started a review of our own 
 8   internal processes to see if there are areas where we can 
 9   improve.  Additionally, we plan on contacting a sample of 
10   those organizations who filed electronically to see if they 
11   have any suggestions on how the process can be improved. 
12                   Finally, I'd also like to point out some 
13   preliminary data as it relates to the first quarter 2006 
14   information.  That shows that for conductor organizations, 
15   gross receipts, especially for pull tabs, continue to 
16   increase.  For the first quarter of 2006, total gross 
17   receipts as of yesterday were at $173.6 million.  
18   63.5 million of that was from regular bingo, 39.5 million 
19   from electronic bingo, and 68.5 was from pull tabs.  So, 
20   what is very telling from that, that is the first time that 
21   pull tab sales have exceeded regular bingo sales, regular 
22   paper sales. 
23                   MS. LOPEZ:  Wow. 
24                   MR. ATKINS:  Of course, we'll have a full 
25   report on first quarter 2006 figures at your next meeting. 
0060
 1                   And one last thing that I just wanted to 
 2   mention because I didn't recall if it had been mentioned 
 3   before, but the Commission has now started to hold two 
 4   meetings a month on the first and third Wednesday of every 
 5   month, and they have designated the first meeting of their 
 6   month to be dedicated to bingo-related items, with the 
 7   second meeting of the month being related to 
 8   lottery-related items. 
 9                   Now, there are, of course, some carry-over 
10   items that appear on each of the agendas, but for the most 
11   part, the bulk of any bingo-related issue will appear at 
12   that first Wednesday meeting each month. 
13                   And that's all I have for that item. 
14                   MS. ROGERS:  Their meetings are at 
15   8:00 a.m.  Correct? 
16                   MR. ATKINS:  They have actually started 
17   meeting, I believe, now at either 8:30 or 9:00.  Because 
18   the agendas aren't as long, they've started meeting a 
19   little later. 
20                   MS. ROGERS:  Okay. 
21                   CHAIR TAYLOR:  And we'd like to welcome 
22   Commissioner Cox.  Thank you for coming to the meeting.  If 
23   you have anything you'd like to let us know, please 
24   interrupt at any time. 
25                   COMMISSIONER COX:  Thank you. 
0061
 1                   CHAIR TAYLOR:  I wanted to tell you how 
 2   much I appreciate the fact that the Commission is going to 
 3   be addressing bingo items during that first meeting.  One 
 4   of the things that I always felt bad about when I come to 
 5   the Commission meetings is we do a little bingo at the 
 6   beginning and then the rest of the bingo is down at the 
 7   end, and it's a long drive back to town if I try and wait 
 8   for the last item. 
 9                   So, I think it's really interesting, and 
10   hopefully more of the BAC members can come to those 
11   meetings now that it's going to be bingo.  So, thank you.  
12   We really -- I appreciate that. 
13                   Is there any other public comment? 
14                   David Heinlein, did you have anything to 
15   comment? 
16                   MR. HEINLEIN:  Well, I could always 
17   comment. 
18                   CHAIR TAYLOR:  I'll get your form after the 
19   meeting. 
20                   MR. HEINLEIN:  I was so impressed with the 
21   presentation of Phil Sanderson.  That information is really 
22   good, and the comments that y'all ended up with is a note 
23   of financial thing that really is my focus.  
24   Commissioner Cox had mentioned this to you-all and it was 
25   the last item that y'all forgot what it was and remembered, 
0062
 1   and that is to deal with net receipts. 
 2                   I'm kind of a newcomer in this industry 
 3   really, and, so, as I started beginning to look at 
 4   charities' financial pluses and minuses and I saw a lot of 
 5   the bingo information, that everybody was focused on gross 
 6   receipts and prize payout and then adjusted gross and all 
 7   that formula.  The 35 percent report that -- There's one 
 8   lady at the VFW hall that I spent several years with.  
 9   She's passed on now, but every year, now, how do I figure 
10   that 35 percent.  She could never figure it out. 
11                   But I saw that it was not important at all 
12   to me what the gross receipts was or what the prizes paid 
13   out was, and I began right away tracking just net receipts, 
14   and, so, on my daily cash reports that I do a schedule of 
15   each month, I take every day, every session, and I record 
16   the net deposit amount.  That's all I care about is what 
17   money goes into the bank. 
