0001 1 TRANSCRIPT OF PROCEEDINGS 2 BEFORE THE 3 BINGO ADVISORY COMMITTEE 4 (TEXAS LOTTERY COMMISSION) 5 AUSTIN, TEXAS 6 7 QUARTERLY MEETING OF THE § BINGO ADVISORY COMMITTEE § 8 WEDNESDAY, MAY 2, 2007 § 9 10 COMMITTEE MEETING 11 WEDNESDAY, MAY 2, 2007 12 13 BE IT REMEMBERED THAT on Wednesday, 14 the 2nd day of May 2007, the Bingo Advisory Committee 15 meeting was held from 10:00 a.m. to 12:00 noon at the 16 Offices of the Texas Lottery Commission, 611 East 6th 17 Street, Austin, Texas 78701, before CHAIR SUZANNE 18 TAYLOR. The following proceedings were reported via 19 machine shorthand by Aloma J. Kennedy, a Certified 20 Shorthand Reporter of the State of Texas, and the 21 following proceedings were had: 22 23 24 25 0002 1 APPEARANCES 2 BINGO ADVISORY COMMITTEE: 3 Ms. Suzanne Taylor, Chair Ms. Kimberly Rogers 4 Ms. Rosalie Lopez Mr. Thomas "Tom" Weekley 5 Mr. John "Jack" Dougherty Mr. Larry Whittington 6 Mr. Knowles Cornwell 7 CHARITABLE BINGO OPERATIONS DIVISION ASSISTANT 8 DIRECTOR: Mr. Phil Sanderson 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 0003 1 TABLE OF CONTENTS 2 PAGE NO. 3 AGENDA ITEM NO. 1 - Meeting Called to Order...... 5 4 AGENDA ITEM NO. 2 - Consideration of and possible discussion and/or action on the 5 minutes of the February 7, 2007, Bingo Advisory Committee meeting........................ 5 6 AGENDA ITEM NO. 3 - Report, possible 7 discussion and/or action on the 80th Legislature....................................... 5 8 AGENDA ITEM NO. 4 - Report, possible 9 discussion and/or action on 4th quarter and calendar year 2006 bingo conductor 10 information....................................... 23 11 AGENDA ITEM NO. 5 - Report, possible discussion and/or action on amendments to 12 16 TAC §402.102 relating to the Bingo Advisory Committee................................ 28 13 AGENDA ITEM NO. 6 - Consideration of and 14 possible discussion and/or action on nominations and appointment and/or a 15 nomination and appointment procedure on the Bingo Advisory Committee...................... 40 16 AGENDA ITEM NO. 7 - Consideration of and 17 possible discussion and/or action on the Bingo Advisory Committee work plan............. 46/74 18 AGENDA ITEM NO. 8 - Report and possible 19 discussion and/or action on the 2006 Bingo Advisory Committee Annual Report............ 59 20 AGENDA ITEM NO. 9 - Report and possible 21 discussion on the activities of the Charitable Bingo Operations Division ........... 69 22 AGENDA ITEM NO. 10 - Public comment............. 78 23 24 25 0004 1 TABLE OF CONTENTS (continued) 2 PAGE NO. 3 AGENDA ITEM NO. 11 - Consideration of and possible action on future Bingo Advisory 4 Committee meeting dates and/or items to be considered for future meetings.................. 84 5 AGENDA ITEM NO. 12 - Adjournment................ 87 6 REPORTER'S CERTIFICATE.......................... 88 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 0005 1 P R O C E E D I N G S 2 WEDNESDAY, MAY 2, 2007 3 (10;00 a.m.) 4 AGENDA ITEM NO. 1 5 MS. TAYLOR: It appears to be 10 6 o'clock. We have a quorum, so we're going to call the 7 meeting to order. 8 AGENDA ITEM NO. 2 9 MS. TAYLOR: Item No, 2, consideration 10 of and possible discussion and/or action on the 11 minutes of the February 7, 2007 Bingo Advisory 12 Committee meeting. 13 Does anyone want to make a motion to 14 approve those as they were posted on line? 15 MS. LOPEZ: I will. 16 MS. TAYLOR: Rosie makes a motion. 17 Is there a second? 18 MS. ROGERS: I second. 19 MS. TAYLOR: Seconded by Kim. All in 20 favor? 21 FROM THE COMMITTEE: Aye. 22 MS. TAYLOR: Opposed? 23 No opposed. It unanimously passes. 24 AGENDA ITEM NO. 3 25 MS. TAYLOR: Item No. 3, report, 0006 1 possible discussion and/or action on the 80th 2 Legislature. 3 Good morning, Nelda. 4 MS. TREVINO: Good morning, Madam Chair 5 and members. For the record, I'm Nelda Trevino. I'm 6 the Director of Governmental Affairs. 7 As I reported to you at your February 8 meeting, the 80th regular session of the Legislature 9 convened on January the 9th, and the last day of the 10 session is May 28th. 11 Included in your meeting packet behind 12 Tab 3 is a copy of the tracking report listing 13 legislative bills filed with potential impact to the 14 Lottery or to Charitable Bingo. We have provided you 15 this morning with an updated copy of the tracking 16 report, and I would like to highlight a few bills 17 specifically related to Charitable Bingo. 18 First of all, House Bill 1156 by Rep. 19 Kino Flores and its companion bill, Senate Bill 1256 20 by Sen. Averitt. This relates to the operation and 21 regulation of charitable bingo and the use of bingo 22 proceeds. A committee substitute to the House bill 23 was considered and voted favorably by the House 24 Licensing and Administrative Procedures Committee. 25 The bill includes some provisions -- some general 0007 1 provisions related to the regulation of bingo and also 2 includes some provisions to streamline the licensing 3 process 4 Some provisions of note that I would 5 like to mention this morning include adding a 6 definition for a bingo chairperson who would be 7 responsible for overseeing the organization's bingo 8 activities, eliminating certain unnecessary 9 requirements from the license application, increasing 10 the number of temporary licenses that may be issued to 11 an organization from 12 to 24 per year, requiring a 12 licensed organization to disburse all of the 13 organization's net proceeds for charitable 14 distributions rather than the 35 percent of adjusted 15 gross receipts, and eliminating the requirement for 16 licensed organizations to collect the five percent 17 prize fee on prizes of five dollars or less, although 18 the organization would still be required to remit 19 prize fees to the state. 20 For your reference, I have also 21 provided you with a copy of the House Committee Report 22 bill analysis on the committee substitute for House 23 Bill 1156. And it is anticipated that this bill will 24 be scheduled on the House calendar for the full House 25 to consider. This bill is a product of the bingo 0008 1 legislative workgroup formed at the request of Rep. 2 Kino Flores that included members of his staff, 3 members of the industry and staff members of the 4 agency. 5 The next bill that I want to mention, 6 while not necessarily specific to charitable bingo, it 7 certainly impacts the agency, and that's House Bill 8 1180 by Rep. Kino Flores also. And this relates to 9 the continuation of the Texas Lottery Commission. And 10 this bill would change the agency's sunset date from 11 2011 to 2009. And this bill passed out of the House 12 and had been considered by the Senate State Affairs 13 Committee where the bill is currently pending. 14 The next bill I would like to mention 15 is House Bill 2206 by Rep. Pat Haggerty and its 16 companion bill, Senate Bill 1110 by Sen. John Carona 17 relating to the use of a card-minding device to play 18 bingo. A committee substitute to the House bill was 19 considered and voted favorably from the House 20 Licensing and Administrative Procedures Committee. 21 This bill authorizes the use of a card-minding device 22 to display and play a pull-tab ticket. 23 And, lastly, House Bill 2265 by Rep. 24 Pat Haggerty relates to the prizes awarded in a 25 progressive bingo game. This bill was considered and 0009 1 amended by the full House and passed on a vote of 105 2 to 31. The bill, as amended by the House, authorizes 3 a single progressive bingo game per occasion, with a 4 jackpot prize limit of $2,500, and also provides a 5 limit on the amount of the consolation prize in a 6 progressive bingo game to $250 and establishes a limit 7 of one consolation prize per occasion. 8 This concludes my report, and I'll be 9 happy to answer any questions. 10 MR. CORNWELL: Nelda, can you give us 11 an update on what the House Bill 3914 is supposed to 12 do? That's the one relating to allowing the lottery 13 to run Internet games. 14 MS. TREVINO: House Bill 3914, that 15 bill by Rep. Toney Goolsby has not been considered by 16 the committee. What I'm going to do, Knowles, in 17 response to your question, I'm really going to talk 18 about the companion bill, because there's been a 19 little more action on the companion bill, and that's 20 Senate Bill 1751 by Sen. Royce West. 21 And what the filed bill does is 22 authorizes the Commission to basically sell tickets 23 over the Internet. What was considered in the Senate 24 State Affairs Committee was a committee substitute 25 that is very different from what the filed bill was. 0010 1 And the committee substitute that was considered 2 authorized a study to be conducted during this coming 3 interim that would be conducted by the Comptroller's 4 office with the consultation of the Lottery 5 Commission's Department of Information Resources and 6 the Department of Public Safety. 7 And it would be a study, again, to look 8 at the feasibility and the viability of selling 9 lottery tickets over the Internet. That committee 10 substitute was considered by the Senate State Affairs 11 Committee, I believe it was last week, and failed to 12 receive approval by the committee. 13 MR. CORNWELL: And when we talk about 14 the sale of lottery tickets on the Internet, is that 15 actually being able to disclose the outcome of the 16 lottery ticket on the Internet? How do we deliver a 17 purchase of a lottery ticket on the Internet? 18 MS. TREVINO: The specifics on how it 19 would actually work were not included in the filed 20 version of the bill. And so I think a lot of the 21 specifics on the technicalities on how things would 22 work would be, if this were to be authorized, how the 23 Commission would set that up. And another thing, too, 24 is if the Commission decided to -- again, assuming it 25 was authorized and the Commission pursued maybe going 0011 1 out to see what vendors might be out there with the 2 technology through the RFP process, the request for 3 proposal process, we would certainly stipulate a lot 4 of -- I think, some of the questions we're asking it. 5 MR. CORNWELL: Okay. Thank you, Nelda. 6 MS. TREVINO: Any other questions? 7 MR. DOUGHERTY: Nelda -- 8 MS. TREVINO: Yes, sir? 9 MR. DOUGHERTY: -- on the subject of 10 casino gambling as a subject, there's three bills -- 11 there's House Joint Resolution 58, Senate Joint 12 Resolution 8 and Senate Joint Resolution 45 relating 13 to that subject. What's your sense on those? Are 14 they going to make any headway or what? You may not 15 have been following them. I don't know. 16 MS. TREVINO: Well, we're following 17 them from the stance of that we're tracking the 18 legislation, because certainly any legislation like 19 that, you know, the agency feels would certainly have 20 an impact on charitable bingo and on the lottery. 21 MR. DOUGHERTY: It would. 22 MS. TREVINO: In regards to the Senate 23 bills that you referenced -- 24 MR. DOUGHERTY: The Joint resolution. 25 MS. TREVINO: Right, the joint 0012 1 resolution, and also the enabling legislation which is 2 Senate Bill 1359 by Sen. Rodney Ellis, those were 3 considered by a subcommittee in the Senate State 4 Affairs Committee where those bills are currently 5 pending. So they have received a hearing on the 6 Senate side in a subcommittee. But, again, the 7 legislation is pending. 8 Now, on the House side, there's several 9 bills and joint resolutions that are also filed: 10 House Bill 3326, House Bill 3335, House Bill 3351, and 11 then again several joint resolutions: HJR 58, HJR 63, 12 HJR 98, 99 and 100, you know, all relate to again some 13 sort of casino gaming legislation. 14 Those bills -- yesterday there was a 15 committee hearing posted for those House bills to be 16 considered, but then the meeting was canceled. So 17 there hasn't been any public action that has occurred 18 with the House bills. 19 MR. DOUGHERTY: Thank you. 20 MS. LOPEZ: Nelda -- 21 MS. TREVINO: Yes? 22 MS. LOPEZ: -- what about Senate Bill 23 1478 relating to authorizing non-profit organizations 24 to conduct charitable poker tournaments? 