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 TUESDAY, JULY 17, 2007 § 8 9 COMMITTEE MEETING 10 TUESDAY, JULY 17, 2007 11 12 BE IT REMEMBERED THAT on Tuesday, the 13 17th day of July 2007, the Bingo Advisory Committee 14 meeting was held from 10:01 a.m. to 2:20 p.m., at the 15 Offices of the Texas Lottery Commission, 611 East 6th 16 Street, Austin, Texas 78701, before CHAIR SUZANNE 17 TAYLOR. 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 Ms. Kimberly Rogers 4 Ms. Rosalie Lopez Mr. Thomas "Tom" Weekely 5 Mr. John "Jack" Dougherty Mr. Larry Whittington 6 Ms. Markey Weaver Mr. Knowles Cornwell 7 8 CHARITABLE BINGO OPERATIONS DIVISION ASSISTANT 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 - Meeting Called To order... 5 4 AGENDA ITEM NO. 2 - Consideration of and possible discussion and/or action on the 5 minutes of the May 2, 2007 Bingo Advisory Committee meeting............................. 5 6 AGENDA ITEM NO. 3 - Report and possible 7 discussion on the new Public Service Announcement (PSA)............................ 5 8 AGENDA ITEM NO. 4 - Report, possible 9 discussion and/or action on 1st quarter calendar year 2007 bingo conductor 10 information................................... 9 11 AGENDA ITEM NO. 5 - Report, possible discussion and/or action, on amendments 12 to 16 TAC §402.100 relating to definitions................................... 12 13 AGENDA ITEM NO. 6 - Report, possible 14 discussion and/or action, including proposal of repeal, on 16 TAC §402.102 relating to 15 Bingo Advisory Committee...................... 12 16 AGENDA ITEM NO. 7 - Report, possible discussion and/or action, including proposal 17 on new 16 TAC §402.102 relating to Bingo Advisory Committee............................ 12 18 AGENDA ITEM NO. 8 - Report, possible 19 discussion and/or action on guidelines for Internal Controls............................. 37 20 AGENDA ITEM NO. 9 - Report and possible 21 discussion and/or action on draft for Compliance Audit............................. 66 22 AGENDA ITEM NO. 10 - Report, possible 23 discussion and/or action on draft rule for Dispute Resolution............................ 81 24 25 0004 1 TABLE OF CONTENTS (continued) 2 PAGE NO. 3 AGENDA ITEM NO. 11 - Report, possible discussion and/or action on draft rule 4 for Books and Recordkeeping Requirements for Conductors................................ 98/149 5 AGENDA ITEM NO. 12 - Report, possible 6 discussion and/or action on draft rule for Conduct of Bingo......................... 113 7 AGENDA ITEM NO. 13 - Report, possible 8 discussion and/or action on draft rule for House Rules.................................. 131/156 9 AGENDA ITEM NO. 14 - Report, possible 10 discussion and/or action on nominations and appointment and/or a nomination and 11 appointment procedure on the Bingo Advisory Committee.......................... 157 12 AGENDA ITEM NO. 15 - Consideration of and 13 possible discussion and/or action on the Bingo Advisory Committee work plan............ 163 14 AGENDA ITEM NO. 16 - Report and possible 15 discussion on the activities of the Charitable Bingo Operations Division.......... 176 16 AGENDA ITEM NO. 17 - Public Comment........... 177 17 AGENDA ITEM NO. 18 - Consideration of and 18 possible action on future Bingo Advisory Committee meeting dates and/or items to be 19 considered for future meetings................ 178 20 AGENDA ITEM NO. 19 - Adjournment.............. 183 21 REPORTER'S CERTIFICATE........................ 184 22 23 24 25 0005 1 P R O C E E D I N G S 2 TUESDAY, JULY 17, 2007 3 (10:00 a.m.) 4 AGENDA ITEM NO. 1 5 MS. TAYLOR: It's 10 o'clock. We would 6 like to call this meeting to order, Bingo Advisory 7 Committee meeting. 8 AGENDA ITEM NO. 2 9 MS. TAYLOR: Item No. 2 on the agenda 10 is consideration of and possible discussion and/or 11 action on the minutes of the May 2, 2007 Bingo 12 Advisory Committee meeting. 13 These were posted on line. Do I hear a 14 motion to approve them as posted? 