18                   And, of course, I always point out to 
19   charities when I begin to do their books that there's only 
20   one thing I can do for you, I can track the money that goes 
21   into the bank, I don't have a clue as to what happens at 
22   the front end to get it to the bank, so you're going to 
23   have to be responsible for that.  But I think the most 
24   important part of that is to track how much money actually 
25   goes in the bank and then to find how you netted it. 
0063
 1                   Of course, I also look at per person 
 2   average deposit.  I think that's something that gives me a 
 3   sense. 
 4                   And then as we have begun these event tabs 
 5   in 2002, I began another column that I track the net 
 6   deposit from pull tabs.  Again, not dealing with gross, but 
 7   factoring in the net deposit to the bank from the pull 
 8   tabs, and I've seen the growth just go astronomically. 
 9                   I remember challenging some to get $500 to 
10   the bank from -- net from pull tabs.  They met that.  I set 
11   the goal for 1,000.  They met that.  I set the goal for 
12   1,500.  They met that.  Set the goal for 2,000.  One of 
13   them's met that.  Incredible. 
14                   So, that's why you're seeing those gross 
15   receipts go up, and more importantly, the net receipt -- 
16   Larry, you can see that extra $200 a session without 
17   increasing people, if you can increase the net deposit per 
18   person, you know, that you're getting from the hall that's 
19   going to come from those pull tabs. 
20                   So, I think that's a very important part of 
21   the presentation that needs to be added to that, and I 
22   really think all the percentages, rent, payrolls, all those 
23   factors -- there should be a percentage of actually the net 
24   going to the bank.  We can just throw away all that top 
25   stuff and just look at the net to the bank and factor 
0064
 1   everything in as a percentage of that. 
 2                   And, of course, with the new reports in 
 3   2005 having the -- I believe, nine different categories of 
 4   other expenses has given us a lot more insight as to the 
 5   individual items, and I've really appreciated that.  In 
 6   fact, I probably -- makes everybody mad, I even would like 
 7   another couple of items on that as from the accounting 
 8   point of view, but I think the more detail I have on 
 9   different items, I can better -- I'm able to serve the 
10   client in looking at something and seeing if it's out of 
11   line.  You know, I really think there's another couple 
12   things that we can talk about. 
13                   That's all.  I just would like to have made 
14   that comment about the financial stuff.  So, thank you. 
15                   CHAIR TAYLOR:  I absolutely agree with you.  
16   I also like the items being split out instead of all thrown 
17   into other expenses.  It gives a much better idea of where 
18   the money is being spent. 
19                   MR. HEINLEIN:  Actually, I just did a 
20   report yesterday that I had to try -- I tried to back in 
21   because prior years I wanted to look at.  So, I took the 
22   items that I had specific from years prior, and that was 
23   cost of goods sold, lease payments to distributors and 
24   rent -- took those three items and then I listed all the 
25   other items in 2005 and took the total of those items and 
0065
 1   other expenses, did a percentage, you know, and just 
 2   percentaged each of those from 2005 to 2004, 2003.  Gave me 
 3   a little, you know, interesting information to kind of look 
 4   at because I -- Statistical information is the only way 
 5   that you can base your future. 
 6                   If you are going to try to plan ahead and 
 7   look at what might happen, you need good information coming 
 8   into that, and I -- So, I think that would be the thing 
 9   that I would recommend when we go to some kind of reporting 
10   method.  If you're going to ask me the items I would 
11   increase, I'll tell you that. 
12                   CHAIR TAYLOR:  What are those items?  
13                   MR. HEINLEIN:  Because of the way that we 
14   report the tea tax, I'm separating event tabs and instant 
15   bingo and paper sales.  So, I get an invoice from Danny and 
16   it's got paper, pull tabs, event tabs and it's all on one 
17   invoice, and I'm taking those invoices and I'm having the 
18   girls separate those expenses on a line item to give me 
19   paper cost, the event tab cost and the instant bingo cost, 
20   and if the cost of goods sold item was broken down into 
21   those items, of course, then you would also, likewise, have 
22   to have the sales put into that item as well. 