25 MS. TREVINO: There hasn't been any 0013 1 action on that bill. And while it's not a companion 2 bill, Rosalie, there is a House bill, House Bill 3186 3 where there's been a little more action. And, again, 4 they're not companion bills. But House Bill 3186 by 5 Rep. Jose Menendez, this relates to the authorization 6 and regulation of poker gaming and the duties of the 7 Texas Lottery Commission. And that bill has received 8 a committee hearing and was just voted out and 9 reported out of the committee yesterday. And that 10 would create a poker gaming division here at the 11 lottery Commission -- 12 MS. LOPEZ: Okay. 13 MS. TREVINO: -- where there would 14 certainly be some benefit to charitable organizations, 15 because there would have to be a charitable 16 organization that gets licensed in order to be able to 17 have the conduct of the poker game. 18 MS. LOPEZ: Fine. 19 MS. TREVINO: There is a threshhold -- 20 as far as where they would actually be held, they 21 would be licensees of the Texas Alcoholic Beverage 22 Commission. And not having the bill in front of me, 23 I'm hesitant to say what there is a threshhold on the 24 gross receipts, if you will, of what a TABC holder, 25 license holder, would have to reach in order to be 0014 1 licensed where the actual conduct of the poker game 2 would be conducted at. 3 Phil, if I misspoke on anything, please 4 correct me. 5 MR. SANDERSON: No. You did an 6 excellent job, Nelda. 7 MS. TREVINO: Any other questions? 8 MS. TAYLOR: Thank you, Nelda. 9 MS. TREVINO: Thank you. 10 MS. TAYLOR: I would like to take this 11 one quick opportunity to welcome Commissioner Clowe 12 with us. We sure appreciate you taking the time to 13 attend the meeting. 14 Phil? 15 MR. SANDERSON: Tuesday a week ago was 16 Charity Day at the Capitol. And we have been provided 17 with this news release that we have been requested to 18 play for y'all to enjoy. 19 (An excerpt of the news release was 20 played as follows: 21 QUESTIONER: Mr. Chairman, I appreciate 22 you being with us this morning. And I know you're 23 really busy, so we thank you for your time. You have 24 been a big supporter of charitable bingo and 25 charitable causes in Texas. You're sponsoring a 0015 1 resolution for Texas Charity Day at the Capitol. 2 Tell me a little bit about that and why 3 you're so supportive. 4 REP. FLORES: Well, you know, I mean, 5 today we just want to highlight the issue of what the 6 organizations are doing and how they're helping people 7 in their districts back home, as they say. And, you 8 know, personally I've seen -- like we started ours -- 9 in Palmview where I live, we started it about six 10 months ago, and we're already starting to see the 11 infusion of dollars that are coming in that are 12 helping our Police Department and our boys' club. 13 So I'm real excited about that. But 14 over the years, you know, I've had a chance to work 15 with bingo a lot at the Comptroller's office, and I 16 see the direct impact that it has on our community. 17 So, you know, I've been a supporter and I'll be a 18 supporter for a long time to come. 19 QUESTIONER: Great. It means so much 20 to Texans across the board. Over $30 million was 21 raised last year that goes everything to, as your 22 resolution says, honoring American war heroes coming 23 home from Iraq, not to mention cancer clinics. There 24 is one in your district, I believe, in the Lower Rio 25 Grande Valley for care for kids for a cancer clinic. 0016 1 These charities are just so important to all the 2 Texans. 3 REP. FLORES: Well, you know, and 4 that's the whole point, you know. And then you 5 have -- you know, the bingo hall, you have people who 6 are willing, who are wanting to be there, who want to 7 play, who want to contribute. They know that a 8 percentage of the money that they're playing is going 9 to organizations that, you know, help kids, get kids 10 off the street, to help cure a disease or help 11 somebody rehabilitate or prevent crime in the 12 community. And that's what it's all about, and I'm 13 just glad I'm part of it. 14 QUESTIONER: All right. Is there 15 anything else you would like to say? 16 REP. FLORES: Yes. I mean, other than, 17 you know, to thank the organizations for what they do. 18 And a lot of times they're doing it because they care 19 and their willingness to make a difference. And I'm 20 just glad that we played a very small part. 21 MR. MIKE SIZEMORE: Good morning. We 22 appreciate all you being here today for Texas Charity 23 Day at the Capitol. My name is Mike Sizemore. And, 24 as you all well know and who work so hard in Texas, in 25 our local Texas charities, how important the work that 0017 1 you do and important the work of Texas charitable 2 bingo interests across the state. 3 More than $30 million was raised last 4 year for Texas charity interests across the state. 5 They pay for college scholarships, cancer treatment 6 for kids, after school programs. They pay for so much 7 in our local communities. Volunteer fire departments, 8 services for our Iraq war veterans, our American 9 heroes coming home from the Iraq war, so much that you 10 do in our communities, and it means so much to all of 11 Texans. 12 Today what we're doing is celebrating 13 Texas charities. In the Senate we have a resolution 14 that will be offered by Sen. Lucio, who will be 15 speaking to us in just a moment, a very good friend 16 for our Texas charities, and from Chairman Kino Flores 17 in the House of Representatives, a resolution in the 18 House to honor Texas Charity day at the Capitol as 19 well. 20 SEN. LUCIO: Senate Resolution 823 will 21 honor the work of Texas Charity Advocates, also known 22 as TCA, an organization dedicated to bettering Texas 23 charities. TCA is an organization composed of nearly 24 300 charities that hold charitable bingo licenses in 25 this state. I commend these non-profits for raising 0018 1 money to fund programs for our wonderful soldiers 2 returning from Iraq, college scholarships, volunteer 3 fire departments, medical services assistance for the 4 blind, disabled children and many other worthwhile 5 projects that all of us are aware of. Charitable 6 organizations are often the primary funding source for 7 many of these essential community programs and 8 sometimes the sole source, unfortunately. 9 For example, charitable bingo raises 10 $100,000 yearly to support the Rio Grande Valley 11 radiation and treatment foundation, a cancer treatment 12 center for children. If it wasn't for the generous 13 contributions raised from charitable bingo, this 14 clinic probably would not exist today, and our Rio 15 Grande Valley children and their families would suffer 16 further when seeking treatment close to home. 17 Texas benefits from charitable 18 organizations, and Texas badly needs the programs you 19 sponsor, all of you sponsor. I am proud to honor 20 Texas Charity Advocates and their work. And I thank 21 each and every one of you here today. 22 MR. HANK ANAWATY: Bingo is important 23 to so very many Texans. The concept of Charitable 24 Bingo is a simple one. Give people a fun and social 25 atmosphere, combine that with the chance for them to 0019 1 win, and it should result in funding for charitable 2 giving and service to others. This is how our 3 lawmakers envisioned it in 1982, and we are proof 4 today that the concept works. 5 Bingo is unique in that its reasons for 6 existence is charitable, and it is why we are all 7 gathered today. All of us are proud, proud of what 8 bingo does towards helping others, helping fellow 9 Texans. 10 MR. JON CHARLES: We're running about 11 600 kids a day now through our programs and facilities 12 in that area. We're in nine locations, five 13 communities, serving almost 9,000 kids here in the 14 next month or so. And part of the kids that come to 15 our community, a lot of our kids that come to our 16 community are kids -- 50 percent of our kids are on 17 free and reduced lunch. Sixty percent of those kids 18 are active military families that need our services 19 more and more. 20 We're open every day after school until 21 8 o'clock. We're open in the times that kids need us 22 the most. And we couldn't do that and support that 23 number of kids every day without the help of the Texas 24 charities and charitable bingo. Because of your help, 25 we continue to be a leader in our area, to provide 0020 1 those kids with the greatest opportunity we can give 2 them. So thank you very much for all your support. 3 MS. ROSALIE LOPEZ: I am the Executive 4 Director of Keep Odessa Beautiful. And my 5 organization has been very, very lucky to be a part of 6 Charitable Bingo for 22 years. Through Charitable 7 Bingo, our organization has been able to plant 8 thousands of trees in West Texas and Odessa. And so 9 again, we're very thankful for the industry that has 10 provided us a diverse source of funding to be able to 11 meet our needs in the community. 12 Again, we provide a lot of community 13 clean-ups. And this is really a unique business, 14 because some of our customers have become some of our 15 greatest volunteers in helping us clean up 16 neighborhoods, streets and different parks. And so 17 again, we're very thankful for being a part of 18 charitable bingo. 19 COMMANDANT BOB QUINN: Our detachments 20 are really having a blessing from the bingo funds. 21 This charity has been so good to us. In the last 22 three years, we've given out over $100,000 in the 23 community: Scholarships for high school students, 24 cancer victims, the Marine and Navy personnel coming 25 back, and their families. We send a lot of money to 0021 1 the Army burn center in San Antonio, Texas, to house 2 the families that come there at $8 a night, so their 3 kids can heal faster, a 70 percent increase in healing 4 by the families being present. 5 We provide telephone cards, some of the 6 games, until their records and clothes catch up with 7 them. We've have built a patio down there where the 8 families can help them out when they're not restricted 9 to the hospital. And they can't leave because they 10 come back for infection. We also are involved heavily 11 with Marines and Navy personnel in need: Sometimes 12 insurance, sometimes medicine. 13 REV. LANDON SCHULTZ: What I think it 14 means to be a Christian is to be on the front lines 15 helping people who really need help. I can't be here 16 in every one of these situations personally. But 17 because of the money that we get through Texas bingo 18 and Texas charities, I can send a check to help the 19 people who are on the front lines. And I'm thankful 20 that we're able to do that, and I'm thankful for 21 you-all and the work you're doing. God bless you.) 22 MR. SANDERSON: And that's it. 23 (Applause) 24 MR. CORNWELL: I have a question. Can 25 I raise that question? 0022 1 MS. TAYLOR: No. Don't ask it yet. I 2 want to say one thing first, Mr. Cornwell. 3 One of the things that we were asked to 4 do while we were at Charity Day at the Capitol was to 5 go to our representatives' offices and talk about 6 charitable bingo to them. And so we spent several 7 hours, after we went to the meetings, and did just 8 that, walked the halls of the Capitol and found office 9 from office from office. And thank goodness my 10 daughter is better at directions than me or we would 11 still be there. 12 But one other important thing that 13 happened that day, while I was going around promoting 14 charitable bingo, I was also taking a letter around 15 that I had written about a friend of mine that has 16 breast cancer that could not get any help to get the 17 chemo or radiation therapy she needs. Her husband 18 died eight years ago and left her uninsured. And the 19 only income she receives -- she's disabled, but she's 20 never claimed disability because the lady is too 21 proud. Well, now it's come back to bite her, because 22 since she doesn't have disability, there is no 23 Medicare. There is nobody out there to help her. 24 She got a call yesterday, from our 25 pounding the halls, that the representative has found 0023 1 chemo and cancer -- the cancer treatment for her that 2 she needs, and she's able to start it this month. 3 MS. LOPEZ: Awesome! Awesome! 4 (Applause) 5 MS. TAYLOR: Now it's your turn, 6 Knowles. 