15 MS. ROGERS: I make a motion to approve 16 them as posted. 17 MR. CORNWELL: Second. 18 MS. TAYLOR: There has been a motion 19 and a second. All in favor? 20 FROM THE COMMITTEE: Aye. 21 Opposed? 22 (No response) 23 They're unanimously approved. 24 AGENDA ITEM NO. 3 25 MS. TAYLOR: Item No. 3, report and 0006 1 possible discussion on the new public service 2 announcement. 3 MR. SANDERSON: Members, we have 4 revised the public service announcement that we issued 5 last year. We have updated it with the 2006 6 information. And at this time I would like to have 7 staff play the English and the Spanish version for 8 y'all. 9 (English public service announcement 10 shown on overhead as follows: 11 "It's been called the most charitable 12 game in Texas for a very good reason. Approximately 13 20 million Texans played charitable bingo last year, 14 and they won $491 million in prizes. But the biggest 15 winners of all were the many Texas charities that 16 received more than $31 million in proceeds from the 17 conduct of bingo. So what are you waiting for? Log 18 on to txbingo.org/hall to find a playing location near 19 you.") 20 (Spanish public service announcement 21 shown on overhead as follows: 22 "Le llaman el juego más caritativo en 23 Texas, y por buena razón. Casi 20 millones de 24 aficionados del bingo caritativo jugaron el año pasado 25 en Texas, y ganaron un total de premios de $cuatro 0007 1 cientos noventa y un millones de dólares. Pero los 2 ganadores mayores fueron las organizaciones 3 caritativas que lograron más de $31 millones del 4 conducto del bingo. Pues, ¿qué esperas? Encontraras 5 la sala de bingo más cercana a ti en 6 t-x-bingo-punto-o-r-g.") 7 MR. SANDERSON: For this agenda item, I 8 just wanted to show you that we had updated it and 9 it's available for anyone that would like to receive a 10 copy of it. 11 And I know, Rosie, you've used it quite 12 a bit. 13 MS. LOPEZ: Yes. I would like at least 14 three dubs, if I could get three dubs of the new PSA. 15 And I'll take those back to West Texas with me. Not 16 today, I mean just whenever I can get them would be 17 great. 18 MS. ROGERS: How do you go about 19 getting them? Do you request them on line or do you 20 call a certain person? 21 MR. SANDERSON: You can send me an 22 e-mail. 23 MS. ROGERS: Okay. 24 MR. CORNWELL: Just a side comment. 25 They did renew the National Bingo Night, starting in 0008 1 December 17th again, along the same line as PSAs. 2 MR. DOUGHERTY: September? 3 MR. CORNWELL: I'm sorry? 4 MR. DOUGHERTY: September? 5 MR. CORNWELL: December 17th. 6 MR. DOUGHERTY: December. 7 MR. CORNWELL: They renewed it for five 8 shows. 9 MS. LOPEZ: I did actually get to watch 10 it one Friday night when I was at home. And I thought 11 about even dressing up like the little umpire guy and 12 actually doing that at bingo, because I thought that 13 was really pretty cute. 14 MR. CORNWELL: You don't know how many 15 times people ask me -- on a plane -- ask me, "What do 16 you do on the bingo?" "No bingo." They tell me back, 17 "No bingo." 18 MS. TAYLOR: One thing I was going to 19 say, the PSA is available at no cost? 20 MR. SANDERSON: That is correct. 21 MS. LOPEZ: Okay. 22 MS. TAYLOR: We would like to recognize 23 Commissioner Clowe. Thank you for attending. We sure 24 appreciate your taking the time out of your busy 25 schedule to come over here. 0009 1 AGENDA ITEM NO. 4 2 MS. TAYLOR: Item No. 4, report, 3 possible discussion and/or action on first quarter 4 year 2007 bingo conductor information. 5 MS. SHANKLE: Good morning, Madam Chair 6 and members. For the record, my name is Terry 7 Shankle. The presentation this morning contains 8 figures reported by our licensed charitable 9 organizations for the first quarter of 2007. 10 I would like to thank Susan Beasley of 11 the Office of the Controller for preparing the 12 statistical analysis that is included in your 13 notebook. 