1 1 2 3 4 * * * * * * * * * * * * * * * * * 5 6 BINGO ADVISORY COMMITTEE 7 MEETING 8 9 FEBRUARY 13, 2002 10 11 * * * * * * * * * * * * * * * * * 12 13 14 15 16 17 18 19 BE IT REMEMBERED that the BINGO ADVISORY 20 COMMITTEE meeting was held on the 13TH of FEBRUARY, 21 2002, from 10:07 a.m. to 1:51 p.m., before Mary 22 Scopas, RPR, CSR in and for the State of Texas, 23 reported by machine shorthand, at the Offices of the 24 Texas Lottery Commission, West Sixth Street, Austin, 25 Texas, whereupon the following proceedings were had: WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 2 1 APPEARANCES 2 3 Chairman: Mr. William Neinast - Burton, Texas 4 5 Vice-Chairman: Ms. Virginia Brackett - Lubbock, Texas 6 7 Committee Members: Ms. Suzanne Taylor - Corpus Christi, Texas 8 Mr. Lexford Speed - Plano, Texas Mr. Saleem Tawil - Austin, Texas 9 Ms. Mary Magnuson - St. Paul, Minnesota Mr. David Castillo - Kingsville, Texas 10 Mr. Robert Rinehart - Amarillo, Texas Mr. Louie George - Wake Village, Texas 11 12 Charitable Bingo Operations Director: Mr. Billy Atkins 13 14 15 16 17 18 19 20 21 22 23 24 25 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 3 1 INDEX 2 3 Appearances...................................... 2 4 AGENDA ITEMS 5 Item Number 1..................................... 4 6 Item Number 2.................................... 4 Item Number 3.................................... 4 7 Item Number 4.................................... 5 Item Number 5.................................... 13 8 Item Number 6.................................... 22 Item Number 7.................................... 90 9 Item Number 8.................................... 97 Item Number 9.................................... 98 10 Item Number 10................................... 125 Item Number 11................................... 127 11 Item Number 12................................... 137 Item Number 13................................... 143 12 Item Number 14................................... 143 Item Number 15................................... 154 13 14 Reporter's Certificate........................... 155 15 16 17 18 19 20 21 22 23 24 25 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 4 1 FEBRUARY 13, 2002 2 Bingo Advisory Committee Meeting 3 MS. TAYLOR: I'm going to go ahead and 4 call it to order at this time. The first item on the 5 agenda was the -- or actually, the second item on the 6 agenda is consideration and possible action, including 7 approval, on the minutes of the August 29th, 2001 8 Bingo Advisory Committee meeting. These minutes were 9 posted on the Internet. Were there any discussion on 10 these minutes? If not, they'll be considered approved 11 as posted on the Internet. 12 Item number three is report, possible 13 discussion and/or action on Attorney General opinion 14 JC0449 relating to card minding devices. William 15 Neinast is witness to that. Was there any discussion 16 on that by any members of the committee? Phil? 17 MR. SANDERSON: Not that I'm -- you 18 know, I just -- I know Bill had asked to put it on the 19 agenda. 20 MS. TAYLOR: Since he's not here, do I 21 hear a motion -- unless somebody else wants to bring 22 this up, do I hear a motion to table this until the 23 next meeting? 24 MR. SPEED: I will. 25 MS. TAYLOR: A second? WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 5 1 MR. CASTILLO: Second. 2 MS. TAYLOR: David. It's been motioned 3 and seconded to table this until the next meeting. 4 We'll bring this up at the next bingo advisory 5 meeting. 6 Item number four, consideration of and 7 possible discussion and/or action on proposed 8 amendments to 16 TAC 402.567 relating to Bingo 9 Advisory Committee. I guess that gets to be you, 10 Phil, since Bill is not here. 11 MR. SANDERSON: This is the rule that 12 pertains to the Bingo Advisory Committee and the 13 functions of the Bingo Advisory Committee. And I 14 think there were two areas there. One, Bill wanted to 15 discuss the possibility of putting something in the 16 rule that would allow for meetings outside of Austin. 17 And there are other areas that we're revising in the 18 rule that are still in the draft stages. So I guess 19 if there is any discussion that you-all want to have 20 on the meetings. 21 MS. TAYLOR: Any discussion? 22 MR. SANDERSON: The only thing I recall 23 is, didn't this go to the flagpole one time and they 24 said, no, we want you-all to meet in Austin? This was 25 the commissioners, not anybody else. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 6 1 THE REPORTER: I can't hear. 2 MS. TAYLOR: It was agreed at one point 3 by the BAC to recommend to the Lottery Commission that 4 we hold a couple of meetings a year outside of Austin 5 around the outskirts of Texas. When William Neinast 6 went to the Lottery Commission and talked to the 7 commissioners, they disapproved having meetings 8 outside of Austin. It's put back on the agenda to try 9 and see if there's any further discussion if we wanted 10 to try this again or if there is any new information. 11 Do we have some public comment? 12 MR. BRESNEN: I've got a form here. I 13 don't know whether I want to comment about most of 14 this or not because I don't know what it is. My name 15 is Steve Bresnen. I represent the Bingo Interest 16 Group, which is an organization of commercial lessors 17 and their attendant charities around the state. I 18 guess I've got a couple of questions here because it's 19 not clear to me. I understand the -- one issue is 20 whether this committee ought to be able to meet around 21 the state or not. I would strongly subscribe to that. 22 As you can tell, there is a few more 23 people here today than usually attend these meetings. 24 All of them have come from somewhere else. And I 25 think your attendance would be improved. And I think WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 7 1 you've got some important issues at least that I want 2 to talk about later at the appropriate time that they 3 would all have more effective input into if you guys 4 were able to get up around the state. So on behalf of 5 our group, I pledge to ask the commission to make that 6 possible. 7 But did I understand that there is some 8 kind of a draft rule or something that's being worked 9 on that relates to the advisory committee? 10 MR. SANDERSON: All of our rules are 11 currently under review, so -- and this is one of them. 12 We had hoped to have a draft ready to present to the 13 BAC today. But there are still some other areas that 14 we're ironing out right now. 15 MR. BRESNEN: Okay. I'd like to make a 16 recommendation that whenever you guys on the BAC are 17 going to consider these rules, that they either be 18 placed on the Internet a couple of weeks in advance or 19 that you maybe take them up at one meeting and then 20 take them up at another meeting. Because what happens 21 to me, I saw several things on here. I come in the 22 room. There is nothing laid out on the table. In the 23 past back in August, I think there was a stack of 24 rules about that high that are very detailed that deal 25 with audits and everything. So even those of us who WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 8 1 are relatively sophisticated about those things have 2 to sit down and do our analysis on the back of an 3 envelope and tell you what we think. And it's not a 4 very effective way of getting input from people here. 5 So one of the things that I would 6 suggest that might -- maybe would go into -- maybe 7 into that rule, Phil, or maybe some kind of just 8 understanding that the BAC would have is that people 9 be given a way of knowing about these things far 10 enough -- far enough in advance of the meeting that, 11 A, if they want to show up, they can -- they can show 12 up and take note of it. And B, once they get here, 13 they will have something that's meaningful to say 14 about it and not just, you know, off the cuff. 15 So anyway, I won't beat that horse any 16 further because I'm going to beat it on about the next 17 five other issues here. But thank you for the 18 opportunity. 19 MR. FENOGLIO: Good morning. I -- my 20 name is Stephen Fenoglio. And I have filed a document 21 or the sheet to comment on this item. I'm an attorney 22 in Austin. Represent over 200 licensed conductors, a 23 number of lessors, and distributors and manufacturers. 24 I want to echo first what Mr. Bresnen said. It would 25 be extremely helpful -- and I know, having worked for WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 9 1 a state agency, that sometimes the rules aren't ready 2 until they're really ready, which may be the day 3 before the morning before. But to the extent that, 4 even if it's a working draft, that you can publish 5 that on your website. The agency has gotten better, 6 in my view, of putting stuff up on its website so that 7 there is a meaningful -- an opportunity to have a 8 meaningful review of what's being proposed or being 9 considered to be proposed, as opposed to the dry 10 recitation of, proposed amendments to 402.567. There 11 is no way that I could communicate with my clients as 12 to what might happen, what is being considered on -- 13 in that -- on that rule, or anything else. And I know 14 that the notice meets the requirements of the Open 15 Meetings Act. I'm not -- I'm not suggesting that it 16 doesn't. But if you-all really want meaningful 17 comment from the industry, it seems to me that the 18 committee ought to be encouraged that the note -- 19 posting notice give some meaningful information. It 20 helps a lot with my communication with my clients and 21 with the charities to understand, well, what are the 22 possible ramifications? 23 As an example, the last round of rules. 24 There were seven that were posted. And I don't know 25 if you-all have had a -- any of you had an opportunity WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 10 1 to go through them. I know Mr. Sanderson has 2 ad nauseam. He and I have had some running dialogue 3 on some of those provisions. But my comments to my 4 clients were about ten pages on the proposed rules. 5 And the proposed rules I think are about 12 or 15 6 pages. So it's far more helpful for me to try to help 7 the clients, the charities, etcetera, and for them to 8 make meaningful comment if they know what's -- other 9 than a dry recitation of what's going on. 10 We would support the notion of having 11 meetings outside of Austin. And I understand that's 12 one of their considerations that you-all are tossing 13 around. I don't know that you want to have all of 14 your meetings outside of Austin. But if you had them 15 in regional and perhaps every other meeting or 16 something like that or quarterly -- well, I guess 17 you-all meet quarterly. So every other meeting in 18 Houston, Dallas, wherever. I think it would encourage 19 charities in that area to show up there. And I know 20 many of you-all represent charities. They have a 21 limited budget, limited time. They're mostly for the 22 most part pure volunteers. And it's hard for them to 23 come to Austin, to take an entire day out of their 24 life. So thank you. 25 MS. TAYLOR: Were there any other WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 11 1 comments? 2 MR. BISHOP: My name is Don Bishop. 3 I'm with the AMVETS organization. I'm also a 4 commercial lessor. I have some general comments and a 5 couple of questions, if I may ask. I don't have 6 anything about any of the specific rules because we 7 haven't had anything to review at this point that I 8 know of. I would like to point out that I'm not an 9 attorney. As a matter of fact, I want to defend these 10 attorneys. Someone told me the other day it was 99 11 percent of the attorneys that give the rest of them a 12 bad name, so -- I have a short list of the meeting 13 agenda and I have a copy of the bulletin that you-all 14 put out. And just the third quarter figures are given 15 here between 2000 and 2001. I think all of us know 16 that this is indicative of the general trend that 17 bingo has gone through. 18 MS. TAYLOR: Don, I don't mean to 19 interrupt you. But I need to remind you that we are 20 on the item relating to Bingo Advisory Committee. If 21 you could keep comments on that item until we get down 22 to that, which we will. 23 MR. BISHOP: We will? 24 MS. TAYLOR: We will. 25 MR. BISHOP: Okay. Then I'll just hold WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 12 1 my tongue now on that. 2 MS. TAYLOR: Are there any other 3 comments on the Bingo Advisory Committee? 4 MS. IVES: Good morning. My name is 5 Sharon Ives. That's I-v-e-s. I'm out of Fort Worth 6 and I represent the greater Fort Worth civic leaders 7 as well as the international Fort Worth military ball. 8 And I am for the Bingo Advisory Committee having 9 meetings outside of Austin. In the bingo business, 10 there is many times that different issues or items are 11 coming up on the agenda down here, but the timing 12 never seems to be right. I think it would be more 13 beneficial to have those meetings in different regions 14 around the state so that the organizations would have 15 the benefit of attending the meetings in person and to 16 voice their concerns or opinions at that time. That's 17 it. Thanks. 18 MS. TAYLOR: Thank you, Sharon. Do we 19 need another motion? 20 MR. SANDERSON: You've got one. 21 MS. TAYLOR: This was William's baby on 22 the agenda. But if one of you want to make a motion 23 so that we do have it for the next meeting of the 24 commissioners. Any motion? 25 MR. SPEED: Isn't this about our third WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 13 1 go? I make a motion to table it. 2 MS. TAYLOR: Okay. There has been a 3 motion to table it. Second on that motion? 4 MR. TAWIL: Second. 5 MS. TAYLOR: And a second. This will 6 be discussed at the next meeting. I'm sorry to put 7 you-all off. But William really has talked to the 8 commissioners about this. It's been his baby that 9 he's been trying to get them to pass. He has gone to 10 the meetings and talked to them. It would really be 11 good if he was here to work through this again. He's 12 had the motion. It's been passed. The BAC has passed 13 it. But I will -- he will know when he reads the 14 minutes of the overwhelming approval from the rest of 15 the bingo population to move the meetings, that it 16 wasn't just the BAC thinking it was a good idea, that 17 it had the general approval from the rest of the 18 people at the meeting today. 19 So if there is no other comments on 20 this item, we'll go on to item number five, 21 consideration of and possible discussion and/or action 22 on progressive bingo. 23 Once again, this is a Bill Neinast 24 agenda item. Any idea what they planned to discuss on 25 this? Is there any comment from the committee? WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 14 1 Public comment? 2 MR. FENOGLIO: I'll take a stab at it. 3 This is -- I'm Stephen Fenoglio. This issue was 4 discussed in the last series of meetings leading up to 5 the 2001 legislative session. And there was a bill 6 that was passed. And unfortunately, it did not become 7 law. And my clients are very much interested in 8 supporting this proposal. We want the Bingo Advisory 9 Committee to take favorable action, which the 10 committee did, if memory serves me correctly, in the 11 last round. We wanted to do it early enough -- as 12 most of you will hear later about the sunset advisory 13 commission process, it would be very helpful to have 14 the Bingo Advisory Committee up front and proposing 15 that so that it can be put into the report. The 16 report, if you don't know, will be sent to the 17 legislature. And from that report will come 18 legislation presumably reauthorizing the Lottery 19 Commission and the charitable bingo division in some 20 form or fashion. If you don't take action on that, in 21 my view you miss an opportunity to get the sunset 22 advisory commission to consider that action four 23 square. Unfortunately, the sunset advisory commission 24 actions are going to start occurring I believe in mid 25 March, ending with their conclusion and analysis WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 15 1 sometime in mid June. So I don't know when your 2 next -- 3 MR. TAWIL: In August. 4 MR. FENOGLIO: In August. I don't know 5 when your next meeting is. But if you don't take 6 action today, you may be -- you may not be able to 7 take a committee action in the next session or at the 8 next meeting in time to get that into the report. 9 This is something, Phil, that my clients would also 10 like for the commission. And I've reviewed the 11 initial report the commission has made to sunset. But 12 we'd like for the commission to consider as well early 13 on. So that's going to be -- and I know you-all are 14 looking at a number of legislative issues to negotiate 15 or comment on with sunset. And my clients would like 16 to be a part of that process. I'll be happy to answer 17 any questions. 18 MR. TAWIL: I'd like to make a motion. 19 I'd like to make a motion that the chair of this Bingo 20 Advisory Committee to write a letter directly to the 21 sunset commission supporting this effort, as well as 22 offering any advisory assistance and answering any 23 questions or help in their review process where we 24 deal directly with them. 25 MS. TAYLOR: You don't see anything WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 16 1 wrong with that? 2 MR. SANDERSON: No. 3 MS. TAYLOR: Good. Is there a second 4 to the motion? 5 MR. SPEED: Second. 6 MS. TAYLOR: Saleem, would you be 7 willing to amend that motion to also add back in 8 having BAC meetings outside? Instead of just this one 9 item, to encompass the other items that we have 10 approved? 11 MR. TAWIL: That would be fine. I 12 don't think the staff is against that. 13 MR. SANDERSON: Well, the BAC meetings 14 will be -- just in a rule, what the sunset would do 15 would be legislative. 16 MR. TAWIL: Yeah. I think they're 17 separate. That's just a -- 18 MS. TAYLOR: Okay. Okay. 19 MR. TAWIL: So really, supporting the 20 progressive process. But also more importantly, that 21 we as a committee from the chair, letting them know 22 that we're here to assist him and provide any 23 assistance, testimony, help in the sunset review of 24 the Lottery Commission. 25 MS. TAYLOR: Go ahead. Comment? WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 17 1 MR. BRESNEN: Yeah. First of all, I 2 know there's another couple of people that want to 3 comment. 4 THE REPORTER: Who are you? I'm sorry. 5 Who are you? 6 MR. BRESNEN: I'm sorry. Steve Bresnen 7 with the Bingo Interest Group. My last name is 8 spelled B-r-e-s-n-e-n. We've long supported 9 progressive bingo. We worked hard on bingo during the 10 session. The bill was vetoed. That bill was vetoed, 11 Steve? Yeah. So it seems to me we've got to have 12 some way of effectively communicating to the 13 governor's office why this is important for bingo. I 14 think the -- as I recall, the veto message related to 15 their desire not to encourage gambling in Texas. I 16 know from discussions with the staff of the governor's 17 office that some of them were concerned that there was 18 no outside limit on how high that pot could get. 19 So I think you-all have some more work 20 to do. I think the general communication to the 21 sunset advisory commission about progressive bingo and 22 some other things that I'm going to bring up later 23 would be great. And I strongly support that. But I 24 think you-all have got some rolling up your sleeves 25 kind of work to do to develop that to where some WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 18 1 legitimate concerns expressed by the governor's office 2 and maybe others would get addressed. 3 And so if I can just allude back to the 4 item on the rule making on the Bingo Advisory 5 Committee, you may either have to work more frequently 6 or have some -- do some more subcommittee work where 7 some of you who know the nuts and bolts of these kinds 8 of things can push these ideas along and put a little 9 more flesh on them. Most people don't know what 10 progressive bingo is. So I would suggest as you're 11 thinking about how the Bingo Advisory Committee 12 functions that you maybe use this as one example of 13 many issues that need some -- the shirt sleeves rolled 14 up and some elbow grease put to them in order to 15 get -- to get those accomplished. Thanks. 16 MS. TAYLOR: Is there any other public 17 comment? 18 MR. HUTCHINGS: Good morning. My name 19 is Charles Hutchings. I want to speak in favor of 20 this. I've been a big supporter of this progressive 21 bingo since it first started. We first started trying 22 to get it enacted through the legislative sessions. 23 I'm a commercial lessor. All my charities and such as 24 that, this has all been discussed with them. They're 25 all in favor of it. And I know this is not Louisiana, WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 19 1 but Louisiana has, oh, various gambling. They've put 2 in a progressive bingo game down there. And from what 3 you can find out from the people in Louisiana and the 4 bingo industry, it saved their industry. It's 5 extremely profitable for the organizations. It will 6 hold people. It will keep them in the state. Keep 7 them from going to the other gambling centers because 8 they get to play for a large amount of money, at least 9 one game per session. That's it. Like I say, I just 10 speak in favor of it. Any questions? 11 MS. TAYLOR: Thank you. You're up. 12 MR. BISHOP: Don Bishop, Dallas, Texas, 13 AMVETS Post 31, and commercial lessor. As I was 14 saying when I was so politely interrupted a while 15 ago -- and you were very polite. Thank you. I'm also 16 and my associates are all in favor of making some 17 progress on getting the progressive bingo. We think 18 it would really benefit the charities. And I did jump 19 the gun a little while ago. 20 But in keeping with what I was saying 21 about the slow deterioration of the charities' 22 revenues in bingo as well as the attendance, we've got 23 to have some more tools to work with because the tools 24 we have, we're just not able to generate new 25 enthusiasm like -- well, like it's the same problem WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 20 1 that the Lottery Commission is having with the 2 lottery, you know. We read in the paper almost weekly 3 where the lottery is decreasing and you-all are 4 struggling to pump it up. Well, we have the same 5 problems in bingo. And some of our charities are 6 really hurting. 7 One question I had: Is there anything 8 else that the Lottery Commission or the advisory 9 committees are discussing other than this progressive 10 bingo that might help the charities in building up 11 bingo? Is there anything you know of? 12 MS. TAYLOR: My baby comes up on number 13 seven. 14 MR. BISHOP: All right. 15 MS. TAYLOR: I believe that Mary is up 16 on number six with that same problem? 17 MS. MAGUNSON: Yes. 18 MS. TAYLOR: We're down on number 12, I 19 believe. 20 MR. BISHOP: Okay. Thank you for your 21 time. 22 MS. TAYLOR: Thank you. 23 MR. BISHOP: And I just might say that 24 I served the first year on the advisory committee, 25 along with Jane Thompson, Sharon Ives, and whoever WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 21 1 else. And I want to thank you for the work you do 2 coming down and showing up on our behalf and doing the 3 job you do. Thank you very much. 4 MS. TAYLOR: Thank you. Any other 5 comment on this item? There has been a motion and a 6 second for the chair, which is William Neinast, to 7 write a letter to the sunset commission in favor -- 8 with the BAC in favor of progressive bingo. Is there 9 any other discussion on it? 10 MR. TAWIL: And additional help or 11 assistance in their review of the Lottery Commission. 12 MS. TAYLOR: Would you like to restate 13 that entire motion? 