23                   But I do it -- For the tea tax anyway, I 
24   have to go separate them.  So, it's causing me -- My first 
25   quarter's very busy.  In fact, I've had to file extensions 
0066
 1   on unit tax returns because I just couldn't get them out, 
 2   and I've got until May 15th, and some of them I'm still not 
 3   going to make it. 
 4                   It's too much work to go through all of 
 5   these daily cash reports and pull out all of these sales.  
 6   I've had to change my sales journal to report the event 
 7   tabs and pull tabs in a separate column and then a total  
 8   for the instant to be able to balance the quarterly report.  
 9   So -- but it was worth doing it because the charities saved 
10   an awful lot of money.
11                   CHAIR TAYLOR:  Right.  I have my -- every 
12   one of those things is separated, and I know that if you 
13   request it from the distributors, they will separate it on 
14   their invoices, because they do for me.  They never put 
15   that stuff together.  I think more and more organizations 
16   are going to be requesting that in the future.  So, it 
17   probably is something that I think the distributors are 
18   pretty much going to get in the habit of doing for 
19   everybody. 
20                   MR. HEINLEIN:  And another item on -- for 
21   the materials -- The product coming into the halls is 
22   becoming such a large quantity, I'm very interested in 
23   talking with some of them about electronic tracking.  I 
24   really think it would be a good addition to the way that we 
25   conduct business to electronically track all the material 
0067
 1   that comes into the bingo hall, and then as its used, you 
 2   could electronically use it, and it takes away that human 
 3   factor.  I think we really need to look seriously at doing 
 4   something like that. 
 5                   MR. ATKINS:  Well, I think David's talking 
 6   about -- We're actually aware of several jurisdictions that 
 7   have some pretty sophisticated inventory tracking systems 
 8   that utilize bar codes, and it actually --
 9                   MR. HEINLEIN:  A bunch of them already got 
10   bar codes on them. 
11                   MR. ATKINS:  -- manufacturer to distributor 
12   to the organization.
13                   MS. JOSEPH:  I just wanted to encourage 
14   everyone to speak one at a time.  I think our reporter's 
15   having trouble capturing the conversation. 
16                   MR. ATKINS:  We apologize.
17                   MS. ROGERS:  That's okay.
18                   MR. HEINLEIN:  My daughter's a court 
19   reporter.  So, I'm sensitive to that. 
20                   MR. ATKINS:  David, if you'd like to follow 
21   up with Phil, he can share a lot of that with you. 
22                   MR. HEINLEIN:  Okay.  Good, because it's -- 
23   I've just been recently investigating that and thinking, 
24   man, I don't understand this.  I mean, where are we -- 
25   because this is a pretty sophisticated industry really, and 
0068
 1   it's getting more so, and with the data that you're 
 2   providing, I mean, it's giving us more tools to work with, 
 3   and we just really ought to step into the 21st century 
 4   here. 
 5                   And the grocery stores, they can't hire 
 6   people that can add and subtract and put it on a machine, 
 7   you know.  They scan that sucker.  When you go through the 
 8   line, boy, I mean, it's moving like this, and it's only 
 9   because they can scan that sucker and it goes in and it's 
10   taken out of inventory.  They order their inventory based 
11   on what came out.  Well, why can't we do that. 
12                   CHAIR TAYLOR:  One other disagreement I 
13   have with you, though, David -- and I almost always agree 
14   with everything you say.  We can't look for the pull tabs.  
15   There's only so much money and so many pockets, and I agree 
16   with Larry.  We've got to get that extra 20 people in the 
17   hall. 
18                   What I hear from the bingo customers is 
19   that they come less to bingo because they spend so much 
20   more.  So, now they're coming less, and I think that's one 
21   of our attendance problems is that they're not coming as 
22   often as they used to. 
23                   MR. HEINLEIN:  Well, that's one of the 
24   things that you have a committee that is even addressing 
25   alternative styles of bingo, and as we identify these 
0069
 1   different styles -- Just like the event tab came along and 
 2   it saved our life and it's been great, we need something 
 3   else to follow behind that now.  I mean, we need other -- 
 4   Just like everything else that's any kind of an 
 5   entertainment enterprise, the more products you have to 
 6   entertain with, the better job you're going to be able to 
 7   do. 