7 MR. CORNWELL: Phil, we mentioned that 8 $30 million is raised through charitable bingo. But 9 I've heard different people say, "Well, $30 million in 10 charities' hands is equivalent to what in a state 11 program? You've heard the same numbers. Do you know? 12 MR. SANDERSON: I haven't heard that, 13 so I can't really comment. I do know that there's -- 14 whenever they talk about how much an event brings into 15 the town and economic impacts and so forth, it's 16 usually like five times. So . . . 17 MR. CORNWELL: Okay. Thanks, Phil. 18 MS. TAYLOR: Very awesome! Any more 19 discussion on Item No. 3? 20 AGENDA ITEM NO. 4 21 MS. TAYLOR: If not, we'll continue 22 with Item No. 4, report, possible discussion and/or 23 action on 4th quarter and calendar year 2006 bingo 24 conductor information. 25 MS. SHANKLE: Good morning. For the 0024 1 record, my name is Terry Shankle. The presentation 2 today covers bingo statistics for the fourth quarter 3 in calendar year 2006. 4 Total gross receipts for 2006 were 5 $655.6 million and are at the highest level since 6 2002. Last year's gross receipts represent a 7 3 percent increase over gross receipts in 2005. Even 8 though total gross receipts increased in 2006, regular 9 card sales continue to decline and pull-tab sales are 10 growing but at a lower rate than in past years. 11 Net receipts totaled $165.7 million and 12 is the highest amount since 2000. However, the 13 increase in net receipts in 2006 is only 2 percent 14 over net receipts in 2005. 15 Since 2002, the average amount spent 16 per player has steadily increased, even though the 17 number of occasions and the number of conductors 18 reporting has declined each year. The average amount 19 spent per player for 2006 was $33.78, or $2.18 more 20 than the average spent in 2005. 21 Overall, attendance has declined every 22 year since 1991. Last year 19.4 million people were 23 reported as playing bingo, a decrease of over 500,000 24 from 2005. Even with the continual decline in 25 attendance, there has been a 44 percent increase in 0025 1 the amount spent per player since 2002. 2 The average number of players per 3 occasion in 2006 were 136, down an average of three 4 players per occasion, or 2.69 percent from 2005. 5 Total number of occasions has decreased 6 each year since 1995. The number of occasions for 7 2006 were 1,000 less than those held in 2005. 8 However, the good news is, the decline from 2005 to 9 2006 was less than any year since 2002. And the 10 number of occasions per conductor remains fairly 11 constant, averaging 100 to 103 per year. The average 12 number of conductors reporting for 2006 was down 3.89 13 percent from 2005. 14 Fourth quarter statistics: Total gross 15 receipts for the fourth quarter of 2006 were 16 $159.3 million. Gross receipts from the sales of 17 regular and electronic bingo were $98.3 million. 18 Prizes paid for regular and electronic bingo were 19 $75.5 million, or 76.8 percent of gross receipts. 20 Gross receipts from pull-tabs totaled $61 million. 21 $44.1 million, or 72.3 percent of gross were paid out 22 in prizes. 23 Total gross receipts for this quarter 24 are approximately 1.1 percent greater than the same 25 quarter of 2005. For the same time period, prize fees 0026 1 increased by 1.6 percent 2 The fourth quarter cash disbursements 3 as a percentage of net receipts were -- 23.7 percent 4 were for callers, cashiers and ushers. 23 percent 5 went to rent, 17.7 percent reported as charitable 6 distributions. 12.1 were lease payments to 7 distributors. 7.2 percent went to cost of goods sold. 8 7.1 percent were for janitorial services, 5.1 reported 9 as security, legal and/or accounting. And 5 percent 10 were for miscellaneous expenses such as bingo 11 equipment, advertising and mortgage payments 12 This pie chart is a graphical 13 indication of what percent each expense is as it 14 relates to total expenses. Again, prize payouts or 15 charitable distributions are not included. Salaries 16 account for 43 percent of total expenses. Rent is 17 27.7 percent, while cost of goods sold was 23.1. 18 Gross receipts by type for the fourth 19 quarter were: Regular card sales were $60.4 million, 20 or 37.9 percent of total gross; pull-tab sales, 21 $61 million, or 38.3 percent of total gross. And 22 electronic card sales accounted for $37.9 million, or 23 23.8 percent of total gross. 24 The average number of players per 25 occasion decreased by one from the fourth quarter of 0027 1 2005. 2 This chart shows the comparison of net 3 receipts for the fourth quarter of years 2002 through 4 2006. As you can see, net receipts for instant bingo 5 have increased 9.9 million between 2002 and 2006, 6 while the net receipts for regular bingo has decreased 7 $8.2 million for the same time period, which means 8 that the overall net receipts have only increased 9 $1.7 million, while gross receipts have increased 10 $21 million. 11 To conclude this report, there is one 12 more statistic that I would like to mention for 2006. 13 Licensed authorized organizations reported 14 distributing almost $32 million to charitable cause or 15 deed. That's $32 million, is three times the amount 16 that is required by statute. 17 Thank you. 18 MS. TAYLOR: Any questions for Terry? 19 Comments? 20 MR. WHITTINGTON: Well, I just think 21 the last thing you said really means a lot of these 22 people do care, and they are concerned about the 23 charities. That's why we need to keep doing 24 everything we can to try to make it better for the 25 charities to get the most money that they can. These 0028 1 people are not greedy. They're not trying to run a 2 game on these charities anymore. These people 3 actually care. And it makes me feel good to hear that 4 mentioned by you. 5 MS. TAYLOR: Anything else from the 6 committee? 7 Any public comment? 8 AGENDA ITEM NO. 5 9 MS. TAYLOR: Moving on to Item No. 5, 10 report, possible discussion and/or action on 11 amendments to 16 TAC 402.102 relating to the Bingo 12 Advisory Committee. 13 MR. SANDERSON: I would like -- before 14 we discuss the rule in itself, I would like to give 15 you an opening information about moving towards plain 16 language. I'm going to ask our internal auditor, Cat 17 Melvin, to come up and start the presentation. One of 18 the things that we're doing is looking at, as we 19 develop rules and as we amend rules, trying to get the 20 language words plain and concise. 21 And so I will turn this over to her, 22 Ms. Melvin, and let her begin the presentation. 23 MS. MELVIN: Thank you. Madam 24 Chairman, members, for the record, my name is 25 Catherine Melvin. I'm the Internal Audit Director 0029 1 here at the Texas Lottery Commission. 2 As Mr. Sanderson indicated, there's 3 been quite an effort underway in the Bingo Division 4 under his leadership to rethink rules and write them 5 in a manner that is clear, concise, easy to understand 6 and, more importantly, easy to comply with. And we 7 have worked together some on this. And so he has 8 asked me to give some background as to plain language 9 and a plain language movement from which this stems. 10 So let me -- I guess let me start with: 11 What is plain language? It seems very simple. And if 12 you remember, these are all the things that we learned 13 back when we were in school and the things that our 14 English teachers tried to impress upon us. Basically 15 plain language -- and if you're familiar with the 16 plain language movement -- and let me just give you a 17 little bit of history on that. 18 Back in the nineties, the President 19 issued a memorandum, an executive memorandum, to all 20 federal agencies that directed them to rewrite their 21 brochures, their pamphlets, their rules, their 22 communications to the public in plain language. And, 23 in fact, the Vice President -- and it was Vice 24 President Gore at the time -- issued an award that he 25 called the No Gobbledygook Award, and there were many 0030 1 recipients of that. I think they had recipients 2 monthly. But it was an impressive effort because 3 federal agencies slowly began converting all of their 4 communication to the public in very clean, easy-to- 5 read format. Now, obviously, there is still a lot of 6 work be done to that. But let me discuss more about 7 what we're doing here. 8 So plain language is also called plain 9 English. Basically it's communication your audience 10 can understand the first time they read it or hear it. 11 It is plain language if your audience can find what 12 they need, understand what they find and use what they 13 find to meet their needs. 14 This is one definition. I like this 15 because it seems very straightforward. But if you 16 read the underlying text, "Writers of plain English 17 let their audience concentrate on the message instead 18 of being distracted by complicated language." And 19 don't we all want that? 20 Okay. So why plain language? Why is 21 this important? Well, fundamentally, obviously, there 22 are clear advantages to plain language. But we 23 believe that our public, our licensees deserve plain 24 language communication from their government. And we 25 can go into a lot of benefits of that one; you know, 0031 1 obviously, get your message across in the shortest 2 time possible, it's clear, it's easy to understand. 3 But at the end of the day, we're seeking compliance. 4 You know, we're seeking the overall meeting the goals 5 of charitable bingo. And so to the extent that we can 6 write our rules in a way that helps achieve that 7 objective, that's what we want. 8 So how to write in plain language? 9 And, as I stated before, you know, these are the 10 fundamental things that we were all taught back in 11 school, but basically writing in a manner that is 12 logically organized, it has your reader in mind, so 13 when you lay out your document or your brochure or 14 whatever it is you're creating, you're thinking about 15 that end user, using "you" and other pronouns, using 16 the active voice, shorter sentences, common everyday 17 words and, of course, easy-to-read design features, 18 whether that's bullets or numbering things or allowing 19 for a lot of white space in your text. 20 So ultimately no one technique defines 21 plain language. It's defined by its results: It's 22 easy to read, understand and use. We have a couple 23 examples here, and then Phil is going to show you how 24 this is translated into reworking and rethinking how 25 the bingo rules will look. And that will look very 0032 1 different over the months to come, as he starts to 2 share those with you. 3 But the first example is the Medicare 4 fraud letter. And I won't read this all to you, but 5 you can see there's lot of language here, 6 "Investigators at the contractor will review," 7 blah-blah-blah. The very last sentence: This can 8 lead to expulsion from the program, monetary 9 penalties, imprisonment, pretty serious, scary 10 language. 11 Well, at the end of the day, this was 12 rewritten to, "We will take two steps to look at this 13 matter: We will find out if it was an error or fraud. 14 We will let you know the result," bottom line. Very 15 nice; very clean. 16 Here is another example. This is my 17 favorite example, because this is something I think 18 every one of us is familiar with. Do you remember how 19 labeling on over-the-counter medicine used to look? 20 This was an example. This is how some of that looked. 21 And it's in very tiny print. It's hard to find. 22 Where's the directions and dosage for you? And it 23 wasn't the most reader-friendly text. 24 But now you have probably seen 25 over-the-counter medicine labeled like this. Well, 0033 1 this is another result of the plain language amendment 2 to change things into a format that the reader can 3 identify with. So this was very successful. 4 Another very common tool is to use 5 question and answer format. 6 And so I'm going to let Phil take it 7 over from here. 8 MR. SANDERSON: Thank you, Ms. Melvin. 9 We decided the first rule that we would 10 try to put in this format is the Bingo Advisory 11 Committee rule. I believe at the April Commission 12 meeting, they expressed a desire to have the BAC rule 13 encompass the work plan and the membership and so 14 forth in such a manner that it's all consistent in 15 time frames and everything happens at the same time. 16 But, anyway, so this rule, if you go 17 out to the website, you'll see the first page is still 18 the same. Of course, the Bingo Advisory Committee is 19 under Subchapter A, Administration. And you go to 20 Subchapter A. And the Bingo Advisory Committee is 21 402.102, and here is the current rule as it looks on 22 the website today. You know, it's just a long rule, 23 very detailed. 