14 MR. TAWIL: Phil, help me. Do you know 15 what I was trying to say? 16 Just -- we want to just show that we 17 support this effort. So the motion is that the chair 18 of the Bingo Advisory Committee I guess -- do we have 19 our own letterhead? 20 MR. SANDERSON: No, I don't think so. 21 MR. TAWIL: Well, he's still got to 22 write a letter directly. I don't mean through Billy 23 or anybody else. Chair directly to the sunset 24 commission supporting and endorsing their help in 25 getting progressive bingo to help the charities. But WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 22 1 in addition to that, as well as to provide assistance 2 in the review process of the Lottery Commission or the 3 bingo division. 4 MS. TAYLOR: Okay. Everybody got it? 5 MR. RINEHART: We'll get this thing, go 6 back, review this again, and get some facts and 7 figures in there as to what we would like -- 8 THE REPORTER: I can't hear. I'm 9 sorry. 10 MR. RINEHART: Where they could see 11 what we're trying to do. I'm talking about the 12 legislation from the commission. And send it to the 13 commission and let them review this and see if we 14 couldn't get something done on it. 15 MR. TAWIL: The review process, sir, 16 has started, I think. So we really don't have a whole 17 lot of time to get our input in there. It's going to 18 have to be done before. 19 MS. TAYLOR: Any other comment? It's 20 time for a vote. All those in favor of the writing of 21 the letter? Any opposed? That passes, then. We'll 22 let William know he gets to do that. 23 We come to item number six, 24 consideration of and possible discussion and/or action 25 on the proposed amendments to 16 TAC 402.554 relating WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 23 1 to instant bingo. Mary. 2 MS. MAGUNSON: Thank you. For those of 3 you that don't know me, this is my first time at the 4 Bingo Advisory Committee. My name is Mary Magunson. 5 I am taking the place of Fabian Hoffner and at least 6 filling out the remainder of his term on the BAC. I 7 work with the manufacturers association. I've been 8 their legal counsel for almost ten years now. So 9 hopefully I don't fall within that 99 percent that we 10 were talking about earlier. 11 I have a number of items that I would 12 like to talk about. And I think there are a number of 13 people in the audience who have some issues that they 14 want to address. So I'm going to ask Suzanne: How do 15 you want me to do this? Break it down into separate 16 issues? Should we do it that way and take each one 17 independently? 18 MS. TAYLOR: Yes. 19 MS. MAGUNSON: Okay. I basically have 20 three issues that I want to talk about, all of which I 21 think have a direct bearing on how we can hopefully 22 try to improve the state of bingo in Texas and 23 particularly the sale of instant bingo tickets for the 24 charities in the halls. And those issues really are, 25 one, looking at some different products that might be WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 24 1 available to use that currently are not legal in 2 Texas, but that might be legal by virtue of changing 3 the rules or just simply changing the definition of 4 instant bingo. 5 Secondly, changing or streamlining 6 perhaps the approval process for instant bingo tickets 7 so that there are tickets that are of a greater 8 variety and they can get into the marketplace faster. 9 And currently if you come up with a concept or someone 10 comes up with a concept for a ticket, it's probably 90 11 days plus before that ticket can actually reach the 12 marketplace because of the approval process, because 13 of the printing process, and getting it out there. 14 And so a lot of times ideas simply become stale over 15 that period of time. And manufacturers are placed 16 with holding a lot of inventory. So the -- there is a 17 reluctance to aggressively put together a lot of 18 different types of products because they're afraid of 19 being stuck with a lot of inventory during the time 20 frames. 21 The third issue which relates directly 22 to the approval process is the fact that in Texas, 23 which is only one of two states in the country that 24 requires this, you are required to put a state seal of 25 the Texas Lottery Commission on the ticket. And that WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 25 1 in and of itself I think has an effect on the volume 2 and variety of product that we get here. I -- back in 3 September, Billy Atkins asked me to send to him 4 examples of virtually every instant bingo product 5 known to humankind. And I did. And I sent him a very 6 large box of product which included regular instant 7 bingo tickets. Sealed cards. Bingo event tickets. 8 And a whole variety of different things that are 9 currently available in the marketplace, but not 10 necessarily available here. Billy, I am told, is at 11 the Capitol. And that box is somewhere in his office. 12 And Worlanda is trying to track it down. So what I 13 think we might want to do is put that issue third, 14 although it might be the most significant, in the 15 hopes that Billy will get back to us and we'll be able 16 to locate some of those samples and we'll have 17 something in front of us to look at while we're 18 talking about the issue. 19 So perhaps we can start with the 20 approval process. And I have for at least the 21 committee members -- and I have a couple of extra 22 copies, but not for the entire audience, I'm afraid. 23 It's a little chart -- and I'll put some up here if 24 you want to share them -- showing approval -- the 25 approval process for six states. Now, I want to back WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 26 1 up a little bit and tell you that instant bingo or 2 pull tabs are legal in 37 states around the country. 3 There are six states, regulatory 4 jurisdictions, that have requirements that instant 5 bingo tickets be approved by a regulatory agency prior 6 to their sale into the state. What my little chart 7 does is, it simply lists what requirements there are 8 in each of those states and significantly the time 9 frame that it takes for those states to actually look 10 at and approve the product. And I'm not going to 11 belabor this by going through each of these in great 12 detail. But what I will point out is that in most of 13 the states, we're talking time frames of anywhere from 14 five days to as much as 30 days. In Texas, we're 15 talking anywhere from, oh, 60 to 90 days because of 16 the various approval processes required. Most states 17 simply require sample tickets. Texas requires three 18 complete live deals of product for testing, which is 19 far more than any other state in the country would 20 require. And that obviously will feed into the amount 21 of time that it takes to approve the product. 22 I am not suggesting the elimination of 23 the approval process. I think that, first of all, 24 that would never happen. And secondly, it's not a 25 bad -- it's not a bad deal. We don't mind doing it. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 27 1 What I'd like to try to accomplish today is to 2 encourage through perhaps a motion or something the 3 commission to streamline its process and to look to 4 the rule as a mechanism for eliminating some of the 5 requirements that are currently in place in the 6 approval process so we can shorten that time frame. 7 And as I said earlier, this is 8 important to you as the end users out there because 9 this time frame, it cuts into the variety of product 10 you're getting. And to some degree, the reluctance -- 11 there is reluctance of the manufacturers to sit on a 12 lot of inventory because it's going to be sitting in 13 their warehouses for maybe 60 or 90 days before they 14 can get it out. So you're seeing fewer and fewer 15 games -- theme games coming into the state as a 16 result. 17 I brought just for the sake of 18 discussion -- I come from Minnesota. Things don't 19 always -- aren't always great there. But they have an 20 approval process. And the process there is that the 21 manufacturer submits the game, the artwork. The 22 artwork is approved by the staff. And then eventually 23 it all goes to the charitable gambling board for final 24 approval. When the board approves the game, then the 25 manufacturer is required to submit one complete set of WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 28 1 the product to the board contemporaneous with the 2 first shipment of the product into the state. That 3 entire process takes roughly 30 days. This is the 4 list of games. These are just -- this is just a 5 random selection. But this is 13 pages of games that 6 were approved one month. This just happened to be the 7 month of December. These are all different games. 8 And the process is actually completed by two guys who 9 look at the art and then who subsequently review the 10 tickets. So it can be done and it can be done more 11 quickly if the process is streamlined and there are 12 some specific requirements set out in the rule in 13 terms of what needs to be looked at and what doesn't 14 need to be looked at. 15 So my first issue here, and I don't 16 know if anyone wants to comment from the audience, is 17 to make a motion that the BAC support the elimination 18 of unnecessary requirements in the approval process 19 and support the streamlining of the approval process 20 so that it doesn't take any longer than 30 days to 21 complete. 22 MS. TAYLOR: That's your motion? 23 MS. MAGUNSON: (Moves head up and down) 24 MS. TAYLOR: Is there a second to the 25 motion? WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 29 1 MR. CASTILLO: Do we have comment? 2 MS. TAYLOR: We're going to -- we're 3 going to make a motion and then have comment on the 4 motion. Is there a second on the motion? 5 MR. CASTILLO: Second. 6 MS. TAYLOR: Okay. David seconds it. 7 Is there any public comment on it? 8 MR. GRIFFITH: My name is Ken Griffith. 9 I'm with K&B Sales, Good Time Bingo and I'm a 10 distributor of bingo products. I'd like to speak to 11 all three of what Mary said. And I think that one of 12 the -- one of the first things I would like to speak 13 to and echo what everyone else said, what we've done 14 in the decline of bingo in the state of Texas through 15 various competitive forces. And we have -- we've lost 16 a lot of ground. Through the legislative process, we 17 missed out on the progressive bingo. We have 18 focused -- our company has focused our attention on 19 what we could do now between the time of the next 20 legislative session and what we could do right now to 21 help bingo in the state of Texas. One of those areas 22 was pull tabs or the instant bingo tickets as a way to 23 help generate more profits. We've seen a steady 24 decline in tickets over the years. We've been very 25 aggressive at trying to get tickets approved. We've WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 30 1 had a multitude of tickets in for approval. 2 The first thing that I want to speak of 3 on the different tickets, we also -- we did seminars 4 throughout the states. We took a lot of petitions on 5 a lot of different issues. One of the petitions was 6 allowing four different types of tickets in the state 7 of Texas, including seal cards, coin boards, 8 merchandise, tickets. We wanted to see the reaction 9 of the charities to different types of stuff. We have 10 several hundred charities, probably in excess of 400 11 charities, on our petition who are in support of 12 seeing different tickets. It's going to be -- I think 13 that it could have happened. I know Mr. Hoffner 14 worked on this issue before with the lottery and we 15 didn't have any success. 16 What I would like to do, I would like 17 to make the -- and I want to go to the approval 18 process. I'd like to make the commission -- I mean, 19 this group aware of some things that are going on 20 today that you may or may not be aware of. And that's 21 an issue of how they do approve tickets today. And 22 like Ms. Magunson said, it's a very lengthy process 23 and it's a very hard process for us to go through. 24 Recently a ticket was denied. One of 25 the manufacturers who put in a ticket was denied WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 31 1 because they didn't like the cartoon character of the 2 lady that's on the ticket. The representative from 3 the lottery -- the name of the ticket was Black Magic. 4 The lottery's denial of the ticket and the 5 recommendation was that she should be clothed 6 different and possible reduction of her breast size. 7 I find that when I hear this -- and I asked the 8 manufacturer, I say, this is some sort of censorship 9 that I've never heard of. The reply from the 10 manufacturer was that, and this is in their words, you 11 may be interested to know that we will not make the 12 changes to the blonde in this game as requested by the 13 Texas authority. Instead, we will simply not market 14 the game in Texas. The reason is, the game is an open 15 game for all states. And all plates have already been 16 made. We would have to go back and virtually replate 17 the entire game, if not all of the plates. 18 Consequently, this experience serves as 19 an example of a barrier to marketing more games in 20 Texas and in addition to the censorship issue. And I 21 think that some of the denial -- or one of the denial 22 reasons was integrity and security of the game. And 23 I'll let Ms. Magunson correct me if I'm wrong. The 24 original reason, integrity of the game, I think had to 25 do with the fact that you were assured that all the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 32 1 winners, all the losers were in there. The security 2 was that you couldn't predetermine a winner. There 3 was random selection. I think that NAFTM has set up a 4 very -- a wonderful first-class process of making sure 5 that all members of their association apply the same 6 rules throughout all the states. And I think they do 7 a very good job of that. 8 So I don't think this is an integrity 9 or security issue. Somehow, integrity now has been -- 10 has come around to a integrity versus taste issue. I 11 personally feel like I don't know if this lady looks 12 more like Daisy Mae's Little Abner or Jessica Rabbit. 13 But I think we can let our customers decide. 14 The purpose of me bringing this up is 15 that this ticket is now available in 37 of 38 states. 16 It's not available in the state of Texas under the 17 same guidelines that were used on another ticket on a 18 denial: "After reviewing the artwork for the 19 following, it's our belief that the following bingo 20 games violate charitable bingo administrative rule 21 402.554 B4 since the symbol of a beer mug does not 22 properly preserve the integrity or security of the 23 Texas Lottery Commission." And once again, we've got 24 a symbol of a beer mug that's a -- more of a cartoon. 25 We personally -- I don't know if it's A&W Root Beer or WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 33 1 a beer mug. I guess you can assume that. 2 My problem with this is the fact that 3 every night I get to watch TV and watch the two step 4 being performed in a dance hall. There is no liquor 5 and there is no guns. But I think the obvious is 6 pretty -- is pretty much there. I think that when we 7 get into censorship issues on what we get, I think 8 that's a whole other program. And I think that there 9 ought to be some input. At least allow the customers 10 to decide whether or not this is in bad taste or not. 11 I don't think it's the venue of the Lottery Commission 12 to say that a cartoon character somehow affects the 13 integrity of the game. 14 On another note, I would like to say 15 that some manufacturers that I've dealt with and I 16 have talked to recently are concerned with the 17 problems of the increasing monetary fines that the 18 State of Texas levels against them. And I'm bringing 19 it up at this point in time because these are the same 20 people who provide the tickets to us. And I'm going 21 to quote from one of the -- one of the consent orders 22 on one of the manufacturers: "Subsequent violations 23 under the Bingo Enabling Act or charitable bingo 24 administrative rules will result in an increase in the 25 recommended penalty, which could include a monetary WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 34 1 fine, suspension, denial, or revocation of license." 2 And I note the word will result in an 3 increase in the recommended fine. The reason that I 4 bring this forward is that every manufacturer as long 5 as I've been in business, we've always had -- and I 6 think any manufacturer in any business always have 7 unintentional things happen. This manufacturer of 8 pull tabs -- the pull tabs were sent in to the State 9 on an approved ticket, but it was one that didn't have 10 the Texas seal on it. My understanding of it is, on a 11 ticket that is made for all states is run. And at 12 some point they stop the presses and then they change 13 the plates to include the Texas ticket, which is fine. 14 And I think that one of these deals possibly got -- 15 several of these deals got into the state of Texas. 16 I think what the biggest concern is is 17 the -- to make sure that the security and integrity of 18 the game is there. It always was there. There is no 19 harm. There was no foul. No customer got cheated. 20 No charity got cheated. The manufacturers have always 21 and consistently recognized that if they've had a -- 22 if they've had a problem with a product, they've 23 always overcompensated for that particular product 24 problem, whether it be a mistake in manufacturing, 25 whether it be a mistake in shipping. They have always WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 35 1 done that. 2 So to fine a manufacturer for a problem 3 like this -- and my question was, why didn't you -- my 4 question is not the fine. My question is the increase 5 of the fine because another manufacturer -- that next 6 increase is $10,000 was the fine that another 7 manufacturer made on their second violation of a 8 no-harm foul. The problem to me is not the amount of 9 these fines in the state of Texas on an increasing 10 basis, but at some point it has to come back and fall 11 back to the charity to increase the price. The 12 manufacturers aren't just going to give up a thousand, 13 10,000, $25,000 in the state of Texas without it 14 costing us more money. It's a very costly issue. 15 MR. SANDERSON: While you're getting 16 into these fines and administrative penalties, one 17 thing that you forgot to mention is the fact that the 18 Bingo Enabling Act allows for only a maximum $1,000 19 per violation per day that a violation takes effect. 20 So to raise it up to arbitrarily 25 or 30,000, they're 21 not arbitrary numbers. And the cases between the two 22 manufacturers that you're talking about and the 23 differences in the penalties, there were some 24 different violations involved. 25 MR. GRIFFITH: I understand the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 36 1 different violations. 2 MR. SANDERSON: Just so everybody else 3 is aware that is -- we're not arbitrarily fining one 4 this amount and another one a higher amount. 5 MR. GRIFFITH: Well, I think what we're 6 using, Mr. Sanderson, is a -- is the fact that this 7 thousand dollars maximum per occurrence or per day or 8 per whatever happened. And in the second case, the 9 fine could have been ten million. If you put it along 10 at least the way it was put to the manufacturer. So 11 they're forced into this thing of settling and paying 12 a fine. I'm not opposed to any type of fine. I'm not 13 opposed to fining manufacturers when they do anything 14 wrong. I think that the real problem here is, whether 15 it be pull tabs or paper or something with the seal on 16 it, is the fact that these things will happen. And I 17 think it's a very good argument to eliminate the seal. 18 The seal originally and back when we 19 first okayed bingo in the state of Texas, there were a 20 different set of circumstances at that time due to the 21 paper manufacturers and later the tab manufacturers. 22 There was a reason for putting a seal on that that I 23 think has been eliminated by the manufacturers which 24 has to do with audit trails. And I would greatly 25 support removing the seal from this. I think the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 37 1 audit trails are in place. I think the manufacturers 2 have a -- over the years have created -- and I know 3 the distributors have, too. We have an audit trail. 4 It's very easy to use. Ms. Magunson noted Minnesota 5 and the approval of those tickets. Manufacturers -- 6 some manufacturers of tickets -- and I won't speak for 7 all of them, I'll speak for some -- are very hesitant 8 in the state of Texas because of the cost involved to 9 put in more than X number of tickets. They will allow 10 us a few tickets. And if I might, Ms. Magunson, from 11 your book, from the national NAFTM book, I'm going to 12 look here at Minnesota. The gross sales were 13 $1,373,000,441. I think this was 1999. Texas was 96 14 million. That's one -- that's just a fraction. 15 And I think it has -- I think that if 16 we do have a streamlined process -- one of the other 17 things that I'd like to speak on on the pull tabs, I 18 have been to the other states. And I've seen what 19 they do and how they do their different tickets. One 20 of the things that we're finding in a lot of states is 21 that new tickets are in absolute demand by the 22 charities. 23 I also hold a distributor license in 24 other states. In other states, there are charities 25 who cannot have -- will not accept the same ticket for WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 38 1 over a year. They want a different ticket every week 2 because they have the ability through the 3 manufacturers who are approved in those states through 4 the approval process to get the ticket approved. And 5 in a lot of cases, those tickets are up and gone and 6 it's over with before we ever even get started in the 7 state of Texas. They've already sold -- I think what 8 we end up with in the state of Texas is, we end up 9 with the end result of whatever they've already done. 10 And if one of those tickets that they've already sold 11 or one of the tickets that are there has some Jessica 12 Rabbit on it, then we won't get that ticket. 13 Let me find my notes here. I wanted 14 to -- there were three things. The approval 15 process -- Mary, what were the three? The approval -- 16 MS. MAGUNSON: Approval process, the 17 elimination of the seal, and the ability to introduce 18 new products into the state. 19 MR. TAWIL: Is it easier for you to 20 manufacture with the seal not there because you have a 21 common thread across all -- 22 MS. MAGUNSON: The seal -- and I'll get 23 to that in a minute. The seal poses two problems. It 24 requires first of all a special manufacturing process 25 for Texas in order to print the seal on the ticket. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 39 1 Now, fortunately over the last few years, the seal has 2 gone from the front of the ticket so that the option 3 is that the seal can be on the back, which is a little 4 less cumbersome, but cumbersome nonetheless. 5 The second issue and perhaps equally 6 important is that what it does is, it requires the 7 manufacturers and, quite frankly, any distributor who 8 does business in more than one state to segregate that 9 inventory and maintain a separate inventory for the 10 state of Texas. So what happens is, once that product 11 is done, it has to go to a certain part of the 12 warehouse. And then it has to sit there and take up 13 space. If it's going to take up space for a 14 relatively long period of time, there is going to be a 15 lessor amount of inventory produced. So it takes up 16 lesser space. 17 The other problem is, it sets the 18 manufacturer up from time to time to make a mistake. 