 8                   And, so, as we identify those things -- and 
 9   I hope that this information that the commissioners have 
10   asked of you will be good tools, as he said -- as 
11   Commissioner Clowe said, that you could be a resource to 
12   the legislature.  When they ask questions, you'll have good 
13   information to give to them. 
14                   I'm looking forward to the next legislative 
15   session, and if we could identify what they think might 
16   help bingo, I think we've got some good resource people 
17   here that could really give credibility to what we're 
18   saying and present that to the legislature.  So --
19                   CHAIR TAYLOR:  Resourcewise for the 
20   commissioners -- I mean for the legislature, I would really 
21   hope that when they come to the Lottery Commission and look 
22   at some of these things, that we might be able to go back 
23   to 2005 and have some of those numbers showing the adjusted 
24   net, everything after the adjusted net to show them. 
25                   MS. LOPEZ:  I've often thought of a super 
0070
 1   marketing idea for bingo, and you guys can probably chuckle 
 2   about this, but this is what I think about at times.  You 
 3   know, in our part of the state, we have a lot of those, 
 4   like, Pronto Check Cashing places where people go cash 
 5   their checks or whatever, and depending on where your bingo 
 6   hall is located, and if -- I don't know -- This would be 
 7   kind of a neat partnership if there was one of those type 
 8   of establishments adjacent or located to your bingo hall 
 9   where people can come in and obviously cash their checks, 
10   pay their utility bills, do whatever, and the bingo hall is 
11   right there.  I mean, because we do want those additional 
12   dollars, and typically those are a lot of our customers 
13   that utilize those type of check cashing places. 
14                   Anyway, just food for thought. 
15                   CHAIR TAYLOR:  Thank you, David.  
16   Appreciate you being here. 
17                   Is there any other public comment? 
18                   Commissioner, would you like to give us 
19   some words of wisdom?  
20                   COMMISSIONER COX:  I would like to clarify 
21   something that -- It is true that I have suggested that, 
22   for certain purposes, focus be on net receipts.  The reason 
23   that I suggested that is because people have a real hard 
24   time relating to 1 or 2 percent of a number going to 
25   charity, but they can relate much more readily to 10 or 20 
0071
 1   percent going to charity.  And if you give them that gross 
 2   receipts number, they start looking at that and saying 
 3   something's wrong here, there's not enough going to 
 4   charity. 
 5                   So, I think for purposes of reporting, that 
 6   it's advantageous and helpful to the public to report net 
 7   receipts.  As far as operating your business, however, I 
 8   think it's very important to control at the level of gross 
 9   receipts. 
10                   The -- When I went to work in the casino 
11   industry in 1970, much of the emphasis was what got into 
12   the bank, and when the casinos began going public, the 
13   Securities and Exchange Commission changed that focus.  
14   They said, we want you looking at what goes into the door 
15   and goes into the till, not just what happens to get to the 
16   bank. 
17                   And, so, the focus now -- A parallel is 
18   slot machines in a casino.  The number that is reported is 
19   how much those machines win, not how much goes into them.  
20   If the number that goes into them and comes back to the 
21   player and goes back in and again and again until finally 
22   the player is exhausted by the house advantage -- if that 
23   number went in there, it would be 10 to 20 times as big as 
24   the number they're reporting and their revenue would be 
25   ridiculous. 
0072
 1                   But that doesn't mean that a single nickel 
 2   isn't controlled.  There are meters -- electronic meters 
 3   and all kinds of people watching people and cameras, 
 4   surveillance, etcetera, the accounting weighing devices, 
 5   all kinds of security on undeposited receipts.  They work 
 6   very hard to control at the gross receipts level, although 
 7   they report at the net receipts level. 
 8                   So, I ask you in your business to think 
 9   about what you can do to be sure that all the money you're 
10   getting is getting into the bank.  Some of the ways that 
11   the casino industry does this is by accounting for paper.  
12   If you've go through 10,000 pieces of paper, tickets, and 
13   they sell for a dollar each, it would be awfully nice to 
14   have $10,000 to deposit. 