24 Under the new format, we would still 25 have the same subchapters. So Subchapter A would be 0034 1 Administration, and under that would be divisions 2 which would give us -- the Bingo Advisory Committee 3 would be Division 3. And when you go to Division 3 4 for the Bingo Advisory Committee, here are the rules 5 for the Bingo Advisory Committee. And they're in a 6 question format: What is the purpose of the Bingo 7 Advisory Committee? and so forth. 8 So, for example, the first one, "What 9 is the purpose of the Bingo Advisory Committee?" Here 10 is the answer. They advise the Commission on the 11 needs and problems of the state's bingo industry, 12 report the activities of the committee to the 13 Commission, perform other duties as directed, and so 14 forth. 15 If you had additional questions or 16 information on the Bingo Advisory Committee, like who 17 is allowed to serve on the Bingo Advisory Committee, 18 it would tell you who is allowed to serve: Conductors 19 that only conduct games, conductors that are also 20 commercial lessors, and so forth. 21 One thing that we're working with on 22 this as we develop these rules, is working with Legal, 23 and they're working with the Secretary of State to see 24 how we can encompass this format. It's not finalized 25 as to what the final versions will look like. But to 0035 1 that degree, we're moving towards this question and 2 answer type format for our rules. And so we'll start 3 with the Bingo Advisory Committee rule. 4 And that's all I have as far as the 5 plain language presentation goes. So if you have any 6 questions for Ms. Melvin or myself with that, we can 7 answer those questions at this time. 8 MS. LOPEZ: That is awesome, I just 9 have to say. I mean, that just really simplifies this 10 for a lot of the non-profits, I really do, I think 11 it's awesome. 12 MS. MELVIN: Thank you. Thank you very 13 much. 14 MR. SANDERSON: Of course, this is just 15 a draft at this point in time. We're still working on 16 it to some extent. Just to give you some high points 17 of the rule itself, the only things that are changing 18 to some degree from the current rule that's in place 19 is that this rule does not have the designated number 20 of individuals on the committee, other than nine, 21 which is by statute. 22 It just says there has to be a 23 representative interest between the public and the 24 conductors that conduct games, conductors that lease, 25 commercial lessors and system service providers. It 0036 1 also says that manufacturers or distributors may be 2 represented, because statutorily that's not a required 3 position. 4 Now, also, since we do not have any 5 system service providers, we put in there language 6 that would allow for, if there is a vacancy for one of 7 these positions where there is not an eligible 8 individual from one of the categories, then the 9 Commission can appoint someone from any of the 10 remaining balance of interests. 11 Some other things that we've added on 12 here is, we've added the nomination process at the top 13 of the second page. It lays out the nomination period 14 each year, and then it talks about what the minimum 15 qualifications are for the Bingo Advisory Committee, 16 how long you serve, the terms. 17 We've changed the terms to expire on 18 August 31st of each year, which sets with the time 19 frame of the BAC and also with, you know, the fiscal 20 year and so forth. It gives how a member may be 21 removed from the BAC before their term expires. Then 22 some general questions that we've had about, you know, 23 can we send someone in my place to the meeting? and so 24 forth, how often the BAC meets. 25 And then it goes into the appointment 0037 1 process. We've already discussed the information 2 about how the Commissioners appoint -- the nominations 3 come in and are reviewed and the Commissioners make 4 their appointment. It talks about the officers of the 5 BAC, and then the BAC reporting requirements, which is 6 one of the items I think that is on the agenda for 7 today, the annual report from the Bingo Advisory 8 Committee. And it also talks about the workplan and 9 also the continuation of the BAC. 10 And, as I said, this right now is 11 primarily just a draft form. We're still, you know, 12 working on the final formatting of it with Legal and 13 the Secretary of State to see how it actually works 14 out. 15 We're currently developing other rules 16 in this type of a question and answer. We're working 17 on the books and records rule and also the general 18 audit rule. Like I said, this is just in draft at 19 this point and would welcome any comment. You know, 20 if you get a chance to look at it right now, you can 21 offer comment. Otherwise, if you have any comment, 22 you can just e-mail myself with the other comment that 23 you might have from the rule. 24 And with that, I'll be glad to answer 25 any questions. 0038 1 MS. TAYLOR: I agree. What an idea, 2 rules that people can understand. 3 MR. SANDERSON: Well, first off, I 4 think our current rules, people can understand our 5 current rules to a certain extent. We're just trying 6 to make it more user friendly, which I think is the 7 movement that we're going towards. 8 MS. ROGERS: Phil, are y'all looking at 9 doing the question and answer to all of the rules? 10 MR. SANDERSON: We're looking at this 11 for the majority of them. Of course, there may be 12 some rules where this format does not play out -- 13 MS. ROGERS: Right. 14 MR. SANDERSON: -- to a certain extent. 15 But to the best of what we're working on at this point 16 in time, that's what we're looking at. 17 MS. ROGERS: That's good. 18 MR. SANDERSON: Thank you. 19 MS. TAYLOR: Any other questions or 20 comments from BAC members? 21 MR. WHITTINGTON: Well, like I said, I 22 think everything is moving pretty good. We understand 23 everything. And I just believe in having a strong 24 BAC, because over the last four years, I've noticed 25 how much input the BAC, along with the Texas Lottery 0039 1 Commission Charitable division, you know, we've come a 2 long ways of solving things. And I just hope we can 3 just keep this strong BAC going as well as the 4 communication between the two, because when it's all 5 said and done, Texas will benefit, the charities -- 6 okay? -- of Texas through bingo, if we just keep 7 working together, you know, and having a strong BAC. 8 MS. TAYLOR: So this rule will help us 9 continue to have a strong BAC. 10 MR. WHITTINGTON: Yes, yes. 11 MS. TAYLOR: Is that what you're 12 saying? 13 MR. WHITTINGTON: Yes. 14 MS. TAYLOR: All right. Any other 15 comment? 16 Any public comment? 17 MR. DOUGHERTY: Madam Chairman -- 18 MS. TAYLOR: Yes, sir. 19 MR. DOUGHERTY: -- I think this public 20 member position is coming up this August -- right? -- 21 this year? 22 MR. SANDERSON: Yes, sir. 23 MR. DOUGHERTY: So how is the 24 nominating procedure passing -- we've got three 25 applicants at -- 0040 1 MS. TAYLOR: Let me get into Item No. 2 6 -- 3 MR. DOUGHERTY: Or is that another 4 item? 5 MS. TAYLOR: -- and then we'll ask you 6 to reask that question -- 7 MR. DOUGHERTY: All right. 8 MS. TAYLOR: -- because I think 9 that's -- 10 MR. DOUGHERTY: All right. 11 MS. TAYLOR: -- where it's going to 12 fit. 13 MR. DOUGHERTY: Okay. 14 AGENDA ITEM NO. 6 15 MS. TAYLOR: Item No. 6, consideration 16 of and possible discussion and/or action on 17 nominations and appointment and/or nomination and 18 appointment procedure on the Bingo Advisory Committee. 19 Now, Mr. Jack, would you like to reask 20 that question? 21 MR. DOUGHERTY: I don't remember what I 22 said. 23 All right. I notice in the items, 24 there are three applicants for public member -- all 25 right? -- pat Gifford, Cochise Cash -- I don't know if 0041 1 he's an Indian or not -- and Charles Pierce. I would 2 like to know the actions that the nominating committee 3 has taken on these members. 4 MS. TAYLOR: Kimberly, would you like 5 to answer that? 6 Or, Phil, would you like to answer 7 that? 8 MR. SANDERSON: Well, I'll go ahead and 9 start. This item and also the next item, the work 10 plan, are two items that I added to the agenda to 11 discuss because at the time we were drafting up the 12 Bingo Advisory Committee agenda, there was some 13 discussion about the work plan that they had presented 14 I guess in March or April to the Commissioners, and 15 then also the nomination process which now looks like 16 it's included in this rule that I just handed out to 17 everyone. 18 The nomination process is going to 19 change just a little bit to where once we receive the 20 nominations, we'll review the applicant, make sure 21 they're eligible and they qualify for the position. 22 We'll also send a copy of the nominations to each 23 individual Commissioner for their review. We'll go 24 through and we'll rank the nominations, with the 25 advice and consultation of the Executive Director of 0042 1 the Lottery, if appropriate. We'll submit to the 2 Bingo Advisory Committee our staff recommendations. 3 You will also have -- your nominations committee will 4 have the copies of the nomination forms which they can 5 conduct their own interviews and contacts. 6 Like I said, we'll present our 7 recommendations. Y'all can discuss your 8 recommendations. And then at the following Commission 9 meeting after that point, then when the Commissioners 10 appoint an individual, we'll have both the discussion 11 from staff and from the Bingo Advisory Committee. And 12 the Bingo Advisory Committee will be used more as a 13 resource than the nominee process. 14 So right now, moving through with this 15 rule, we're hoping to have it on the June Commission 16 meeting, which -- and we'll probably start working 17 towards the time lines that are in this rule as it's 18 laid out. So hopefully somewhere in the July or 19 August time period, there would be the recommendations 20 of who is going to be on the -- staff recommendations 21 for the BAC. And, like I said, the terms are going to 22 change to a September 1 to August 31st, still 23 three-year staggered terms and so forth. 24 Does that answer your question? 25 MR. DOUGHERTY: Yes, sir. Thank you. 0043 1 MR. WEEKLEY: How many advisory members 2 are up for replacement or reelection? 3 MS. ROGERS: Two, three. 4 MR. SANDERSON: I can find that fairly 5 quickly. 6 MS. ROGERS: By August there will be 7 four. 8 MR. WEEKLEY: Four? 9 MS. ROGERS: Right. Now there's three. 10 Right now there's three. And your position -- Jack's 11 position will make four. 12 MR. SANDERSON: There's currently I 13 believe two that are held over and then three 14 additional ones that are terms are expiring. 15 MS. ROGERS: Five. 16 MS. TAYLOR: I realize this is a 17 legislative item, but I should have asked Nelda when 18 she was up here talking. 19 MS. TREVINO: I'm here. Sorry. 20 MS. TAYLOR: Is there any chance that 21 the Legislature is going to change that service system 22 provider position that is unable to be filled on the 23 BAC, so that it could be a nine-member committee 24 again? 25 MS. TREVINO: Phil, if I'm not 0044 1 mistaken, I think there's language in House Bill 1156 2 that eliminates language related to the system service 3 provider, basically for what you just said. 4 MS. TAYLOR: Will they be adding 5 another position or are they just going to reduce the 6 number on the BAC to eight? 7 MR. SANDERSON: The BAC would still say 8 nine. 9 MS. TAYLOR: So what would that 10 additional position, what would that be? 11 MS. TREVINO: I don't think there is 12 language in the bill that changes or adds -- I think 13 it still leaves it -- would leave it up to the 14 discretion of the Commission. 