0001
1                 TRANSCRIPT OF PROCEEDINGS
2                         BEFORE THE
3                  BINGO ADVISORY COMMITTEE
4                 (TEXAS LOTTERY COMMISSION)
5                       AUSTIN, TEXAS
6   QUARTERLY MEETING OF THE      
    BINGO ADVISORY COMMITTEE      
7   WEDNESDAY, MAY 6, 2009        
8   
9                     COMMITTEE MEETING
10                  WEDNESDAY, MAY 6, 2009
11  
12                BE IT REMEMBERED THAT on Wednesday, the
13  6th day of May 2009, the Bingo Advisory Committee
14  meeting was held from 10:10 a.m. to 11:38 a.m., at the
15  Offices of the Texas Lottery Commission, 611 East 6th
16  Street, Austin, Texas  78701, before SUZANNE TAYLOR,
17  Chair.  The following proceedings were reported via
18  machine shorthand by Aloma J. Kennedy, a Certified
19  Shorthand Reporter of the State of Texas, and the
20  following proceedings were had:
21  
22  
23  
24  
25  
0002
1                        APPEARANCES
2   
    BINGO ADVISORY COMMITTEE:
3   
              Ms. Suzanne Taylor, Chair
4             Mr. Earl Silver
              Mr. Thomas "Tom" Weekley
5             Mr. Larry Whittington
              Mr. Knowles Cornwell
6             Mr. Francis M. Ciancarelli
              Ms. Pat Gifford
7   
8   
    CHARITABLE BINGO OPERATIONS DIVISION DIRECTOR:
9   
              Mr. Phil Sanderson
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 -  The Bingo Advisory
    Committee will call the meeting to order......      5
4   
    AGENDA ITEM NO. 2 - Consideration of and
5   possible discussion and/or action on the
    minutes of the February 4, 2009 Bingo
6   Advisory Committee meeting....................      5
7   AGENDA ITEM NO. 3 - Report, possible
    discussion and/or action on the 81st
8   Legislature...................................      6
9   AGENDA ITEM NO. 4 - Report, possible
    discussion and/or action on revised Bingo
10  Public Service Announcement...................      9
11  AGENDA ITEM NO. 5 - Report, possible
    discussion and/or action on Calendar
12  Year 2008 bingo conductor information.........     13
13  AGENDA ITEM NO. 6 - Consideration of and
    possible discussion and/or action on the
14  Bingo Advisory Committee......................     20
15  AGENDA ITEM NO. 7 - Consideration of and
    possible discussion and/or action on the
16  Bingo Advisory Committee, including the
    formation of a nomination committee...........     28
17  
    AGENDA ITEM NO. 8 - Consideration of and
18  possible discussion and/or action on the
    Bingo Advisory Committee work plan............     32
19  
    AGENDA ITEM NO. 9 - Report and possible
20  discussion and/or action on the
    workgroup  Market Conduct...................      35
21  
    AGENDA ITEM NO. 10 - Report and possible
22  discussion and/or action on the 2008
    Bingo Advisory Committee Annual Report........     57
23  
    AGENDA ITEM NO. 11 - Report and possible
24  discussion and/or action on Draft 16 TAC
    402.420. Qualifications for License..........     68
25  
0004
1                     TABLE OF CONTENTS
2                                                 PAGE NO.
3   AGENDA ITEM NO. 12 - Report and possible
    discussion on the activities of the
4   Charitable Bingo Operations Division..........     69
5   AGENDA ITEM NO. 13 - Public comment...........     80
6   AGENDA ITEM NO. 14 - Consideration of and
    possible action on future Bingo Advisory
7   Committee meeting dates and/or items to
    be considered for future meetings.............     80
8   
    AGENDA ITEM NO. 15 - Adjournment..............     84
9   
    REPORTER'S CERTIFICATE........................     85
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 6, 2009
3                        (10:10 a.m.)
4                     AGENDA ITEM NO. 1
5                 MS. TAYLOR:  Okay.  I would like to go
6   ahead and call the meeting to order.  The time is
7   10:10.
8                     AGENDA ITEM NO. 2
9                 MS. TAYLOR:  Item No. 2 on the agenda,
10  it's consideration of and possible discussion and/or
11  action on the minutes of the February 4, 2009 Bingo
12  Advisory Committee meeting.
13                Is there a motion for approving what's
14  posted on line?
15                MR. CORNWELL:  I so move.
16                MS. TAYLOR:  Second?
17                MR. WHITTINGTON:  Second.
18                MS. TAYLOR:  Any discussion?
19                (No response)
20                All in favor?
21                COMMITTEE MEMBERS:  Aye.
22                MS. TAYLOR:  Opposed?
23                (No response)
24                None opposed, so it unanimously passed.
25  
0006
1                     AGENDA ITEM NO. 3
2                 MS. TAYLOR:  Item No. 3, report,
3   possible discussion and/or action on the 81st
4   Legislature.
5                 Nelda.
6                 MS. TREVINO:  Good morning, Madam Chair,
7   members.  For the record, I'm Nelda Trevino.  I'm the
8   Director of Governmental Affairs.
9                 We included in your meeting packet a
10  tracking report of bills filed related to charitable
11  bingo and provided you this morning with an updated
12  copy of a tracking report.
13                I would like to specifically highlight
14  House Bill 1474 by Rep. Charlie Geren.  You may recall
15  that Phil Sanderson served as a resource to a
16  workgroup formed by the House Licensing Committee
17  during the legislative interim to address the
18  committee's interim charge related to bingo, and this
19  bill is a result of that effort.  The bill generally
20  creates provisions related to the regulation and
21  operation of bingo, including provisions to streamline
22  licensing and other administrative processes.  It also
23  provides for reforms on the accounting and reporting
24  requirements for licensees, increases the allowable
25  number of temporary licenses for organizations wanting
0007
1   to conduct bingo -- from 12 to 24 -- amends the
2   charitable distribution formula and deletes obsolete
3   and unnecessary language.
4                 As you will note on the bill history,
5   the House Licensing Committee voted the bill
6   favorably, and it was considered by the full House
7   last Friday, on May the 1st.  Rep. Geren amended the
8   bill on the floor to address some concerns that had
9   been expressed by the Christian Life Commission and to
10  incorporate some suggestions that had been provided by
11  the Governor's office.  The House passed the bill on a
12  record vote of 125 to 16, and the bill is now over in
13  the Senate for the Senate's consideration.
14                Also noted on the tracking report is
15  House Bill 3214 by Rep. Jim Keffer, and this bill
16  would exempt a unit, as defined in the Bingo Enabling
17  Act, from the franchise tax.  This bill was heard by
18  the House Ways and Means Committee on April the 20th
19  and has been pending in that committee since that
20  date.  However, there is similar language contained in
21  House Bill 1474.
22                The last group of bills noted on the
23  tracking report -- and those include House Bills 3806
24  through 3815, and these were all filed by Rep. Keno
25  Flores -- are basically individual components of the
0008
1   comprehensive bill, House Bill 1474 that I just
2   mentioned.  These bills have not been scheduled to be
3   considered by the House Licensing Committee as of this
4   date.
5                 And, lastly, as you may know, the last
6   day of the regular session is June the 1st.  And any
7   legislation related to charitable bingo that may be
8   enacted will be reported in a future Bingo Bulletin
9   and also posted on the agency's charitable bingo
10  website.
11                This concludes my report, and I'll be
12  glad to try to answer any questions that Knowles or
13  anybody else might have.
14                MR. CORNWELL:  Thank you, Nelda.
15                MS. TREVINO:  You're welcome, Knowles.
16                MR. CORNWELL:  I have no questions,
17  Madam Chair.
18                You did an excellent job, by the way.
19                MS. TREVINO:  Thank you, Knowles.
20                MS. TAYLOR:  Anybody else on the
21  committee have a question?
22                Any public comment or questions?
23                Thank you, Nelda.
24                MS. TREVINO:  Thank you.
25  
0009
1                     AGENDA ITEM NO. 4
2                 MS. TAYLOR:  Item No. 4, report,
3   possible discussion and/or action on revised Bingo
4   Public Service Announcement.
5                 MR. SANDERSON:  Members, we have revised
6   the public service announcement that we put out on an
7   annual basis, and Mr. Bates is going to cue it up here
8   in just a second and give you an opportunity to view
9   it.
10                (Following is a transcription of the
11  English version of the public service announcement:)
12                "It's been called the most charitable
13  game in Texas.  Last year over 17 million Texans
14  played charitable bingo, and those players won
15  $512 million in prizes.
16                "But most important of all, Texas
17  charities received more than $42 million in proceeds
18  from the conduct of bingo.
19                "So what are you waiting for?  Log on to
20  txbingo.org/hall to find a playing location near you."
21                MR. SANDERSON:  Then we have the Spanish
22  version.
23                (Following is a transcription of the
24  Spanish version of the public service announcement:)
25                "Le llaman el juego ms caritativo en
0010
1   Texas, y por buena razn.  Casi 17 millones de
2   aficionados del bingo caritativo jugaron el ao pasado
3   en Texas, y ganaron premios que suman ms de
4   $quinientos doce millones de dlares.
5                 "Pero los ganadores mayores fueron las
6   organizaciones caritativas que lograron ms de $31
7   millones de dlares.
8                 "Pues, qu esperas? Encontraras la sala
9   de bingo ms cercana a ti en t-x-bingo-punto-o-r-g."
10                MR. SANDERSON:  I would like to thank
11  Mr. Heith and his staff on putting the presentation of
12  the public service announcement together.  I think in
13  the past, one of the former members, Rosie Lopez, had
14  a lot of benefit out of the use of this PSA.  She ran
15  it on several of the Spanish stations, I think in the
16  Midland-Odessa area, and had good luck with it.
17                I know that we had also supplied Markey
18  Weaver some copies of it for her use.  I don't know if
19  she had a chance or any stations used them or not.  Of
20  course, if you have a need for a beta version of this,
21  we'll be glad to put it on beta.  And also we'll have
22  this up on the website if somebody wants to download
23  it.  And I believe it's also pinged out on the
24  satellite every once in a while, whenever they
25  broadcast out the numbers that are drawn also.
0011
1                 So does anybody have any questions?
2                 MR. CORNWELL:  And the formats again are
3   beta.  And what else did you say?
4                 MR. SANDERSON:  I'll ask Mr. Philip
5   Bates to let me know what the different formats that
6   we can put it in.
7                 Beta and VHS?
8                 MR. BATES:  DVD.
9                 MR. SANDERSON:  And DVD.
10                MR. WHITTINGTON:  DVD.  Do y'all have
11  any copies here now or --
12                MR. SANDERSON:  We've got the DVD copy
13  now, but I don't know how long it would take to put it
14  on the beta.  But if you want to, you know, check with
15  your TV stations as to what format they would desire,
16  then we can definitely put that together for you.
17                MR. WHITTINGTON:  Is there any way --
18  since there is a state PSA, can you plug it on in with
19  like our halls, you know, if we have a station that's
20  willing to do that?
21                MR. SANDERSON:  That would be up to the
22  TV station.
23                MR. WHITTINGTON:  Okay.
24                MR. SANDERSON:  Are you talking about
25  mentioning your hall specifically.