19 You'll get a call from Mr. Griffith that says, you 20 know, I need -- I need five cases of X game. Well, 21 they'll go to the Texas place and see if they have it. 22 And somebody might inadvertently pull five cases of 23 product that doesn't have the Texas seal because it 24 was destined to go to Missouri or something. And 25 inadvertently it gets shipped down here. And then the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 40 1 manufacturers made a mistake because they pulled the 2 wrong -- some guy in a warehouse pulled the wrong 3 boxes off the shelf and put them on the wrong truck 4 and sent them down here. 5 So it's, one, a manufacturing issue 6 which is costly because it's a special manufacturing 7 process. And second, it's an inventory issue because 8 it requires the maintenance of a completely separate 9 inventory for the state of Texas. And then if you 10 combine that with the lengthy approval process, 11 they're not only sitting on extra inventory, but 12 you're sitting on extra inventory for a longer period 13 of time. 14 MR. GRIFFITH: Correct me if I'm wrong, 15 Ms. Magunson, but isn't it also a function of how many 16 tickets must be sold before they are willing to 17 produce a ticket? 18 MS. MAGUNSON: I think that varies from 19 company to company. But I think it's fair to say that 20 if you have to produce a -- do a special run of 21 product for a particular state like Texas, you are 22 going to impose minimum purchasing requirements, 23 because otherwise it isn't worth your while to do that 24 run. So you're going to impose minimum purchasing 25 requirements on the distributor, who of course is then WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 41 1 going to have to be able to sell that product. And if 2 he or she doesn't think that can be done, you know, 3 you're not going to get the product. So I think what 4 you end up getting is a significantly smaller variety 5 of product because of the constraints that are imposed 6 both on the manufacturer and then ultimately on the 7 distributor, who doesn't want to get stuck with a lot 8 of extra inventory, either. 9 MR. GRIFFITH: Then the last thing that 10 I'd like to add, I don't know where -- because of the 11 ticket issue, we had to develop a door prize ticket 12 that we felt like would be advantageous to the 13 charities. We tried -- we tried to stay within the 14 confines of what we thought the law was. And we took 15 legal counsel on it. In our efforts to try to create 16 something more excitable, anything, we're grabbing at 17 straws now. We did come up with a door prize ticket. 18 The letter that -- and we submitted -- we didn't 19 submit it. We asked because this was not a -- it was 20 a ticket -- it was a ticket that would be used for a 21 door prize. So we wanted to get the lottery's opinion 22 on it. And as you'll see, they don't do that. 23 This is a letter back -- that we 24 received back asking whether or not we could provide 25 this game to our customers. "I received your letter WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 42 1 describing a door prize promotion utilizing get the 2 jackpot tickets and your request of the Texas Lottery 3 to issue an opinion as to whether this particular door 4 prize drawing would be sanctioned under the Bingo 5 Enabling Act. The Texas Lottery Commission is not 6 authorized to issue advisory opinions. Therefore, I 7 will not respond to your specific inquiry at this 8 time. Please be aware that the Bingo Enabling Act 9 sets out the following provisions on the conduct of 10 bingo in Texas." And then they quote the Bingo 11 Enabling Act. And at the bottom: "As you know, the 12 Texas Lottery Commission investigates complaints of 13 violations of the Bingo Enabling Act and 14 administrative rules that it receives and will take 15 appropriate action if action is warranted." 16 What I asked my attorney was, I said, 17 what does this mean? I don't -- they won't make an 18 opinion on it. But the answer that I got back was, go 19 ahead and start to run it and then they'll issue an 20 opinion on it. Well, this is another one. And I 21 think that -- I bring this up for one reason. I think 22 that they do opinions all the time. I've spoken to 23 some other people. We do need opinions from them. We 24 need them to tell us whether or not they think this is 25 legal or not. Say so and we can move along the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 43 1 street. 2 Consequently, this one gets -- this one 3 is gone. We'll move on to something else. We're 4 working on several projects. But each project entails 5 a lot of legal work to try to figure out a way to make 6 it more exciting for the games. But when we bring 7 them and the lottery will not issue an opinion, then 8 we're stuck with the fact that should we try this, I 9 think the opinion does come after that. They say, no, 10 that's -- we're not going to allow that. That would 11 be the nice thing to say. Say, we're not going to 12 allow that. Let's find something that will. But I 13 think -- and I'm not asking for an answer on that. 14 I'm just saying, this is the way it -- this is the way 15 it exists today. 16 MR. TAWIL: Who wrote that letter to 17 you? 18 MR. GRIFFITH: Mr. Sanderson. 19 MR. TAWIL: He's not a lawyer. 20 MR. GRIFFITH: But it's -- 21 MR. TAWIL: Why wouldn't you pass 22 something like that to Ken's office and let them 23 respond? 24 MR. SANDERSON: The agency by law 25 cannot issue advisory opinions. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 44 1 MR. TAWIL: Period? 2 MR. SANDERSON: Period. 3 MR. TAWIL: Oh. 4 MR. GRIFFITH: So we're in kind of a 5 catch-22. They won't issue an opinion. So if we try 6 to run the game, then we'll find out. 7 MR. TAWIL: Yeah. 8 MR. GRIFFITH: And I don't know what it 9 is. It's just something that we need to look at in 10 the future and possibly -- 11 MR. TAWIL: Why is it that -- why can't 12 you-all be proactive and -- it's like a -- it's like 13 a -- seems to me like even my own experience is 14 affected. They're sitting there like this, just 15 walking around, you know. Instead of being proactive, 16 say, you know, let's work together to try to make this 17 workable and positive. There is nothing wrong with 18 you-all going down the street. I mean, does that make 19 sense what I'm trying to say, Phil? 20 MR. SANDERSON: It makes sense. And 21 that's -- and I go back to the fact that we're in the 22 process of doing a complete rule provision. The pull 23 tab rule is one of the rules that's being revised 24 also, along with the BAC rule and the rest of them 25 plus some new rules. And we're hoping the rules will WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 45 1 clear up some of this. 2 MR. TAWIL: I just got the feeling 3 like, you know, that you do whatever you want to do. 4 And if the gauntlet comes down on you, you're in 5 trouble. If it doesn't, you just keep doing it. 6 That's not a way to operate. As opposed to being 7 proactive and saying, you know, we're going to help 8 you-all steer this business down the way to help 9 charities more, you know, being proactive. We're all 10 humans. You can make a mistake. Say, you know, we 11 thought we could do that, but they said we can't. So 12 let's stop. As opposed to saying, you did wrong. 13 You're in trouble now, period. I guess you get the 14 drift of what I'm saying. Thank you very much. 15 MS. MAGUNSON: If I could just follow 16 up with Ken. I mean, one of the things that I want to 17 point out, you know, he mentioned Minnesota has it 18 where it's easy to pull the sheet. But there is only 19 4.5 million people in my state. And you know, we do 20 $1.4 billion. There's also 17 Indian casinos, a state 21 lottery, and a race track. And they still survive 22 very well despite other competition. Now, there's one 23 major, major difference in Minnesota that you do not 24 have here in Texas, and that is, the tickets are sold 25 in bars by the charities. So there's 3,000 or so WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 46 1 different locations where the tickets are sold. And 2 that accounts for a large amount of the volume of 3 business. 4 But along those lines, the approval 5 process in Minnesota, a manufacturer has to submit the 6 games for approval by the 15th of the month prior to 7 the next board meeting. And the board meetings are 8 held the third Monday of every month. So it's roughly 9 a 30-day lead time. In the month of December, there 10 were 51 families of games approved, 308 different 11 forms. And that is not atypical. This -- and in 12 fact, that's kind of a small month because it was -- 13 it was Christmas and the holidays and stuff. So 14 that's an average amount of product that comes into 15 the state every month for purposes of approval. 16 Now, these are new games. And so what 17 the charities in Minnesota see is, they'll see some of 18 the popular games will carry over from month after 19 month after months and year after year after year. 20 But what the charities get in Minnesota is, they get a 21 substantial number, in December, 308 new games, that 22 they got to select from. And in many of those cases, 23 they were families of games that simply had five, six, 24 maybe ten different payout schedules. So the 25 charities had a variety not only of game name and game WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 47 1 theme, but they could choose maybe between five and 2 ten different payout amounts that could fit within 3 their relative product mix on a better basis. 4 So when people ask me about the success 5 of ticket sales in a place like Minnesota, I usually 6 suggest that it has to do with the location of where 7 the tickets are sold. But it also has an awful lot to 8 do with the variety of product in the marketplace 9 which contributes to the volume of product that gets 10 sold. 11 So I don't offer some -- I don't -- I'm 12 not going to offer a lot of specifics to the 13 commission for purposes of how they need to change 14 their approval process. I think that's something that 15 as the rules develop, we can work on over time. But I 16 would hope to see a process that would permit a faster 17 turnaround on approval of these games so that there 18 may be more incentive for the companies to get more 19 variety of product out into the marketplace here for 20 people to choose from. 21 Along those lines, Ken mentioned the 22 seal issue. And I had another chart and unfortunately 23 didn't bring a lot of copies, either. But of the 37 24 states that do allow pull tabs or instant bingo 25 tickets, there are two, Texas and New Hampshire, that WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 48 1 require a ticket seal. Tickets in New Hampshire 2 happen to be sold and regulated by something called 3 the New Hampshire Sweepstakes Commission, which is 4 also an offshoot of the New Hampshire Lottery. There 5 are a couple of other states that have some quirky 6 sort of requirements. California has a requirement 7 that on the back of the ticket, there has to be some 8 language that says that this ticket is for sale in a 9 bingo game in California. And in Illinois and 10 Nebraska, the names of the distributors are printed on 11 the ticket as well and required by law. In Nebraska, 12 the distributor actually prints the name on there. In 13 Illinois, the manufacturer is required to print the 14 name of the distributor. But other than those five 15 situations, of the 37 states, there are only five that 16 have some sort of a specific printing requirement on 17 there. 18 And I might say for California, 19 virtually every ticket printed in the country has the 20 California language on it except in Texas. Because 21 there is a requirement in a process sheet that went 22 out in December of 1998 that prohibits any authorizing 23 language from another state from being on a ticket in 24 Texas. So that's another problem. But that's 25 something we'll continue to work on. But virtually WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 49 1 every ticket has the California language on it sold 2 throughout the country. And nobody else seems to care 3 about that. 4 In my state, in Minnesota, they have an 5 imprint requirement. But the imprint is located on 6 the flare for the game. So if there is an imprint or 7 a seal to be required, it's our position that it would 8 be better suited to go on the flare. And if the flare 9 were simply posted, any investigator who were coming 10 in to check on the game simply has to look at the 11 flare. And you can see the seal located on the flare. 12 Then you simply have to match up the serial number on 13 the ticket with the serial number already printed on 14 the flare. And you have exactly the same sort of 15 ability to look at the product that you would if the 16 seal were on the ticket. 17 The existence of a seal is often 18 suggested as a security measure to ensure that the 19 product is legal and that all steps are -- have been 20 taken appropriately for the sale of the product. I 21 like to say that that is a false sense of security for 22 regulatory agencies simply because a seal is on the 23 product doesn't mean it got there legally necessarily. 24 And it doesn't mean that all appropriate fees and 25 taxes and whatever, if they are levied, have been WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 50 1 paid. It simply is a measure that someone can look 2 at, sort of do a quick and dirty check. But what it 3 oftentimes does is, the quick and dirty check is all 4 that gets done. And nobody goes beyond looking at the 5 seal to determine if in fact it is a product that is 6 legally on the premises. Most states don't have seal 7 issues. And quite frankly, most states don't have 8 problems with illegally distributed product. 9 The state of Washington does the 10 greatest volume of product sales. Over a million sets 11 a year go into Washington. They don't have an 12 approval process. They don't have a seal or a ticket 13 imprint requirement. They have a little bar coded 14 registration stamp that gets affixed to a flare that 15 they use as a substitute. But other than that, they 16 don't have any kind of imprint requirement. 17 Getting to at one point Ken's issue 18 about the so-called integrity of the tickets. Some 19 years ago when the regulation of bingo was switched 20 from the TABC over to the Texas Lottery Commission, I 21 recall having several discussions with the then staff 22 about using that opportunity to eliminate the seal 23 because it proved to be quite the headache for the 24 manufacturers to go from doing a TABC seal to a Texas 25 Lottery Commission seal. They had to develop some WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 51 1 sort of a phasing schedule in order to determine what 2 product could stay in the market and what product had 3 to come out. And I had conversations with Laura 4 Linares about it. And at the time, we talked about 5 the seal. And we also talked about the -- sort of the 6 content of the ticket or the graphics on the ticket. 7 And the response I got was, we put our seal on the 8 ticket. And the public then perceives it to be our 9 product or product of the Texas Lottery Commission. 10 And as a result, that product is going to have to meet 11 certain standards that we consider appropriate. 12 So I would suggest that those two 13 issues may go more hand in hand than it might appear 14 at first blush in that because the seal exists on the 15 ticket, the Lottery Commission has perhaps imposed 16 more stringent standards of content requirement than 17 may otherwise have been necessary because of a 18 perception that the existence of the seal somehow 19 makes it appear that it is a Lottery Commission 20 product, like a instant lottery ticket, as opposed to 21 a product that is simply sold in the free marketplace 22 and that happens to be regulated by the Texas Lottery 23 Commission. So it may be that the ability to 24 eliminate the seal may also have an unintended effect 25 perhaps of loosening some of the restrictions that WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 52 1 have been imposed on the content of the product. 2 So on our -- for our purposes, we would 3 like to see the BAC recommend that the Lottery 4 Commission consider amending its rule to eliminate the 5 requirement that the seal, which is the state of Texas 6 and the five-point star and the words Texas Lottery 7 Commission, be imprinted on the ticket. I am not 8 opposed to looking for some sort of a compromise. It 9 would be nice if there was no seal or imprint 10 whatsoever. But we would be willing to talk about the 11 possibility of moving that imprint to the flare for 12 each game, which is a lot easier to work around than 13 it is to put it on the ticket itself. So I don't know 14 if you want a motion before you have discussion or if 15 you want to just talk about it for a while or how do 16 you want to handle that? 17 MR. SANDERSON: Let me interject one 18 thing. I talked with Mary last week about it. We are 19 in the process of revising the rule for pull tabs, 20 along with other rules. And at the same time, the 21 bingo division is in the process of taking over the 22 full security testing of pull tabs. And we have asked 23 our staff to look at all the processes and the 24 procedures to hopefully streamline those procedures. 25 MR. TAWIL: Who is doing that now? Who WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 53 1 is doing it for you now? 2 MR. SANDERSON: Well, the security 3 division -- 4 MR. TAWIL: Separate? 5 MR. SANDERSON: Separate. 6 MR. TAWIL: Okay. It's going to come 7 under -- 8 MR. SANDERSON: It's going to come 9 under bingo -- under the bingo division. We'll have 10 our staff. And there will be bingo staff that will be 11 doing the testing from the artwork through the ticket 12 themselves. So you know, we've asked them to 13 incorporate or to look for any time-saving steps in 14 the -- in the process. 15 And once again, I've got to say we're 16 looking at ways to also expand the sale of pull tabs, 17 looking at the game varieties. So it's not -- you 18 know, you're not -- your testimony is not falling on 19 deaf ears because we're already looking at it. And 20 hopefully it can be streamlined and we can introduce 21 some of these new games sooner than later. 22 MS. TAYLOR: I do have one question on 23 that. I was looking through the notes. Back in 24 November of 2000 is the first time we actually brought 25 it up. I found a copy of the minutes, that part from WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 54 1 the minutes. It's when it was first brought up that 2 we expand the definition for pull tabs to allow for a 3 greater variety. A year ago at the February meeting, 4 there was a motion on the floor at that time also and 5 approved to change the definition of pull tabs by 6 Fabian Hoffner. So how much longer is it going to 7 take? 8 MR. SANDERSON: Well, if you -- 9 MS. TAYLOR: It's been a few years 10 already. 11 MR. SANDERSON: If you remember, we had 12 to look at legislative changes to expand the sale of 13 pull tabs. And we had bills that were introduced to 14 expand the sale of pull tabs that never got out of 15 committee. 16 MS. TAYLOR: So the rule-making 17 process. When did -- when can that be expected, the 18 change in the rule, the definition of pull tabs being 19 expanded to include the greater variety? Is there a 20 time line? 21 MR. SANDERSON: The -- like I said, the 22 rule right now is in draft. So it's -- I can't give 23 you a definite date because it's all tied to public 24 comment and legal and the commission. And as soon as 25 we can get it done, it will be done. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 55 1 MS. MAGUNSON: Phil, is there -- is 2 there a possibility -- and maybe I'm inserting myself 3 here too much. But is there a possibility of having 4 some input in the drafting process, rather than 5 waiting for a final product to be presented through 6 some sort of a formal rule-making process? I mean, 7 can we perhaps have a subcommittee of sorts that would 8 sit down with the staff and talk about the rules as 9 they're being developed? 10 MR. SANDERSON: And any rule, we're 11 willing to take any input that you've got at any time. 12 And the only time that it becomes I guess an official 13 draft would be when we present it to the BAC for their 14 consideration before it goes to the commission. 15 MS. MAGUNSON: So I -- 16 MR. SANDERSON: So -- I mean, a few -- 17 if there is anything in any of the rules that -- you 18 know, the -- that are being -- that are being drafted, 19 if you've got input language. You know, we've got 20 some -- the card minding -- electronic card minder 21 rule is also being revised. So if there is anything 22 that would -- that we can put in a rule that, you 23 know, we're willing to look at. 24 MS. MAGUNSON: Okay. 25 MR. FENOGLIO: Are you ready for WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 56 1 further comment? 2 MS. TAYLOR: Are we ready? Any other 3 comment from the committee? We're ready. 4 MR. FENOGLIO: I have one quick 5 question of Ms. Magunson. Maybe it's because I am 6 dense on Ash Wednesday. But there were three issues. 7 One, you want to streamline and improve the approval 8 process of pull tabs. The second is the seal issue. 9 What's the third? 10 MS. MAGUNSON: Different games. 11 MR. FENOGLIO: Allow different games, 12 which I guess is sort of related to streamline and 13 approve. 14 MS. MAGUNSON: Well, the -- not -- 15 well, in part. On the approval process, it would be 16 nice to streamline the approval process so just the 17 standard games that are now currently available in 18 Texas, the types of games that are here, there could 19 be a greater variety of those games and you could have 20 them quicker. 21 MR. FENOGLIO: Okay. 22 MS. MAGUNSON: The other issue is, 23 there are new products that are out there in the 24 marketplace that are simply not permitted in Texas -- 25 MR. FENOGLIO: Okay. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 57 1 MS. MAGUNSON: -- because of the mostly 2 definitional requirements. 3 MR. FENOGLIO: Okay. 4 MS. MAGUNSON: And we want to look at 5 maybe changing those definitions to allow some 6 products that currently aren't legal here and could be 7 played here. 8 MR. FENOGLIO: Well, and if -- 9 Mr. Sanderson, if it will help, my clients will -- 10 have authorized me to send a letter on the seal 11 process that -- as I understand it, there are 37 12 roughly states that have it. And Texas and 13 New Hampshire are the lone holdouts on a seal. And 14 we'll send a letter tomorrow that will support the 15 elimination of 402.554(a)(2)(A) to get that ball 16 rolling. I'm sure there are -- annoying buzz. Do you 17 want me to continue? Whatever security concerns there 18 could be, it seems to me that could be overridden by 19 what the other states had done. And I have viewed 20 pull tabs in other states. And it seems to me that 21 it's extremely expensive and burdensome to have in 22 Texas the seal of the Lottery Commission on that. 23 Insofar as the -- and certainly we 24 would also agree with streamlining and approving the 25 handout Ms. Magunson gave where it's roughly two to WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 58 1 three times as long for Texas to approve a pull tab. 2 I cannot imagine the hang-up. It sounds like there is 3 going to be some quicker process once the Lottery 4 Commission -- I'm sorry, the charitable bingo division 5 has the control over the employees who are going to be 6 doing the approval process. As it is now, they're 7 under the security division which is not answerable to 8 the charitable bingo division. They're a separate 9 division. And do you have any idea, Mr. Sanderson, 10 when that will formally turn over? 11 MR. SANDERSON: We're in the process 12 right now of acquiring transfer of FTE's to get those 13 positions filled. 