15 MS. TAYLOR: Okay. 16 MR. SANDERSON: It does. It goes back 17 to the -- the statute only requires a balanced 18 interest. And, you know, if you were to go look at 19 our rule that we were talking about a while ago, then 20 the second question talks about who is on the BAC. 21 Right now the current rule says there's 22 three conductors, two commercial lessors, one charity 23 lessor, the SSP, the manufacturer/distributor and the 24 public individual. And now the rule in the draft 25 format indicates that there has to be at least one of 0045 1 those positions at all times on the BAC and allows for 2 the Commission to have -- if they want three charities 3 or three charity lessors or, you know, whoever is best 4 qualified -- 5 MR. WHITTINGTON: Right. 6 MR. SANDERSON: - to serve on the Bingo 7 Advisory Committee. And then also in the rule, we've 8 added that if there is a position such as the SSP, 9 where there are no individuals that can be appointed, 10 then the Commission has the discretion to appoint 11 someone from another category. 12 MR. WHITTINGTON: As we were saying a 13 while ago. 14 MR. SANDERSON: So that's where, you 15 know, that appointment process would come up. 16 MS. ROGERS: I would just like to say 17 one thing in reference, because I was the Chair on the 18 nomination committee. And after reading this, Phil, I 19 mean, I like this. I think this would be a great 20 process in here as far as my opinion goes. 21 As long as -- and I've always said as 22 long as we don't lose interviewing the individuals. 23 And individuals like ourselves who are in the everyday 24 working bingo world interview these individuals to 25 make sure that we get the best people out there 0046 1 because, like I said, I think we've done a pretty good 2 job. I think we have a great BAC. 3 MR. SANDERSON: And I can't speak for 4 the Commissioners, but I believe that's what -- one of 5 their, you know, goals is that the BAC be used as a 6 resource and try -- 7 MS. ROGERS: True. And that's 8 wonderful. And I've always said, as long as we don't 9 lose that aspect of getting an interview with the 10 individuals and getting the best ones. I 11 personally -- you know, so we could funnel the best 12 qualified people to the Commissioners. But them 13 having every one of them, that's great. 14 MS. TAYLOR: Any other comments? 15 BAC members? 16 And public comment? 17 AGENDA ITEM NO. 7 18 MS. TAYLOR: We'll go on with Item 7, 19 consideration of and possible discussion and/or action 20 on the Bingo Advisory Committee work plan. 21 MR. SANDERSON: In your notebook is a 22 copy of the work plan that y'all had drafted I believe 23 at the February meeting. And, once again, it was 24 presented to the Commissioners. And the question came 25 up as to the different time lines that are observed as 0047 1 far as the terms of the members, the time of the work 2 plan coming out, the annual report and those other 3 items. So I just had it in here for your discussion 4 if you wanted to. It looks like that this will 5 probably go in the July or August meeting to the 6 Commissioners for their approval, and it would be the 7 work plan for the time period September 1 through 8 August 31st. 9 MS. TAYLOR: So at this point we're 10 going to continue working under the work plan from 11 2006? 12 MR. SANDERSON: That is fine -- 13 MS. TAYLOR: Okay. 14 MR. SANDERSON: -- which is basically 15 the same as this one. 16 MS. TAYLOR: There was a question. 17 Well, there were a couple of things on 18 the 2006 that we had taken off that we felt were 19 inappropriate, the bingo caller of the year, and there 20 was another one that we no longer were working on. 21 So -- okay. 22 So this is going to be presented at the 23 September -- the July meeting? 24 MR. SANDERSON: The July or August 25 meeting, yes, ma'am. 0048 1 MS. TAYLOR: Do we need to do any 2 additional work on this prior to that? 3 MR. WHITTINGTON: This looks good. 4 MR. SANDERSON: I don't think so. 5 MS. TAYLOR: Okay. Just checking. 6 Any other BAC member comment on this 7 work plan? 8 MS. ROGERS: I have one comment, just 9 so we can maybe discuss this and get this out. I 10 presented this to the Commissioners. I read this to 11 them. And one of the concerns they brought forward 12 was, why is it the same thing going over and over and 13 over again? Are we not finishing something and then 14 starting something new? And I think -- Suzanne and I 15 had had a discussion -- just so it's out there in case 16 someone is reading the minutes and you want to know -- 17 and correct me if I'm wrong, Suzanne -- a lot of these 18 continue to every day bring up new problems where we 19 need to work on them. Is that correct? Maybe you 20 could explain it to everybody like -- 21 MS. TAYLOR: Yes, I do believe that. 22 When we initially got together and worked on the work 23 plan back in 2006 -- which we spent a lot of time on 24 it -- and what we were trying to do was put things in 25 the work plan that would be continuing items, because 0049 1 prior to this, if it wasn't within the work plan, we 2 couldn't put it into the agenda. So we were trying to 3 create a work plan that would not limit us on the 4 agenda items that we felt were appropriate and needed 5 to be able to be discussed during our meetings. 6 So a lot of these items on here are 7 things that were always -- I mean, obviously, we're 8 always going to want to talk about the status of the 9 bingo industry. 10 MS. ROGERS: Right. 11 MS. TAYLOR: We're always going to want 12 to talk about the proposed rules, you know, talk about 13 the effect that the rules are having on the operation 14 of bingo. And a perfect example of this is the bond 15 rule, you know, how it was hurting bingo. Well, if we 16 hadn't had that on here, it wouldn't have been 17 appropriate to discuss it possibly. I mean, just 18 depending upon who was sitting out there and telling 19 us it wasn't in our scope on the agenda. 20 And the alternative styles of bingo, we 21 know we're always going to have to be working on new 22 bingo games and things to make our games more 23 exciting, the review of the legislation and the 24 impact. I mean, I would think that each and every one 25 of these items that we have thought out were things 0050 1 that were always going to be a continuing need of the 2 industry. And the ones that we felt that we weren't 3 going to be working on anymore -- the bingo caller of 4 the year, and I can't really remember what the other 5 things were -- we left alone. And we had changed them 6 and added a couple of new things. 7 But the whole idea was, is that these 8 are things that are always going to continue to be 9 something we need to be working on and looking at and 10 always going to be of importance to us. 11 Anybody else have anything to say? 12 MR. WHITTINGTON: Well, I think 13 basically these things that are the foundation of 14 bingo, we're going to always have to build on those 15 foundations. That's basically what it is, and it's 16 going to steadily change, but it's going to have the 17 same talent as far as being worked on, but it's going 18 to change year-to-year, no matter whether we talk 19 about the same thing, because that's what bingo is all 20 about, those rules and regulations. 21 MS. TAYLOR: I think there's going to 22 be items that come up that we'll be able to start and 23 finish. You know, we'll be able to start a specific 24 rule and work kind of with the staff, and it will be 25 finished and will be accepted by the Commissioners, 0051 1 and that will be the end of it. But there's other 2 things that are always going to be ongoing. 3 MR. WHITTINGTON: Yes. 4 MS. TAYLOR: Like the paperwork just 5 never ends, you know. 6 MR. CORNWELL: Suzanne, I have two 7 points -- Madam Chair. I assume that in the work plan 8 we have a continued commitment to the education and -- 9 we've got a work plan that says comments on 10 improvement and the status of the bingo industry. 11 Is this (referring to microphone) not 12 working? 13 MR. WHITTINGTON: No, I don't think so. 14 Put it over there. There you go. 15 MS. TAYLOR: You look real important 16 now. 17 MR. WHITTINGTON: Yes, very, very. 18 MR. CORNWELL: Thank you. 19 Madam Chair, I'm talking about, you 20 know, I would -- one of the work plan items, subset 21 under improving the status of the bingo industry, we 22 probably ought to have a portion in there that 23 educates or be able to bring to light various issues 24 in our work plan. I want to make sure that's in our 25 work plan. 0052 1 And I'm asking you, my question is: 2 Would you consider that under the improvement and the 3 status of the bingo industry? 4 MS. TAYLOR: Educating who? 5 MR. CORNWELL: The industry as a whole. 6 I would like to bring a lawyer in that is an expert on 7 UBIT. I know that a lot of you folks from San Antonio 8 have been -- operators have been told a lot of things 9 by the IRS agent down there under your UBIT audit, and 10 I'm not just sure that they're entirely correct. And 11 I would like to bring, if possible, somebody in to 12 give a presentation on what UBIT really is. 13 MS. TAYLOR: I believe that it would be 14 appropriate -- well, it does says action. I mean, it 15 would be appropriate under the agenda item to add 16 additional items to this work plan. It's going to be 17 re-presented to the Commissioners, is my 18 understanding. So if we feel the need to add 19 something, this is the appropriate time to do it. 20 MR. CORNWELL: Well, I'm going to ask 21 you my question. Do you think that is -- 22 MS. TAYLOR: What's your words? 23 MR. CORNWELL: My words? Provide 24 opportunities to communicate issues to the bingo 25 industry. 0053 1 MS. TAYLOR: I don't know if "to the 2 bingo industry" is appropriate, since we're a body 3 that is supposed to be apprising the Commissioners. 4 MR. CORNWELL: Okay. 5 MS. TAYLOR: I don't know if that's 6 outside of the realm of what we're supposed to be 7 doing. It's a good idea. I just don't know -- 8 Mr. Sanderson, would you like to answer that? 9 MR. SANDERSON: Well, item No. 6 on the 10 work plan, I believe, may cover some of that to some 11 degree, but, you know, that specific more to public 12 awareness of just charitable bingo in and of itself. 13 But I do think that there are opportunities that you 14 could -- under the improvement and status of the bingo 15 industry, I think that would be broad enough to cover 16 something along the lines of a recommendation that, 17 you know, for training for the organizations, 18 recommend that we add something to the bingo operator 19 training program, if possible for that. One thing I'm 20 not sure if you're aware of, I know the IRS is 21 planning a phone forum program -- 22 MR. CORNWELL: They are. 23 MR. SANDERSON: -- in May. I don't 24 know the exact date yet. They left me a voice mail I 25 believe last week where they've got the times lined 0054 1 up. 2 MR. CORNWELL: You know, Phil? I think 3 that's today. 4 MR. SANDERSON: Is it today? 5 MR. CORNWELL: I think it's May 2nd. 6 MS. ROGERS: It's right now, 11 7 o'clock. 8 MR. SANDERSON: I knew it was the first 9 part of May. But all we got the first time, it was 10 just going to happen in May of 2007. And they may 11 have another one later on, depending on how this one 12 is received. 13 MS. ROGERS: Could we not, on No. 6, 14 put positive public awareness initiatives and 15 education or something -- and educate, just add -- 16 MR. WEEKLEY: I think it's better in 7. 17 MS. TAYLOR: At any rate, as long as 18 it's something that we're not tied up from doing is 19 what we want to be able to do, to be sure that we can 20 bring that. And I absolutely agree with you. I went 21 to several different operator training classes when we 22 were doing like a report on them, on one of the 23 committees. 24 And in one the operator training 25 classes, the IRS was there and explained to the 0055 1 charity, had handouts and explained to them what was 2 going on. And that was the one and only time, and I 3 went to three or four of them during that time period. 4 Every one that they had, I was going to before the 5 next meeting. And only one of them touched on the 6 unrelated business income tax. And it was very 7 interesting. It was important. I think it's a very 8 important thing for these organizations to know, but 9 it's not included. And you're right. 10 MS. LOPEZ: Could we not, on No. 6 -- 11 it says positive public awareness and training 12 initiatives. Could we not add the word "training" to 13 where that could kind of fall in line with what 14 Knowles was discussing about educating? It would be 15 basically training the industry. 