14 This gross receipts and prize graph 15 shows for the first quarter of 2007, regular and 16 electronic card sales totaling $99.8 million. Of that 17 total, $73.5 million were for prizes awarded to 18 winners which equates to 73.6 percent of regular and 19 electronic sales. Instant pull-tab sales were 20 $71.9 million, with prizes being paid out of 21 $52.2 million, or 72.6 percent of pull-tab sales. 22 As revealed on this cash disbursements 23 graph, rent payments, as indicated by the blue column, 24 continue to be the largest expense, at $9.9 million, 25 or 21.6 percent of net receipts, with salaries for 0010 1 callers, cashiers and ushers following at $9 million, 2 or 19.5 percent of net receipts. 3 This pie chart shows expenses as a 4 percentage of total expenses but does not include 5 charitable distributions. When expenses are compared, 6 salaries represent 40 percent of total expenses. And 7 when rent payments are added to salaries, the two 8 categories make up 69 percent of total expenses. 9 The pie chart gross receipts by type 10 reflects the three different products that make up 11 gross receipts. Pull-tab sales have done better than 12 regular card sales three out of the last four 13 quarters. This quarter shows the largest margin of 14 difference, showing pull-tabs outselling regular cards 15 by $11.1 million. 16 The average number of players by 17 occasion compares the first quarters of 2005, 2006 and 18 2007. The average number of players per occasion of 19 128 for the first quarter 2007 shows a decline of 20 9 percent from the previous year. 21 From 2003 to 2007, the first quarter 22 pull-tab net receipts show a continual increase. The 23 increase between the first quarter of 2006 to the 24 first quarter of 2007 is $1 million and is a much 25 smaller increase than the prior first quarters. This 0011 1 could be an indication that pull-tab sales are 2 beginning to level off. 3 Regular bingo net receipts, as 4 indicated by the red line, are down approximately 5 $2.8 million from the first quarter of 2006. Net 6 receipts, as indicated by the green line, are down 7 $1.8 million when compared to the first quarter of 8 2006. 9 As shown on the prize payout percentage 10 chart, regular bingo payout percentages continue to 11 increase the first quarters of each year, while 12 pull-tab payout percentages have decreased the first 13 quarters of 2006 and 2007. 14 Historically, gross receipts, net 15 receipts, attendance and the number of occasions are 16 the highest the first quarter of each year. Since the 17 third quarter of 2002, this is the first quarter that 18 gross receipts have not shown an increase over this 19 same quarter of the prior year. 20 That concludes my report. Thank you. 21 MS. TAYLOR: Does the committee have 22 any questions for Terry? Observations? 23 Thanks, Terry. Anything else on this 24 item? 25 0012 1 AGENDA ITEM NOS. 5, 6 AND 7 2 MS. TAYLOR: If not, we'll continue 3 with Item No. 5, possible discussion and/or action on 4 amendments to 16 TAC 402.100 relating to definitions. 5 MR. SANDERSON: Members, the next three 6 items, 5, 6 and 7, are rulemakings that the Commission 7 proposed for publication at the June 25th meeting. 8 And there was a public hearing that was held yesterday 9 on these three items. And for the purposes of your 10 internal discussions, they were posted on your agenda. 11 And I would like to request that 12 comments that y'all make on these three rules today 13 are not part of the comments for the comment period 14 and that the BAC reduce their comments to writing and 15 submit those as a group if you so desire, and any 16 individual that is wishing to comment individually on 17 the rule to do the same. 18 And with that, the first one is the 19 proposed amendments to the definitions, 402.100, 20 adding a definition for Bingo Chairperson. I believe 21 there is a copy in your notebook. There's some copies 22 that were available on the desk outside for those of 23 you that do not have one. And it's now open for your 24 discussion. 