0012
1                 MR. WHITTINGTON:  At the end, yes.
2                 MR. SANDERSON:  Yes, that would be
3   between you and the station that runs the public
4   service announcement.
5                 MR. WHITTINGTON:  Okay.  I just wanted
6   to know.  I just wanted to know, it's not against the
7   law to do that?
8                 MR. SANDERSON:  No.
9                 MR. WEEKLEY:  Is that a 30-second spot
10  or 15?
11                MR. WHITTINGTON:  No.  Fifteen.
12                MR. SANDERSON:  They're 30-second.
13                MR. WHITTINGTON:  They're 30?  Okay.
14                MR. SANDERSON:  30-second spots.
15                Francis?
16                MR. CIANCARELLI:  And I may be talking
17  beyond what I know here, but can it be uploaded to
18  like Facebook or Twitter -- probably have to ask my
19  kids.
20                MR. SANDERSON:  It can, yes.
21                MR. CIANCARELLI:  Because that -- you
22  can seem to find everything on those.
23                MR. SANDERSON:  Yes.  You know, I don't
24  know if we can upload it to Facebook or Twitter; but,
25  you know, you could.
0013
1                 MR. CIANCARELLI:  Thank you.
2                 MS. TAYLOR:  They look great.
3                 MR. WEEKLEY:  Yes, they do.
4                 MR. WHITTINGTON:  Yes.  It looks nice.
5                 MR. WEEKLEY:  Excelente.
6                 MR. SANDERSON:  And, like I said, in the
7   past I know Rosie had a lot of luck with it in her
8   area with TV stations running it, and people mentioned
9   it.  So thank you.
10                MS. TAYLOR:  Very nice.
11                MR. WEEKLEY:  Thank you.
12                MS. TAYLOR:  Any other public comment?
13                    AGENDA ITEM NO. 5
14                MS. TAYLOR:  Then Item No. 5, report,
15  possible discussion and/or action on Calendar Year
16  2008 bingo conductor information.
17                MR. MINER:  Good morning, committee
18  members and Madam Chair.  For the record, my name is
19  Bruce Miner, and I'm the Manager of the Taxpayer
20  Services Department.  I'm here to present to you the
21  2008 information as reported by our licensed
22  authorized organizations who are the charities who
23  conduct bingo to raise funds for their charitable
24  purposes.
25                Prize payout percentages for regular
0014
1   bingo in 2008 was 76.8 percent of gross receipts.
2   Prize payout percentages for instant bingo were
3   72.4 percent of gross receipts.
4                 This pie chart is a graphical
5   representation of what percent each expense is as it
6   relates to total expenses.  These expenses do not
7   include prize payout or charitable distribution.  The
8   highest disbursements continue to be salaries and rent
9   payments.  The blue box in the upper left-hand corner
10  of this slide sets out all salaries, which include
11  janitorial services, callers, cashiers, ushers,
12  security, legal, accounting, accounting for 32.9
13  percent of total expenses.  Rent payments are another
14  23.1 percent.
15                This pie chart shows that instant bingo
16  sales continue to exceed regular bingo card sales in
17  2008.  Instant sales represented almost 45 percent of
18  the total sales, while regular card sales represented
19  31.9 percent and electronics of 23.5.
20                This chart shows the comparison of gross
21  receipts for each year from 2005 to 2008.  As you can
22  see, gross receipts for instant bingo sales shown by
23  the gray line have increased each year since 2005,
24  while at the same time gross receipts from regular
25  bingo sales, reflected by the red line, continue to
0015
1   decline.  Gross receipts for 2008 are approximately
2   4 and a half percent greater than they were in 2007
3   and almost 8 percent greater than they were in 2005.
4                 This chart shows the comparison of net
5   receipts for each year from '05 to '08, and this slide
6   captures the trend in net receipts, which are gross
7   receipts minus prizes.  The total net receipts
8   increased 4.4 percent over 2007 and almost 6 percent
9   over 2005.
10                This slide compares the gross receipts
11  for regular bingo, which includes paper and electronic
12  bingo sales, and the prize payout is recorded for each
13  of the past four years.  It shows the trend of gross
14  receipts shown in red and prize payouts for regular
15  bingo in yellow.  As you can see, the gross receipts
16  for regular bingo and electronic bingo have dropped
17  $31.6 million, and the prize payouts have dropped
18  $16.2 million, which is a result of the higher
19  percentage of prize payout.
20                And this slide shows that instant bingo
21  has had an increase of $82 million in gross receipts
22  over the past four years and an increase of
23  $57.2 million in prize payouts for that same period.
24                This slide charts the prize payout
25  percentage for regular and instant bingo for the past
0016
1   four years.  The payout percentage for regular bingo
2   has increased from 74.9 percent to 76.8 percent, while
3   the payout percentage for instant bingo has dropped
4   from 73.4 in 2005 to 72.4 in 2008.
5                 This next slide shows the average
6   players per occasion as compared to the average spend
7   per player.  It shows that even though the average
8   attendance has continued to decline since 2005, there
9   has, however, been a 22.7 percent increase in the
10  average spend rate per player over the same four
11  years.
12                This slide illustrates the comparison
13  between reported charitable distributions as opposed
14  to the minimum amount required to be distributed by
15  the Bingo Enabling Act.  As you can see, the actual
16  reported charitable distribution has consistently been
17  more than three times the required distribution
18  amount.
19                This chart shows the comparison of net
20  receipts and charitable distributions.  Total receipt
21  for 2008 was 10.3 percent greater than 2005, while
22  reported charitable distribution increased 7.6 percent
23  since 2005.
24                This slide -- it keeps falling off.  I
25  apologize.
0017
1                 Let me finish up with my paper copy.
2                 Try it one more time here.
3                 This slide shows the decline in the
4   number of licensees by organization type, except
5   fraternal, which has risen almost 10 percent since
6   2004.
7                 And finally, this slide shows the
8   gradual decline in the number of actual playing
9   locations each year since 2004.  There is additional
10  information from our analysis performed by Arlette
11  Taylor, the Operational Planning and Performance
12  Coordinator.
13                I apologize for the disruption here.
14  But if you have any questions, I'll be glad to answer
15  them.
16                MS. TAYLOR:  Very good report.  Any
17  questions?
18                MR. WHITTINGTON:  Bruce, I want to ask
19  you, on the gross -- on pull-tabs, I saw that it
20  really increased a lot on the gross pull-tab sales.
21                MR. MINER:  Correct.
22                MR. WHITTINGTON:  But then yet, it's
23  lower.  Is it because we've got more gross more so
24  than net that we're getting under the pull-tabs in a
25  day's time, compared to 2004, that the percentage is
0018
1   less for each payout when it come to a box of
2   pull-tabs?
3                 MR. MINER:  I think it has to do related
4   to the prize payout.
5                 Phil, can you expand on that?
6                 MR. SANDERSON:  The question is --
7                 MR. WHITTINGTON:  The gross is a lot
8   higher and the net is lower than what it used to be in
9   pull-tabs?
10                MR. SANDERSON:  The payout percentages,
11  they increased at the beginning of 2002 and '03 as a
12  result of the event tickets having a higher payout
13  percentage.
14                MR. WHITTINGTON:  Okay.
15                MR. SANDERSON:  But in the last several
16  years, the payout percentages has declined.
17                MR. WHITTINGTON:  Right.
18                MR. SANDERSON:  So the net receipts for
19  pull-tabs is increasing.  What we're seeing -- what's
20  causing either a decrease or a slight increase overall
21  is the regular bingo where the prize payout percentage
22  is increasing.
23                MR. WHITTINGTON:  Okay.
24                MS. TAYLOR:  What year -- was it 2003
25  event tabs was --
0019
1                 MR. SANDERSON:  September of 2002.
2                 MR. CORNWELL:  Right.
3                 MR. WHITTINGTON:  Okay.
4                 MS. TAYLOR:  I was thinking 2003,
5   because I noticed the jump in the gross from '02 to
6   '03 is where, when I looked at --
7                 MR. CORNWELL:  Well, Suzanne, we got the
8   approval in time -- the product really didn't start
9   running into the state, coming into the state until
10  late in 2002.
11                MS. TAYLOR:  Okay.
12                MR. CORNWELL:  So you didn't have event
13  or pull-tab, those type of tickets, available
14  primarily till 2003.
15                MS. TAYLOR:  Okay.  Then that's why I
16  saw it then.
17                MR. WHITTINGTON:  Yes.
18                MS. TAYLOR:  That's where this big jump
19  happens.
20                MR. WEEKLEY:  Yes, the big jump.
21                MS. TAYLOR:  Okay.  And, yes, the answer
22  to your question, as I looked at the numbers, because
23  the entrance fees continued -- or card sales --
24  continued to decrease and the prize payouts remain
25  consistent after 2500 a session, that's why I see the
0020
1   numbers going up.  You know, our prize payout is going
2   to continue to be a larger portion as the entrance
3   sales decrease which, of course, is the decrease in
4   attendance.
5                 MR. WHITTINGTON:  Yes.  Thank you.
6                 MS. TAYLOR:  Any other questions or
7   comments for Bruce?
8                 Any public comment?
9                 Bruce, great report.
10                    AGENDA ITEM NO. 6
11                MS. TAYLOR:  Item No. 6, consideration
12  of and possible discussion and/or action on the Bingo
13  Advisory Committee.
14                MR. SANDERSON:  Members, this was an
15  agenda item that was placed on the -- item on the
16  agenda for Commissioner Schenck to make his comments
17  and remarks to the BAC, considering the makeup and the
18  possible action of certain -- of members and how the
19  BAC represents and makes available their information
20  to the Commission.
21                Commissioner Schenck.
22                COMMISSIONER SCHENCK:  Madam Chairman
23  and members of the BAC, thank you very much for
24  hearing from me and thank you for your service here,
25  an invaluable resource to this agency.
0021
1                 As some of you probably well know, I've
2   been very clear and outspoken recently about my
3   concerns of some of the extra legal gaming activities
4   we have in this state.  I'm not here today to address
5   any particular item of action that I'm looking for,
6   other than to solicit advice from you on the
7   membership on your committee.
8                 As you know, the public is looking to us
9   to regulate bingo and, separately, our lottery.  And
10  we have an obligation to carry out that mandate as
11  best we can and with the best intentions in mind of
12  getting advice and recommendations from you with
13  respect to how we regulate bingo.
14                We do do background checks and have
15  discussions with each of you before you come on to the
16  Bingo Advisory Committee.  Your membership and service
17  here is essential to us and exists -- your presence
18  and service is not only appreciated, but it's also
19  something we need to keep an eye on and to make sure
20  that we're all moving on the same direction.
21                From time to time we will have
22  developments potentially, as a result of all of our
23  activities, that could give rise to some concern about
24  our service and whether we need to conduct some form
25  of investigation.  I've spoken out on that.  But my
0022
1   view is only my view, and it's not fully informed at
2   this point.  And I think, on behalf of myself and the
3   other Commissioners, I would very much appreciate
4   input from you, the Bingo Advisory Committee, on what
5   information should be conveyed, and to whom, about any
6   developments relating to individual members of the
7   Bingo Advisory Committee.
8                 I would ask you to consider the
9   possibility of advising us, through perhaps Phil or
10  perhaps Kim Kiplin or someone else -- Phil, I'll leave
11  that to you -- of any developments that could raise
12  questions about our fidelity to our mission or fitness
13  for service of any particular members on the BAC.  In
14  connection with that, you might want to consider civil
15  allegations, you might want to consider convictions.