16 MR. CORNWELL: I think we have the -- 17 we have the statutory charge to advise the Commission 18 on unrelated business income taxes. If there needs to 19 be rule changes or statutory changes, we would need to 20 make the Commission aware that those are some 21 necessary changes. 22 I think as you get into the details of 23 the UBIT, that the reason we have to report where and 24 why we're using these funds for charitable purposes, 25 very much so for UBIT purposes, making the bingo side 0056 1 of it at least exempt. So I would like to make sure 2 this type of stuff is included on a 2007 work plan. 3 And, Suzanne, I'll work on some 4 language that maybe clarifies that and e-mail you 5 with. Okay? 6 MR. WHITTINGTON: Well, I want to say 7 something about the IRS. I mean, we have had like 8 three auditors from the IRS come in on our charities. 9 Two of them went fine, of course. And this third one, 10 this lady walked in and I'm there talking about bingo. 11 She was really stunned that, "I don't even know 12 nothing about bingo." And she's sitting there, she 13 says, "I don't understand. Explain it to me." 14 And I've gotten all this paperwork, all 15 of these quarterly reports and everything. She didn't 16 look at one. Okay? Once I got through talking to 17 her, she said, "Okay. Thank you, Mr. Whittington. 18 Now I can go to my next audit and I can understand 19 bingo. Thank you for advising me." 20 She didn't know anything about bingo. 21 She walked out. She didn't check nothing. 22 MS. TAYLOR: I doubt when you were 23 finished with her, she didn't want to check. 24 MR. WEEKLEY: Larry, send her a bill. 25 MR. WHITTINGTON: She told me, "Thank 0057 1 you. I really appreciate that." 2 And I think -- what I wanted to get to, 3 not only do the IRS need to advise us about the IRS 4 and their procedures, somebody needs to advise the IRS 5 and tell them about bingo, before they come in and 6 audit these bingo charities. 7 COMMISSIONER CLOWE: Madam Chairman, 8 Tom Clowe, a member of the board of the Texas Lottery 9 Commission. 10 I think you got it just right. And I 11 was delighted to see you work through it in regard to 12 your role. And you've identified in my mind a 13 potential need, and you've reached an agreement that 14 something needs to be done in relation to the work 15 plan. 16 And my suggestion would be that you 17 take it to the Commissioners in your proposed work 18 plan and let them hear from you about this identified 19 need and what you would like to do about it and then 20 get direction from the Commissioners. 21 And my anticipation is, you'll get a 22 response that will be good direction. It wouldn't be 23 correct, I think, for you to take it upon yourself as 24 a board to move and create some action. You can, 25 remember, as individuals, come to either the 0058 1 Commissioners or to the staff and ask for them to act. 2 But you have come to some unanimity on this issue, and 3 you seem to be in agreement. 4 So I would include it in your proposed 5 work plan and get direction from the Commissioners. 6 That's exactly the function that I see this board 7 performing. So I would just like to say, I think you 8 were looking for some help, and I'll try to give it to 9 you. 10 Thank you. 11 MS. TAYLOR: Thank you. 12 Knowles, did you want to continue? 13 MR. CORNWELL: No, that concludes my 14 statement. I'll get something to you for the 2007 15 work plan for presentation at the next TLC meeting. 16 MS. TAYLOR: Okay. I don't know if 17 we're going to -- will our next BAC meeting be prior 18 to the Lottery Commission meeting? You might need to 19 get something back to us before we leave today, to 20 make sure that we've already gone through it and 21 approved it to be presented at their next meeting, 22 because I don't know which is going to come first, the 23 approval or the -- 24 MR. CORNWELL: I would like to table 25 this motion and move it to the end of the agenda -- 0059 1 MS. TAYLOR: Thank you. 2 MR. CORNWELL: -- and bring it up and 3 I'll have some language. 4 MS. TAYLOR: Thank you. 5 MR. CORNWELL: Thank you. 6 MS. TAYLOR: Okay. We will come back 7 to this item. 8 It's only 11:10. So if everybody is 9 prepared, we can go ahead and go through the Bingo 10 Advisory Committee Annual Report. 11 Did you need a break? 12 THE REPORTER: I'm fine. 13 AGENDA ITEM NO. 8 14 MS. TAYLOR: Okay. Are we ready to go? 15 This is the report that will be presented to the 16 Commissioners from the BAC. It can be changed prior 17 to presentation to them. So if you see something as 18 we're going through that you would like to change, we 19 need to go ahead and make the changes at this time. 20 I'll go ahead and read this through for 21 you and see what y'all think. 22 As you have seen in the rules, the 23 Commissioners have asked for specific comments on four 24 areas: Gross receipts, net receipts, charitable 25 distributions, expense, attendance. And they have not 0060 1 requested any other specifics areas at this time. 2 So using the information contained on 3 the bingo website, the numbers are then put together 4 in this report. 5 No. 1, gross receipts. Gross receipts 6 have continued to improve because of the increased 7 instant bingo sales due to event tabs and an increase 8 in electronic sales. Card sales entrance fees in 2006 9 decreased from 2005 by $9,642,524. Electronic sales 10 in 2006 showed a slight increase of $3,484,979 over 11 2005 electronic sales. And instant bingo sales 12 increased by $29,903,283, resulting in an increase in 13 instant bingo sales of approximately 13.3 percent from 14 2005 to 2006, thus creating an increase in overall 15 gross receipts of approximately 3.7 percent, or 16 $23,745,737. 17 Although instant bingo sales have 18 continued to increase due to the introduction of event 19 tabs, it should be noted that instant sales had 20 increased in 2005 by 28 percent; therefore, a 21 significant slowdown in the increase of instant bingo 22 sales was noted between 2005 and 2006. More income 23 would be derived from an increase in card sales since 24 the prize payouts are limited to $2,500 per session. 25 And with an increase in instant bingo sales, there is 0061 1 an increase in prizes paid out. 2 The charts on Page 4 shows you the 3 increase from 2000 -- well, it shows the gross 4 receipts from 2000 through 2006. 5 Page No. 5 shows a comparison in the 6 card sales, the electronic sales, and the instant 7 sales between last year and this -- well, 2005 and 8 2006. 9 The chart on Page 6 is a breakdown by 10 per person on what -- the instant card sales, the 11 electronic sales and the instant bingo sales have 12 done. 13 Any comment on this area of the report? 14 Item No. 2, net receipts. Although 15 gross receipts have shown an increase of $75,405,747 16 from 2000 to 2006, net receipts have decreased 17 $1,710,529 during the same time period. This anomaly 18 has occurred due to the decrease in card sales that 19 have a fixed prize payout and an increase in instant 20 bingo sales for the corresponding increase in prize 21 payouts, leaving the adjusted gross receipts with a 22 decrease of $2,898,198 during this period. However, 23 the adjusted gross receipts did increase by $6,052,939 24 from 2004 to 2006. 25 You can look at the charts on Page 8, 9 0062 1 and 10. What's interesting, if you flip 2004 to 2005, 2 it looks like the same chart, because all that's 3 happened is, we've got a one percent increase in the 4 mortgage expenses and a one percent decrease in other 5 expenses. Then when you go 2005-2006 and you flip 6 those two charts, once again it looks the same. Our 7 expenses are the same, almost stable. When you look 8 at the charts, the percentage is -- the change is so 9 small that the percentages don't even change. It 10 looks like you're just looking at the same charts over 11 and over, because the expenses are remaining just 12 about -- I think organizations have reduced the 13 expenses and cut costs to where now everything that's 14 being paid is what has to be paid. 15 Charitable distribution. Charitable 16 distributions have continued to follow the trend begun 17 in 2004. Charitable distributions in 2004 were 18 $30,044,665. They increased to $30,380,607 in 2005 19 and increased again to $31,992,821 in 2006. This is 20 the third year in a row to see a slight increase in 21 charitable distributions, even though there has been a 22 decrease in conductors and in attendance during the 23 same time period. 24 Increasing the gross receipts from card 25 sales and electronic sales through increased 0063 1 attendance would allow more income to be available for 2 charitable distributions. And you can see by the 3 chart on Page 11, I mean, we've begun the upward 4 trend, but we're a long way from 2000. 5 Item No. 4, expenses. Expenses 6 increased by $2,247,076 from 2005 to 2006. They have 7 remained relatively stable throughout the last six 8 years, and we're still $1,187,669 less in 2006 than in 9 2000, confirming that conductors have been managing 10 their expenses well. 11 There was an increase in expenses of 12 $2,247,076 from 2005 to 2006. This increase was due 13 largely to an increase in payroll of $1,055,468 and an 14 increase in bingo license fees, janitorial, utility, 15 supplies and services. Because expenses have remained 16 relatively stable, conductors should focus on revenue 17 enhancement. 18 You can see that on Page No. 12, it 19 shows our total expenses, which have gone up slightly 20 but still aren't back up to that 2000 level. They're 21 broken down by category on Page 13. It shows how much 22 each one of them was through 2006. There is a line 23 comparison on Page 14 which, once again, almost looks 24 like the exact same line, if it wasn't two different 25 colors, because the expenses going through are just so 0064 1 close. And the next page, where it used to be 2 called -- everything lumped into other expenses, but 3 it's broken out here on Page 15, And it includes the 4 other expenses, the janitorial, debit card, bingo 5 training, license, security, equipment repairs, 6 payroll, bingo equipment and advertising. And once 7 again, you can see that it's gone up a little bit in 8 the janitorial and utilities and supplies. But once 9 again, I believe that that's gone up due to the 10 electricity because the electricity has gone up and 11 that's -- 12 MR. WHITTINGTON: Yes. 13 MS. TAYLOR: -- where your electricity 14 is lumped right into that little number right there, 15 and then your payroll. The rest of them, you can see, 16 is just almost a duplication of the previous year. 17 Item No. 5 is attendance. Attendance 18 decreased by 625,294 from 2005 to 2006, with a 19 decrease in attendance of approximately 24.5 percent 20 from 2000 to 2006; $25,795,835, down to $19,488,568. 21 One reason for the continued decline in attendance is 22 due to a decrease of approximately 17.6 percent in the 23 number of organizations conducting bingo games from 24 2000 to 2006. This decrease may be due to the 25 increased competition for the gaming dollar, a lack of 0065 1 advertising bingo in Texas, and because current prizes 2 and games are no longer exciting to the general 3 public, therefore making bingo operations of bingo 4 games unproductive for the nonprofits conducting the 5 games. 6 Recommendations for improvement include 7 more charity involvement in requesting local 8 television and radio stations to run public service 9 announcements and working to make bingo more exciting 10 to players in the local halls. Improving attendance 11 remains the key issue to the success of charitable 12 bingo in Texas. 13 The chart on Page 16 shows the 14 attendance levels from 2000 through 2006, as we see 15 this continue to drop. But more significant when you 16 look at it, even if the number of conductors has 17 dropped from the 1,536 down to 1,265 in that same time 18 period. And that's on Page 17. 19 The information on Page 18 through 26 20 is -- or 26, 25 -- 26 is the information from the 21 bingo website. 22 Are there any questions? 23 MS. LOPEZ: I really like your No. 5, 24 attendance, because that really identifies all of the 25 problems and issues that we've been discussing over 0066 1 the past year or two. So again we obviously see the 2 issue, but we see a solution to the problem that we 3 can all work on. And so I just want to commend you on 4 this good job, Suzanne. 