14 MR. TAWIL: Is that all approval, all 15 of the -- including equipment and everything else, or 16 just -- is it -- 17 MR. SANDERSON: Everything bingo will 18 be in bingo. 19 MR. TAWIL: Good. Separate from 20 Pitcock and that bunch? 21 MR. SANDERSON: Correct. 22 MR. FENOGLIO: And do you anticipate, 23 Mr. Sanderson, that the sunset advisory commission 24 will be asked to address that issue? I'm trying to 25 get ahead of the curve. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 59 1 MR. SANDERSON: Not that I'm aware of. 2 MR. FENOGLIO: It's purely an 3 internal -- 4 MR. SANDERSON: Yes. 5 MR. FENOGLIO: -- Lottery Commission 6 issue? 7 MR. SANDERSON: Yes. 8 MR. FENOGLIO: Okay. All right. I 9 guess the other issue -- well, to reiterate what had 10 been said. Charities need innovative products. And 11 the quicker you can bring them to market, the better 12 off everyone is. That's where the big companies are 13 successful today in getting an idea and getting it to 14 market. And the people who get it to market quicker 15 win. And the people who don't, lose. I don't -- I 16 don't think I have to reiterate that issue and I 17 won't. 18 On the issue of the advisory opinion 19 process, I am an attorney. And I'm still not quite 20 sure I understand the process the commission utilizes. 21 And let me just give two examples where I would submit 22 that the commission does give advisory opinions all 23 the time. In the audit process, as an example, when 24 a -- when the audit division is auditing a charity -- 25 and I don't know if any of you have had organizations WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 60 1 that have had -- gone through the audit process. But 2 the auditors do not hesitate to give their opinion as 3 to what is allowed. 4 And for example, an expenditure, you 5 know, from either the bingo fund or the general fund 6 that is comprised of or partially comprised of bingo 7 funds. And that's the auditor's advisory opinion. 8 It's not the commission opinion. I mean, we have a 9 due process requirement that the auditor can give his 10 or her opinion as to what is authorized by the charity 11 in an audit, or any other licensee, for that matter. 12 And -- but that's not the commission's opinion. The 13 commission's opinion is determined in a procedural 14 setting where there is an opportunity to confront your 15 accuser or the auditor to say, well, is this in fact 16 the case or not? And one brief anecdote on that. I 17 represented River City Bingo Charities here in Austin. 18 MR. SANDERSON: Does this -- what does 19 this have to do with pull tabs? 20 MR. FENOGLIO: Well, it has to do with 21 the process that you say you don't have the authority 22 to give an advisory opinion. But in my view, you do. 23 And it relates to the pull tab process as Mr. Griffith 24 raised and I think you responded to. I won't spend 25 long on it. But I mean, the advisers -- the auditor WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 61 1 said a trip on that payment is not authorized under 2 the statute. And you know, we've gone beyond that. 3 But my point on that is that that was the position of 4 the auditor. And it seems to me that's as much an 5 advisory opinion as what was being sought. Security 6 division does the same thing. And I won't belabor the 7 point. But I -- and you're right. This isn't the 8 appropriate forum in the pull tab. But it seems to me 9 that -- and we're not here to just gang up -- gang up 10 on you, Phil, or this commission. But there is a -- 11 there is a high level of frustration in the industry. 12 And I mean, you've seen the charts. And I know you're 13 frustrated that bingo is on -- the good news is, we're 14 moving. The bad news is, we're moving down. And you 15 know, there are -- there are many charities that are 16 really for the first time being confronted with, are 17 they going to stay in bingo or not, all across the 18 state. And so the pull tab issue is one way to get 19 innovative products in where charities can hopefully 20 reverse the slide. I'll be happy to answer any 21 questions. Thank you. 22 MR. BRESNEN: Hello. My name is Steve 23 Bresnen. I represent the bingo interest group. But 24 I'll be quick. I would like to suggest after hearing 25 all this conversation that you include in your memo on WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 62 1 your motion several things. One is that the rules be 2 streamlined to the maximum extent possible under the 3 current statute. 4 Two, that the seal requirement be 5 eliminated. Nobody I know -- I bet you there has 6 never been in the 20 years of bingo a single customer 7 that's come in and asked for the bingo -- the pull tab 8 with the seal on it. They don't even pay attention to 9 it. Nobody knows. Nobody cares. It's not doing 10 anything but driving up the cost and lowering the 11 margin for the charities. 12 This streamlining of the rule ought to 13 encourage variety and allow as many new games as the 14 statute will allow to be able to come in promptly into 15 the marketplace. 16 Four, it ought to reduce the cost to 17 the maximum extent possible so -- because the 18 charities end up paying that. They can continue their 19 prices right where they are right now. If you reduce 20 the cost, their margin goes up. More money goes to 21 the charity. 22 Five, I think the motion ought to call 23 on the staff to identify all statutory constraints 24 that cause the rules to have to be narrower than the 25 widest variety of products that can be sold in Texas WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 63 1 consistent with the Texas constitution. So I'd like 2 for you to consider putting those five items in 3 your -- in your motion, if you would. 4 On this working group, is there -- I'm 5 sorry. On the idea of getting this rule together, can 6 you tell us what's in it? 7 MR. SANDERSON: In the current draft? 8 MR. BRESNEN: Yeah. 9 MR. SANDERSON: It's been a while since 10 I've looked at it. It's -- the staff is doing the 11 testing right now. It's putting a lot of it together. 12 So it's going to deal with the procedures for the 13 testing. What's required on the tickets. Whatever we 14 can get hopefully to expand the sale or the types of 15 games. There is a game called Bingo Event which the 16 winning is -- the winner is based on the ball being 17 drawn. And we're trying to see if there is a way to 18 work that type of game in where it doesn't conflict 19 with bingo prizes and the maximum limits. 20 MR. BRESNEN: That's the single most 21 productive conversation I've ever heard with anybody 22 in the industry about what ought to -- what might be 23 coming in a rule. And it seems to me that a lot of 24 the -- a lot of the problems around this and other 25 things could be headed off if there were some kinds of WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 64 1 working groups or people put together, I know you've 2 heard this theme before, in advance of the rules 3 coming out to be identifying issues and have a better 4 product when you get to the point of running it by the 5 advisory committee. 6 I'm probably not the best person to 7 contribute to that process because it's not something 8 I know a great deal about. But I know that Mary does. 9 I know that Ken does and Jane and other people who are 10 involved in that business. And it might be that if 11 the staff were to meet with some of them in advance 12 and do a little brainstorming in them, then the 13 product they bring to you will be further along or 14 avoid negative public comment. I'm just suggesting a 15 different way of going about it with respect to this 16 particular rule. I'm going to -- and I'm going to 17 keep coming back to that. 18 And in deference to everybody else that 19 might want to talk about this issue, I'm going to come 20 back to the -- whether you are prohibited by law from 21 issuing advisory opinions at an appropriate time. 22 Okay. Thanks. 23 MS. TAYLOR: Is there any other comment 24 on this? 25 MR. DOUTY: Are we discussing all the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 65 1 things referenced in this thing here? Have you 2 finished number three? 3 MS. MAGUNSON: I don't know that we 4 finished number three. We could be finished with 5 number three. I do have some -- I do have my box 6 here, though, of stuff I sent to Billy. So I do 7 have -- if anybody is interested, I do have some 8 examples of these bingo event tickets and things like 9 that if you want to talk about that in greater detail. 10 MR. DOUTY: Hello. My name is Jesse 11 Douty. I work at Players Bingo in Houston, Texas. 12 And I've been involved in bingo for about six years. 13 I come from another industry. And in a lot of ways, I 14 look at bingo from a fresh point of view because I 15 came from a different industry. And a lot of times, 16 that causes me to come up with ideas that are even 17 controversial. I think the first was when I decided 18 to start announcing pull tab winners about six years 19 ago. That seemed to caught on pretty well. 20 In case anybody hasn't noticed, bingo 21 is not exactly in a healthy situation here in Texas 22 right now. And I believe that an issue has come up 23 today that is probably one of the most important 24 aspects in terms of turning around bingo in Texas. 25 And although I'll be discussing some other things that WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 66 1 seem unrelated, it will all tie in in the end in terms 2 of why I think the pull tab issue might be the most 3 important thing that we're talking about today. 4 You know, there's an old saying that 5 says we create our own problems. One of the reasons 6 why bingo is so tough around the state is that we've 7 got very high fixed expenses. In a typical commercial 8 hall, for instance, if you're paying $600 a session in 9 rent, two times a day just 300 days a year, that's 10 $360,000 in fixed expenses. Nothing you can do about 11 it. We've introduced computers, which are a great 12 product in our state. But if we're selling 100 of 13 those at $3.50 a session, that -- 300 days a year, 14 that comes out to about 210,000. There's another 15 almost fixed expense. That's 570,000 right there. A 16 typical fixed -- a typical pull tab, 50 cents out of a 17 typical tab would have an expense of 13 percent of the 18 profit would actually be to pay for the box of tabs. 19 These are all my expenses. That doesn't mention paper 20 costs, a million and a half dollars a year in prizes, 21 etcetera. 22 So part of the problem in bingo is the 23 fact that we do have very high expenses. So I think 24 our solutions need to keep in mind that, you know, 25 we've got an uphill battle there. Obviously, we've WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 67 1 got bingo trends dropping seven to eight percent a 2 year over at least the last three years. 3 I plead for a sense of urgency in 4 solving our problems because if we wait two years to 5 solve our problems, then that's another 14 or 16 6 percent that we've lost. And frankly, there aren't 7 very many halls that can lose another 14 to 16 percent 8 and still be open. 9 The good news is, I think that we can 10 fix it. But I think that people are pushing in 11 different directions in terms of how to do it. The 12 customers, the players are giving us -- giving us a 13 big message by not coming to the halls in the numbers 14 that they used to. The big message is, we're no 15 longer satisfied with your product. I think we need 16 to recognize that. If they were satisfied with bingo 17 as it exists right now in Texas, they would still be 18 coming in. They're either going to the movies now or 19 going to dinner. Whatever their entertainment dollars 20 that could have been going to bingo are now going to 21 other places because of our product. 22 So the question arises: How do we 23 solve this? The first thing you do in solving any 24 kind of business issue is, you take the four walls of 25 your building and you fix what is wrong inside your WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 68 1 building. You make sure the place is spotlessly 2 clean. You make sure the staff looks good. They're 3 friendly. The food is good. Everything possibly 4 within the four walls of your building -- actually, 5 you could extend it outside the parking lot, the 6 lighting. Everything in reference to your business is 7 good. 8 You, of course, then advertise your 9 business, going outside the four walls in terms of 10 attracting people in. And if anybody thinks you can't 11 get the people in at least once, you can do this. 12 Because we just ran a promotion this past Sunday and 13 had 650 people in there, which is well over double 14 what our normal crowd is. People will still come out 15 if you can create an event that gives them a product 16 that they want to come out for. Okay. But you can't 17 do that every day. So the days that you could have 18 like that, if you're losing money the rest of the 19 days, you're still not going to have a successful 20 operation. 21 In terms of solving problems, here is 22 what a typical business would do. A typical business 23 says, oh, we're down seven percent this year. Let's 24 raise our prices seven percent. Well, that's one of 25 the surest ways to go out of business. But guess WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 69 1 what? Business after business in our country does 2 this. And they go out of business, because then the 3 following year they're raising it another seven 4 percent and another seven percent or whatever their 5 industry standard is for their decrease. So that 6 doesn't work. 7 So what are some other things that have 8 been tried in the bingo industry? Slash prices to 9 increase the customer counts. Well, if our common 10 goal is to benefit all of the charities, which I think 11 our common goal should be to benefit all of the 12 charities in the state of Texas, slashing prices -- 13 well, what that will do is, that will bring into my 14 hall and take away people from the other halls. Maybe 15 their hall will have to close. And those charities 16 then don't get the money that they can operate and 17 ultimately pass onto the public in what their missions 18 happen to be. So I ultimately would like not to do 19 that. Also, that wouldn't work, because then the 20 competing halls, they lower their prices. And pretty 21 soon it's all level. Everybody is now at the same 22 number of people that they were, but now we're all 23 making less money. So slashing prices doesn't work. 24 Raising prices doesn't work. 25 You can increase the bingo procession WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 70 1 payouts. Okay. That's something that was discussed a 2 few years ago. Frankly, I'd be nervous about that 3 one, because if you have a -- like a commercial hall 4 like I have, and all of a sudden we're giving away 5 $10,000 a session, then that's going to put out of 6 business a lot of the smaller halls because they can't 7 compete. So I think we need to come up with solutions 8 that are beneficial to both small halls and big halls. 9 And I think that's a very, very, very important 10 concept. 11 However, an area that we can 12 immediately impact today is by increasing the number 13 of products that we sell. You know, if you go to your 14 typical 7-Eleven or whatever they're called here and, 15 you know, if they're just selling orange juice, 16 they're going to have a certain amount of sales. But 17 if they're selling orange juice and milk, they're 18 going to have more sales. Orange juice, milk, and 19 bread, they're going to have more sales. 20 Bingo is very much the same, except 21 we're kind of limited to pull tabs and bingo, although 22 there are now products within the pull tab realm that 23 basically to the players will seem like not just a new 24 type of pull tab in terms of like from Silver Star 25 versus, say, Monopoly, but an actual different event WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 71 1 for them. 2 The progressive bingo game came up last 3 year. And that would be an example of a new product. 4 Personally, I think -- I didn't come up about the 5 bingo -- progressive bingo thing. But I personally 6 support it because it is a new product. It would be 7 successful. It would help out bingo. And it will 8 also help out small halls, big halls, all sorts of 9 different size halls. And you know -- but that's the 10 one that's being handled. That's really not why 11 I'm -- why I'm here today. 12 But what I do want to talk about is, I 13 want to talk about these new -- at least new -- they 14 would be new to Texas, special event tickets, seal 15 cards, point of merchandise tickets. All of these 16 create opportunity here in Texas. And places where 17 these tickets are being used, most specifically 18 special event tickets, they're just having enormous 19 success with them. The players -- they're increasing 20 the customer counts in the hall. Their sales and 21 revenues are going up. Well, that's an indication 22 that the players are accepting that product. Well, we 23 need to offer them products that they're accepting to 24 get our counts up. 25 The special event tickets are done in a WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 72 1 variety of different ways. But one of the ways that 2 they're done is, they're played just like a normal 3 pull tabs in terms of prizes being paid out, except, 4 as an example, 75 bingo balls would be on 75 of those 5 tickets in these boxes. These boxes are very small 6 boxes. They're geared to be sold out box after box 7 during that session. So -- but what happens is, as 8 soon as a box is sold out, the 75, quote, 9 semi-finalists that have a bingo ball, well, they now 10 want to come to the completion of that game. That's 11 when the bingo caller announces the game number, which 12 would be the serial number on the -- on the tab. 13 Pulls a bingo ball. And then the last prize, which 14 would be about a $200 prize, $100 prize, in that 15 range, because these are very small boxes. So you 16 can't have a prize that would be humongous. 17 Otherwise, you wouldn't make any profit on the box at 18 all. And then they win that final prize. In the 19 meantime, you're already selling the next box and 20 getting ready for the next game, which would be the 21 next, you know, special event game. 22 This tab would be equally as beneficial 23 to small halls or large halls. So it fits the 24 requirement to benefit all charities in the state of 25 Texas. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 73 1 I mentioned they are so successful in 2 other states, it's just -- it's just unbelievable. 3 From what I understand -- although I'm not part of the 4 99 percent, from what I understand, these tabs could 5 be permissible with a simple rewording of the 6 definition of what a pull tab is in the administrative 7 rules. I hope that's so, because that's something we 8 could impact right away. 9 MR. SANDERSON: The definition of a 10 pull tab is also in the Bingo Enabling Act, which is 11 legislative. So I don't know what word you're talking 12 being changed. But it's -- the definition is also in 13 the act. 14 MR. DOUTY: Okay. Is there a way to -- 15 is there a way to handle this issue without actually 16 having to infringe on the act itself? 17 MR. SANDERSON: That's what we're 18 looking into. 19 MR. DOUTY: Okay. If we refer anybody 20 to you to help you with that, is that okay? 21 MR. SANDERSON: That's fine. 22 MR. DOUTY: The bingo games themselves 23 are somewhat limited in what we can -- what can be 24 done. In hall after hall, the bingo packs no 25 longer -- by the way, and I'm sure most of you-all are WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 74 1 aware of this, no longer bring in enough money to 2 cover expenses. And in a lot of cases, the bingo 3 packs can't even cover the prizes. You cover the 4 prizes with your pull tabs. With selling extra games 5 on the floor. But your actual bingo packs very often 6 do not even cover the prizes you have to pay out. And 7 in an overwhelming number of cases, the only profits 8 that charities are getting in Texas right now are on 9 the profits made from pull tabs. This is the avenue 10 of growth that Texas bingo must take, A, in order to 11 survive, and B, in order to thrive. 12 And I hope that the sense of urgency on 13 these things is fast, because this is the type of 14 thing that could -- possibly could be done quickly. 15 And if we could be selling these things by the spring 16 or somewhere thereafter, I think that we could begin 17 the initial turnaround of bingo. 18 I would like to address one issue on 19 why the special event tickets and these other tickets 20 should not be included in the $2500 cap on the 21 sessions that we can pay out for regular bingo. 22 The primary reason that there should be 23 a cap on the number of dollars that is paid out in a 24 session of bingo has to do with the competitiveness 25 from the different types of halls. You've got your WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 75 1 commercial halls. You've got your smaller halls. So 2 if you had an unlimited amount, then eventually the 3 halls would just basically be Indian bingo halls all 4 around the -- you know, but not actually Indian halls 5 around the state. And smaller halls would cease to 6 exist. And therefore, less charities would actually 7 get served. That's the reason for the cap. 8 The -- these extra tickets that were 9 coming in, the revenues to pay these prizes are 10 actually derived from the box. These boxes are sold 11 in advance before the final prize is even given out. 12 So the small halls are benefitted. They can sell 13 these just like the big halls. They will make more 14 money. Their customers will be satisfied. Their 15 product has been approved. That is why it should not 16 be included as part of the $2500 given away. This is 17 a totally separate issue. 18 Pull tabs are already described as 19 bingo. Okay. You've got instant bingo and you've got 20 the regular bingo games. The regular bingo games are 21 controlled by the $2500 because of what it would do 22 competitively. The instant bingo tickets and the new 23 ones that we're talking about bringing in benefit 24 everyone. Benefits you, benefits us, benefits the 25 charities, and also benefits the people of Texas. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 76 1 Thank you. Any questions? 2 MS. TAYLOR: Is there any other public 3 comment? 4 MR. ARNOLD: Thank you all very much 5 for the hard work you're doing. I can see that there 6 are so many issues involved in this whole thing of 7 bingo. I can just tell by the agenda there's a lot to 8 discuss today. So I want to be brief. I want to be 9 to the point. 10 MS. TAYLOR: Excuse me, but could you 11 state your name? 12 Yes, I will. And I want to be very 13 clear in my name, which is Phil Arnold from Houston, 14 Texas. I represent a number of bingo charities in the 15 Houston and Gulf coast area. In fact, we had a 16 meeting yesterday with a group of charities. We went 17 through many of these things that I want to talk 18 about. 19 I've been involved in bingo since 1986. 20 And I've seen the good times and the bad times. But 21 I've been here before saying times are bad. But times 22 are really bad now. I am certain that there will be 23 many charities over the next few months that will not 24 be able to pay their bills, their advertisement for 25 their paper. This is going to cause enforcement WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 77 1 issues. I've never actually seen things in such a 2 dismal state. 