15                   Pull tabs, same thing.  You know, you have 
16   an inventory for those things, and it's relatively easy to 
17   make a real good estimate of what your revenue should be.  
18   So, to the extent that you're doing that, I think it's a 
19   very good thing.  To the extent you're not, I ask you to 
20   think about looking at that. 
21                   I didn't see the information that Phil 
22   gave, but I'm gathering it may have been some of the 
23   information that he presented to the Commission at the last 
24   meeting, and I thought it was very good information, and it 
25   was food for thought for us because it caused us to ask for 
0073
 1   a lot more information.  So, at our next meeting at which 
 2   we discuss bingo agenda, we will be looking for additional 
 3   information. 
 4                   What we asked for here was help us 
 5   understand why really good halls make money and help us 
 6   understand why the weak ones don't and -- so that we can -- 
 7   really for Chairman Clowe and me just to get a better feel 
 8   for what the industry is doing so that we can be better 
 9   regulators and work toward a mutual benefit for the 
10   regulator and the regulatee. 
11                   So, that's why we're trying to go with 
12   these things, understanding the industry better so that we 
13   can work better with you. 
14                   And if y'all have any questions for me, 
15   I'll sure try. 
16                   MR. MANIO:  Commissioner, if I may, one of 
17   the items that caught my attention during Phil's 
18   presentation was the average amount spent by a player which 
19   is about $31 now, and that has been going up.  At the same 
20   time, the attendance is going down.  So, we have a 
21   situation where people -- less and less people are playing 
22   bingo, but they're spending more and more, which reminded 
23   me of the question that you raised four months ago, and 
24   your question, I believe, was, how long can we sustain a 
25   situation like this.  And I was just wondering if you have 
0074
 1   had any feedback or if you have received any ideas, 
 2   explanation or speculation as to how long can this be 
 3   sustained. 
 4                   COMMISSIONER COX:  Well, I've heard 
 5   speculation.  I've heard people talking about that and 
 6   saying, hey, that's an interesting way to look at things, 
 7   perhaps we should be looking at things that way.  I haven't 
 8   really heard any answers. 
 9                   Although, I did hear Suzanne say something 
10   today that I haven't heard before, and that is her 
11   suspicion -- or maybe it's an observation, that people are 
12   spending more, but they're coming fewer times.  That can 
13   certainly be part of that equation, Mario, that there -- 
14   the product is more attractive.  So, when they come, they 
15   partake of more of it, but that doesn't increase their 
16   budget for bingo. 
17                   Is that kind of what that seems to say? 
18                   CHAIR TAYLOR:  Exactly. 
19                   COMMISSIONER COX:  So, I guess what that's 
20   saying is you're more competitive with the various other 
21   kinds of entertainment that are out there, but the 
22   entertainment budget is only so big. 
23                   MR. WHITTINGTON:  And don't you think as 
24   far as gross receipts, as I said, as a marketing person, 
25   it's basically put on advertisements, more so than the 
0075
 1   realistic amount that a charity might get? 
 2                   It's good to use a gross receipt for 
 3   advertising, like on TV OR radio.  We can pay out this, and 
 4   we give out that, which most places do.  Casinos, Texas 
 5   Lottery.  Of course, that's good for people to know what 
 6   we're giving out prizewise. 
 7                   COMMISSIONER COX:  Of course. 
 8                   MR. WHITTINGTON:  But we need to make sure 
 9   we come to the realization that what the charities are 
10   getting is a whole different dimension.  It's out there by 
11   itself.
12                   COMMISSIONER COX:  If you go to Las Vegas, 
13   what is the thing you see on every marquis about the slot 
14   machines?  99 percent paid back, 99.99 percent paid back, 
15   and, yet, they don't report prizes paid.  They only record 
16   their net win. 
17                   So, you're absolutely right.  I totally 
18   agree, Larry.  Thank you. 
19                   CHAIR TAYLOR:  Thank you, Commissioner. 
20                   Any other public comment?  Committee 
21   members, any comments? 