5 MS. TAYLOR: Thank you. 6 MS. ROGERS: Very nice job. 7 MR. CORNWELL: Madam Chair, excellent 8 report. It hits right home on all the major issues, 9 the five issues that we have. Your recommendations 10 are done well. And I honestly somehow, some way, feel 11 like we ought to spend more time talking about those 12 recommendations. But this is an excellent report. 13 Good job. Thank you very much. 14 MS. TAYLOR: One of the items last 15 year, the committee made some specific recommendations 16 that would have included some legislative changes. 17 When we took those to the Commissioner to do the 18 report, they said they did not want to see anything 19 that would require a legislative change. So that's 20 why none of those recommendations are included; you 21 know, progressive bingo. So like bingo, all the 22 things we talk about outside of this room that we 23 would love to do, they're not in this report because 24 it would require a legislative change. So we can only 25 recommend changes for improvement that are things 0067 1 within the scope of the Commission to do. 2 So if we have any additional 3 recommendations, it would be very, very easy to add 4 them to the report. Or if there's another chart that 5 you feel that we need to see in here, we can add it to 6 the report prior to presentation to the Commissioners. 7 MR. CORNWELL: Thank you. 8 MS. TAYLOR: So you have until the end 9 of the day. 10 MS. LOPEZ: Until the end of the day. 11 MS. TAYLOR: Until we leave this 12 meeting, we can come back to this item. We'll put it 13 on hold. If somebody has additional comments, we'll 14 do it at this time and approve this at the end of the 15 meeting for presentation, if you would like to do 16 that. 17 MR. CORNWELL: That's a good idea. And 18 then we can also have public comment on it, too? 19 MR. WHITTINGTON: Plus, I want to add 20 Suzanne stayed up all night, because her computer 21 crashed. 22 MS. TAYLOR: I no sooner finished it 23 than the computer crashed, and I had to start over at 24 4:30 in the morning. 25 MR. WHITTINGTON: And then drive up 0068 1 here. 2 MR. CORNWELL: Did you drive up? 3 MS. TAYLOR: My husband drove me. 4 MR. WHITTINGTON: While she was asleep. 5 MR. CORNWELL: Did you bring a pillow? 6 MS. TAYLOR: Well, I was making 7 changes, because the numbers on the website change 8 every single day, and I had made changes in the report 9 and the numbers. And I decided to tweak one of the 10 graphs and the whole thing just died. Anyway -- and 11 it's not that I hadn't saved it, because I had. But 12 when you went back it said it was so corrupted, 13 everything under that entire file folder disappeared. 14 At this time, I like to welcome our new 15 Commissioner, Cox. We love to see you here. Thank 16 you. If you have any questions, we would be glad do 17 answer them. If you have any comments, we would love 18 to hear them. 19 CHAIRMAN COX: Thank you, Suzanne. 20 MS. TAYLOR: Okay. Any other comment 21 at this time? Otherwise -- from the BAC members? 22 Otherwise, we'll reserve it until the end of the 23 meeting. No other comment? 24 Any public comment? 25 Yes, ma'am? 0069 1 MS. JOSEPH: Good morning. Sandy 2 Joseph, assistant General Counsel. 3 Just in regard to your review of the 4 work plan, I wanted to follow up on what Commissioner 5 Clowe had said a bit and just say that I suggest that 6 as you look at each item on the work plan, look to see 7 if you can tie that item back to one of the purposes 8 delineated in the statute or provided as a task for 9 the committee in the rule. I just think it's 10 important that you be sure you can tie that back. 11 MS. TAYLOR: Any other comments? 12 AGENDA ITEM NO. 9 13 MS. TAYLOR: Okay. Let's go on to Item 14 No. 9, report and possible discussion on the 15 activities of the Charitable Bingo Operations 16 Division. 17 MR. SANDERSON: Members, in your 18 notebook is the updated chart tracking charitable 19 distributions since 1982. Additionally, there is the 20 allocation memo that indicates allocation were up for 21 the fourth quarter of 2006, by 10.2 percent over the 22 fourth quarter of 2005. And then there's a press 23 release that was issued for these allocations, in your 24 notebook. 25 Other items, I would like to briefly 0070 1 update you regarding the usage of the Bingo Services 2 Center. Suzanne mentioned it when she was giving her 3 annual report. For the period of September 1, 2005 to 4 the end of April, we have had 3,249 individual log-ins 5 to the Bingo Services Center. And they viewed 36,648 6 different pages. And, of course, these are only those 7 that log in. It doesn't count the individuals that go 8 through the public portion of the site. 9 Currently we are 246 active external 10 users, and they represent 676 licensed organizations. 11 Additionally on our website, we have 71 of the forms 12 that are currently in an interactive format where you 13 can go on line, enter the information into the form 14 and then print it out and send it in. 15 We are also in the process of beta 16 testing a revised version of the quarterly report that 17 will be used for those organizations that only conduct 18 bingo with a temporary bingo license. We have reduced 19 the number of line items, hopefully to get them to 20 fill them out more timely and get them submitted. 21 Then also during the latter portion of 22 this summer, we'll begin testing Phase 2 of the Bingo 23 Services Center, which will allow for electronic 24 filing and tax payment of quarterly reports. Our 25 hopeful implementation of that portion of the Bingo 0071 1 Services Center is October 1st of 2007. 2 In Audit Services, the majority of the 3 activities that have been conducted by Audit Services 4 relate to the implementation of the internal audit. 5 As I mentioned earlier, we're developing rules as a 6 result of that internal audit. The following rules 7 are in the process of being developed, and that's the 8 books and records rule requirement, which will be for 9 conductors, lessors, manufacturers and distributors. 10 We will have a rule for the fair conduct of bingo, and 11 house rules, dispute resolution process rule, 12 corrective action rule, a general audit rule and 13 internal control guidelines. 14 Because of the timeline and the time 15 frame of getting these rules to the Commission for 16 possible adoption -- publication and adoption, we will 17 not be able to bring all these rules to the BAC for 18 your comment. However, once we have the rule 19 finalized in a draft format, we will publish it or 20 post it on the website. And I'll send each of you an 21 individual e-mail regarding that so that you can offer 22 your comments to me directly. 23 The audit procedures and the audit 24 report are being revised, as well as recommended forms 25 that will be utilized for keeping the information that 0072 1 you are required to keep for the quarterly reports. 2 Additionally, in March of 2007, the audit staff 3 received training on the generally accepted government 4 auditing standards, the yellow book revision 2007. 5 And they also had some training on the methodology for 6 conducting audits and the process and workpaper 7 documentation. 8 The Commission action on the following 9 rules have taken place this year: We have amended the 10 general licensing rule, 402.400, which allows for a 11 predetermined nation of eligibility for organizations 12 to be licensed. We hope that it helps streamline the 13 licensing process. 14 Additionally, we have adopted a new 15 rule, 603, for the bonds, which reduces the amount of 16 bond for new organizations. And the bond is based on 17 the licensed class that the organization is applying. 18 We've adopted the permissible expense 19 rule which helps define reasonable or necessary and 20 sets out guidelines for documentation. And currently 21 the price fixing rule, we had a public hearing this 22 morning on that rule. The version that was published 23 back in February, I believe, was an incorrect version. 24 We had to republish it last month. It will be 25 hopefully ready for the Commission to vote at the June 0073 1 meeting. The May meeting is just inside still the 2 comment period. 3 There have been two AG opinions that 4 have been issued this year. One AG opinion, GA-0499, 5 relates to health care expenses. And, in summary, 6 that opinion indicates that it prohibits an authorized 7 organization from incurring or paying from the bingo 8 account the cost of health insurance or benefits for 9 the organization's employees or their dependents. 10 The other AG opinion that was recently 11 issued is GA-0541, and it relates to electronic 12 pull-tab bingo. And it indicates that for specific 13 reasons, Texas would find that electronic pull-tab 14 bingo, as described in a previous floor amendment in 15 this 79th session, would require a constitutional 16 amendment. 17 And that is all I have on the 18 activities of the Bingo Division. And I'll be glad to 19 answer any questions you may have. Thank you. 20 MR. WHITTINGTON: Your voice is very 21 pleasant, Phil. You sound good, man. 22 (Laughter) 23 MR. SANDERSON: Well, thank you, Larry. 24 Thank you very much. 25 (Laughter) 0074 1 MS. TAYLOR: Okay. We're going to take 2 about a 15-minute break. We're getting down to the 3 end of the agenda. If anybody has anything to add or 4 we want to make changes to the work plan or anything 5 to add to our annual report, this is your opportunity 6 to get those items together, because it looks like 7 we'll be closing up the meeting when we come back. 8 Okay. Fifteen minutes. We'll be back 9 about a quarter of 12:00, realtime. 10 (Off the record: 11:30 a.m. 11:46 11 a.m.) 12 MS. TAYLOR: Okay. We would like to go 13 ahead and call the meeting back to order. 14 Okay. We've got five people sitting 15 here. The meeting has been called back to order at 16 this time. 17 Where is my gavel? 18 AGENDA ITEM NO. 7 (continued) 19 MS. TAYLOR: We're going to go back to 20 Agenda Item No. 7, the work plan. During the break, 21 Mr. Knowles has handed me an additional item to add to 22 our work plan, if anybody would like to comment on 23 this. He would like to add Item No. -- 24 MR. CORNWELL: Eight, I believe. 25 MS. TAYLOR: -- 8, advise the 0075 1 Commission on the needs of the industry for operator 2 training. 3 Okay. Any comment on this? 4 MS. LOPEZ: Could that be incorporated 5 with No. 6, with the public awareness, or would it 6 have to be a No. 8? 7 MR. CORNWELL: Rosie, let's add it to 8 specifics. 9 MS. LOPEZ: Okay. 10 MR. CORNWELL: And let's let these 11 other categories be more general, but let's make this 12 one specific. 13 MS. LOPEZ: Specific. Okay. 14 MS. ROGERS: I personally believe that 15 we should do this, because it will -- I can see this 16 helping a lot of charities. 17 MS. TAYLOR: Okay. Do I hear a motion 18 to approve the work plan -- wait. Let me back up for 19 a second here. 20 Phil was telling me that we might think 21 of changing our next meeting so that we could have one 22 more meeting prior to the Commission's adoption of the 23 work plan, to move our meeting up a couple of weeks so 24 we could have this meeting prior to it. So this is 25 kind of like a circle. We need to see if everybody is 0076 1 willing to do that 2 MR. CORNWELL: That is July. Right? 3 Phil, is that what you're telling that's going to 4 occur in July's meeting? 5 MS. TAYLOR: Or -- go ahead. 6 MR. SANDERSON: It will probably be the 7 August meeting. Right now you're tentatively set to 8 meet the first Wednesday in August, which means the 9 Commission is tentatively scheduled to meet two weeks 10 after that. And if you move your meeting up a week or 11 10 days, into July, it would give Suzanne enough time 12 to finalize her reports that she needs to get turned 13 in for the Commissioners when they hold their meeting 14 in August. 15 MS. TAYLOR: So what we could do is, we 16 could add this to the work plan, if everybody is in 17 agreement to it, which we'll do a motion in a second. 