16  You might want to consider convictions only of
17  felonies.  You might want to consider allegations of
18  criminal wrongdoing in connection with any crime of
19  moral turpitude, in addition to any felonies or
20  gaming-related offenses.
21                My view -- I think I've been fairly
22  clear on this.  And again, this is just my view and at
23  this point looking forward to your advice on this --
24  is I think it would be in the interest of the
25  Commission and the Bingo Division to be advised of any
0023
1   allegation of moral turpitude, felonious conduct or
2   violations of Texas gaming laws, given the particular
3   nature of what we do.
4                 This Commission is not in a position of
5   making any judgments of a conclusive nature, and that
6   includes allegation of criminal wrongdoing.  That's
7   not our role.  We have a separate role.  We're
8   concerned with the operations of charitable bingo.  We
9   have that as our sole focus.  I'm interested in making
10  sure that we maintain that as our focus.
11                So all I'm asking for from you is your
12  sincere input, as soon as you can give it to us, on
13  what information you think should be provided to the
14  Commission in order for us to make sure that the Bingo
15  Advisory Committee is carrying out its mandate in a
16  way that we're all comfortable with and happy about.
17  And we look forward to that advice.
18                And I'm happy to take any questions if
19  anyone has any on what exactly we're looking for in
20  this regard.
21                MS. TAYLOR:  Commissioner, are you
22  looking for us to discuss it between the BAC members
23  at this meeting, our opinions of each of these items
24  that you have mentioned?
25                COMMISSIONER SCHENCK:  I don't think I
0024
1   necessarily -- I don't want to -- some of you I think
2   are hearing about this probably for the first time.
3   So I think it would be better, in order for people to
4   have an informed judgment, perhaps to let you discuss
5   this between now and maybe the next meeting or at the
6   next meeting.
7                 Really, I'm looking for your best
8   opinion on this.  I'm not looking to surprise you with
9   some inquiry that you're not prepared to address.  So,
10  I mean, there's all kinds of possible outcomes here
11  about what information you think ought to be conveyed
12  to the Commission for it to make determinations about
13  this committee.  But I'm looking for just what is your
14  advice, before we act on our own without your input.
15                MS. TAYLOR:  Okay.
16                COMMISSIONER SCHENCK:  Thank you very
17  much.
18                MS. TAYLOR:  Thank you.
19                MR. WHITTINGTON:  Thank you,
20  Commissioner.
21                MS. TAYLOR:  Because I have already seen
22  you, I forgot to welcome you to the meeting.  I
23  apologize.
24                COMMISSIONER SCHENCK:  Okay.
25                MS. TAYLOR:  Members, do you want to
0025
1   discuss this at this meeting or would you like to have
2   some time to think on it and have this on the agenda
3   for the next meeting?
4                 Tom, what do you want to do?
5                 MR. WEEKLEY:  I think put it on the
6   agenda for the next meeting if it's within the time
7   frame that the Commissioner requests.
8                 MS. TAYLOR:  Okay.  Pat?
9                 MS. GIFFORD:  Sounds good to me.
10                MS. TAYLOR:  Francis?
11                MR. CIANCARELLI:  I think the
12  Commissioner makes some interesting comments, because
13  some of the times when I've been in various halls, I
14  hear concerns from the people we had running the games
15  that there is competition -- unfair competition,
16  illegal competition -- so it's an interesting point.
17                One of the things that -- I realize that
18  my role is advisory, working at the pleasure of the
19  Charitable Bingo Division and the TLC.  But if you're
20  looking for us to go out and find more information --
21  I think sometimes when I walk into a hall, I like to
22  identify myself as more than just a person, that I'm
23  on the BAC.  And so I think about credentials of some
24  nature to say, "We're here just to help, we're here to
25  look."  And that would be helpful, to gather
0026
1   information, I think.  So I agree we should put it on.
2   I have no problem with that.
3                 MS. TAYLOR:  Okay.  Earl?
4                 MR. SILVER:  And I'll say we go to the
5   next meeting with it --
6                 MS. TAYLOR:  Okay.
7                 MR. SILVER:  -- so we can get a game
8   plan and --
9                 MS. TAYLOR:  Knowles, next meeting?
10                MR. SILVER:  -- questions.
11                MS. TAYLOR:  Okay.
12                MR. CORNWELL:  Sure.  Go home with it.
13                MR. WHITTINGTON:  Yes.
14                MS. TAYLOR:  Okay, Larry.
15                From the Commissioner, it's my
16  understanding that what we're looking for is not to go
17  out to individual halls and do surveillance work.
18  What I believe that I understand is he looking for is,
19  what are we looking for in BAC members and what would
20  disqualify them or --
21                COMMISSIONER SCHENCK:  For example, I'm
22  licensed as an attorney right now.  If certain things
23  happen to me, I have the obligation to self-report it
24  to the State Bar.
25                MR. WHITTINGTON:  Correct.
0027
1                 COMMISSIONER SCHENCK:  My failure to
2   report that development would itself give rise to a
3   basis for discipline.  I'm not looking for you to put
4   on badges and chase each other around.  That's not
5   what I'm asking for.  What I'm asking for is just
6   advice from you on what types of developments relating
7   to individual members of the BAC should be brought to
8   the attention of the Commission, so that we can make
9   sure that when you walk into a bingo hall and say,
10  "I'm here from the BAC," people are confident that
11  you're there to carry out the mandates of this
12  Commission in a way that we'll all happy about.
13                And so what I'm looking for, for advice
14  from you on this, is what it is we should be looking
15  for from you.  And I can't guarantee you that I will
16  agree with that advice, but I think it's only fair for
17  me to give you that opportunity to advise us before we
18  take any action.
19                And I'm happy to take any information
20  that you think will be useful for us to consider
21  before we come to any final determinations about any
22  of this.
23                MS. TAYLOR:  Thank you, Commissioner.
24                Okay.  We're going to be discussing this
25  at the next meeting, so you can get your thoughts
0028
1   together.
2                 And in the meantime, is there any other
3   public comment on the subject?
4                 If not, we will have this on the agenda
5   for the next meeting.
6                     AGENDA ITEM NO. 7
7                 MS. TAYLOR:  Item No. 7, consideration
8   of and possible discussion and/or action for the Bingo
9   Advisory Committee, including the formation of a
10  nomination committee.
11                That's mine.  Okay.  It's time to form a
12  new nomination committee.  I know that Kim was on the
13  last one.  I would imagine she is willing to continue
14  to serve on this one.
15                Is Kim up for -- is her position up?
16                MR. SANDERSON:  No.  The three positions
17  that are up for -- or the terms will expire in August
18  are yours, Suzanne, Larry Whittington's and Knowles
19  Cornwell.
20                MS. TAYLOR:  Okay.  Then other than
21  these three people, including myself, would anybody
22  like to serve with Kim?  I'm going to go ahead and
23  make her on that nomination committee.  Would anybody
24  else be interested in serving on that?
25                MR. SILVER:  I do.
0029
1                 MS. TAYLOR:  Earl.  Okay.  And do we
2   have one more member?
3                 Pat.  Okay.  Then our nomination
4   committee will be made up of Kimberly, Earl and Pat.
5                 MR. SANDERSON:  And in your notebook,
6   there are the nominations that we have received thus
7   far for those three vacancies.
8                 MS. TAYLOR:  I noticed previously -- and
9   I don't remember if it was last year or the year
10  before last year -- that when the nomination form went
11  in, there were some additional questions that were
12  asked that were answered.  There was actually -- and I
13  only know because I found it on my -- I found the one
14  that I had submitted myself where there were some
15  questions asked of the members.  And I can't remember,
16  because I didn't read over it really well, but one of
17  them was, "Would there be any problem with you coming
18  to the meetings in Austin every quarter?"  There was
19  an actual questionnaire that went with the nomination
20  form.
21                MR. SILVER:  I have a copy of that on my
22  laptop.  I believe I do, because I did use it last
23  year.
24                MS. TAYLOR:  Is that something that the
25  nomination committee can send out to potential
0030
1   nominees or does the Commission have to do that?
2                 MR. SANDERSON:  I think that is what the
3   nomination committee sent out to the nominees.  We
4   don't have that question and answer sheet.
5                 MS. TAYLOR:  Right.
6                 MR. SILVER:  The way I utilized it was
7   just on the phone interview, went through the
8   questions and then wrote down the responses and then
9   did a concise report on it, and that's what I
10  submitted to Phil and Suzanne.
11                MS. TAYLOR:  Is that up to the committee
12  to use that or is that something they can be directed
13  to use?
14                MR. SANDERSON:  It would be up to the
15  committee to use it.
16                MS. TAYLOR:  Okay.  So you know you have
17  it on your laptop?
18                MR. SILVER:  I'll try -- I'll find it.
19                MS. TAYLOR:  Okay.  I just ran across
20  that, and I didn't even know that that was
21  something -- because I know that mine was in writing.
22  My responses were in writing to those.  So I didn't
23  know what you were --
24                MR. SILVER:  Yes.  We never sent a
25  questionnaire.  We just went off the application they
0031
1   submitted.  And then on a phone interview, we asked
2   specific questions that were given to us.
3                 And I believe it may have come from you,
4   Phil, and your office.  I'm not sure where it came
5   from, but it wound up in my --
6                 MR. SANDERSON:  I'll check.  I don't
7   recall it right off the top of my head.
8                 MR. SILVER:  But it wound up in my
9   hands, and it was a very good, informative
10  questionnaire.
11                MS. TAYLOR:  Okay.  Then any other
12  comments on this item?
13                One question I had for you, Phil, is
14  when were the nomination forms, is it closed or is it
15  still open for new --
16                MR. SANDERSON:  The nomination period
17  was February 1st through April the 30th -- I'm
18  sorry -- March 1st through April the 30th.  So that
19  based on the Bingo Advisory Committee rule, the
20  receipt of nominations is closed, but that does not
21  mean that the Commissioners are not able to appoint
22  someone other than -- they can appoint a nominee that
23  has been recommended by the BAC, they can appoint a
24  nominee that's been recommended by the Commission, or
25  they can appoint any other individual that they deem
0032
1   necessary to serve on the committee.
2                 MS. TAYLOR:  Okay.  Then let's go on
3   with this next item.  Earl -- I'm sorry, before the
4   next item -- your committee, the committee you're
5   serving on, would you like to chair this committee,
6   since you're here today?
7                 MR. SILVER:  Sure.
8                 MS. TAYLOR:  Okay.  Great!  You can
9   chair it.  And you will have to, at the next BAC
10  meeting --
11                MR. SILVER:  Yes, ma'am, I'll have
12  information for you.
13                MS. TAYLOR:  Terrific!
14                    AGENDA ITEM NO. 8
15                MS. TAYLOR:  Okay.  Item No. 8,
16  consideration of and possible discussion and/or action
17  on the Bingo Advisory Commission workplan.
18                A copy of this workplan has been
19  included; the workplan that we had this last year has
20  been included in our notebook.  I notice that Item No.
21  12 talks about the activities -- well, wasn't there an
22  item in here, Phil?