25 MR. CORNWELL: Phil, I have one 0013 1 question. Under the definitions, the only thing you 2 added in that definition was the definition of a bingo 3 operator. Right? If there's other definitions in 4 there, are they open to public comment also? 5 MR. SANDERSON: I don't believe so. 6 Only the definition that was -- only the amendment 7 that was made to the rule itself is open for public 8 comment. Now, there are some other definitions that 9 we are looking at in the future. So if you have any 10 particular requests, I'll be glad to -- you know, 11 e-mail me those and entertain those. 12 MR. CORNWELL: And, Phil, when you say 13 you don't want us to comment but to discuss, I've got 14 another question. In 102 it mentions the Executive 15 Director of the Lottery has an opportunity to be a 16 part of the process of the appointment of bingo 17 advisory personnel or members. 18 MR. SANDERSON: You're going to make me 19 look it up, aren't you? 20 Madam Chair, do you want to take these 21 three items all at once? 22 MS. TAYLOR: Does the committee have a 23 problem with that? 24 FROM THE COMMITTEE: No. 25 MS. TAYLOR: Okay. That's fine with 0014 1 me, then. We're going to go ahead and consider Items 2 6 through 8. So in addition -- 3 MR. SANDERSON: 5 through 7. 4 MS. TAYLOR: I'm sorry. 5 through 7. 5 So in addition to the item that we already talked 6 about, we're going to talk the report, possible 7 discussion and/or action, including proposal of 8 repeal, on 16 TAC 402.102 relating to the Bingo 9 Advisory Committee; and Item No. 7, report, possible 10 discussion and/or action, including proposal on new 16 11 TAC 402.102 relating to Bingo Advisory Committee. 12 Knowles. 13 MR. CORNWELL: Yes. On (e)(2), Page 4, 14 "Charitable Bingo Operations Division staff rank the 15 nominations with advice and consultation of the 16 Executive Director as appropriate." Should that mean 17 you, Phil, or does that mean Mr. Sadberry? By 18 definition, it means Mr. Sadberry. 19 MR. SANDERSON: By definition, it's 20 Mr. Sadberry, and it does mean Mr. Sadberry, that he 21 can have input if he so desires. 22 MR. CORNWELL: And what was Legal's 23 determination of that issue of having a separate 24 director for bingo versus in the legislation, it is 25 clear that the responsibilities of your position and 0015 1 Mr. Sadberry's are separate and distinct? What was 2 Legal's response to that statutory language? 3 MR. SANDERSON: I am not prepared to 4 answer that. I would have to look at Sandy to see if 5 she has any recollection of the legal interpretation 6 on that. 7 MR. CORNWELL: Okay. That's all the 8 questions I have. 9 MS. TAYLOR: You know, Knowles, I've 10 got to tell you, I was so busy looking at the other 11 ones, I totally missed that. But I, too, think that 12 that's awfully weird to have that in there. I can't 13 understand -- 14 MR. CORNWELL: I don't think it has any 15 statutory basis for having it in there. 16 MS. TAYLOR: I would imagine the 17 Lottery doesn't consider your recommendations -- 18 MR. CORNWELL: I think it ought to be 19 you, Phil. 20 MS. TAYLOR: -- of the Lottery, do 21 they? 22 MR. SANDERSON: I'm not aware of an 23 advisory committee for the lottery. 24 MS. TAYLOR: Okay. Good observation, 25 Knowles. Thank you for drawing that to our attention. 0016 1 MS. LOPEZ: I have a question. On the 2 bingo chairperson, if you're an actual nominated bingo 3 chairperson by the organizations, is that not the same 4 thing as like a designated agent of your trust? Or is 5 that totally a different -- is this a totally 6 different -- 7 MR. SANDERSON: That would be totally 8 different. The bingo chairperson is as defined as an 9 officer of the organization. 10 MS. LOPEZ: An officer of the 11 organization. But I guess my question, could not the 12 designated agent also be a bingo chairperson? 13 MR. SANDERSON: They could be. 14 MS. LOPEZ: They could be. 15 MR. SANDERSON: There is not a 16 prohibition, no. 17 MS. LOPEZ: Okay. 18 MS. TAYLOR: So a director could not be 19 the bingo chairperson? Does it have to be an officer? 