3 And I know in our area, of course, we 4 had the flood. We had the crises. We have Enron. We 5 have a lot of problems in our area. But this is, I 6 hear, throughout much of the state. Maybe not every 7 region, but most regions. Something very, very bad 8 that's happening can be solved through some of the 9 issues we're talking about today, I think, if we act 10 quickly. And I know we're all here talking about it. 11 We talk about it from the point of view of the 12 industry. Talk about it from the point of view of the 13 manufacturers, the distributors, the lessors, the 14 governing agency. And we've talked about it from the 15 point of view of the charities. And that's what we're 16 really talking about. All these various aspects of, 17 how long does it take to get a pull tab approved. Why 18 it would be helpful to speed up the process. The 19 reason we're talking about all these things is so that 20 there could be more money raised for charity. 21 Just a month ago, I got a call from a 22 woman who has breast cancer. She couldn't pay her 23 rent. We gathered together as much money as we could 24 to help her pay her rent. Well, the next month the 25 same problem occurs. Now we don't have another $600 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 78 1 to distribute in her direction when I have ten other 2 phone calls from other people, some of whom we were 3 already obligated to to help through promises we had 4 already made. What do I do in that situation? 5 Well, my mind is racing. If the 6 charities I work with could make just another $100 a 7 session, in seven days I would have 600 or 700 and 8 1400 more dollars. I can impact that particular 9 situation immediately. So my mind says, how can we 10 get another $100? We've raised prices already. We 11 already have sold this. We've done this. We've 12 thought of this. 13 And so I think back. And I remember 14 being here about a year and a half ago. And I believe 15 his name was Fabian, made a talk here about some of 16 the event cards and some of the sealed cards, some of 17 the other products. And I think to myself, there were 18 promises made that day that rules will be written. 19 That that would be investigated. That something would 20 be done about it. Then I look back and I say, well, 21 we didn't get the progressive game because of what 22 happened with the veto. Many of the other things in 23 the legislature that we all supported. I never saw 24 the industry come together so much on some of those 25 issues. Almost none of them were passed. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 79 1 But here was something I was told. I 2 heard with my ears that there could be perhaps a 3 rewriting of the rules that would make a big 4 difference on those -- on the issue of the seal cards 5 and the event cards, event tickets. So I start 6 looking. Well, where have those rules been rewritten? 7 Has anything been done? Had something been done, 8 perhaps another thousand dollars would have been in 9 the bank. We could have made a contribution to 10 someone to make a difference. 11 So we can't wait a year and a half for 12 progressive bingo. That's not the solution that's 13 going to save some charities. We need action. We 14 need it fast, now. We need all the elements of the 15 industry to work together. There is a big table 16 that's spread before us with a lot of good food on it. 17 We've got turkey. We've got dressing. We've got 18 potatoes. We've got a lot of food on this bingo 19 table. I see all these various groups gathered 20 around. We have the manufacturers. We have the 21 distributors. We have the lessors. We have the 22 charities. And every now and then I get the 23 impression their hands are reaching up, not from the 24 charities, but from other forces grabbing the turkey. 25 And the charities aren't getting any food from it. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 80 1 It's a big table. There's enough food there for 2 everybody. And the charities can do their jobs. 3 We need action I think very, very soon 4 on the event tickets. I think that would make a huge 5 difference. It would immediately I think impact the 6 charities where another 100 to $200 a session could be 7 raised. I'm not thinking in terms of thousands of 8 dollars per session. Just a couple of hundred more. 9 And those event tickets would make that kind of 10 difference. 11 It's been a year and a half. I would 12 like to see -- and that's one reason I want to monitor 13 this situation. And I think charities in Houston want 14 me to do this, because we have been waiting. We need 15 your assistance. I know you have many things to do. 16 But let's think in terms of what this will do for the 17 charities throughout Texas. And by moving this along 18 in stages, this month, next month, hopefully by June, 19 we can have something out so that some of these event 20 tickets and perhaps seal cards could be approved that 21 we'll have these products and we'll make a huge 22 difference. 23 If I -- if I sound a little urgent 24 about this or very -- or even radical about it, I am. 25 I am very radical about this because the charities are WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 81 1 suffering. They're going to be closing down. Halls 2 are going to close down. There's no need for it. We 3 need these products. Anything you can do in your own 4 capacity and individual lives and responsibilities to 5 help us. Remember -- please remember us and see what 6 we can do to bring these event cards, these event 7 tickets. They'll make a huge difference. Players 8 will love to play them. It gives them variety. 9 They'll love to come out and play these games. And as 10 others before me have spoken about them, what they are 11 saying about them is very true. It can make a 12 difference. 13 And I wonder if there is some way we 14 can enter as charities and the 15 or 20 that I 15 represent from Houston in some kind of dialogue or 16 some kind of correspondence with members of this 17 advisory board and the bingo division so that we can 18 offer any input from our years of experience on what 19 players like and what they don't like and what 20 wouldn't work and how soon we need something. Is 21 there some point of focus where we can send faxes or 22 we can write in order to stay in touch? So I can go 23 back over the next few weeks as I meet with these 24 groups. I can say, you know, this is being done. 25 Look at this fax. We got a response. This is -- this WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 82 1 letter was written. There is plans. Something is 2 coming down the train -- the train track. It's not 3 going to collide with us. It's going to help us. So 4 I need some guidance so I can report to charities how 5 they stay in touch with the process that's going on so 6 we can -- we can be aware of it, have some hope. We 7 have to make decisions on what we want to do. Do we 8 stay open seven days? Do we go to four? Do we go to 9 night? A lot of this hangs on what's going to happen, 10 the decision that's going to be made. So I guess I'm 11 posing a question. 12 MS. TAYLOR: You can get in touch with 13 all the members of the committee through the address 14 if you go to the website. I know I just got it off 15 there myself last night. The addresses are there to 16 get in touch with the committee members. 17 But I'm as concerned about the pull tab 18 issue as you are because it seems like we're going 19 nowhere. It's been two years and we haven't 20 progressed forward from what we looked at. 21 MR. TAWIL: I've got a question. Is -- 22 Mary, is it totally rule issues that you're just -- 23 rules which would be inside the commission and nowhere 24 else. Right? 25 MS. MAGUNSON: I hope so. I think WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 83 1 there is -- Phil raised an interesting issue about the 2 bingo event tickets and whether there is maybe a 3 statutory problem. And I guess I'm hoping that we can 4 creatively figure out a way to get around that and 5 make it entirely a rule issue. 6 MR. TAWIL: Why can't we -- why can't 7 we get the bingo division to give us something in 8 writing of what's being proposed so we can 9 individually work with it, and in our next committee 10 meeting be ready to tackle resolving those issues, as 11 opposed to waiting to see, and we come again next time 12 for the first time to see it, and then -- you follow 13 what I'm saying? 14 MS. MAGUNSON: Yeah. I was just 15 thinking. And I hate to put you on the spot here, 16 Phil, but I'm going to put you on the spot. You know, 17 one of the -- and this is a very beneficial forum and 18 a very beneficial committee. But one of the problems 19 I think with it is that it only meets quarterly. And 20 everything kind of gets pushed into those quarterly 21 meetings. And sometimes they even don't occur 22 quarterly. Like the last meeting I think that 23 occurred was in July of last year, BAC. And this is 24 the first meeting since then. So if things are geared 25 toward working these issues out at the various WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 84 1 advisory committee meetings, you really prolong your 2 time frame because of the timing involved in the 3 meetings. 4 So what I'm going to suggest is that 5 the staff -- and I might kill myself for suggesting 6 this, but that the staff think about a day, perhaps 7 soon, where a group of people are invited. And the 8 group should be representative of the various 9 interests involved, including operators and lessors 10 and charities. Not a large -- a huge group, but a 11 workable group that can sit down and just hash out 12 these issues and maybe come up with a very rough 13 preliminary draft of a new rule. 14 Because I think what otherwise will 15 happen, we can all independently submit stuff into the 16 staff. And the staff can say, well, we're working on 17 it. And we'll try to get something to the next 18 meeting. And the next meeting might occur in June. 19 It might not. And then -- and then you're all sitting 20 there waiting for something to come out so that you 21 can have input on it, which of course -- and then 22 those issues aren't going to get resolved at that 23 meeting. They're going to get pushed back for further 24 consideration by the staff. And then maybe further 25 consideration at the next meeting, which won't be for WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 85 1 another three months. 2 So I'm trying to figure out a way that 3 there could be a more immediate sit down, 4 get-together, and a draft hashed out so that by the 5 time the draft gets to the next Bingo Advisory 6 Committee meeting, it's pretty well done. And it 7 could be actually moved and voted on at that time. 8 And the formal rule-making process could commence. Is 9 there something available, something like that that 10 could happen? 11 MR. SANDERSON: At the last BAC 12 meeting, which was August the 29th, there was 13 something brought up I believe that mentioned 14 stakeholder meetings. And I know that we're looking 15 into that and trying to contact someone that has these 16 type of stakeholder meetings. I think what we've got 17 to do is make sure that we identify who we invite. 18 Because if we invite Bingo King and Earl doesn't show 19 up, not invite her, or vice versa, then, you know, 20 you've got some concerns there. So it -- and the same 21 thing goes with charities. If we invite the veterans 22 but not the other fraternals or we don't invite the 23 churches -- we've got to get a good representation of 24 who to invite. And we don't want 1500 people there. 25 MS. MAGUNSON: No. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 86 1 MR. SANDERSON: So you know, like I 2 said, that's what -- we're looking at who the 3 stakeholders are and how to identify those 4 stakeholders. 5 MS. MAGUNSON: I don't -- you know, 6 some states do it differently. Washington has monthly 7 meetings. They call them working groups. And before 8 every gambling commission meeting, the working groups 9 get together for a period of time and talk about 10 issues. And that's how they hash out issues with 11 respect to the rules and things like that. So you're 12 assured that there is a meeting every month where you 13 have the opportunity to sit down with the staff 14 typically and talk about issues. 15 Other states have these processes 16 worked into their rule-making process where they 17 either sit down informally and talk about rules as 18 they are under development prior to the time that they 19 go out to the public. Or in some states that they 20 have what are called public advisory committees which 21 are required by law so that a particular committee 22 gets appointed by the state agency. And that is how 23 the rules are developed, through that public advisory 24 committee. And then they go into the formal process. 25 So you know, I understand the political WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 87 1 concerns with making sure the right people get invited 2 to the table and you're not excluding people. But 3 sometimes I think it's important just to bite the 4 bullet and do it. And if somebody complains, they 5 complain. But I think just to get the process going, 6 maybe it would be helpful to try to identify a time 7 frame and say, we would like something to occur and we 8 would like a meeting to occur by X date so that in the 9 event there is in fact a BAC meeting in June, this 10 committee is ready to look at the product and kind of 11 vote it up or down and not mess around with a lot of 12 comment and a lot of drafting issues. 13 MR. ARNOLD: And I think my concern is 14 that this issue of the tabs, the need for more 15 variety, especially the event tickets and perhaps the 16 seal cards, at least some forms of them, that those 17 event tickets -- that that be put on the front burner, 18 the front burner right now, because we need immediate 19 relief. Charities do. This is a crisis situation. 20 Thank you. 21 MS. TAYLOR: Was there any other 22 discussion? 23 MR. DOUTY: Yeah, just something that's 24 thought by various -- 25 THE REPORTER: State your name again. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 88 1 MR. DOUTY: Oh. Jesse Douty from 2 Players Bingo. I belong to a group where we often 3 have trouble coming to decisions because we don't 4 eat -- I mean, meet often enough. And it's for a 5 sporting event. And we typically meet at the world 6 championships and the national championships of this 7 event, which would be either once or twice each year. 8 So we did -- we actually started a -- 9 our own -- for the people that are on this board, we 10 started our own Internet group at Yahoo groups. And 11 it's -- you know, and you can start your own. It can 12 be called the Bingo Advisory Committee at Yahoo 13 Groups.com is what the address would be if you did 14 one. Or you could name it anything that you wanted. 15 And it would be a way for all of you to actually 16 remain in contact. And we'd actually be voting that 17 way as well so that we don't actually have to be in 18 our own -- in each other's presence to actually do 19 voting. 20 I don't know if you have a setup for 21 that right now. I just want to let you know there are 22 opportunities out there on the Internet group that you 23 can actually create your own group. No one can get 24 into this group except you. No one can monitor what 25 you're -- what you're putting on there. And it might WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 89 1 be a way to help get some decisions from you-all made, 2 you know, even quicker without actually having to wait 3 three months to make it happen or wait for that next 4 meeting to make it happen. Thanks. 5 MS. TAYLOR: Were there any other 6 public comments on the subject? What was that motion? 7 MS. MAGUNSON: Okay. Now, before we 8 move on, I want to amend my motion to something along 9 the lines that Steve said, although I can't remember 10 everything he said, to say something to the effect 11 that I move that the Bingo Advisory Committee support 12 the streamlining of the instant bingo rule to include 13 streamlining the approval process. Shortening the 14 approval process. Eliminating the Texas Lottery 15 Commission seal on the tickets. And looking for ways 16 to amend the rule to permit a greater variety of 17 product -- instant bingo products to be played within 18 the state. And just as a catch-all, any over 19 impediments that may exist. 20 MS. TAYLOR: Is there a second to that 21 motion? 22 MS. MAGUNSON: Is that pretty 23 consistent with what you said, Steve? 24 MR. BRESNEN: (Moves head up and down) 25 MS. TAYLOR: Committee, is there a WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 90 1 second to that motion? 2 MR. CASTILLO: I second the motion. 3 MS. TAYLOR: Okay. If there is no 4 other comment on this, then we'll take a vote. All in 5 favor of this motion, say aye. Any opposed? Okay. 6 We pass. 7 It's 12:10. Do you need a break? 8 THE REPORTER: (Moving head up and 9 down) 10 MS. TAYLOR: Okay. We're going to take 11 a break at this time for ten minutes. And we'll be 12 back here at 12:15. 13 (RECESS) 14 MS. TAYLOR: If we could call the 15 meeting back to order, please. Okay. Item number 16 seven on the agenda is the consideration of and 17 possible discussion and/or action on charitable bingo 18 advertising. 19 This is an item that's been considered 20 here for -- I went back in the minutes of the 21 different meetings to see how many times that we've 22 discussed this particular one. We started discussing 23 this also November 30th of '99 is when we started 24 talking about the attendance in bingo going down. We 25 made a motion at the last meeting to request of WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 91 1 general counsel what procedure we would need to follow 2 for a generic bingo commercial, just advertising bingo 3 without a specific location or occasion. And that was 4 approved. So hopefully today we know what procedure 5 we can use. 6 What I was trying to do last time when 7 I originally brought this up, we have several 8 charities -- well, most of the charities in Nueces 9 County are interested in trying to put a commercial on 10 TV in the Bingo Bugle, the same way the lottery does. 11 There's a lot of TV stations through our community, 12 the cable stations that we can get ads for two and 13 three dollars. And what we were trying to do is to 14 more or less do like the lottery does where you just 15 put commercials on saying how much fun bingo is. Come 16 and win money. And not necessarily advertise a 17 particular hall, but to try and see if we could 18 increase the attendance at all the halls without 19 competing with each other in a generic bingo 20 commercial. 21 So the request was made to see through 22 the legal counsel if that is something the lottery 23 could do. If they -- lottery could put together a 24 generic commercial for us that could be used and that 25 would be paid for by the charities, but without WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 92 1 putting the charity names on it because the Lottery 2 Commission's seal of approval would be on the 3 commercial. So -- 4 MR. TAWIL: Could you back up a second? 5 MS. TAYLOR: Yes. 6 MR. TAWIL: I feel compelled since 7 Mr. Arnold and the other gentleman had pleaded his 8 case on the pull tabs and the delays that occur, I 9 wonder if we could have a motion to have the Lottery 10 Commission -- the bingo division staff draft a 11 proposed rule and circulate it to us say by April the 12 15th or something of that nature, close to that time, 13 so that we'll have time to study it and talk to the 14 constituency and then be ready to act at the next 15 meeting. 16 MS. TAYLOR: Okay. You're backing up 17 to the previous -- 18 MR. TAWIL: Yeah. Do you mind? 19 MS. TAYLOR: No. That's fine. That's 20 fine. 21 MR. TAWIL: So the motion is for the 22 division staff to draft the proposed rule on pull tabs 23 that encompasses all of Ms. Magunson's concerns by 24 April the 15th for review by the advisory committee. 25 MS. TAYLOR: Okay. Is there a second WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 93 1 on that? 2 MS. MAGUNSON: I'll second. 3 MS. TAYLOR: Anymore discussion? Then 4 we'll have a vote. All those in favor. Opposed. It 5 passes unanimously. 6 MR. SANDERSON: As far as legally as we 7 can do it, we'll try to do it. 8 MR. TAWIL: It's something that a 9 working draft -- 10 MR. SANDERSON: Yeah, I know. But 11 there is -- whenever you start making things public, 12 they become public record. And there is an open -- 13 you know, there is -- I don't know what all the -- 14 what all it would entail. But you know, if it's -- if 15 it's some -- if it's something -- if it's something 16 that we can do, then we can, you know, be glad to do 17 it. 18 MR. TAWIL: I'm just trying to help 19 speed the process up. 20 MS. TAYLOR: Okay. Back to the 21 advertising. 22 Did we find out from the counsel if the 23 Lottery can put together a commercial for us? 24 MR. SANDERSON: Well, apparently when I 25 went back and read the transcript, I misunderstood WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 94 1 what you'd requested. Because what we sent up to the 2 legal counsel was a decision or try to get something 3 on how charities could advertise generically. And 4 number one, it did go up back in October or September, 5 somewhere in there. And when I checked yesterday, 6 they were still looking at it. 7 Now, two things. One that I do know, 8 the act itself says that only an authorized 9 organization in the bingo division may advertise. And 10 there is a rule that states that if an authorized 11 organization advertises, they must put their name on 12 the advertisement. And that's the two grounds. I 13 mean, that's the two things that would regulate how 14 things are advertised. 15 As far as the bingo division 16 advertising, we did not receive any appropriation to 17 advertise. And we haven't had a budget increase since 18 1995. So we're operating under the same budget that 19 we were operating under seven years ago. And trying 20 to find room for advertising, there is not. We did 21 advertise one year. Does anybody -- was it in '95, 22 '8? 23 MR. SPEED: '97. 24 MR. SANDERSON: '97. Somewhere in 25 there we did -- we did advertise some billboards and WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 95 1 flyers and so forth. So -- but they are looking at 2 how the charities can generically advertise and pay 3 for it. 4 MS. TAYLOR: Okay. 5 MS. MAGUNSON: Excuse me, Suzanne. 6 Phil, did I just hear you say that there was a rule 7 that required the charities to put their name on any 8 advertising? 9 MR. SANDERSON: Yes. 10 MS. MAGUNSON: It's not a statutory? 11 MR. SANDERSON: No. It's a rule. 12 MS. MAGUNSON: So since we're dealing 13 with rules, maybe that would be another item to add to 14 the list of items to be reviewed as what impediments 15 there exist toward advertising by charities in -- 16 either independently or generically or even 17 collectively. If it's something that the bingo 18 division can put together, but the charities could 19 collectively pay for for some sort of a group effort. 20 MS. TAYLOR: So is this -- is this in 21 the form of a motion or is this just something that 22 automatically is going to be -- during the rule-making 23 process, you're going to be looking into this item 24 also, or does it need to be a motion? 25 MR. SANDERSON: No. We can look -- we WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 96 1 can look at it during the rule-making process. I 2 mean, it will be looked at. 3 MS. TAYLOR: Okay. 4 MS. MAGUNSON: But I think that maybe 5 to make the views of the BAC clear, perhaps I would be 6 prepared to make a motion that the BAC would recommend 7 that the staff specifically look at any rules relative 8 to bingo advertising and attempt to amend them in such 9 a way that creates greater flexibility for charities 10 to advertise bingo. 11 MS. TAYLOR: Is there a second? 12 MR. SPEED: I second. 