18 Then we can also, if we have any changes, I'll take it 19 to the Commissioners at their next meeting and see if 20 they have any additional input. That way we could 21 tweak the work plan prior to its adoption, at the 22 Commission meeting in August, if everybody is 23 agreeable to that. 24 Okay. In that case, do I hear a motion 25 to add this to the current work plan that we had -- 0077 1 the draft work plan? 2 MR. CORNWELL: Madam Chair, I move that 3 we add Item 8 to our draft work plan. 4 MS. TAYLOR: Is there a second? 5 MS. LOPEZ: Second. 6 MS. TAYLOR: All in favor? 7 FROM THE COMMITTEE: "Aye." 8 MS. TAYLOR: Opposed? 9 None opposed. It's unanimous. So we 10 will add this onto the agenda and talk to the 11 Commissioners at their next meeting and then get it 12 finalized for their August meeting when they'll 13 approve it. 14 MR. WHITTINGTON: So we're going to 15 move the BAC meeting? 16 MS. TAYLOR: We're not talking about 17 that yet, but we're going to in just a moment. That's 18 coming up, Larry. Keep that thought. 19 MR. WHITTINGTON: Yes. 20 MS. TAYLOR: Okay. So that's that one. 21 Are there any additions that we want to make to the 22 annual report? 23 Going once, going twice. 24 Public comment? 25 Okay. Do I hear a motion to submit the 0078 1 annual report to the Commissioners? 2 MR. CORNWELL: I move we submit your 3 annual report to the -- BAC's annual report to the 4 Commissioners at their next meeting. 5 MS. TAYLOR: Is there a second? 6 MS. ROGERS: I second that vote. 7 MS. TAYLOR: In favor? 8 FROM THE COMMITTEE: "Aye." 9 MS. TAYLOR: Any opposed? 10 It passes unanimously. We will hand 11 that to them at their meeting. 12 AGENDA ITEM NO. 10 13 MS. TAYLOR: Okay. We'll go on to Item 14 No. 10, public comment. 15 CHAIRMAN COX: Suzanne, Jim Cox, 16 Chairman of the Texas Lottery Commission. 17 I don't have any comments, but I wanted 18 to give y'all an opportunity to ask me any questions 19 or tell me anything that y'all wanted to tell me. 20 MS. TAYLOR: Thanks for coming. 21 MR. WHITTINGTON: I think you look very 22 good with your pinky shirt on. 23 CHAIRMAN COX: Thank you for your 24 service. 25 MS. TAYLOR: Seriously, we do so 0079 1 appreciate the interest the Commissioners have taken 2 in bingo. It means a lot to each and every one of us. 3 Sometimes we feel we're spinning our wheels. But 4 knowing that y'all are coming to the meeting and 5 listening to us and taking the time from your schedule 6 truly, truly means a lot to us all. 7 CHAIRMAN COX: We appreciate what y'all 8 are doing. 9 MS. LOPEZ: And I might just mention 10 again, just to hit on the Texas Charity Day last 11 Tuesday at the Capitol, it was again an awesome way of 12 promoting charitable bingo for our organizations. And 13 I just wanted to make that comment. 14 CHAIRMAN COX: And thank you for that. 15 Mr. Heinlein is having a copy of the DVD made for me 16 so I can take a look at it, and I look forward to 17 that. 18 MS. TAYLOR: Thank you. 19 CHAIRMAN COX: Thank you. 20 MS. LAUDER: Good morning, members and 21 Madam Chair. My name is Carol Lauder, from the 22 Controller's office. 23 I just want to say Bravo! to all of 24 you. When I first started working with the Bingo 25 Advisory Committee, you were actually under review as 0080 1 to whether -- not you personally -- but whether the 2 committee should be continued, as to whether it was 3 serving in the role that it was intended in carrying 4 out its mission. And I just have to say that I think 5 you have really started using processes and 6 collaboration as a committee in taking charge of the 7 role in which you serve. 8 I would like to mention some specifics 9 so that it's not so general. You seem to function as 10 a team. You seem to share subgroup, subcommittee 11 work. I'm sure some of you do more than others, 12 because every committee is like that. There's the 13 workers and there's the people that just can't find 14 time to do it. But still, you seem to be working as a 15 team. I remember when you were sitting like this, 16 facing outward, rather than sitting where you could 17 see each other and really having a meeting. So 18 congratulations on that. 19 You all seem to be so committed to 20 improving your role and charitable bingo. And I think 21 the proof is in the statistics. When I started 22 working with you, things were going down, down, down, 23 had been going down. You're kind of holding your own 24 for various reasons, and some of those reasons are 25 ideas that y'all have come up with and that the Bingo 0081 1 Division has acted on, where they can under statutory 2 requirements. 3 I have seen a lot more acknowledgement 4 of the contributions that the Bingo Division makes to 5 support you in serving in your role and a lot more 6 contributions from you to them in terms of what your 7 needs are. 8 You just have functional processes in 9 place. Everybody is contributing now. Everybody 10 talks. It's not just a couple of people doing the 11 talking in the meeting, which tells me that you're 12 operating as a team, which is what good team 13 management is all about, good contribution from the 14 team is all about. 15 Congratulations on the publicity you 16 received. Publicity was a huge issue when I first 17 started working with you. And it wasn't something 18 that the Bingo Division could do for you, because of 19 the statutes. The Texas Charity Day, I was so happy 20 to see just the video. And, obviously, there was more 21 to it than we got to see, and I think that is 22 terrific. I don't know how that came about or who is 23 responsible. But congratulations that you got that 24 publicity. 25 Congrats on the annual report. I think 0082 1 it's the most impressive report I've seen to date, and 2 I encourage you to continue. 3 So in some ways, I feel like my work is 4 done. I don't know that I continue to make a 5 contribution to the group. And I will be visiting 6 with the Commissioners about that, whether they would 7 like to see me continue in the role. I mean, I truly 8 feel like my work is done. I think you're doing 9 great. My hesitancy is that you have new members 10 coming on. And when you add new members, it changes 11 the dynamic of a committee. So, you know, we'll be 12 discussing that and we'll see if there's still a role 13 for me, or maybe not. And when my work is done, I 14 feel that I've done good, so that's not a bad thing. 15 Thank you. 16 MS. TAYLOR: Thank you, Carol. 17 MS. ROGERS: Thank you. 18 MS. TAYLOR: David Heinlein, I have a 19 witness affirmation form from you. Did you want to 20 say something? 21 MR. HEINLEIN: I've already said it. 22 MS. TAYLOR: Okay. Any other public 23 comment? 24 You're going to hand us one of these? 25 MR. ANAWATY: Yes. 0083 1 MS. TAYLOR: As soon as you finish. 2 Right? Okay. 3 MR. ANAWATY: Once I get one from you. 4 For the record, Hank Anawaty, adviser 5 to the Texas Charity Advocates, and board member. 6 I just wanted to address the day as 7 well, the Texas Charity Advocates day at the Capitol. 8 And I know we have probably talked about it enough, 9 but there are a couple of people that should be 10 recognized that aren't here. And that would be 11 Melissa Young, who is our Executive Director. It 12 would not have happened without her. And then, of 13 course, Mike Sizemore, who is at the Capitol for us 14 today. He was on the DVD. We would like to thank 15 them. 16 And then some of our board members were 17 very active in putting it together. That would be Dan 18 Moore, whom I believe you all know, and then David 19 Heinlein is one of our officers. And there's probably 20 a few others that I can't -- that doesn't come to mind 21 today. 22 In attendance were over 50 charities, 23 so that was a real breakthrough. And the awareness 24 was just unbelievable. We had both Houses recognizing 25 us. So what we set out to do about a year and a half 0084 1 ago has happened. So thank you-all for recognizing 2 that and showing the DVD today. 3 MS. ROGERS: Thank you. 4 MS. TAYLOR: Thank you for your time. 5 We appreciate it. I think everybody on this board 6 feels it's very important to have an outside source 7 since we can't do what Texas Charity Advocates can do. 8 Any other public comment? 9 AGENDA ITEM NO. 11 10 MS. TAYLOR: Then we are going to go 11 down to consideration of possible action on future 12 Bingo Advisory Committee meeting dates and/or items to 13 be considered for further meetings. 14 Mr. Larry. 15 MR. WHITTINGTON: I'm thinking if the 16 meeting has got to be moved back, I think the last 17 Wednesday of July would be fine with me. I don't know 18 how everybody else feels. 19 MS. ROGERS: That is the only Wednesday 20 that I will be out of town. I can make July 18th. I 21 can make August 1st. But I'm only one person. So if 22 everybody else can make that Wednesday, that's fine, 23 but I will be out of town. 24 MR. WHITTINGTON: Well, I think all of 25 us should be here. I can make any Wednesday. 0085 1 MR. WEEKLEY: The last meeting in July 2 would be -- 3 MS. ROGERS: What about the 18th -- 4 does that assist us? -- instead of the 25th? 5 MR. SANDERSON: July the 18th is a 6 tentative date for a Commission meeting. 7 MS. ROGERS: Okay. 8 MR. SANDERSON: That is the third 9 Wednesday in July. The last Wednesday is July the 10 25th. 11 MR. WHITTINGTON: 25th. 12 MR. SANDERSON: Tentatively the meeting 13 for the BAC is scheduled for August 1st currently. So 14 if you wanted to move that date up a little bit, any 15 time before August 1st would be sufficient. 16 MS. TAYLOR: Does it have to be on a 17 Wednesday? 18 MR. SANDERSON: It does not have to be 19 on a Wednesday. 20 MS. ROGERS: I am perfectly fine any 21 day of the week, just not that last week. 22 MS. TAYLOR: Oh, the whole week. Okay. 23 MS. ROGERS: I will be leaving on 24 Sunday and not returning until the following Sunday. 25 MS. TAYLOR: Okay, committee, what are 0086 1 the wishes of the committee? 2 MS. ROGERS: Did you want to make it 3 Tuesday or Thursday of the week before? 4 MR. WHITTINGTON: Thursday is bad. 5 MS. ROGERS: Thursday is bad? 6 MR. WHITTINGTON: Yes. 7 MS. ROGERS: Tuesday? 8 MR. WHITTINGTON: Tuesday is fine. 9 MS. ROGERS: So July 16th? 10 MS. LAUDER: 17th. 11 MR. WHITTINGTON: Could you come 12 through Dallas and pick me up? 13 MR. SANDERSON: July the 17th? 14 MS. ROGERS: You can't make the 17th? 15 No? 16 July 17th, Phil? 17 MR. SANDERSON: That date is open. 18 MR. WEEKLEY: July what? 19 MS. ROGERS: 17th. 20 MS. TAYLOR: Okay. 21 MR. DOUGHERTY: What day of the week? 22 MS. LOPEZ: Tuesday. 23 MS. TAYLOR: Is that Tuesday? 24 MR. SANDERSON: It's a Tuesday. 25 MS. TAYLOR: Tuesday, July 17th. Can 0087 1 any committee member here feel they cannot make that 2 date? 3 Okay. Then our meeting will 4 tentatively be scheduled for Tuesday, July 17th. 5 Items to be considered for future 6 meetings. Obviously, the items that we didn't finish 7 today will be on there. If there are additional items 8 that you are aware of, if you'll let Phil know or 9 myself know. 10 MR. SANDERSON: I will need those items 11 by July the 2nd and any information that you would 12 like to have in the notebook by July the 9th. 13 MS. LOPEZ: I would like to go ahead 14 and bring back a public service announcement report at 15 that time, so you can add that. 16 MS. TAYLOR: Okay. Any agenda items 17 need to be in by July 2nd, any information for the 18 notebooks by July 9th. 19 Any other items? 20 AGENDA ITEM NO. 12 21 MS. TAYLOR: Then this meeting will be 22 adjourned. It's 12 o'clock. 23 (Meeting adjourned at 12 o'clock) 24 25 0088 1 C E R T I F I C A T E 2 STATE OF TEXAS ) 3 COUNTY OF TRAVIS ) 4 I, Aloma J. Kennedy, a Certified 5 Shorthand Reporter in and for the State of Texas, do 6 hereby certify that the above-mentioned matter 7 occurred as hereinbefore set out. 8 I FURTHER CERTIFY THAT the proceedings 9 of such were reported by me or under my supervision, 10 later reduced to typewritten form under my supervision 11 and control and that the foregoing pages are a full, 12 true and correct transcription of the original notes. 13 IN WITNESS WHEREOF, I have hereunto set 14 my hand and seal this 16th day of May 2007. 15 16 ________________________________ 17 Aloma J. Kennedy Certified Shorthand Reporter 18 CSR No. 494 - Expires 12/31/08 19 Firm Certification No. 276 Kennedy Reporting Service, Inc. 20 Cambridge Tower 1801 Lavaca Street, Suite 115 21 Austin, Texas 78701 512.474.22 22 23 24 25