23                MR. WEEKLEY:  I didn't see 12.
24                MS. TAYLOR:  I thought I saw an item on
25  the draft where it was actually -- where we talk about
0033
1   what we accomplished during the last year.  Is that
2   not on this particular --
3                 MR. SANDERSON:  That's not on this
4   agenda, no.
5                 MS. TAYLOR:  Okay.  Well, this is our
6   workplan for this last year.  We need to have a
7   workplan for the coming year.  This is actually on my
8   computer, so I'm willing to put this together again.
9                 Would anybody else -- while we're here,
10  since y'all have already had these notebooks, are
11  there any other items that you would like to see on a
12  workplan that is not currently on the workplan?
13                Anybody?
14                MR. CORNWELL:  That's pretty complete,
15  pretty broad.
16                MR. WEEKLEY:  Yes, it is.
17                MS. TAYLOR:  I don't know that we've had
18  anything this last year that we've wanted to talk
19  about but we haven't been able to, that hasn't fallen
20  within the scope of the workplan.
21                But since the committee doesn't find any
22  additional items, can we approve this work plan to
23  present to the Commission?
24                MR. SANDERSON:  You definitely have that
25  option, yes.  I believe that that item is broad enough
0034
1   to allow you to --
2                 MR. CORNWELL:  I move that we adopt this
3   workplan and submit it to the Commissioners.
4                 MR. WEEKLEY:  I'll second it.
5                 MS. TAYLOR:  Okay.  All in favor?
6                 COMMITTEE MEMBERS:  Aye.
7                 MS. TAYLOR:  Okay.  Opposed?
8                 (No response)
9                 Okay.  It passes unanimously.  I'll just
10  stick a new date on it.
11                And it will have to come through our
12  next meeting?
13                MR. SANDERSON:  It won't have to come
14  through your next meeting.  What we'll do is, we'll
15  place it on the agenda for the Commission meeting I
16  believe that will happen towards the end of the fiscal
17  year in August.
18                MS. TAYLOR:  Okay.
19                MR. SANDERSON:  And that's the meeting
20  that you will provide them with your annual report as
21  well as your workplan, and that's where they will vote
22  to continue the BAC for another year.
23                MS. TAYLOR:  Okay.  So that's all said
24  and done.
25                Off of this agenda item.  Boy, we're
0035
1   just swinging right through this.
2                     AGENDA ITEM NO. 9
3                 MS. TAYLOR:  Item No. 9, report and
4   possible discussion and/or action on the workgroup --
5   Market Conduct.
6                 MR. SILVER:  We've had several meetings.
7   They're all been by conference call, and our first
8   meeting was February 11th.  Myself, Knowles, Francis
9   and Kris Keller were there.  Mr. Keller expressed
10  concern regarding price war in Bexar County.  The
11  topic of this session was the price of the
12  electronics.
13                Mr. Keller requested that the Texas
14  Lottery Commission set a minimum price for computers.
15  There was discussion among the attendees about this
16  issue and the effects that price-setting could have.
17  Knowles gave the group a brief history on the price of
18  computers or the pricing of computers as well as a
19  similar occurrence that happened years ago.
20                During our conversations of this
21  meeting, other topics came up that will affect the
22  bingo industry or could affect the bingo industry,
23  such as predatory pricing, third-party subsidies,
24  third-party guarantees, monopolizing in the
25  marketplace, charity rotation, profitability of a
0036
1   charity.  We've also discussed maybe a code of conduct
2   in the bingo industry amongst everybody in the
3   industry.
4                 We also had an additional meeting after
5   that where similar topics were discussed.  As far as
6   the consensus of the group, for the first issue, which
7   was regarding setting a minimum price, we couldn't
8   come to a consensus, so we would like to leave it in
9   the hands of the Texas Lottery and the Commission,
10  with their staff and their legal experience and their
11  legal staff, to see if they want to go into this
12  realm.
13                MS. TAYLOR:  And the rest of these items
14  that you talked about are the --
15                MR. SILVER:  As far as like the
16  predatory pricing, third-party subsidies, that there
17  could be a rule that could address that.  We're not
18  exactly sure how to approach it, so we all may need to
19  gather again.
20                MS. TAYLOR:  Let me stop you there.
21  What is the third-party subsidies?
22                MR. SILVER:  To where if a hall was
23  going bad or doing something -- or was going under, a
24  third party would come in and subsidize the charities
25  in order to profit back up.
0037
1                 MS. TAYLOR:  And by "subsidizing the
2   charities," you mean coming in and buying paper and
3   throwing it in the garbage or what are we talking
4   about?
5                 MR. SILVER:  Possibly.  It could be
6   that, or just buying up inventory that the charity
7   would have, just to inflate the records.  I mean, that
8   instance, I don't know if it has occurred, but that's
9   something that may need to be looked at.
10                MS. TAYLOR:  Okay.  So back to the price
11  of computers, the minimum pricing, no consensus.  But
12  predatory pricing, what did the committee talk about
13  on predatory pricing?
14                MR. SILVER:  It came up as far as how it
15  needs to be approached or if there is such a way.  I
16  mean, as far as our workgroup, we really didn't come
17  to a conclusion on that.  But that could be a problem
18  in this industry where somebody is coming in and
19  lowering the price just to run another competitor out
20  of business.  That happens in the everyday -- that
21  happens in the workplace in different industries, and
22  it's something that --
23                MR. WEEKLEY:  The automobile industry.
24                MR. SILVER:  -- the legal staff may want
25  to address in a rule or something to that effect.
0038
1                 MS. TAYLOR:  Okay.  And after the third-
2   party subsidies, what was the next item that you
3   discussed?
4                 MR. SILVER:  It was a third-party
5   guarantee.
6                 MS. TAYLOR:  What is that?
7                 MR. SILVER:  Which means if a charity --
8   or a charity would come in, that they're guaranteed to
9   make this amount of money, no matter what.
10                MS. TAYLOR:  Okay.  And the monopoly?
11                MR. SILVER:  Monopolizing in the
12  marketplace would go along with the predatory pricing.
13  That would be a result of all the other issues we
14  discussed, which would be trying to generate a
15  monopoly in the marketplace to try to dictate the
16  marketplace.
17                MS. TAYLOR:  And the last one I have is
18  charity rotation.
19                MR. SILVER:  It's charity rotation.  If
20  a charity is in a hall and it makes good money, moving
21  into a hall that is not making good money, just to try
22  to break even.
23                MS. TAYLOR:  So you're not talking
24  rotation within a hall; you're talking rotation
25  between halls?
0039
1                 MR. SILVER:  Possibly between halls or
2   it could either be in a format of within a hall.  Our
3   halls aren't like this; our halls are in a unit.  But
4   if you had a charity that would play on Mondays and
5   not make any money, where you had another charity that
6   would play on Fridays and make all the money.  There
7   has to be some type of equity possibly in there.
8                 MS. TAYLOR:  Okay.
9                 MR. SILVER:  Or the charity that had all
10  the money moving to a day where it didn't make any
11  money and started losing money.
12                MR. WHITTINGTON:  Well, that's why they
13  got unit accounting.
14                MR. SILVER:  Correct, because they
15  probably can't come up --
16                MR. CORNWELL:  When you --
17                MS. TAYLOR:  One at a time.
18                MR. CORNWELL:  I'm sorry.  Go ahead.
19                Each one of these individual actions
20  that he's talking about probably aren't bad or wrong.
21                MR. WHITTINGTON:  No, I didn't say that.
22                MR. CORNWELL:  When you put these in
23  combination with all of those things, with the overall
24  intent as a barrier to entry, then it's not good.
25  That's not the market conduct you want.  And, you
0040
1   know, rotating charities between halls -- not within
2   the hall -- between the halls, to take them from one
3   good hall to two bad halls, I don't think that's --
4   it's not prohibited by the statutes, but it's just not
5   good market conduct.
6                 MR. WHITTINGTON:  Well, that's the whole
7   point about unit accounting, the halls agree that they
8   don't mind doing this, splitting the profit or
9   whatever, so-and-so.  If you've got some that don't
10  agree, that's why those halls don't have unit
11  accounting.  So they ain't going to agree to that, are
12  they, change, go to the --
13                MR. CORNWELL:  What we're talking about
14  is outside the unit, Larry.
15                MR. WHITTINGTON:  Yes.  I'm talking
16  about that.
17                MR. CORNWELL:  Yes.
18                MS. TAYLOR:  I'm sorry.  Earl, who were
19  the members of your committee again?
20                MR. SILVER:  Myself, Knowles Cornwell,
21  Francis Ciancarelli and Kris Keller.
22                MS. TAYLOR:  Okay.  Sounds very
23  informative.  It sounds like you went through an awful
24  lot of topics and had a lot of discussion on them, and
25  I appreciate you sharing that with the committee.
0041
1                 Is there any other discussion or
2   questions anybody has for Earl?
3                 MR. SANDERSON:  I've got one.  Has the
4   committee come to a point, or the subcommittee
5   workgroup come to a point to where they're ready to
6   make a recommendation to the complete Bingo Advisory
7   Committee and, with that recommendation, provide
8   advice to the Commission to adopt a rule with these
9   standards or whatever standards you've got, in this
10  phase?
11                MR. SILVER:  No, sir, not yet.
12                MR. SANDERSON:  Not at this point?
13                MR. SILVER:  Not at this point, because
14  it's a lot of ground to cover.  And we would probably
15  need some outside advice for legal.  And like what
16  Knowles said, I mean, these individual things aren't
17  illegal, are not prohibited.  But when you combine
18  them -- and just exactly what Knowles said, have a
19  barrier to entry or it would be hard to prove intent.
20  But these things can be happening in this industry,
21  and that's something we may need to address in a rule.
22                MR. SANDERSON:  Okay.  So the committee
23  will continue to meet and maybe at the next BAC
24  meeting have hopefully some recommendations to make to
25  the committee as a whole?
0042
1                 MR. SILVER:  Yes, sir.
2                 MS. TAYLOR:  And when you're looking for
3   the legal, are you talking help from staff?
4                 MR. SILVER:  Yes, ma'am --
5                 MS. TAYLOR:  Okay.
6                 MR. SILVER:  -- just because that's not
7   my expertise.  I'm not an attorney.  And I just -- I
8   just know from some classes I took in college that
9   these are not good things to have in a competitive
10  industry.
11                MS. TAYLOR:  Great!  Great!  I mean, it
12  sounds like you guys did a lot of work.  I'm anxious
13  to see the recommendation.
14                Any other public comment on this item?
15                Kris.
16                MR. KELLER:  Okay.  My name is Kris
17  Keller.  And I'm just going to bring it up again about
18  the -- I would still like the Commission to set the
19  minimum price that any electronic can be sold.  And we
20  talked about a little bit on this committee, I'm
21  willing just to do it for Bexar County.  If the
22  Lottery Commission can do it for Bexar County only,
23  I'm fine with that.  That seems to be -- once again, I
24  don't see anybody standing behind me saying, "No, no,
25  no."  Everybody I've talked to in San Antonio, every
0043
1   bingo hall that I've spoken to has said they may be in
2   favor of this.
3                 Price continues to go down, down to
4   $3.75 now for an electronic.  Free food at some of
5   these halls that offer this thing.  And here is what's
6   happening now -- I've mentioned this before the last
7   few times I was standing here.  I'm going to say it
8   again.  And I promise you that illegal monies are
9   going to enter the bingo hall to supplement these low
10  prices on the computers today.