22                   Then, we'll move on to Item No. 16, 
23   consideration of and possible action on future Bingo 
24   Advisory Committee meeting dates and/or items to be 
25   considered for future meetings.  Obviously we'll be doing 
0076
 1   some of these -- the report on the Prize Fixing Work Group,  
 2   the alternative styles of play, report on the 39th 
 3   legislature, possible report on the PSA announcements. 
 4                   MS. LOPEZ:  Sure. 
 5                   CHAIR TAYLOR:  We'll have the fourth 
 6   quarter information -- I'm sorry, first quarter information 
 7   of 2006. 
 8                   MR. DOUGHERTY:  Madam Chair, this item 
 9   about meeting dates, I got something -- I don't know, maybe 
10   it was a quarterly report, that already had our dates all 
11   set up for the rest of the year. 
12                   CHAIR TAYLOR:  I believe that our dates 
13   were just moved a week ahead of where we had originally put 
14   them.  We were meeting the second month of the quarter, the 
15   third week, I believe, the third Wednesday. 
16                   MR. DOUGHERTY:  I thought it was the 
17   second. 
18                   MR. ATKINS:  It was the third.  It has been 
19   moved to the second. 
20                   CHAIR TAYLOR:  So, now we are meeting the 
21   second month of the quarter, the second Wednesday, which is 
22   easier to remember anyway. 
23                   MR. ATKINS:  The next meeting date will be 
24   August 9th. 
25                   MS. ROGERS:  And, Billy, if the 
0077
 1   commissioners are able to meet with the nominees, then we 
 2   will need a slot to introduce them, or do we do anything 
 3   with that?
 4                   MR. ATKINS:  I missed that first point. 
 5                   MS. ROGERS:  We're talking about what's 
 6   going to go on the next agenda.  Correct? 
 7                   CHAIR TAYLOR:  Correct. 
 8                   MS. ROGERS:  Make sure I'm on the right 
 9   place. 
10                   If the commissioners are able to meet with 
11   the three nominees, then would we need anything there for 
12   that?
13                   MR. ATKINS:  Yes, potentially we would, 
14   yes, to have them introduced and take care -- as well as 
15   recognize any outgoing members. 
16                   MS. ROGERS:  Okay. 
17                   CHAIR TAYLOR:  And possibly we'll have some 
18   information on the caller of the year.  We'd like to have 
19   the 2005 annual report here for the Committee next time. 
20                   And is there any other items at this time 
21   anybody can think of? 
22                   MS. LOPEZ:  Maybe discuss maybe -- I don't 
23   know if this is possible, but maybe one unit accounting, 
24   how that's working for halls throughout the state, if that 
25   can maybe be a possible discussion. 
0078
 1                   MR. ATKINS:  I have the note down. 
 2                   MR. WHITTINGTON:  There's still a few 
 3   things they need to work on, but, yeah, it would be a good 
 4   discussion, yes. 
 5                   CHAIR TAYLOR:  Good.  If there's any other 
 6   items that you can think of, if you could e-mail myself or 
 7   Billy with them. 
 8                   And if there's no other discussion, then 
 9   this meeting is adjourned.  That's it.
10                   (Concluded at 11:41 a.m.)
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0080
 1                      REPORTER'S CERTIFICATE
 2   
 3   STATE OF TEXAS   )
                      )
 4   COUNTY OF TRAVIS )
 5   
 6                I, LEIGH ANNE WILLIAMS, Certified Shorthand 
 7   Reporter in Travis County, Texas, do hereby certify that 
 8   the above-captioned matter came on for hearing before the 
 9   BINGO ADVISORY COMMITTEE as hereinafter set out, that I 
10   did, in shorthand, report said proceedings, and that the 
11   above and foregoing typewritten pages contain a full, true 
12   and correct computer-aided transcription of my shorthand 
13   notes taken on said occasion.
14                WITNESS MY HAND THIS, 25th day of May, 2006.
15   
16   
17                                                        
                      LEIGH ANNE WILLIAMS, Texas CSR 4446
18                    Expiration:  12-31-06
                      Firm Registration No. 225
19                    Expiration Date: 12/31/06  
                      1801 N. Lamar Blvd., Mezzanine
20                    Austin, Texas  78701
                      (512) 474-4363
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