20 If there is only like president, secretary/treasurer 21 and vice president as officers, does one of them have 22 to be the bingo chairperson? 23 MR. SANDERSON: At this time the 24 definition is officer, yes. And we're receiving 25 comments on that. 0017 1 MS. LOPEZ: And an officer could be -- 2 you have to actually hold a position in the 3 organization? I guess is what you were asking -- 4 MS. TAYLOR: Yes. 5 MS. LOPEZ: -- do you have to hold a 6 position? 7 MS. TAYLOR: Well, an officer 8 position -- 9 MS. LOPEZ: An officer position. 10 MS. TAYLOR: -- because there's a lot 11 of director positions -- 12 MS. LOPEZ: Right. 13 MS. TAYLOR: -- or committee chair 14 positions. 15 MS. LOPEZ: Okay. 16 MR. CORNWELL: Chairperson/officer. 17 MS. TAYLOR: I'm sorry. When did you 18 say the comments -- I mean, I know you want to receive 19 any comments in writing. When are they due by? 20 MR. SANDERSON: The rule was published 21 Friday the 13th, so it would be 30 days from -- be 22 like August the 12th. 23 MR. CORNWELL: That's right. 24 MS. TAYLOR: So any comments the BAC 25 would have to make on this -- I know you said 0018 1 something about putting it in writing -- is that 2 individually comment on this or comment as the BAC? 3 MR. SANDERSON: That would be comment 4 as the BAC. 5 MS. TAYLOR: And they're due by 6 August -- I'm sorry? 7 MS. WEAVER: 12th. 8 MS. TAYLOR: So it's August 12th. 9 Okay. So any comments we want to make, we need to go 10 ahead and put it together, and Knowles is going to put 11 together in writing for us. Is that correct, Knowles? 12 MR. CORNWELL: Sure, Suzanne. Thanks. 13 MS. TAYLOR: You're so good at that. 14 MR. CORNWELL: Oh, yes. 15 MS. TAYLOR: Okay. Are there any other 16 comments or any particular things that you would 17 like -- personally Knowles would like that to be 18 somebody on the Board of Directors, a member of the 19 Board of Directors instead of necessarily an officer, 20 because a lot of organizations are very limited. The 21 officers have more than they can handle. 22 MR. CORNWELL: Well, Suzanne, I don't 23 know. And that's the questions that we really need to 24 get into, is an officer -- you can have officers of a 25 corporation or a volunteer fire department if it needs 0019 1 to be. And all you have to do is designate it in the 2 bylaws that says: This person is going to be my bingo 3 chairperson/officer if that's what -- is it semantics, 4 Phil, or -- that's what I'm asking. I guess what 5 they're trying to get to is that you can amend your 6 bylaws and have this officer if you would like. It 7 doesn't have to be a president. It doesn't have to be 8 a treasurer. It doesn't have to be a vice president. 9 It doesn't have to be the secretary. 10 MS. TAYLOR: You have board member it 11 could be. 12 MR. CORNWELL: But that board member, 13 you'll have to amend the bylaws to allow for an 14 officer to handle -- 15 MS. TAYLOR: Bingo. 16 MR. CORNWELL: -- bingo. So is that 17 what you're trying to accomplish? 18 MR. SANDERSON: I believe that would be 19 permissible, yes. 20 MR. CORNWELL: So, Suzanne, you know, 21 if you'll go back and -- I don't know what your 22 purpose of a comment there. If they're going to let 23 you do that, then nothing has really changed except 24 they're just trying to define somebody, point to 25 somebody who is going to be accountable, is what 0020 1 they're trying do. 2 Right, Phil? 3 MR. SANDERSON: This term is used in 4 other rules that are being developed. And the 5 individual that we're looking at is not -- it's 6 different than what is called the primary operator or 7 the operator. The bingo chairperson would be 8 responsible for overseeing the activities as a whole 9 and reporting back to the organization. There's some, 10 you know, reporting requirements in different rules. 