11                I'm not going to mention the name of the
12  hall.  But if the Lottery Commission will look at it,
13  you're going to see on there charitable distributions,
14  the name Ben E. Keith.  Ben Keith is their food
15  supplier.  They pay for their food that they give away
16  free out of the bingo account and list it as a
17  charitable distribution.  That can't happen.  It
18  cannot be.
19                Anyways, I want to set it for Bexar
20  County.  I would like to set it at $10.00, which is
21  well below other areas in the state right now and just
22  try to end this -- I don't even know how to word it --
23  but just stop the presses on this thing.  It's
24  ridiculous.
25                And I guess that's it.  I'll say
0044
1   anything that anybody recommends me to say, though, if
2   I can push this project forward.  If anybody says,
3   "Why don't you say this?" I'm glad to say it.
4                 MR. CORNWELL:  Chris, why don't you --
5   there's 62 statistical metropolitan areas in the State
6   of Texas.  Bexar County is in one of those 62, but it
7   would catch Seguin, it would catch some of the
8   surrounding towns around there if you just would say,
9   "Let's take that statistical area and make it a $10.00
10  minimum price in that statistical area."  That way,
11  somebody is not going to go out on the edge --
12                MR. KELLER:  Take that statistical area
13  and make it a $10.00 minimum.
14                MR. CORNWELL:  There you go.
15                MR. KELLER:  So that would be Bexar
16  County and I guess any county that touches Bexar
17  County.
18                So anybody else have any suggestions I
19  can say to move this project forward or . . .
20                MS. TAYLOR:  Is the only problem that
21  you're having in Bexar County the cost of electronics,
22  or has paper also been discounted?
23                MR. KELLER:  Paper?
24                MS. TAYLOR:  Yes, penny papers or
25  anything like that?
0045
1                 MR. KELLER:  Oh, yes, they've got penny
2   paper, penny computer.  The first 25 people get their
3   computer free.
4                 MR. CORNWELL:  That's free bingo.  They
5   can't do that.
6                 MR. WHITTINGTON:  Can't do it.
7                 MR. WEEKLEY:  But they can charge a
8   penny.
9                 MR. SANDERSON:  Well, if we can get a
10  name of a location, we can definitely send someone out
11  to look at all of your allegations (laughter).  But
12  for us to send someone to every bingo hall in Bexar
13  County, we don't have the staff for that at this point
14  in time.
15                MS. TAYLOR:  So maybe perhaps you would
16  like to meet with Phil later.
17                MR. KELLER:  You know, I don't go to
18  these bingo halls either.  I just pick up the Bingo
19  Bugle and there it is in big bold letters.
20                MR. SANDERSON:  I don't have the Bingo
21  Bugle either.
22                MS. TAYLOR:  So you will be willing to
23  provide a copy of the Bingo Bugle to the Lottery
24  Commission?
25                MR. KELLER:  Well, I wish I had brought
0046
1   the Bingo Bugle, but I didn't.
2                 MR. WHITTINGTON:  They say free?
3                 MR. CORNWELL:  It says free in there.
4                 MS. TAYLOR:  Well, you do have the
5   mailing address, so I'm sure you could get a copy over
6   here.
7                 MR. KELLER:  You know, and I'm sure it's
8   not free.  They just say that.
9                 MR. WHITTINGTON:  They can't say that.
10                MR. KELLER:  And it might be free.  I
11  don't know.  My main concern, what I want to get done,
12  I want to set that minimum price in Bexar County and
13  the surrounding counties, to stop this downward
14  spiral.
15                MR. CORNWELL:  Phil, what would be --
16  would staff even entertain a petition for a rule on
17  that subject matter?
18                MR. SANDERSON:  The only thing that I
19  recall at this point is, historically we've had -- and
20  Suzanne can confirm one of these, because I think she
21  was involved in it -- they came to the Commission
22  wanting a pricing rule just for Nueces County, I
23  believe, Corpus Christi.
24                MS. TAYLOR:  Right.
25                MR. SANDERSON:  The Commission chose at
0047
1   that point -- the makeup of the Commission chose not
2   to proceed.  We had at one point in time in the card-
3   minding rule that an electronic card-minder could not
4   be sold less per face than paper.
5                 MR. CORNWELL:  Right.
6                 MR. SANDERSON:  Through comment, that
7   was taken out, so that was the industry comment that
8   had that removed.  Now, I will say this, we've got
9   three --
10                MR. CORNWELL:  New commissioner.
11                MR. SANDERSON:  -- fairly new
12  commissioners.
13                MR. CORNWELL:  Very conservative, by the
14  way.
15                MR. SANDERSON:  So, you know, it's a
16  completely new makeup of new members and anything is
17  highly possible.  And I think that's one of the areas
18  that I believe Commissioner Schenck, not only as it
19  relates to his request for you to deliberate on
20  members' actions and so forth but also the purpose of
21  the BAC is to advise the Commission.
22                And I think, as the BAC puts something
23  together, a presentation -- and Suzanne made that
24  presentation to the Commission, along with the
25  petition, then I think there could be, you know, some
0048
1   consideration for that.  I can't speak for the
2   Commission.  But, you know, that's one of the options
3   and that's one of the purposes of the BAC, is to come
4   with that recommendation or advice to the Commission.
5                 MR. CORNWELL:  I don't mind Suzanne
6   showing up as the BAC member.  But wouldn't it even be
7   better if we had all the hall owners in San Antonio or
8   operations from those halls represented in front of
9   the Commissioners?
10                MR. SANDERSON:  That would be entirely
11  up to you.
12                MR. CORNWELL:  Well, it's up to this man
13  (indicating).
14                MR. SANDERSON:  And then there again, I
15  know that --
16                MR. CORNWELL:  I'm just asking.
17                MR. SANDERSON:  -- historically the
18  Commission has taken public comment, you know,
19  throughout the process.  So I don't know if things
20  will change with the new makeup or not, but public
21  comment is always an option.
22                MR. CORNWELL:  Okay.
23                MS. TAYLOR:  I tell you, Kris, we tried
24  this, it was probably --
25                MR. CORNWELL:  It's been a while.
0049
1                 MS. TAYLOR:  -- 12 or 13 years ago.  The
2   price of paper is still where it was 12 or 13 years
3   ago, and they lowered it.  So we went from our $6.00
4   books down to $2.00 books, and it's still $2.00 across
5   the city.  So --
6                 MR. KELLER:  That's not good, though, is
7   it?
8                 MS. TAYLOR:  Oh my gosh, it's not good!
9                 MR. KELLER:  Maybe you ought to join
10  with Bexar County (laughter).
11                MS. TAYLOR:  But we did try -- in fact,
12  the Commission came to Corpus Christi at that time and
13  had a meeting in Corpus Christi for all of them and at
14  that time chose not to do that, said it would be
15  price-fixing.  But I'm still saying we do have a new
16  Commission now and --
17                MR. CORNWELL:  It's not outside -- the
18  Bingo Enabling Act says they have the power to do it.
19                MS. TAYLOR:  Right.  So what we would
20  need to do, I think the committee -- hang on just one
21  second, Francis -- the committee needs to come up with
22  a recommendation for the BAC so that we can have this
23  discussion at our next meeting.  And after that, then
24  we can take it forward to the Commission, but we need
25  a recommendation from our committee.
0050
1                 Francis?
2                 MR. CIANCARELLI:  I would just like to
3   ask the question.  It sounds like we're interested in
4   getting more public comment.  Would it be feasible,
5   possible, allowable for us to schedule a future BAC
6   meeting in San Antonio, therefore bringing in more
7   comment?
8                 MS. TAYLOR:  I don't know that that's
9   going to happen.  We have tried at one point to see if
10  we could have the BAC meetings in different areas, but
11  the Commission wasn't receptive to that idea.
12                MR. CORNWELL:  Francis, there's no
13  prohibition against a subcommittee meeting in
14  San Antonio and inviting testimony or inviting
15  comment.
16                MR. CIANCARELLI:  I believe in the
17  regulations, it says there can be one meeting held
18  remotely.
19                MR. SANDERSON:  There can be one meeting
20  held outside of Austin.  But also I think what Knowles
21  is mentioning -- and I'll have to go back and look,
22  but I think at one point in time several years ago,
23  some of the BAC members got together in subgroups of
24  two to three and held town hall meetings, so to speak,
25  in certain areas of the state.  I don't know -- do you
0051
1   recall something like that, Suzanne, or maybe it was
2   before you, which would have been way in the early
3   days, but --
4                 MS. TAYLOR:  No, I don't.  Thank you.
5   No, I don't recall that.  You know, it's the old
6   memory of mine.
7                 MR. WEEKLEY:  Just don't remember, huh?
8                 MR. SANDERSON:  There may have been some
9   talk about it, but I think that would be -- you know,
10  that there is a possibility that you could have a town
11  hall meeting, so to speak, in the different cities
12  that two to three BAC members go to and kind of get
13  some information.  It all fits back in with -- you
14  know, the purpose of the Bingo Advisory Committee is
15  to come back with this information and, you know, give
16  the Commission the information they need and indicate
17  what the pulse of the bingo industry is in this state.
18                MS. TAYLOR:  So, Earl -- Francis, do you
19  serve on that committee?
20                MR. SILVER:  Yes, ma'am.
21                MS. TAYLOR:  Okay.  Earl, you're
22  chairing the committee.  Right?
23                MR. SILVER:  Yes, ma'am.
24                MS. TAYLOR:  Okay.  Then this is back in
25  your area.  So --
0052
1                 MR. CORNWELL:  I don't know if that's in
2   his area or not, to talk about petitioning for a rule
3   change, market conduct.
4                 MS. TAYLOR:  Well, not that so much as
5   to whether or not they're going to try and do a
6   meeting outside of --
7                 MR. CORNWELL:  Okay.
8                 MR. SILVER:  I haven't made it that far
9   yet.
10                MS. TAYLOR:  -- outside of Austin.
11  We'll leave that up to you and your committee to
12  decide, of course with Phil's input.  And then we'll
13  look for a recommendation at the next meeting.
14                Kris, thank you for serving on this
15  committee --
16                MR. KELLER:  Thank you.
17                MS. TAYLOR:  -- and for bringing this up
18  to our attention.
19                MR. KELLER:  Again.
20                MR. CORNWELL:  Again.
21                MS. TAYLOR:  Again.
22                MR. WHITTINGTON:  Kris, are these full-
23  pay halls that's doing this?
24                MR. KELLER:  Yes, they are.
25                MR. WHITTINGTON:  You should have a
0053
1   meeting in Dallas.  We'll tell you our prices at our
2   charities, because we've got half-pay halls.  They
3   don't go below $10 for half pay.  That's low.
4                 MR. KELLER:  Yes.
5                 MR. WHITTINGTON:  My full-pay hall
6   averages about $25 ever, because we couldn't make a
7   dime.
8                 MR. KELLER:  I would love to see it in
9   Bexar County.  I don't think we'll ever get that far,
10  but I would be satisfied with $10.00.  We still charge
11  $11 at our daytime hall --
12                MR. WHITTINGTON:  Yes.
13                MR. KELLER:  -- but you can see the
14  attendance continually going down.  We're able to make
15  it up with the pull-tab sales still, but eventually
16  that will start eroding, too.