13 MS. TAYLOR: Okay. All those in favor. 14 Opposed. 15 Was there any other public comment on 16 this subject? I should have asked that before we just 17 did this. 18 MR. DOUTY: My name is Jesse Douty from 19 Players Bingo. Just a brief comment, kind of 20 reiteration because it's a small part of actually what 21 I talked about before, is that advertising does work. 22 Advertising absolutely does work. In a hall that 23 typically -- our typical crowds right now are down 24 like every other place in Texas, probably, you know. 25 And we might do a typical Sunday of 250 people. And I WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 97 1 might be exaggerating a little bit there. And this 2 past Sunday, just by good advertising and creating a 3 nice event, we brought in 652 people on one session. 4 I think that was the slowest of the three sessions 5 that we did that day. So advertising does work. And 6 I support this 100 percent because it would -- that 7 would be good for bingo and the entire industry. 8 Thank you. 9 MS. TAYLOR: Thank you. Any other 10 comment? Then we'll move on to the next agenda item. 11 Number eight is report, possible discussion and/or 12 action on the 20th anniversary of charitable bingo in 13 Texas. I imagine that would be you, Phil. 14 MR. SANDERSON: I do know that in your 15 notebooks, there is -- I think it's just right off the 16 website or something that indicates the -- that this 17 is the 20th anniversary of bingo. We've got a new 18 logo, a new license that we're using this year. We're 19 also planning on trying to put out numerous press 20 releases. Free advertising, so to speak. And we're 21 going to have an anniversary report out that's going 22 to track the last 20 years of bingo. There will be 23 some posters that will be made available for the bingo 24 halls that are about the size of those ones in the 25 back of the room, about -- what are they? Probably WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 98 1 two and a half by four, something like that. We're 2 going to try to, you know, visit all the -- visit a 3 lot of the bingo halls. And I think at the training 4 program, they're also giving away some of the 20th 5 anniversary logo type items. Not yet. Okay. And -- 6 but that's what we've got planned for the 20 years of 7 bingo in Texas. 8 Oh. There is two other items. The 9 communications division within the lottery, they're 10 making available radio clips that radio stations can 11 download and play on the radio. And they're also 12 providing a template that organizations can request 13 for their own press release to indicate, you know, if 14 a particular organization wants to send a press 15 release to the newspaper that they, you know, donated 16 three million dollars in the last ten years all, you 17 know, due to bingo, then we'll have all that 18 information for them. And that's all I have. 19 MS. TAYLOR: Is there any public 20 comment on this? Is there any comment? If not, we'll 21 go on to the next agenda item. Number nine, report by 22 Bingo Advisory Committee subcommittee, possible 23 discussion and/or action on whether the charitable 24 bingo division should be a separate state agency. 25 Virginia Brackett chaired the subcommittee. She did WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 99 1 send a e-mail to the other committee members. And I 2 think we're -- most of us were in agreement. 3 MR. TAWIL: I didn't get that. 4 MS. MAGUNSON: I didn't get that. 5 MS. TAYLOR: This was sent to the 6 subcommittee. But I will go ahead and read you the 7 contents of -- most of the contents of the e-mail that 8 we received. And I'm sorry that it wasn't in the 9 booklet. Virginia -- I don't know if you received her 10 e-mail. But she has a personal emergency. Her mother 11 is in dire condition in a hospital. So that's why she 12 was not able to make this meeting. 13 This is the -- this is the 14 recommendation that the subcommittee was looking at. 15 And I quote from her e-mail. "From our previous 16 conversations and exchanges of information and 17 opinions we have gathered from those various parts of 18 the industry, do you agree we should ask the BAC 19 to" -- at the following -- the meeting -- excuse me. 20 "To ask the BAC to act on the following at the 21 February 13th meeting. The Bingo Advisory Committee 22 recommends the charitable bingo operations division of 23 the Texas Lottery Commission become the Texas Bingo 24 Commission with regulatory authority of the bingo 25 industry and a separate entity from the Texas Lottery WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 100 1 Commission." That is the recommendation that the 2 subcommittee is making to the Bingo Advisory Committee 3 at this time. So if there is any discussion. 4 MS. MAGUNSON: I think there might be 5 some public comment. 6 MS. TAYLOR: Well, is there any public 7 comment on this particular item? 8 MR. BRESNEN: I'm Steve Bresnen from 9 the Bingo Interest Group. Since I haven't seen the 10 full recommendation, I hesitate to comment in too 11 great a detail. The Bingo Interest Group has not as a 12 group endorsed or come out against transferring or 13 keeping the power to regulate bingo at this agency. 14 We think that there are a lot of problems that are 15 inherent in this current structure. There may be ways 16 to address that that are other than transferring 17 regulation. But we do want to see those problems 18 addressed. And when we get back to the -- to the 19 public comment or consideration for future issues, 20 I've got a number of things that I'll suggest that may 21 fall under those categories. 22 But I do want you-all to realize that a 23 number of people came here today who don't usually 24 come. And some of them are needing to get back. And 25 so we're not going to -- we're not going to comment -- WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 101 1 all of us aren't going to comment today. But we do 2 think that this is an important issue and one that 3 ought to be considered by the full Bingo Advisory 4 Committee. 5 I think more people in bingo need to 6 have more input on this item. And what I would like 7 to suggest is that in the not very distant future, the 8 Bingo Advisory Committee have a -- have a meeting 9 about this and focus in on the question. Get word out 10 more than eight days before the meeting about the 11 meeting. Go to some extra special effort and discuss 12 that issue maybe in a little more detail. 13 But anyway, that's all I've got to say 14 about it right now. I appreciate the work of the 15 subcommittee. I think there is a good deal of 16 sentiment in the bingo community for your 17 recommendation. It's just that we're not -- we're not 18 quite there and haven't made a decision within our 19 group yet. 20 MR. FENOGLIO: For the record, my name 21 is Stephen Fenoglio. My clients are ready to endorse 22 the recommendation. 23 Having said that, you-all must 24 understand that bingo regulation is a far improvement 25 over what it was when it was represented by the liquor WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 102 1 boys and girls, I guess. But there are improvements 2 that need to be made. And there is among my clientele 3 a unanimous agreement that there is a perception. And 4 sometimes perceptions become realities. 5 But the perception is that bingo is 6 being regulated by its foremost competitor, the 7 lottery. And the perception is that lottery gets 8 better treatment. Quicker access to commissioners. 9 That when the lottery needs to be innovative, the 10 lottery division, it can be innovative and it moves 11 quickly. 12 This is not intended to be a criticism 13 of anyone at the commission. But there is a growing 14 belief among my clientele. And I wouldn't say it's 15 unanimous yet, but it's close, that this perception 16 problem is getting in the way of free and full 17 communication. They would certainly like the issue at 18 a minimum to be studied. They are willing to come to 19 Austin to comment in detail on that and to answer 20 questions that the committee members might have. 21 But they think something radical -- and 22 I don't know that this is the most radical, but that 23 something radical needs to happen in bingo or else the 24 continuing decline will worsen. And then all of a 25 sudden you won't have 1800 licensed charities. You WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 103 1 won't have the several hundred bingo halls. Texas 2 will become a distant player in the bingo industry. 3 I'll be happy to answer any questions. Thank you. 4 MS. TAYLOR: Is there any other public 5 comment on this? Did the committee want to -- did you 6 want to make a motion and vote on this or -- 7 MR. RINEHART: I thought we had already 8 discussed this, approved it, and sent it on up. I 9 mean, how many times are we going to have to do it? 10 MS. TAYLOR: So are you making the 11 motion? 12 MR. RINEHART: No, because I -- we've 13 already done this once. 14 MR. SPEED: I don't -- I don't think 15 it's been sent up, Bob. 16 MR. RINEHART: Huh? 17 MR. SPEED: I don't think -- I think 18 they just appointed a subcommittee. And I don't think 19 it's been beyond that. 20 MR. CASTILLO: Suzanne, are you wanting 21 to -- 22 MR. RINEHART: We all approved it. 23 THE REPORTER: I can't hear. I can't 24 hear. Okay. 25 MS. TAYLOR: What we would -- what the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 104 1 subcommittee met -- what the subcommittee was 2 discussing working on was whether or not it would be 3 in the best interest of bingo to be separated from the 4 Lottery Commission. This -- and I'll read you one 5 more time. This is the motion that the subcommittee 6 asked the full committee to look at. "The Bingo 7 Advisory Committee recommends the charitable bingo 8 operations division of the Texas Lottery Commission 9 become the Texas Bingo Commission with regulatory 10 authority of the bingo industry and a separate entity 11 from the lottery -- Texas Lottery Commission. 12 MR. TAWIL: That's going to require 13 legislative approval. So what we're asking here is to 14 go to the full commission for endorsement, which would 15 further take it up the line. Right? 16 MS. TAYLOR: Right. This is -- this is 17 the future, looking into the future. This is not 18 something that's going to happen today or tomorrow 19 or -- 20 MR. TAWIL: Where is Steve? Steve, do 21 you feel like we need public hearings on these kinds 22 of issues, more so than we have? 23 MR. BRESNEN: Pardon? 24 MR. TAWIL: Do you think we need more 25 public hearings around the state or anything on this WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 105 1 issue more than we have the endorsement of? 2 MR. BRESNEN: I think this committee, 3 to the extent that they've been in touch with the 4 members of the -- you know, there are six members of 5 the Bingo Advisory Committee here today. You-all have 6 been involved with bingo. Some of you-all are on the 7 subcommittee. Some are not, I gather. 8 MR. TAWIL: Right. 9 MR. BRESNEN: So I certainly don't want 10 to second guess it. If you're ready to make a 11 decision, make a decision. I just want to make it 12 clear that there is a strong sentiment out there. But 13 because I come down here and my group votes from time 14 to time, we have not yet taken a position one way or 15 the other. So you know, I don't want to keep you from 16 voting. And you-all do what you think is right. 17 You -- I'm trying to strike a theme that really 18 doesn't have any reference to the underlying subject 19 matter. And that is, we have to have a better 20 dialogue in bingo. And we've got to have processes 21 that are going to be -- that are going to get more 22 folks involved. And so that's the basis of my 23 comments. 24 MR. SPEED: I make a recommendation 25 that we put this off until our next meeting since both WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 106 1 Bill -- he's the one that initiated the thing to start 2 with. And the chairman as well as Virginia both being 3 absent, I think we need to hold off until our next 4 meeting and discuss it again. 5 MS. TAYLOR: Is that the consensus of 6 the committee? 7 MR. RINEHART: I'll agree. 8 MS. MAGUNSON: Can I just say one 9 thing? I -- being the newcomer here -- and I don't 10 know if this is -- you know, with all the changes, 11 this may be my first and last meeting for all I know. 12 But I don't really -- you know, being new, I don't 13 know too much about this. And so I guess I would like 14 to see -- I don't have a problem with that, with 15 tabling the motion until the next meeting. Since it's 16 legislative anyway, the legislative session, you know, 17 won't start until next year. I would like to see more 18 information. I mean, that's a pretty sketchy motion. 19 And I'd be interested in kind of understanding more 20 fully what they base that on and whether they actually 21 are preparing a report or if it's just going to be 22 that motion. 23 And so if we could incorporate in that 24 some sort of request that the subcommittee provide us 25 with some more details about the basis for their WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 107 1 recommendation and maybe more specifically what 2 they're thinking, that might be helpful. And then in 3 the interim, perhaps we can discuss that with members 4 of the industry and maybe address some of the concerns 5 that have been raised about not having as much 6 dialogue about that issue. 7 MR. SPEED: I don't have a problem with 8 that. And one of the reasons that I would suggest 9 that we delay it is, we don't have the numbers 10 together yet. There is lots of numbers that has to be 11 crunched on this to see, first of all, if we could 12 even do it. And I don't know how many figures that 13 Virginia has put together, either. So -- 14 MS. TAYLOR: Okay. 15 MR. SPEED: I think it would be best if 16 we table it until the next meeting. 17 MR. CASTILLO: I just have one comment, 18 that we were working -- Billy was going to see about 19 funding and security and everything. He was supposed 20 to come with that. But is the -- the legislative 21 committee, if we move now and recommendations go to 22 the commission, then the commission, do they have up 23 until March to submit this to the legislature? 24 MR. SANDERSON: Until March? 25 MR. CASTILLO: March of -- March or WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 108 1 June this year? 2 MR. SANDERSON: Well, the legislature 3 won't meet until -- 4 MR. CASTILLO: Until next year. 5 MR. SANDERSON: -- next year. 6 MR. CASTILLO: So when do the 7 committees start setting up? Until they're -- January 8 of 2003? 9 MR. SANDERSON: The legislative 10 committees? 11 MR. CASTILLO: Yes. 12 MR. SANDERSON: There's probably some 13 legislative committees already formed now that are 14 holding different -- you know, not just for bingo, but 15 other -- 16 MR. CASTILLO: Other committees, yeah. 17 MR. SANDERSON: So I'm not -- I'm not 18 aware of the full process. 19 MR. CASTILLO: Okay. That's what we -- 20 Billy said at one time -- 21 THE REPORTER: I can't hear you. 22 MR. CASTILLO: We can hold off until 23 next meeting, next -- 24 MR. TAWIL: You know, I'm concerned 25 that this may be an issue from a timing standpoint WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 109 1 that if it's strong enough in the industry, we'd want 2 the sunset commission to be aware of it. And I'm not 3 sure how we'd go about doing that, Steve. Don't you 4 think timing is at issue now? 5 MR. BRESNEN: The -- as I understand 6 it, the sunset staff is going to be formulating 7 recommendations and doing their fundamental work on 8 bingo and the Lottery Commission in general in the 9 March time frame. Obviously, all that work doesn't 10 culminate until the end of the year. But the 11 recommendations from various people are being 12 solicited. Phil, I don't know if you were involved. 13 But I think the staff from the Lottery Commission has 14 already turned in some self-evaluation material. And 15 I'm sure there has been other interaction. So it's a 16 timely -- you know, it's the time to start getting 17 your recommendations together and getting them to the 18 commission going forward. 19 MR. TAWIL: If we don't do it now, 20 obviously it's not going to get into the 21 recommendation of the sunset commission. 22 MR. BRESNEN: I don't know what the 23 time frame is for the full commission to act. The 24 staff work is being done in the meantime. But I know 25 I'm sort of getting mine together to give to them in WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 110 1 the near term. 2 MR. TAWIL: You see the problem? As 3 this gentleman said, we had this -- we've passed this 4 over and over and over several times. I'm wondering, 5 what's the reluctance on this -- voting on this issue? 6 THE REPORTER: Could you speak into 7 your microphone? I'm sorry. I can't hear you. 8 MR. TAWIL: I'm wondering what the 9 reluctance is in deciding on this issue. 10 MS. TAYLOR: We need somebody to make a 11 motion, somebody to second it, and the BAC to vote on 12 it. 13 MR. TAWIL: But didn't Virginia as the 14 chair of the subcommittee recommend that this be taken 15 up today as a motion? 16 MS. TAYLOR: Yes, she did. 17 MR. TAWIL: Okay. You can't make the 18 motion? 19 MS. TAYLOR: No. One of you needs to 20 make the motion. 21 MR. TAWIL: Well, let's -- why do you 22 want us to table it? 23 Why do you want to table it, Bud? 24 MR. SPEED: I don't think we have 25 enough facts, Saleem, on this. And we -- and we have WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 111 1 not discussed this but one time that I can remember, 2 which was the last meeting in August. And Virginia 3 and myself and -- I think you were on the 4 subcommittee. I've not done any research on it. And 5 I don't think she has. And I'm not sure that we're 6 totally interpreting her letter to mean that -- she's 7 asking for a lot of other information here in her 8 letter. I don't -- I just don't think we have enough 9 numbers and facts to go forward. This is an awful big 10 request right here. Something that needs to be 11 researched and lots of data to support it. And I 12 don't think just to say we want our own separate 13 operations division, etcetera, is enough. We're going 14 to have to have a lot of stuff to support it. That's 15 my thinking. 16 MS. TAYLOR: The reason I read that is 17 because one of the sentences in her letter said the 18 purpose of our recommendation would be to get the show 19 off the road. So I'll go ahead and -- Saleem, I'll 20 give you this e-mail so that you can have a -- you've 21 got a copy of it already. Right? 22 MR. SANDERSON: No. 23 MS. TAYLOR: Oh, I'm sorry. I thought 24 you did, too. Anyway, I know that it was something 25 that she thought if we -- it's something that we've WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 112 1 discussed. And there is pretty general agreement that 2 we felt like if the bingo division was a separate 3 entity, that even if it's only the perception, the 4 perception is, we always feel like the stepchild. I 5 mean, that's how it is. That perhaps we could move on 6 and work towards -- instead of always looking back to 7 the bingo division and it's all their fault, maybe we 8 could work together to try and get this industry back 9 on the road it needs to be and going forward and not 10 dropping. 11 MS. MAGUNSON: Can we think about maybe 12 a compromise? I understand the concern that maybe 13 there isn't enough information available and Virginia 14 is not here to talk about it. On the other hand, if 15 in fact there is a time frame issue because of the 16 sunset committee and if that time frame is sometime in 17 and around March, we -- if there is sort of general 18 agreement that this is a path that ought to be 19 pursued, we may lose a significant opportunity to 20 express our views to the sunset committee. 21 So as I recall earlier today, Saleem 22 made a motion that the chair would write a letter to 23 the sunset commission. I'm wondering if we can't 24 incorporate into that letter information about this 25 issue. And while we maybe don't have to go so far as WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 113 1 to say that the Bingo Advisory Committee supports the 2 move, if people aren't comfortable in doing that, 3 perhaps we can at least say that the Bingo Advisory 4 Committee is actively exploring this issue and would 5 perhaps like to have the opportunity to provide some 6 direct information to the sunset commission on the 7 issue. I think that was Saleem's motion earlier. So 8 I suspect he'd have to agree to something like that. 9 MR. CASTILLO: Write two letters. 10 Well, Bud, I can understand your concern. I'm just 11 trying to facilitate the process. I've not 12 necessarily made up my mind on anything. 13 MR. SPEED: I think the letter would be 14 a great idea. I think that would at least make 15 mention of it. 16 MR. CASTILLO: You want to restate your 17 motion as incorporating it into that? 18 MR. SPEED: Incorporate the letter into 19 the motion of putting it on the agenda for the next 20 meeting, whenever that might be. And also write the 21 letter to the sunset committee. It's not that I'm 22 opposed to it. I just think that it's going to take a 23 lot of study here. This is a big item. 24 MR. TAWIL: I had people call me and 25 say they want to have hearings around the state on it. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 114 1 MR. SPEED: Hearings. And I -- and I 2 totally support the backup on it as far as the 3 frustration on getting things done on the pull tab 4 issues, etcetera, etcetera. I think that is what's 5 behind this proposal, is the frustration that we have, 6 not only in this committee, but of accomplishing 7 things that we try to do. Because we have -- we beat 8 some of these things to death. The pull tabs, you 9 know, we talk about them every meeting. But nothing 10 ever gets done. And we're back to -- but anyway, 11 that's beside the point. I make the same motion along 12 with the letter that she's proposing. 13 MS. TAYLOR: And who seconded that 14 motion? 15 MR. RINEHART: I'll second it. 16 MS. TAYLOR: Okay. All in favor. 17 Opposed. 18 And we'll move along to number ten. 19 I'm sorry. 20 MR. BRESNEN: I'm sorry. Just real 21 quick. I don't want to -- I don't want to beat this 22 horse to death. But since he's just got a few breaths 23 left in him, I might as well finish him off. 24 What about having a separate BAC 25 meeting where you focused in on this issue? Like you WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 115 1 said, Bud, this is a big deal. Why not get people 2 out -- make a special effort to get people out and 3 find out about this issue. There may be multiple 4 options, whether you went to another agency, whether 5 you stayed here with a different structure, you know. 6 I personally -- the theme I've hammered on long is 7 that I don't think your legal department ought to be 8 separate from your bingo department, nor your 9 security. I think everybody ought to be in one line 10 so everybody can be accountable so Billy can get the 11 job done and he's not having to run off and report to 12 somebody in another division that's not accountable to 13 him. 14 I think there is a lot of issues that 15 if you're going to come back and do this, let's come 16 back and do it. I mean, let's do it. Roll your 17 sleeves up, have a meeting, get a bunch of people in 18 this room, see what they think, and work through some 19 of these issues. I would implore you to do that. 20 Otherwise, it's just the same old, same old. And you 21 know, frankly, I don't think under your current 22 operating procedure you're getting anywhere. 23 You're -- Bud, you just said -- you said it yourself. 