17                The thing that I can't get across,
18  though, is that if I lower our prices, don't everybody
19  understand that now we're all selling for the same
20  price, we're all selling for $4.00, are my customers
21  not going to come back to my hall now?  Yes.  So it
22  just -- but once you go down, it's really hard --
23                MR. WHITTINGTON:  You can't go back up.
24                MR. KELLER:  -- to go back up.
25                MR. SILVER:  It seems like you're having
0054
1   other issues there besides the price of electronics,
2   because -- what we mentioned earlier is the third-
3   party subsidies, like you said, the charitable
4   distribution of Ben Keith.
5                 MR. KELLER:  Yes.
6                 MR. SILVER:  I mean, that could be a
7   whole other issue besides what it looks like as far as
8   the price of computers, to where if you raise the
9   price of computers to your $10 mark, then they may do
10  something else in order to subsidize it somehow, so
11  that may have to be in this other recommendation that
12  we needed to make as far as a rule, as far as the
13  third-party subsidies.
14                MR. KELLER:  Well, I think for sure we
15  shouldn't be allowed to pay our food that we give away
16  out of the bingo account.  You can't do that, can you?
17                MS. TAYLOR:  Yes.
18                MR. SANDERSON:  Well, Kris, I'll say
19  this one more time.  You give me the name of the
20  location, and we'll send somebody there and look at
21  the records.  I can't investigate a complaint of
22  allegations of violations of our statute and rules
23  without knowing where to go look.
24                MR. WEEKLEY:  That would be helpful.
25                MS. TAYLOR:  But you can do promotions.
0055
1   I mean, you couldn't show that as a charitable
2   distribution, but you can run promotions and pay for
3   it with your bingo account as long as you can show it
4   does increase your attendance.
5                 MR. CORNWELL:  It's a reasonableness.
6                 MS. TAYLOR:  Yes.
7                 MR. SANDERSON:  That is correct.
8   They're permissible expenses.  If it's used for
9   promotional purposes and they can document that it has
10  increased their sales and/or attendance, then, you
11  know, it would be reasonable or necessary.
12                MR. WEEKLEY:  Yes.
13                MS. TAYLOR:  So anyway, this sounds like
14  committee work.  So we'll let the committee get back
15  to working on this and bringing us a recommendation to
16  the next BAC meeting.
17                MR. SILVER:  For the next BAC meeting,
18  you mentioned a recommendation to the Bingo Advisory
19  Committee to set up a price on computers in order
20  to -- and get it to the Commission?
21                MS. TAYLOR:  What it would be, it would
22  be a recommendation for us to adopt it and forward it
23  to the Commissioners.
24                MR. CORNWELL:  And then we would also
25  have a petition for a rule change done, Earl, that we
0056
1   could present right then and there at the Lottery
2   Commission.
3                 Right, Phil?
4                 MR. SANDERSON:  I believe that would be
5   the process, yes.
6                 MR. CORNWELL:  Yes.
7                 MR. SILVER:  If we couldn't come to a
8   consensus in the workgroup, what would happen then?
9                 MR. WEEKLEY:  Give a minority report.
10                MS. TAYLOR:  You can still bring that --
11  I think you can bring it to the BAC, let them know you
12  didn't come to a consensus and let the BAC see if --
13                MR. CORNWELL:  Yes.
14                MS. TAYLOR:  -- as a committee we can
15  come to a consensus.
16                MR. CORNWELL:  Let the committee come to
17  a vote, just put it to a vote if the subcommittee
18  cannot come to a consensus.
19                MR. SILVER:  Got it.
20                MR. WEEKLEY:  Majority report and
21  minority report.
22                MR. CORNWELL:  Yes, you could.
23                MS. TAYLOR:  Once again, thank you,
24  Kris.
25                MR. KELLER:  Thank you.
0057
1                 MS. TAYLOR:  Really appreciate your work
2   on this.
3                 MR. KELLER:  Is that it?
4                 MS. TAYLOR:  That's it.
5                 Any other public comment?
6                     AGENDA ITEM NO. 10
7                 MS. TAYLOR:  We'll go on to Item No. 10,
8   report, possible discussion and/or action on the 2008
9   BAC Annual Report.
10                Committee members, you all have the
11  notebook in front of you with the annual report in it.
12  I'm going to go ahead and just read the page and a
13  half that we have in here, and if you can refer to the
14  charts included within the book.
15                "Rule 402.102(n)(2) states that, 'The
16  BAC will report annually to the Commission the BAC's
17  perspective on the state of the charitable bingo
18  industry in Texas with specific comments on the
19  following:
20                "(A) gross receipts;
21                "(B) net receipts;
22                "(C) charitable distributions;
23                "(D) expenses;
24                "(E) attendance; and
25                "(F) any other matter requested by the
0058
1   Commission."
2                 I'm reading this fast.  But our court
3   reporter has a copy of the book, so she can get it all
4   down later.
5                 "The Bingo Advisory Committee used data
6   contained in the Charitable Bingo Conductor Return
7   Summaries from the Statewide Financial Reports
8   available on the Texas Lottery Commission Charitable
9   Bingo Website.  The Committee analyzed the data
10  contained in the Conductor Return Summaries and
11  charted on the graphs contained in this report and has
12  made the following observations and come to the
13  subsequent conclusions:
14                "A.  Gross Receipts."
15                This is shown on charts on Pages 4, 5
16  and 6.
17                "Gross receipts have continued to
18  improve because of increased instant bingo sales due
19  to event tabs and an increase in electronic sales.
20  Card sales entrance fees continued the decrease begun
21  in 2003 and continued each year with 2008 decreasing
22  from 2007 by $10,810,599.  Electronic sales in 2008
23  showed a slight increase of $4,872,707 over 2007
24  electronic sales and instant bingo sales increased by
25  $32,222,048, resulting in an increase in instant bingo
0059
1   sales of approximately 11.81% from 2007 to 2008, thus
2   creating an increase in overall gross receipts of
3   approximately 3.994% or $26,284,156.  Although instant
4   bingo sales have continued to increases due to the
5   introduction of event tabs, it should be noted more
6   income would be derived from an increase in card sales
7   since the prize payouts are limited to $2,500.00 per
8   session and, with an increase in event ticket sales,
9   there is an increase in prizes paid out, cost of goods
10  sold, and additional payroll costs incurred selling
11  the event tickets.
12                "B.  Net receipts."
13                You can see that on the charts on Pages
14  7, 8, 9 and 10.
15                "Although gross receipts have shown an
16  increase of $127,274,372 from 2002 to 2008, adjusted
17  gross receipts have only increased by $12,924,843 and
18  net receipts have increased by just $5,609,407 during
19  the same time period.  This anomaly has occurred due
20  to a decrease in card sales that have a fixed prize
21  payout and an increase in instant/event ticket sales
22  with a corresponding increase in prize payouts."
23                Charitable distribution is Item No. C.
24  It can be shown on Page 11.
25                "Charitable distributions have continued
0060
1   to follow the trend begun in 2004.  Charitable
2   distributions in 2004 were $30,044,665; they increased
3   to $30,384 530 in 2005, increased to $31,999,875 in
4   2006, to $32,073,589 in 2007 and again to $32,792,760
5   in 2008.  This is the fifth year in a row to see a
6   slight increase in charitable distributions even
7   though there has been a decrease in conductors and in
8   attendance during the same time period.  Increasing
9   the gross [receipts] from card sales and electronic
10  sales through increased attendance would allow more
11  income to be available for charitable distributions."
12                Item D is expenses.  It can be seen on
13  the charts on Page 12, 13, 14 and 15.
14                "Expenses increased by $4,862,060 from
15  2007 to 2008 but have remained relatively stable
16  throughout the last six years and were $7,315,436 more
17  in 2008 than in 2001, confirming that conductors have
18  been managing their expenses well.  Rent payments
19  increased by $1,037,124, payroll increased by
20  $596,907, cost of goods sold increased by $1,700,096,
21  and lease payments to distributors decreased by
22  $167,451 between 2007 and 2008.  The sale of event
23  tickets contributed to the increase of payroll and
24  cost of goods sold.  Because expenses have remained
25  quite stable, conductors should be focused on revenue
0061
1   enhancement."
2                 E is attendance.  It can be seen on
3   charts on Pages 16 and 17.
4                 "Attendance decreased by 229,393 from
5   2007 to 2008, with a decrease of approximately 25.4%
6   from 2001 to 2007, although the decrease from 2007 to
7   2008 has been the lowest one-year decrease since 2002.
8   One reason for the continued decline in attendance is
9   due to a decreasing number of organizations conducting
10  bingo games from 2002 to 2008 (1447 down to 1229).
11  This decrease may be due to the increased competition
12  for the gaming dollar, a lack of advertising bingo in
13  Texas, and because current prizes and games are no
14  longer exciting to the general public, therefore
15  making operations of bingo games unproductive for the
16  non-profits conducting the games.  Recommendations for
17  improvement include more charity involvement in
18  promoting their bingo occasions and working to make
19  bingo more enticing to players in the local halls.
20  Improving attendance remains the key issue to the
21  success of charitable bingo in Texas."
22                And F, "No other matters were requested
23  by the Commission at this time."
24                Is there any comment from the committee?
25                MR. CORNWELL:  Very good report,
0062
1   Suzanne.
2                 MR. WEEKLEY:  Very good report.
3                 MS. TAYLOR:  Thank you.
4                 MR. CORNWELL:  I'm just tossing out an
5   idea, Suzanne.  And I saw the charts and I saw where
6   our card prices are escalating up to -- they're going
7   to be 75 percent pretty quick here.  And that's the
8   kind of -- I always thought a 70/30 was a good way to
9   run your hall, you know, with at least 30 percent
10  profit.
11                MS. TAYLOR:  Right.
12                MR. CORNWELL:  But I don't know.  Is
13  there a need, is there -- this committee -- is there a
14  need for this committee to start studying prize board
15  management techniques?  Would it do us or the industry
16  any good?
17                MS. TAYLOR:  I think that we have
18  discussed before -- I mean, and you might be right.
19  There might be a need for the committee to discuss it.
20  I think the problem that we've come up with before
21  when we've talked about it is that if you had told one
22  hall that they can only pay out a certain percentage
23  and their payouts are averaging $2,100 a session, then
24  they're going to lose more people to the hall that can
25  pay out the $2,500 a session.  So we want to put
0063
1   together -- if it's the will of the committee to put
2   together a committee to work on that, that's fine with
3   me.
4                 MR. CORNWELL:  Oh, I was --
5                 MS. TAYLOR:  If you want to chair that
6   committee --
7                 MR. CORNWELL:  I'll pass.
8                 MS. TAYLOR:  -- and get some committee
9   members, that would be great.
10                MR. CORNWELL:  I'll only do it if you'll
11  be part of it, because you're one of the better
12  operators.  I need you and Larry, Earl maybe, Kimber.
13                MS. TAYLOR:  We can't get too many
14  committee members here.
15                MR. CORNWELL:  I know we can't get too
16  many, but --
17                MS. TAYLOR:  Okay.  So do you want to
18  chair --
19                MR. CORNWELL:  I was just volunteering
20  it --
21                MS. TAYLOR:  -- this with Knowles,
22  Larry --
23                MR. CORNWELL:  -- here at the end of the
24  table.