24 And you've documented it. You've got transcripts to 25 document it. You-all aren't getting anywhere. So WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 116 1 unless you do something different, you're not going to 2 get anywhere. 3 So I would ask you on behalf of the 4 public to have a Bingo Advisory Committee meeting that 5 has one subject, and that's this subject. Don't frame 6 it as necessarily a separate commission. But you 7 know, who, what, when, why, and where ought to 8 regulate bingo in the future. And I would ask that 9 you do that in a -- in the near term. And then get 10 that information -- then make a decision and get that 11 information to the sunset commission. And I will do 12 whatever is necessary to gather information. 13 Bingo has been moved before. We know 14 what those -- what it entails to do that. There are 15 alternative forms of regulating that we could bring to 16 you. There is a lot of expertise that's available to 17 you. If I could just find a way to divest myself and 18 others of it, I would do it, I swear to you. So 19 anyway, I appreciate if you could do that. I'd love 20 it if somebody would pick that up and make a motion. 21 And I guess if you don't, then your silence will make 22 a statement louder than your words. So thank you. 23 MS. MAGUNSON: Well, I'll make a 24 motion. I think it's -- I think it's a significant 25 issue. I think it's an issue that has a profound WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 117 1 impact on every person, be they manufacturer, 2 distributor, or operator or lessor in this industry. 3 Because any change is going to have some dramatic 4 consequences. They may -- they may be good. They may 5 be -- they may be not so good. And I think it's 6 important to listen to those people and try to get a 7 good handle on where things are going. I am curious 8 as to whether -- does this committee have the ability 9 to call a meeting or does it have to be called by the 10 chair? I mean, can we -- can we make a motion that we 11 will have a separate meeting and direct the chair to 12 call that meeting on a particular date? 13 MR. TAWIL: Chair can do it. 14 MS. TAYLOR: Is that a problem? 15 MR. SANDERSON: I don't think it would 16 be. 17 MS. TAYLOR: Okay. 18 MR. TAWIL: Let's hear Ms. Thompson 19 first. 20 MR. SANDERSON: I think the only thing 21 in the rule, it just -- I think it states that they 22 have to meet quarterly or at the call of the 23 commission. 24 MR. TAWIL: Minimum wording. 25 MR. SANDERSON: I know in the past at WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 118 1 one time, they were meeting monthly. 2 MR. TAWIL: Yes. You can call it next 3 week if you want to. 4 MS. THOMPSON: My name is Jane Thompson 5 with Thompson Allstate Bingo Supply. And I just -- 6 along that same line, I want to volunteer our services 7 as a distributor and hope that the other distributors 8 would do the same thing. I'll be willing to put 9 notices in invoices about the meeting to try to 10 encourage interest in the industry so they'll know 11 that there is a meeting about this subject. I think 12 it's crucial that we get as many people in the 13 industry involved in this decision. And I for one 14 would be glad to put notices in with invoices or do a 15 mail out. I just wanted to go on record. 16 MS. TAYLOR: Okay. Then let's go ahead 17 and set our meeting date for next month. Is there a 18 problem with that? 19 MS. MAGUNSON: Well -- 20 MS. TAYLOR: Is that what the BAC would 21 like to see? 22 MR. SANDERSON: I think right now 23 you've got like two or three motions on the floor. 24 You need to clear up some of that. 25 MS. TAYLOR: Okay. Let's clear up some WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 119 1 motions that are on the floor. We have a motion to 2 write the letter and to include in the letter to the 3 sunset committee exploring the issue of moving bingo. 4 Is that -- 5 MR. TAWIL: That was seconded. 6 MS. MAGUNSON: We voted on -- yeah, we 7 voted on that. 8 MS. TAYLOR: Okay. So -- 9 MR. TAWIL: That's done. What was the 10 other one? 11 MR. SANDERSON: Did you have a motion 12 to table or did you go through that one? 13 MR. SPEED: We had a motion to table 14 it. But if we -- if we want to have another meeting, 15 I'll withdraw the motion. And we'll -- 16 MR. TAWIL: Well, just rephrase it. 17 MR. SPEED: I'll rephrase it. We have 18 the other meeting. Let the letter stand, which we've 19 already voted on. And if we have another meeting 20 whenever you decide or whenever we decide for further 21 study with an invitation to lots of folks for input. 22 MR. FENOGLIO: I don't want to 23 complicate matters. My name is Stephen Fenoglio. But 24 the group -- Mr. Sanderson is correct. The rule is 25 clear. The committee meets quarterly or at the call WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 120 1 of the commission, not the chair. So you can have 2 a -- in my view, you could have a subcommittee 3 meeting. But the only other meeting the committee can 4 have is the quarterly meeting, which I guess you-all 5 are thinking in terms of in June or -- you haven't 6 talked. Okay. 7 MS. MAGUNSON: But it says minimum 8 quarterly, doesn't it? 9 MR. TAWIL: It says -- 10 MR. FENOGLIO: No. Shall meet 11 quarterly or at the call of the commission. The rule 12 is 5567, subparagraph E. Mr. Sanderson had it right. 13 The rule, not the statute. 14 MR. TAWIL: Can we have a subcommittee 15 of all the members? Committee of the whole, 16 subcommittee of the whole. 17 MR. SANDERSON: I would think we could 18 have a -- I would guess that as long as it's -- if you 19 have more than -- or five or more, then it has to be 20 posted as an open meeting. 21 MR. TAWIL: We have a subcommittee 22 meeting next week. 23 MR. FENOGLIO: The rules of order would 24 allow a subcommittee comprised of the whole. 25 MS. TAYLOR: Okay. So we're back to a WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 121 1 subcommittee comprised of the whole for a meeting next 2 month. Is that what -- 3 MR. SPEED: Why don't we make it a 4 public meeting? 5 MS. TAYLOR: Well, it would be a public 6 meeting. It would need to be posted. It would be a 7 public meeting. And Jane Thompson is going to put 8 advertisements in all of her bills. And I'm sure all 9 the other distributors would want to do the same 10 thing. 11 MR. BRESNEN: Can we do better than 12 just the public -- the posting out there and give 13 people a little bit longer? I think this meeting had 14 eight days. It came to my horizon eight days. So I'm 15 just asking for a couple of weeks' notice so people 16 can get here, make their plans. Or set the date now 17 and -- 18 MR. TAWIL: Can you-all notify all your 19 associations, all your members? There's 200 and 20 something members in your file group? 21 MR. BRESNEN: If you-all set the date 22 now, we'll start notifying people. 23 MR. FENOGLIO: Stephen Fenoglio again. 24 And the commission does have a good website. It's 25 user friendly. And I know a lot of licensees don't WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 122 1 have access to it. But you can certainly reach out a 2 lot of people if you'll broadcast that on your 3 website. 4 MR. SANDERSON: I would think that the 5 only thing that we could do would be to put it as 6 tentatively scheduled, because until it's actually -- 7 MR. FENOGLIO: Right. 8 MR. SANDERSON: -- posted and 9 published, then it's not official, so -- 10 MR. FENOGLIO: You bet. 11 MS. TAYLOR: Does anybody have a 12 particular date in mind, a tentative date in mind? 13 MR. CASTILLO: March 13th. It's -- 14 election day is March 12th. March 13th is a 15 Wednesday. 16 MR. SANDERSON: There -- before you 17 pick a date, well, beginning sometime in the -- around 18 the first -- end of the first week of March, somewhere 19 around the 7th, 8th, or 10th, in there, they're going 20 to start renovating the room, auditorium. So any 21 meeting that we hold will have to be somewhere -- I 22 think there is -- a building across the street has 23 allowed us to use their conference facilities before, 24 so -- 25 MS. MAGUNSON: For those folks who are WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 123 1 putting out flyers and the Steves, are we anticipating 2 50 people, 500 people? Any clue? 3 MR. BRESNEN: I don't really know. But 4 just as a suggestion, Phil, that, you know, there is 5 rooms at the Capitol building up there in the 6 extension hearing rooms. And I'm sure we can get a 7 member of the legislature to request the use of a room 8 for us up there if we need it. 9 MR. SANDERSON: All I know is, we have 10 to find someplace off-site -- 11 MR. BRESNEN: Sure. 12 MR. SANDERSON: -- anywhere after about 13 March the 8th, somewhere in there. 14 MR. TAWIL: How long is the renovation 15 going to take? 16 MR. SANDERSON: It will be -- they're 17 anticipating until about the first ten days of May. 18 MR. RINEHART: Let's have it on a 19 Wednesday, whatever -- 20 MR. SPEED: Phil, can we get you to 21 give us the tentative date, then? We need to -- we 22 need to structure it to where our chairman as well as 23 Billy can be here. 24 MS. MAGUNSON: Should we shoot for the 25 13th? I mean, that was a good date. So the 13th and WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 124 1 see if we can't get everyone to work around that? 2 MS. TAYLOR: I agree. 3 MS. MAGUNSON: I'd rather come up with 4 a date and see rather than waiting for -- 5 MR. FENOGLIO: Stephen Fenoglio again. 6 Just so you know, that's the week of spring break for 7 most public schools. I don't know if people have 8 children. I happen to. I can make it. But I mean, 9 it's just -- it's one of those things that a lot of 10 people are out of town. 11 MS. MAGUNSON: You want to shoot -- you 12 want to try the next week? Otherwise, we're running 13 into Easter week. 14 MS. TAYLOR: Do we tentatively want to 15 try and set this meeting for March 20th? 16 MR. TAWIL: March 20th will be better. 17 MR. SPEED: Yeah. 18 MS. TAYLOR: Okay. Then we're going to 19 tentatively schedule a meeting for March 20th. We 20 will check to make sure that Billy and William and 21 Virginia are going to be available. We will know this 22 for sure -- I'm sure we will, right, Worlanda, by 23 Friday? 24 MS. NEAL: Yes, we will. 25 MS. TAYLOR: So that we can let WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 125 1 everybody know. And I know Worlanda will get it 2 posted for us. And it will be on the website. So 3 she's the one to call. She'll know all that 4 information I'm sure by Friday. Is there any other 5 discussion on this item? 6 MR. TAWIL: You need a motion for this? 7 MS. TAYLOR: Do we need a motion for a 8 subcommittee meeting? 9 MR. SANDERSON: I don't know. 10 MS. TAYLOR: Just in case, would you 11 want to make the motion, Saleem? 12 MR. TAWIL: I make a motion that we 13 have a subcommittee of the whole on March the 20th, 14 contingent on scheduling and space availability, to 15 discuss a single item relative to the bingo operation 16 division and how it should function within its 17 existence in the future. 18 MS. TAYLOR: And there is a second? 19 MR. SPEED: I second. 20 MS. TAYLOR: All in favor. Opposed. 21 Okay Worlanda will have all that information for you. 22 Okay. Then going on. Item number 10, 23 report, possible discussion and/or action on fourth 24 quarter year 2001 charitable bingo financial data and 25 comparison of calendar year 2001 to calendar year 2000 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 126 1 financial data. 2 MR. SANDERSON: In your notebooks were 3 provided -- you were provided some charts that compare 4 the gross receipts, prizes, and distribution on a 5 quarterly basis from '97 through the year 2001 6 calendar year. And there is also a chart that 7 compares the annual 2000 and 2001 for gross receipts, 8 prizes, distribution, and attendance. 9 These same charts and grafts were 10 presented to the commissioners yesterday at the 11 commission meeting. And as you can see on some of 12 these, the -- it's a continued decline. But the one 13 aspect of it, if there is anything that is good about 14 it, is the fact that the decrease this last quarter is 15 less of a decrease than in the previous years. 16 Whether it's a leveling-off trend, you know, we're not 17 sure if we're, you know, exactly right now at this 18 time. But when the -- this was presented to the 19 commissioners yesterday, they also, as most of you-all 20 here have, expressed deep concerns over the decline in 21 bingo as far as gross revenues go. And it is their 22 desire to get the input from the BAC to see what they 23 feel could be the problems. And also to see what can 24 be done within the current boundaries of the act and 25 the rule to turn bingo around in the state of Texas. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 127 1 And chairman Clowe did offer whatever help that the 2 commission could provide in coming to something that 3 will resolve or help improve the situation with bingo 4 in Texas. 5 MS. TAYLOR: Was there any discussion, 6 any public comment on this? 7 In that case, we'll go on with the next 8 agenda item. Number 11, report, possible discussion 9 and/or action on the development of electronic bingo 10 forms and/or reports, Billy Atkins. 11 MR. SANDERSON: I'm going to turn this 12 over to our senior audit manager, Roy Gabrillo. He is 13 going to present to you an Excel workbook that we've 14 developed that encompasses all of the audit forms and 15 reports for the conduct of bingo. 16 MR. GABRILLO: What we've -- what we've 17 developed is, it's an Excel format. It's a workbook. 18 We've taken all of the -- some of the worksheets that 19 are -- some of the sheets that are in the audit forms 20 manual, the printed, the hard copy. We've taken some 21 of the -- we've taken some of those sheets and 22 incorporated them into this forms manual. For 23 example, the sales journal is here. Cash 24 disbursements journal. The quarterly report. The 25 floor sales by usher. And the daily cash report. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 128 1 And on the daily cash report, what -- 2 there is 45 different sheets in there. That's the 3 maximum number you can play in a quarter. You can 4 play three times a week. That's 30 -- and 13 weeks in 5 a -- in a quarter. That's 39, plus your six 6 temporaries. So it's 45 sheets that are in there. 7 On this conductor information screen, 8 once you enter the information, the organization name, 9 mailing address, all of this information into the -- 10 in this screen, it's all linked. And all the forms 11 will have all that information on them. Sales journal 12 has the organization name, the conductor, the 13 conductor taxpayer number, and your -- the quarter. 14 Same thing for the disbursements journal. It has that 15 information. The quarterly report. Floor sales. 16 The floor sales and on the daily cash 17 report, the manual entries will have to be -- will be 18 the date, the occasion, and in this case, the 19 attendance, which is manual. And the number of 20 electronic players. The number of electronic players. 21 Electronic sales has to be manually entered. And also 22 the floor sales by usher. 23 And if you notice here, you've got some 24 buttons where you can add additional -- there's a 25 group of four sets already entered here. If you need WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 129 1 to enter additional sets, if you sell more than four 2 different times of sets, you can enter that. You can 3 add that or you can -- or you can remove them down 4 here. I'll show you down here. In this section for 5 the instant bingo, again, it's got six already 6 entered, six different types of deals if you're using 7 that many. But you can also add additional if you're 8 selling more than six or you can remove any of those 9 additional ones. Also at the bottom of -- or on this 10 same sheet is the daily schedule of prizes. And you 11 can enter the date and the occasion. Now, these you 12 have to manually enter. The number of winners, 13 halfway winners, and the prize amounts have to be 14 manually entered. And below that is the instant 15 bingo. And again, form number of the -- of the deal 16 that's being played, the serial number, the stated 17 payout, and the prize amounts have to be all manually 18 entered. 19 This one is blank. I'll show you one 20 that I -- that I've prepared that has some data in it. 21 I'll show you how it flows. I'll go -- first go to 22 the daily cash report. And -- excuse me. Again, 23 date, all that is entered. The serial number of 24 the -- of the -- of the card that's being used. And 25 if you'll notice, too, you put your cursor on any of WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 130 1 these little triangles, like I did right there, it 2 tells you what goes in that particular cell. Enter 3 the card numbers with the sets available for sale. 4 The card numbers will vary between cuts of paper. And 5 then right above it, enter the serial number for the 6 first page of the up pad. So each one of these cells 7 gives you directions as to what information needs to 8 be input into that cell. 9 So just to give you a brief 10 demonstration of what I was talking about as far as 11 adding lines, let's click on that. And if you notice, 12 it went -- it added set number five. And come down 13 here. Click on that and it's gone. So you can remove 14 it. I'll just go down here. And when you enter the 15 number issue, there is a cell here that has a formula 16 in it where you can put in your set issue and your set 17 return. It automatically calculates what the -- what 18 the number of sets sold is. So if you just enter the 19 price here, the price per set, which I'm going to 20 enter ten here, it automatically calculates your 21 sales. So in this case, it's $3,000. I'm going to 22 enter five here and it calculates $2,000. And it 23 automatically -- it adds all the way down to here. 24 And I'll show you the daily cash 25 report. The floor sales by usher works back over WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 131 1 here. And up here you have to have -- it's just like 2 what's in the forms manual that we -- that we already 3 issue. And enter the price of the cards. The serial 4 number. The number issued. The number returned. And 5 you notice when -- all you have to do here is just 6 enter. It automatically calculates what the revenue 7 should be returned to you, the money that should be 8 returned to you. And it automatically calculates a 9 hundred issue, 20 return. 10 And it's got room for the name of the 11 usher. And again, you can come up here and click on 12 this button. And it automatically adds anymore. If 13 you've got more than four floor workers working, it 14 will add or remove if you don't need that many on 15 there. I'm just going to add -- he came back with 16 $81. It will calculate whether, you know, they 17 brought back too much money. In this case, it was -- 18 it came back -- the usher came back with an extra 19 dollar. This one was a dollar short. So it 20 automatically calculates. And then all of this -- all 21 these figures, it totals everything up by floor, by 22 game, and also by floor usher. And then it 23 automatically -- you carry this figure to the daily 24 cash report, which was up -- which I'll show you. 25 Which I said you can manually enter that figure here. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 132 1 But I said if you -- it calculates your total sales, 2 your electronic sales, your card sales right there. 3 Then you manually enter -- 4 Again, here are your instant bingo, 5 your series number, your sales, floor bingo, or 6 instant bingo. On the daily schedule of prizes I 7 mentioned earlier, you manually enter the number of 8 winners and also the prize amount. And if you notice, 9 it's calculating what the total amount that's awarded 10 in the game and also calculates your prize fees. And 11 at the bottom, it calculates your total payout for 12 regular bingo and then the prize fee and then your net 13 payout, which is automatically entered or 14 automatically goes over to this cell here. It's 15 linked. So you don't even have to go back up and 16 manually enter. It's linked. The total is linked and 17 it posts it up there. Also what it does, the prize 18 fee that's withheld, again, that's linked to also so 19 you don't have to manually enter it at all. 20 For instant bingo, it's the same 21 concept. Enter the prize amount. Calculate your 22 gross payout and the prizes you withheld and your net 23 payout. And then it calculates also your total payout 24 for regular and instant, your total prize fee 25 withheld, and your total net prizes, which again comes WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 133 1 down here. There is your instant bingo prizes here 2 and there. And also your prize fee withheld, your 3 total prize fee withheld. Your next -- and it adds up 4 your total sales, which are regular and instant. And 5 your prizes, which is there. And then your instant -- 6 your total prizes, your net sales, your prize fee 7 withheld, your beginning petty cash. And then your -- 8 now, you have to manually enter your total -- your 9 petty cash beginning and your petty cash ending. 10 These two should be the same unless you happen to pay 11 out from petty cash for a bingo prize if you happen to 12 run short. But you do have to manually enter your 13 cash on hand. 14 And then all these figures -- and it 15 calculates your net deposit. It also has a signature 16 for the preparer and also for an approval signature. 17 Usually the preparer is going to be your cashier. It 18 should be approved or should be reviewed, at least, by 19 the operator that's on duty that night. 20 Now, having said this with all of these 21 figures, what you can do, you don't -- you can go 22 straight to the -- go to the sales journal and 23 everything is entered for you. You don't have to do 24 any manual entries here. Your card sales, electronic 25 sales, instant, your total sales, your card prizes, WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 134 1 instant prizes, total prizes, net sales, your prize 2 fees, if you're short or over, your net deposit, your 3 attendance, and also the number of electronic players. 4 It totals everything by column. And then at the 5 bottom -- at the bottom here, this line three, line 6 four, line five, all of these numbers correspond to 7 the quarterly report. 8 So having said that, we go to the 9 quarterly report. All of these figures are entered, 10 with the exception of the total attendance. That has 11 to be manually entered. But it -- I mean, the total 12 number of sessions, excuse me, during the quarter. If 13 you notice, all of this information is already in 14 there. The taxpayer number, your location number, the 15 date -- or the quarter and the date, the location 16 name, and your organization's name. All those -- all 17 of these figures are already entered, all your sales 18 figures, your prize fees withheld. And also from the 19 sales journal at the bottom part -- bottom half of the 20 report, your regular and instant prizes are entered. 21 Now, these sales are in blue. Those figures have to 22 be manually entered if you have rental income, if you 23 happen to have a lessor license, approved bingo loans, 24 or proceeds, bingo interest earned, and previous 25 proceeds undistributed. Of course, that has to -- WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 135 1 that's going to come from your prior quarter's report. 2 So that's entered on there, and it automatically 3 totals all of your -- all of your bingo proceeds. 4 Go to the cash disbursements journal 5 where you enter all your expenses for the quarter. 6 Again, all this information is already here. Enter 7 the check number, the name of the payee, the amount, 8 and then by category, and then comments. And even 9 though -- like if these particular other entries are 10 categorized, it's still a good idea to make a note 11 what the -- what the payment is for. For example, to 12 A. Lessor, it was under rent. But still, you make a 13 note as to what occasion you're paying for. The same 14 thing for the check for the comptroller, for prize 15 fees, the quarter you're paying, ushers. So -- and 16 then here, you have to manually enter any bank charges 17 that you may have or checks or any other miscellaneous 18 charges. And then over in short, that's from your 19 sales journal. In this case, you -- this $50, it's 20 subtracting it from your other expenses because you 21 had too much money at the end of the quarter. And 22 again, this also totals up by category and in the 23 corresponding line of the quarterly report. You take 24 those quarters over to the quarterly report and all 25 those figures are there. The only -- you don't have WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 136 1 to manually enter any of these items in the bottom 2 half under expenses and distributions because that all 3 comes from the -- from the cash disbursement journal. 4 So it's automatically linked. It also gives you your 5 total expenses. Gives you your total proceeds, 6 proceeds undistributed. It also calculates your 7 prizes awarded and your prize fees due. The only 8 thing that has to be manually entered is if the report 9 is filed late, the penalties and any interest if it's 10 accrued. And then it has, of course, your signature 11 line and then a daytime phone number where whoever the 12 preparer is can be contacted. 13 So it's -- if you're familiar with 14 Excel, it's not that difficult to use. The floor 15 sales by usher, that particular report has to be 16 prepared daily. There is not 45 sheets like there is 17 with the daily cash report. But each one of these 18 also -- if you notice, each one of these sheets has a 19 button where you can actually print the report. You 20 don't have to go in and specify the print area. There 21 is a button there that will let you -- that you print. 22 The best thing to do, too -- let me go back to this 23 conductor information. The best thing to do is, once 24 you, you know, make this available to you and you -- 25 and you begin using it, once you enter this WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 137 1 information, go ahead and save it. And then every 2 quarter when you -- when you start a new quarter, just 3 save it under a different file name. That way you 4 don't have to -- have to fill out this information 5 every quarter. And also you don't need to be -- you 6 won't have to be deleting entries, for example, in the 7 cash disbursement journal. So if you start off with a 8 blank one, that would be the best way to do it. 9 Now, once we're ready to make this 10 available for licensees, it will be posted on our 11 website so that you can download it. But also we'll 12 make it -- if you don't have access to the Internet, 13 we'll also make it available either on a CD or on a 14 floppy for, you know -- of course, there will be a 15 charge for that. That's it. Any questions? 16 MR. TAWIL: That gets rid of the 17 bookkeeper, doesn't it? 18 MR. GABRILLO: It will -- it will help 19 the charities, we hope. Thank you. 20 MS. TAYLOR: We'll go on with number 21 12, consideration of and possible discussion and/or 22 action on the tax on pull tab prizes of $5 and under 23 and bingo game prizes of $25 and under. This is 24 something that the BAC had passed and was given to the 25 legislature for consideration, the $5 and under prize WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 138 1 fee. I brought it up again because I was requested to 2 by several of the organizations. I'm sorry that I 3 didn't make enough of these for everybody to have one. 4 But what it actually says is: "Due to 5 the downturn in the bingo industry during the last 6 five years, there has been much talk on how to 7 increase revenue, attendance, and the bottom line. 8 The elimination of a prize fee on pull tab winners of 9 $5 and under will encourage players to trade in small 10 winners for additional tabs, thereby increasing tab 11 sales. The elimination of prize fees on bingo games 12 of $25 and under will also encourage players to play 13 additional games and perhaps persuade players to make 14 a donation to the organization and/or tip the bingo 15 worker, which will help by allowing the organizations 16 to offer a lower wage due to increased compensation by 17 tips." 18 The motion that is on this form says: 19 "The motion that the BAC request the commissioners 20 direct amend a legislative change to eliminate the 21 prize fee on pull tab winners of $5 and under and 22 bingo games $25 and under." 23 So if there's any discussion on this 24 item. 25 MR. DOUTY: I didn't realize this was WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 139 1 going to be discussed today. But I have a couple of 2 questions. Can I ask some questions? Okay. 3 THE REPORTER: State your name again, 4 please. 5 MR. DOUTY: Oh. My name is Jesse Douty 6 from Players Bingo. Okay. First question is: 7 Doesn't the money that you guys collect from that or 8 that the Lottery Commission collects from that, is 9 that used to actually fund the -- I mean, their whole 10 way of doing things? Is that where that money goes? 11 MS. TAYLOR: If I can go ahead and 12 answer this with a Billy Atkins thing. I copied off 13 of the minutes of the last meeting the numbers that 14 were given. And I don't remember if it was Steve 15 Fenoglio, but I'm pretty sure that it was. It's on 16 one of these. Talked about the fact of how much money 17 the Lottery Commission brings in and how much is 18 actually spent on bingo. And what it came down to was 19 that it was costing -- there was 11 million left 20 over -- after this first went to the local 21 jurisdiction, that there was $11 million left over 22 that went into the general fund. 23 MR. DOUTY well, it sounds like 24 Mr. Sanderson -- he's got his budget increase for next 25 year. Okay. So my question is: If you eliminated WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 140 1 this -- if you eliminated this -- the one on the $5 2 and under, how much does that add up to? I mean, like 3 in other words, could that be millions? I mean, are 4 you going to actually be putting -- what's the effect 5 on that? 6 MS. TAYLOR: As a matter of fact, at 7 the minutes of the meeting on February 14th, Billy 8 Atkins answered this by saying -- telling BAC members 9 that: "The loss under revenue from not collecting 10 prize fees on prizes of less than $5 would be 11 $890,000. Not collecting prize fees on prizes of 10 12 to $50 would cause a loss of revenue of 2.9 million 13 for the state. After this would be a loss to local 14 jurisdictions." 15 So does that answer your question? 16 MR. DOUTY: Yes. All right. Still 17 well within the limits of the surplus? 18 MS. TAYLOR: Yes. 19 MR. DOUTY: Okay. My point of view is 20 that as an operator is that I've got distributors that 21 want to sell me pull tabs. And if it's got like a 22 50-cent playback, I can't even consider it because 23 it's just absolutely insane. So for me, the most 24 important part of that is the $5 and under. And 25 whatever else you decide on that is fine with me. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 141 1 MS. TAYLOR: The $25 game is for 2 several different things. One was for the ten cent 3 bingo halls. And I know that there is more ten cent 4 bingo halls all the time. Their prizes are ten -- 5 most of their games are between 10 and $15 and don't 6 go much over 25. There's not a lot of halls that 7 offer prizes of 25 and under. So this might not be 8 something that affects a lot of halls. Only in that 9 instant when you have 20 people that win on a bingo 10 game and you're running around paying everybody $9.54, 11 you know. So, I mean, in that case, most halls, I 12 don't believe, would be affected by the 25 and under. 13 But there are some smaller halls that offer smaller 14 prizes. So the tab is $5 and under. 15 MR. DOUTY: Oh, the tab would be -- 16 okay. The 25 is actually bingo. 17 MS. TAYLOR: 25 and under is just bingo 18 games. 19 MR. DOUTY: Okay. 20 MS. TAYLOR: Yes, sir. 21 MR. BRESNEN: Steve Bresnen for the 22 Bingo Interest Group. We support doing this. Thanks. 23 MS. TAYLOR: Thanks. 24 MR. FENOGLIO: Stephen Fenoglio. We 25 agree. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 142 1 MS. TAYLOR: Thank you. Yes. 2 MR. ARNOLD: Phil Arnold, Houston area 3 charities. We support this also. We think it will 4 increase sales opportunities for pull tabs because it 5 will make it more efficient, quicker, and easier to 6 sell the product, which means in the long run more 7 revenues for the state and for the charities. And 8 therefore, the winners' fees will actually increase, 9 not decrease, in our opinion. 10 MS. TAYLOR: Thank you. Are there any 11 other comments? Would one of the committee be willing 12 to make this motion? 13 MS. MAGUNSON: Correct me if I'm wrong, 14 but I'm reading the minutes from previous meetings 15 where a motion was made? 16 MS. TAYLOR: Yes. 17 MS. MAGUNSON: We're just restating it? 18 MS. TAYLOR: The motion on the paper I 19 gave you on page one, it's italicized under motion. 20 This will be a new motion that we would remake again 21 to emphasize that we would like this particular item 22 to be brought back up again. 23 MS. MAGUNSON: I'll make that motion. 24 The BAC would request the commissioners to 25 recommend -- WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 143 1 THE REPORTER: I can't hear you. 2 MS. MAGUNSON: The BAC would request 3 the commissioners to recommend a legislative change to 4 eliminate the prize fee on pull tab winners of $5 and 5 under and bingo game prizes of $25 and under. 6 MS. TAYLOR: Is there a second to that 7 motion? 8 MR. SPEED: I second. 9 MS. TAYLOR: It's been made and 10 seconded. Any other discussion? All those in favor. 11 Opposed. 12 Okay. Next item. Well, we're down to 13 the next item, which is public comment. Is there any 14 other public comment? 15 Okay. Then we go into item number 14, 16 consideration of and possible action on further Bingo 17 Advisory Committee meeting dates and/or items to be 18 considered for future meetings. 19 MR. TAWIL: I've got a question. We 20 have not received anything from the bingo division on 21 the sunset review, what their plans are, or what 22 their -- frankly, I thought it would be in this 23 booklet for this meeting. Nothing has been done. And 24 further, I'd like to know why. And will they be 25 providing information to us on this process, what WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 144 1 their thinking is and their involvement so we can have 2 an opportunity and insight and how we want to react 3 with the sunset commission? 4 MS. TAYLOR: Are you responding to 5 that? 6 MR. TAWIL: Maybe Billy can. 7 MR. ATKINS: I can. Billy Atkins, 8 director of the charitable bingo division. I 9 apologize, madame chair and members, for being late. 10 We got backed up with a whole bunch of meetings today. 11 And I'm actually going to -- I think I timed this just 12 right because I have another one starting at 2:00. 13 I did not -- I have to take 14 responsibility for that. I thought the advisory 15 committee had been provided a copy of the staff 16 self-evaluation report. I guess they haven't. We can 17 do that. We have posted it on our website. And so we 18 can provide each of you with a copy of that. 19 Currently from what I understand is 20 that the sunset staff is scheduled to be in this 21 agency beginning in the middle of March. And I think 22 they are scheduled to be here two or three months. 23 I'm sorry. I'm going off memory. And then their 24 report is scheduled to be presented to the sunset 25 committee on -- in August or September. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 145 1 MR. TAWIL: August. 2 MR. ATKINS: Is it August? 3 MR. TAWIL: (Moves head up and down) 4 MR. ATKINS: One of the things we did 5 do in the self-evaluation report is include in that 6 report all of your names, addresses, and phone numbers 7 as individuals who could be contacted regarding the 8 bingo division and the bingo industry in Texas. I say 9 that. I don't think we included you, Mary. I think 10 it was -- it was your predecessor. 11 MR. TAWIL: Thank you. 12 MR. ATKINS: Sure. 13 MR. CASTILLO: Billy? Excuse me, 14 Billy. Could you help us out with the dates that you 15 and the chairman would be available for meetings in 16 the future? 17 MR. ATKINS: I'm not sure I follow you. 18 MR. SANDERSON: There has been 19 scheduled a subcommittee on just the recommendation -- 20 Virginia Brackett's recommendation to review the 21 possibility of bingo being operated as a separate 22 agency or in some other way. And that's been -- 23 they've tentatively scheduled that for March the 20th. 24 MR. ATKINS: Okay. 25 MR. SANDERSON: And I told them that, WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 146 1 of course, it would have to be off-site somewhere. 2 MR. ATKINS: Who? Oh, is that because 3 of the auditorium here? 4 MR. SANDERSON: Yeah. 5 MR. ATKINS: Is that just the 6 subcommittee? 7 MR. SANDERSON: Well, the subcommittee 8 is going to be comprised of all the members. 9 MR. ATKINS: Subcommittee of the whole? 10 MR. SANDERSON: Yeah. 11 MR. ATKINS: I can -- I can check with 12 him on his availability. I assume you're talking 13 about chairman Clowe? 14 MR. CASTILLO: Yes. 15 MR. ATKINS: Okay. Yes. I can -- I 16 didn't -- I don't know his schedule. 17 MR. CASTILLO: No, no. 18 MS. TAYLOR: I do think he should be 19 here, too. 20 MR. TAWIL: He's talking about Bill 21 Neinast. But I think it's a good idea to have 22 chairman Clowe be here. 23 MS. TAYLOR: I think that's a great 24 idea. 25 MR. ATKINS: Yeah. And again, I WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 147 1 don't -- I don't know if Bill mentioned it. Chairman 2 Clowe did want to be here, but he also had a prior 3 commitment today. I can -- I can check with all of 4 the absent members about the availability of March 5 20th as well as chairman Clowe. 6 I just throw this out for 7 consideration. The advisory committee in the past has 8 talked about the possibility of a joint meeting. I 9 can -- I can raise that also if it's the committee's 10 desire. 11 MR. TAWIL: Joint meeting with who? 12 MR. ATKINS: The Lottery Commission and 13 the advisory committee. 14 MR. TAWIL: On this subject matter, 15 wouldn't you want us to discuss it with the division 16 before we take it to -- 17 MR. ATKINS: You know, I'm going to 18 leave it up to you-all. Well, I -- well, you know, in 19 order to move along, that actually may not be the best 20 thing because there is tentatively a commission 21 meeting scheduled for the 6th. So given their 22 availability, it may be easier just to try and get 23 chairman Clowe to come in. 24 MR. TAWIL: Plus there was a lot of 25 voices that came out earlier before you were here that WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 148 1 they wanted as much public participation as possible. 2 MR. ATKINS: Okay. 3 MS. TAYLOR: Okay. At this time, I 4 don't recall if there is another meeting that's 5 already been prescheduled for the quarterly meeting of 6 the Bingo Advisory Committee. Is there a date 7 already? The second Wednesday of the second month of 8 the quarter or something? 9 MR. SANDERSON: Normally I think it's 10 been like the second -- yeah, the second Wednesday of 11 the second month of the quarter, which would be May -- 12 whatever May -- that second Wednesday is would be the 13 next -- 14 MR. FENOGLIO: Wednesday? 15 MR. SANDERSON: Yes. 16 MR. FENOGLIO: It would be May 8th. 17 MS. TAYLOR: Okay. So the next meeting 18 on a normal basis, then, William Neinast has it 19 scheduled as the second Wednesday of the second month 20 of each quarter. So in that case, it would be May 8th 21 for the next regularly scheduled BAC meeting. We need 22 to look at future agenda items for that meeting. I 23 have five of them that I've written down as we -- as 24 we have been going through this. One of them is the 25 location at which the BAC meetings are held. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 149 1 Progressive bingo issue. Instant bingo definition. 2 Pull tab rules and event tickets. And elimination of 3 prize fees on instant bingo five and less and 25 and 4 less for bingo games. Are there any other agenda 5 items that -- 6 MR. SANDERSON: There is one that we 7 apologized that we didn't catch and neither did Bill 8 Neinast is, we left the security report off of this 9 agenda. And we'll add it to the next meeting, the May 10 8th meeting, and they can give you two reports. 11 MS. TAYLOR: Are there any other items 12 that you can think of right now? 13 MR. BRESNEN: I'd like to mention -- 14 MS. TAYLOR: Yes, sir. 15 MR. BRESNEN: -- something, if I might. 16 Well, I got me a long list. But some of these have 17 already been talked about today. And some of them 18 were in the list that you ran down. So I'll just try 19 to hit the ones that have been on my mind that I'd 20 appreciate your consideration for scheduling, if not 21 the next meeting, then sometime this year. 22 One of the problems that I think is a 23 recurring problem for charities is the vague 24 definition of what constitutes a charitable purpose 25 and what you can use the net proceeds of bingo for. I WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 150 1 think there are some -- I think people are running 2 into this in the audit process. And in connection 3 with that, the definition of what spent in Texas 4 means. You have to spend your money, your net 5 proceeds, in Texas. And you have to spend it for a 6 charitable purpose. The statute has fairly vague 7 descriptions of charitable purpose, but it nowhere 8 defines spending in Texas. 9 That may sound like a stupid thing to 10 be -- for you-all to be discussing. But if you think 11 about it for a minute, you may -- there may be 12 perfectly legitimate travel, for example, that you 13 would take in furthering a charitable purpose. You 14 make the expenditure at a travel agent in Dallas. Are 15 you in bounds? But if you pay the airline and they're 16 headquartered in St. Louis, are you out of bounds? 17 The more -- that's probably the less difficult 18 question to be getting an answer to. But what 19 constitutes a charitable purpose is something that I 20 think -- I think needs some attention and some 21 attention from you-all. I think it will make a real 22 difference. Nailing that down a little better will 23 make a real difference in the lives of a lot of the 24 charities. 25 Secondly, I would like to -- we sort of WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 151 1 hit around in several subject matters today about the 2 rule-making process at the Lottery Commission. And I 3 would like to see you-all have a day to just focus on 4 that. Not necessarily to take any particular action 5 at that time, but to understand that -- I've been 6 advocating for more industry involvement before you 7 get to the point of running out rules to you-all. One 8 of the things I've heard people talk about today is 9 getting -- if you're going to have a BAC meeting and 10 look at a draft rule, you get the draft rule out there 11 well in advance and to the public well in advance so 12 when they get here, they can have more meaningful 13 input to the BAC. So I think it might be helpful if 14 at one of your meetings you would focus on that -- how 15 rules are actually -- not the -- the Administrative 16 Procedures Act has a formal process. I'm talking 17 about how we get what -- really what we do before we 18 get to that formal process. 19 Another item, and I think this is sort 20 of a corollary to who's going to regulate bingo in the 21 future, is to separate out the legal division and the 22 security division and bring all of those under the 23 direct authority of the director of the charitable 24 bingo division in one line item. Since we've been 25 here so long, I'm not going to go into all our -- all WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 152 1 the reasons for wanting to discuss that. But I think 2 from experience, the -- I could -- we could spend a 3 good time today and I can tell you a lot of the 4 reasons why I think the current structure is not 5 functional. 6 Secondly or fifthly, however many I'm 7 down to here, I think the statute is -- has lots of 8 obsolete provisions in it. And there are vague 9 provisions in it that are just traps for charities. 10 And I would like to see some focus put on identifying 11 some of those obsolete or vague provisions in the 12 statutes and see if they serve a purpose, if they 13 can't be made clear to everybody who has to live under 14 them. 15 Another item that has been raised to me 16 by one of my members is, there is a perception that 17 the -- how licenses on administrative hold are going 18 to be treated when they're brought of administrative 19 hold. There is a -- there is a perception at least by 20 one of my members that the underlying policies about 21 that have changed. And I'm not really sure there has 22 been any rule change or anything. So I'd like to see 23 you-all focus on that a little bit, how it works, and 24 if we could make clear exactly what the policies are 25 about that. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 153 1 Let me see. I've already talked about 2 that one. I think if there are -- similar to my 3 suggestion about the vague or obsolete statutes. If 4 there are rules that can be simplified, they ought to 5 be. I know, Phil, you've talked today several times 6 about the rules of due process that's been going on. 7 So far, the perception of my clients is that there is 8 a great deal more complexity being injected into the 9 process. I think to some extent there are some -- 10 some of that is -- perception is raised by the fact 11 that you to some extent are codifying past practices. 12 And they've probably been living with some of that 13 complexity, but they've never seen it in print before. 14 But I think to the extent that you had an ongoing 15 process that maybe for this committee to look at the 16 rules and start thinking about how could that be made 17 more simple, then there would be a perception in the 18 bingo community that there was an ongoing effort to do 19 that. 20 And I think -- I think that's a pretty 21 healthy list right there and I'd stop there. I've got 22 some other things that are probably not quite as 23 specific as that. And I think if you'd manage to 24 accommodate me on a few of those maybe at each 25 meeting, that might help me at least explain to you WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 February 13, 2002 154 1 what I'm talking about. Those things. Thanks. And 2 if I get sufficient advance notice, I'll have specific 3 examples and people who can come in and talk about 4 their personal experience. Questions? Thanks. 5 MS. TAYLOR: Were there any other items 6 to add? If not, then the meeting is adjourned. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 155 1 REPORTER'S CERTIFICATION 2 3 STATE OF TEXAS ) 4 COUNTY OF TRAVIS ) 5 6 I, MARY SCOPAS, Certified Shorthand 7 Reporter for the State of Texas, do hereby certify 8 that the above-captioned matter came on for hearing 9 before the BINGO ADVISORY HEARING as hereinafter set 10 out, that I did, in shorthand, report said 11 proceedings, and that the above and foregoing 12 typewritten pages contain a full, true, and correct 13 computer-aided transcription of my shorthand notes 14 taken on said occasion. 15 16 Witness my hand on this the 21ST day of 17 FEBRUARY, 2002. 18 19 20 21 MARY SCOPAS, RPR, CSR #5313 22 Expiration Date: 12-31-02 1609 Shoal Creek Boulevard, Suite 202 23 Austin, Texas 78701 (512) 474-4363 24 25 JOB NO. 020213MS WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363