25                MS. TAYLOR:  -- me and Earl?  Okay.
0064
1   Knowles.  You'll let us know when you want to get
2   together?
3                 MR. CORNWELL:  Who did I get on the
4   committee, you and I?
5                 MS. TAYLOR:  Knowles, Larry, myself and
6   Earl.
7                 MR. WHITTINGTON:  Suzanne is my
8   spokesperson.  She speaks for me.
9                 (Laughter)
10                MR. SANDERSON:  So this is a
11  committee -- just to be clear, it's a committee to
12  study --
13                MR. CORNWELL:  Prize board --
14                MR. SANDERSON:  -- prize board
15  management --
16                MR. CORNWELL:  -- techniques.  What
17  could you do?  What are the turns and the twists?
18  Suzanne is right, you know.  If the players figure out
19  you're not giving out the money, then they're going to
20  go across the way.  But there ought to be ways to be
21  able to control our prize payouts.  I don't know any
22  of those ways.  But, you know --
23                MS. TAYLOR:  I agree with you.  We do
24  control the prize payouts at my hall, and there are
25  very few sessions that we actually pay out $2,500, but
0065
1   there are some sessions.
2                 MR. CORNWELL:  You're the exception out
3   there.
4                 MS. TAYLOR:  Yes.  There are some other
5   halls, too.  I mean, the average payout in the hall is
6   probably 16 to $1,800 a session, is the average
7   payout.
8                 MR. WHITTINGTON:  Really?
9                 MS. TAYLOR:  Yes.  But, no.  I agree
10  it's not a bad thing.  I don't know where your
11  committee is going to go with this, but it will be
12  interesting.
13                Okay.  But are there any other
14  recommendations that the committee would like to see
15  under any of these gross receipts, net receipts,
16  charitable distribution, any of these items?
17                Are there any other additions that we
18  would like to add to that?
19                MR. CIANCARELLI:  Madam Chair?
20                MS. TAYLOR:  Yes.
21                MR. CIANCARELLI:  May I suggest that we
22  add a list of the BAC members that were sitting at the
23  time this report was covering?
24                MS. TAYLOR:  That would be me.
25                MR. CIANCARELLI:  What I mean --
0066
1                 MS. TAYLOR:  Oh, who was serving on the
2   committee?
3                 MR. CIANCARELLI:  Correct, all the
4   members.
5                 MR. SANDERSON:  Include a list of the
6   BAC members that were --
7                 MS. TAYLOR:  That were on the committee?
8                 MR. SANDERSON:  No, that are on the
9   whole committee.
10                MS. TAYLOR:  At present?
11                MR. SANDERSON:  During the 2008 --
12                MR. CIANCARELLI:  If you're making an
13  annual report --
14                MR. SANDERSON:  Right.
15                MR. CIANCARELLI:  -- even though you did
16  the report, it sort of represents what the committee
17  may or may not have done.
18                MS. TAYLOR:  Okay.  We can put that in
19  there.
20                MR. CORNWELL:  He wants you to pat
21  yourself on the back.
22                And it's good point, Francis.  Thank
23  you.
24                MS. TAYLOR:  You know, I think that what
25  we can do is, before gross receipts or before that
0067
1   last sentence in there, we can go ahead and say who
2   was serving -- that would be last term and this term,
3   since we had some different members on there.  So we
4   can list all the BAC members that served on the
5   committee during this time frame, during the 2008.
6                 MR. CIANCARELLI:  Thank you.
7                 MS. TAYLOR:  I'll just send that to you,
8   Phil.
9                 Okay.  Any other additions, changes or
10  recommendations?
11                Okay.  We'll add that to the report.
12                MR. CORNWELL:  Do you need a motion?
13                MS. TAYLOR:  Is there a motion to
14  approve the report with this added?
15                MR. CORNWELL:  I move that we approve
16  the report, with the changes.
17                MR. WHITTINGTON:  I second it.
18                MS. TAYLOR:  All in favor?
19                COMMITTEE MEMBERS:  Aye.
20                MS. TAYLOR:  Any opposed?
21                (No response)
22                Unanimously passes.
23                Any public comment?
24  
25  
0068
1                     AGENDA ITEM NO. 11
2                 MS. TAYLOR:  Item No. 11, report and
3   possible discussion and/or action on Draft 16 TAC Rule
4   402.420, qualifications for a license.
5                 MR. SANDERSON:  Members, in your
6   notebook is a revised draft of 402.420 that was on the
7   last agenda for the BAC meeting.  I just incorporated
8   some comments that were received from the workgroup.
9   And if you've had an opportunity to look at it and
10  provide any additional comments, we'll be glad to look
11  at adding those or changing the draft, using your
12  recommendations.
13                One thing is, there are some items in
14  here that may be impacted by current legislation, so
15  we're not going to take this to the Commission in the
16  next meeting or probably the following meeting.  We'll
17  wait to see if there's any changes that needs to be
18  made based on legislation.
19                MR. CORNWELL:  That would change it
20  quite a bit, wouldn't it?
21                MR. SANDERSON:  In some cases, it would,
22  yes.
23                So if there's no comments, then we'll
24  take this draft and revise it as necessary during the
25  legislation and then move forward.
0069
1                 MR. CIANCARELLI:  Is there a time frame
2   on when we need to get the comments back on this
3   draft?
4                 MR. SANDERSON:  It's still out in the
5   open for informal comments, so there's not really at
6   this point in time any particular time frame.  The
7   sooner the better, though.
8                 MR. CIANCARELLI:  Okay.  Thank you.
9                 MS. TAYLOR:  Okay.  So get the comments
10  in ASAP.
11                Any public comment?
12                    AGENDA ITEM NO. 12
13                MS. TAYLOR:  Then we'll go on to Item
14  No. 12, report and possible discussion on the
15  activities of the Charitable Bingo Operations
16  Division.
17                MR. SANDERSON:  Members, in January --
18  or actually early February -- I changed the format of
19  my reporting to the Commission on the activities of
20  the Division.  I've included in the notebook the
21  reports that I provide to the Commissioners at their
22  monthly meetings.  And you'll have the reports that I
23  provided on the January activities, the February
24  activities.  And then also you'll have the memo that's
25  provided on the allocations that were made for the
0070
1   fourth quarter of 2008, as well as two press releases
2   relating to the allocations and one relating to the
3   gross receipts for 2008.
4                 I'll be glad to answer any questions.
5                 MR. CORNWELL:  Phil, under your special
6   projects, you're working on a bingo products system
7   development.  Can you expound -- explain?
8                 MR. SANDERSON:  It will be the primary
9   database for our art work and will be an approval for
10  pull-tabs so that the staff will be able to query it
11  by form number to get information on the ticket as to
12  the cost, the payout, and the gross receipts.
13                MR. CORNWELL:  I know Homer has retired
14  and I know that -- I think Roy took over some of that.
15  Right?
16                MR. SANDERSON:  And he's retired.
17                MR. CORNWELL:  And now he's retired.
18  Where are we on outsourcing the testing of electronic
19  card-minding devices?
20                MR. SANDERSON:  We're in the process of
21  drafting the necessary changes to the rule --
22                MR. CORNWELL:  Yes.
23                MR. SANDERSON:  -- as well as
24  identifying our recommendations to the Commission as
25  to how they would want to proceed with the
0071
1   outsourcing, whether it be sole source or open market
2   or approval of more than one testing facility.
3                 MR. CORNWELL:  And in the meantime, I
4   guess we're still operating under the old rules?
5                 MR. SANDERSON:  In the meantime, they
6   still need to contact Worlanda Neal to schedule a time
7   to bring the system in and set it up, and we'll have
8   someone test it at that point.
9                 MR. CORNWELL:  Okay.
10                MS. TAYLOR:  I have a couple of things I
11  was going to ask you about, which I think you can
12  answer, since it's in here.  Are the open record
13  requests substantially declined, now that all that
14  information is available online?
15                MR. SANDERSON:  My understanding from
16  our open records coordinator is that they have for
17  bingo.  They have declined drastically, because of the
18  information that we put available on the website.
19                MS. TAYLOR:  And how about the bingo
20  operator training?  Is the number of online
21  trainings -- I see that the first one was up
22  significantly, 75 to 32, but then it went back down on
23  the next one.  Is that just because there were more
24  classes offered, on-site classes?
25                MR. SANDERSON:  There were definitely
0072
1   more on-site classes offered during the last several
2   months as it relates to getting all the operators and
3   the chairpersons trained.  The online training went
4   active in June, towards the end of June of 2008.  And
5   I want to say in January or early February, we had
6   trained over 1,000 individuals already on online
7   training.
8                 So it's been very successful.  And we
9   have been getting very positive feedback on this
10  online training.  We did have several classes the last
11  couple of months that Bruce Miner, Meagan Ahmad, Rich
12  Frysinger, some of the audit staff in the field
13  offices participated in, and there were some that had
14  over 80 people to 100 people in the classes.  And we
15  continue to get very positive feedback from the
16  training classes.  It's a little long.  We hear that
17  quite a bit.  And it lasts a while and it takes a
18  little bit longer to sit down and attend the training,
19  but they all feel like they come out of there with a
20  lot of knowledge and more information.
21                One of the other misconceptions that
22  we've heard in the last several classes that we had is
23  that some organizations are requiring their workers to
24  attend the training.  And that's not a requirement,
25  other than if the organization wants that, that's up
0073
1   to them.  But there were a lot of people that were
2   saying that were at the training, you know, they were
3   told to be there and they were just workers.  And so
4   we informed them that for our purposes, it's only the
5   operators and the bingo chairperson that are required
6   to be there.
7                 MS. TAYLOR:  And online training, how
8   many -- I know before there had been some people what
9   didn't quite pass it.  What is the percentage of
10  people that passed that question?  Is it pretty high?
11                MR. SANDERSON:  I don't have in front of
12  me the passing rate as far as 50 percent or 70 percent
13  or whatever number that might be.  I can look at
14  getting that for the next meeting.
15                MS. TAYLOR:  That would just be
16  interesting.  I mean, it seems like it must be pretty
17  high since the answers are right in front of you.
18                MR. SANDERSON:  Well, we've had some
19  people that have had to take it three times.
20                (Laughter)
21                MR. WHITTINGTON:  And they work bingo?
22                MS. TAYLOR:  Yes, they're an operator.
23                MR. WHITTINGTON:  That's what I wanted
24  to say.  On the training, I've been through the site
25  training plenty of times, but this time it was a
0074
1   little different when I went.  It wasn't a lot of your
2   mission (phonetic) workers talking about different
3   entities of the book (phonetic), because a lot of time
4   they missed a lot when they used to just talk about
5   it.  But the training class, at least you have this
6   voice that's going through everything thorough, and
7   you can actually sit and listen and pick up
8   everything.  So I guess it's almost similar to the
9   online training exactly when they go out and show this
10  video?
11                MR. SANDERSON:  The difference between
12  the online and the on-site training is very minimal.
13  On the on-site class, we have taken out some of the
14  slides, because they're duplicates.  But because of
15  the way the online training is set up in different
16  modules, we've incorporated some slides in different
17  modules that are the same slide, because it's needed
18  to flow through that process of what that module is
19  intended for.
20                MR. WHITTINGTON:  Right; right.
21                MS. TAYLOR:  And the requirement that
22  all the bingo chairperson and operators must have
23  attended or done an online training, when did that --
24  was it the 11th or --
25                MR. SANDERSON:  April the 10th or 11th
0075
1   was the date that an organization is to be in
2   compliance.  All of their operators or chairpersons --
3   and chairpersons had to have taken the training.  And
4   we've had several that have not.  We're sending out
5   letters right now to those organizations.  We're
6   giving them an additional 60 days, I think, somewhere
7   in there, to get the training done.  That was one
8   reason that we conducted so many classes the last two
9   months.
10                And the staff -- you know, our staff put
11  a lot of time and effort into that.  And the staff
12  that stayed in Austin that wasn't part of the training
13  picked up a lot of extra duties that they had to
14  perform for the people that were out training.  So the
15  bingo staff has done an excellent job in making all
16  the training happen in a timely fashion.
17                MS. TAYLOR:  Are the bingo tests scanned
18  or are they physically graded?
19                MR. SANDERSON:  They're physically
20  graded.  Like any test, there is an overlay that
21  indicates which ones are right or wrong.
22                MS. TAYLOR:  Do people get the wrong --
23  are some answers consistently wrong, more than others?
24                MR. SANDERSON:  We have had -- and we do
25  have an individual that looks at that.  If there is a
0076
1   question that appears to be missed more often than
2   not, we'll go back and look at the question to see if
3   it's the wording of the question.  Or if the
4   information that's in the module is not sufficient to
5   answer that question, then we'll make changes to it.
6   And there have been instances where that's happened.
7   It's either been worded in such a manner that it
8   potentially could be confusing, you know, for the
9   answer, and so we make changes to it.
10                MS. TAYLOR:  Okay.  I noticed recently
11  that one of the modules was changed.  Is that to add
12  additional things in that module or -- I just noticed
13  it had a changed module.  I think the second or third
14  module had been changed.
15                MR. SANDERSON:  Well, there's several of
16  them -- of course, they're continually updated as
17  rules are adopted, because when there is a rule
18  that -- I'll give you an example, is the bingo
19  chairperson rule.  When that got adopted, then we went
20  in and changed all the slides that changed from
21  primary operators to bingo chairperson.
22                MS. TAYLOR:  Maybe that was the module
23  that I --
24                MR. SANDERSON:  So that's probably the
25  one that you were talking about.
0077
1                 MS. TAYLOR:  Yes.  Very interesting.
2                 Any other questions or comments?
3                 MR. CIANCARELLI:  Mr. Sanderson, has
4   anyone aced the online training course?
5                 MS. TAYLOR:  Me.
6                 MR. SANDERSON:  I'm sure there have been
7   some.  I'll add that to my report at the next BAC
8   meeting, give you the full statistical analysis of the
9   online class.
10                MR. CORNWELL:  Can we make an
11  announcement of their names?
12                MR. WEEKLEY:  Give them a prize.
13                MS. TAYLOR:  Yes, we would like to see
14  grades from now on.
15                (Laughter)
16                One item -- and I know that you guys
17  don't have enough to do already.  But it really would
18  be interesting to know which questions you missed and
19  what you have wrong, because if you're answering the
20  question wrong, then obviously you don't know the
21  right answer, and you think your wrong answer is
22  correct.  That's the only thing that I can see that
23  would help, is if the people not only get a
24  certificate, say, "These are the wrong answers," or
25  something.
0078
1                 MR. WHITTINGTON:  Right.  That's it.
2                 MS. TAYLOR:  Or, "You need to look back
3   over this particular item, even if you don't want to
4   give the right answers."
5                 MR. SANDERSON:  I understand what you're
6   saying.  And I know, we've got our information
7   resource staff, we're still looking to improve the
8   online training.  And primarily not having the funding
9   to develop a real nice online training, we've kind of
10  taken, you know, not the Cadillac version but the
11  lower, you know, version of it to just put out there,
12  to have that opportunity.  However, it has been a very
13  good base to work from.
14                And when we move to the new format that
15  IT is working on right now, then I think it does have
16  the capability of taking the test online you see what
17  you get correct and what you get wrong, as well as I
18  think if you miss the questions, then it will let you
19  go back and review it and take the questions again so
20  you don't have to take the whole test over.  But it's
21  just a matter, you know, of us not having that funding
22  to get that moved into production in the first place.
23  So we're working towards that goal.
24                MS. TAYLOR:  That would be great; that
25  would be great.
0079
1                 MR. WHITTINGTON:  Is it something -- as
2   far as the questionnaire that you've got to answer on
3   online training, I haven't been to that program.  I go
4   live, you know.  But is there any kind of way that
5   this could be, the question they miss -- because I'm
6   sure it's some type of software -- you can just go
7   through and you click and it tells you what's wrong,
8   "This is what's wrong," "This is the right answer,"
9   and go back and at least they would know it's the
10  right answer, because if somebody come out and they
11  got the wrong answer, they don't know, they will be --
12                MR. WEEKLEY:  Send them the key.
13                MR. WHITTINGTON:  -- written up for it
14  I'm sure.  So I'm sure it's some type of software
15  y'all could have for that program.
16                MS. TAYLOR:  That's what, I believe, he
17  was describing to us.
18                MR. SANDERSON:  Yes.
19                MR. WHITTINGTON:  Yes.  That would
20  simplify it.
21                MS. TAYLOR:  Yes.  I mean, I agree not
22  to just give them the right answer but to go back, at
23  least let them know that they have that wrong so they
24  know where they need to go back add --
25                MR. WHITTINGTON:  Yes.
0080
1                 MS. TAYLOR:  -- read it over again.
2                 Any other discussion?
3                 Public comment?
4                     AGENDA ITEM NO. 13
5                 MS. TAYLOR:  Then we're in public
6   comment.  Any public comment?
7                 Commissioner, would you have anything --
8   any pearls of wisdom for us?
9                 COMMISSIONER SCHENCK:  On this topic,
10  no.
11                MS. TAYLOR:  Okay.  No public comment.
12                    AGENDA ITEM NO. 14
13                MS. TAYLOR:  Then we're on to Item No.
14  14, consideration of and possible action on future
15  Bingo Advisory Committee meeting dates and/or items to
16  be considered for future meetings.
17                MR. CORNWELL:  One, we left off the new
18  products committee report again on the agenda.  It was
19  on the original and then it got -- somehow it got
20  dropped.  Make sure that gets on there.
21                MS. TAYLOR:  We, of course, have Earl's
22  group.
23                MR. SILVER:  Yes, the market conduct --
24                MR. CORNWELL:  Market conduct.
25                MR. SILVER:  -- report as well as the
0081
1   nomination committee reporting.
2                 MS. TAYLOR:  The Commissioners' item,
3   I'll let you figure out how to phrase it.
4                 MR. SANDERSON:  How to phrase that?
5   There will also need to be the agenda item that you --
6   how did you word it earlier?  It's the one where you
7   give your report of the activities of the BAC.
8                 MS. TAYLOR:  Yes.  BAC activities.
9   Okay.
10                MR. SANDERSON:  So that they can have
11  that to -- provide to the Commissioners and relate all
12  this meeting.
13                MS. TAYLOR:  When does the annual report
14  go?
15                MR. SANDERSON:  The annual report will
16  more than likely go to them not at this coming meeting
17  but probably the next meeting that they have?
18                MS. TAYLOR:  Any idea approximately when
19  that is?
20                MR. SANDERSON:  Historically they've
21  been meeting on the third Friday of each month.
22  However, they did not meet in April.  And due to
23  scheduling conflicts, I think the meeting right now is
24  tentatively scheduled for next Thursday.  So I would
25  look at probably the third week in June possibly.  But
0082
1   there again, you know, as soon as I can find out a
2   more accurate tentative date, then I'll let you
3   know --
4                 MS. TAYLOR:  Okay.
5                 MR. SANDERSON:  -- because you'll have
6   this on the agenda as well as the report of the
7   meeting here.  You'll have the annual report -- this
8   annual report --
9                 MS. TAYLOR:  Right.
10                MR. SANDERSON:  -- 2008, to present to
11  them, along with --
12                MS. TAYLOR:  The workplan.
13                MR. SANDERSON:  -- not the workplan but
14  your report on this meeting --
15                MS. TAYLOR:  Meeting.  Okay.
16                MR. SANDERSON:  -- this meeting here.
17                The workplan and the activities of the
18  BAC will be on the same meeting, along with the rule
19  that indicates that they must, you know, vote to
20  continue the BAC.  And so all three of those go
21  hand-in-hand.
22                MS. TAYLOR:  Any other items that you
23  can think of right now?
24                MR. CORNWELL:  Put the workgroup's study
25  of the -- or the prize board --
0083
1                 MS. TAYLOR:  Prize board workgroup.
2                 MR. WHITTINGTON:  Smile when you say
3   that.
4                 MR. CIANCARELLI:  And how did we leave
5   the remote meeting location -- study it, think about
6   it, do it?
7                 MR. SILVER:  That's on the subcommittee.
8                 MR. CIANCARELLI:  Right.
9                 MR. SILVER:  We'll work on that one.
10                MS. TAYLOR:  Earl is going to be taking
11  care of that.
12                MR. CORNWELL:  I would like to -- also I
13  would like to add Steve Fenoglio to that committee,
14  Earl, if you would accept it to your market conduct
15  committee.  That's what you were talking about, wasn't
16  it?
17                MR. SILVER:  Okay.  Which one?
18                MR. CORNWELL:  Market conduct.
19                MR. SILVER:  Oh, yes.  Steve's help will
20  be greatly appreciated.
21                MR. CORNWELL:  Yes, since we didn't get
22  any offers for staff come help us, help you.
23                (Laughter)
24                MS. TAYLOR:  Okay.  Any other agenda
25  items that you can think of, if you'll let myself or
0084
1   Phil know that you would like those to be on the next
2   agenda.
3                 And the next meeting will be?
4                 MR. SANDERSON:  Right now what y'all had
5   previously voted on, the next meeting would be
6   scheduled for August the 5th, so the first Wednesday
7   in August.  At this stage do you want to continue with
8   blocking out?
9                 MR. CORNWELL:  Yes.  I move that we
10  accept August 5th as our next meeting date.
11                MS. TAYLOR:  Okay.  Second?
12                MR. CORNWELL:  5th.
13                (Laughter)
14                MS. TAYLOR:  All in favor?
15                COMMITTEE MEMBERS:  Aye.
16                MS. TAYLOR:  Opposed?
17                (No response)
18                Okay.  August 5th is the next tentative
19  meeting.
20                    AGENDA ITEM NO. 15
21                MS. TAYLOR:  If there is nothing else,
22  then -- it's 11:38 -- this meeting is adjourned.
23                (Meeting adjourned:  11:38 a.m.)
24  
25  
0085
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 15th day of May 2009.
15  
16  
17  
                          ________________________________
18                        Aloma J. Kennedy
                          Certified Shorthand Reporter
19                        CSR No. 494 - Expires 12/31/10
20                        Firm Certification No. 276
                          Kennedy Reporting Service, Inc.
21                        Cambridge Tower
                          1801 Lavaca Street, Suite 115
22                        Austin, Texas  78701
                          512.474.2233
23  
24  
25