11 There are some requirements as our contact liaison 12 that we deal with, with the organization, as the 13 Commission does. And then there's some reporting 14 requirements that they have to the Commission as well 15 as some other different activities that they oversee. 16 So it's not -- they're not required to be at every 17 game, you know, and there is no prohibition that it 18 could not be an operator or a primary operator or a -- 19 MR. CORNWELL: And there is no intent 20 to separate those two in the future. 21 MS. LOPEZ: Okay. That's what I wanted 22 to know. 23 MR. CORNWELL: There's no directive 24 intent to separate the primary operator from this 25 bingo officer? 0021 1 MR. SANDERSON: Not necessarily, no -- 2 MR. CORNWELL: Okay. 3 MR. SANDERSON: -- not that I'm aware 4 of. 5 MS. LOPEZ: Thank you. 6 MS. TAYLOR: Okay. Any other 7 discussion? 8 MS. LOPEZ: One more question back on 9 the bingo chairperson. It's almost like your Schedule 10 E which is an authorized representative of that 11 organization. Is that kind of sort of almost -- 12 MR. SANDERSON: Well, Schedule E, 13 authorized representative, does not have to be a 14 member of the organization. 15 MS. LOPEZ: Okay. Okay. 16 MR. SANDERSON: Schedule E would be, 17 for example -- and I think he's here -- Mr. Fenoglio 18 is an authorized rep for several organizations. 19 MS. LOPEZ: Okay. 20 MR. SANDERSON: He has no officer 21 affiliation with them. 22 MS. LOPEZ: With them. Okay. 23 MR. SANDERSON: He's authorized to 24 discuss information with the Commission on behalf of 25 the organization. 0022 1 MS. LOPEZ: On behalf of the 2 organization. Okay. 3 MR. FENOGLIO: Madam Chairman, I did 4 have a few comments to make. 5 MS. TAYLOR: Any other comments from 6 the BAC? 7 Public comment, please. 8 MR. FENOGLIO: For the record, my name 9 is Stephen Fenoglio. I'm an attorney in town, and I 10 filed a witness affirmation. 11 I filed comments on the three attended 12 yesterday and made oral presentations and had a couple 13 of handouts. Briefly, on the BAC rule, Subparagraph 14 (b)(4) is an important improvement. It's as a result 15 of some discussions with Commission personnel and the 16 Commissioners where there is a system service provider 17 by statute seen on the BAC. And as most of you know, 18 there hasn't been SSP, system service provider, 19 licensee for at least two years, so that seat has been 20 held over. So (b)(4) gives -- if there is vacancy, 21 that gives the opportunity to fill that seat. 22 I had a couple of comments on 23 Subparagraph (d)(1) and (e)(3). Both sections 24 anticipate an orderly filling of -- and I understand 25 there are four vacancies on the BAC now. And my only 0023 1 observation is, occasionally someone either withdraws, 2 retires or perhaps is removed, for whatever reason, 3 and that language doesn't anticipate filling a vacancy 4 or the staff commenting on the vacancy, et cetera, or 5 someone making a nomination. And I visited with 6 staff, and I think they're going to make some changes 7 to give the Commission and the nominees and the staff 8 maximum flexibility. 9 And then finally, under Subparagraph 10 (k), there is a prohibition against a proxy vote. And 11 non-profits regularly authorize proxy voting. I'm 12 aware of both articles and bylaws that specifically 13 authorize that. And dozens of organizations, and in 14 publicly traded companies, board of directors are 15 authorized to proxy vote. And privately held 16 companies, the same way. 17 And my observation, while I'm unaware 18 of any proxy vote that's ever been granted by the BAC, 19 about two -- or four years ago, a member of the BAC 20 contacted me about proxy voting, after being informed 21 that they could not do so by -- or indicated that they 22 could not do so, by staff. And my observation was, if 23 it's not prohibited, it's allowed. 24 And so while I don't anticipate that 25 would happen very often, if, for whatever reason, 0024 1 Kimberly Rogers couldn't attend -- and I'm just 2 picking on her because I can read her name -- and she 3 knew of a specific issue that she wanted to be shown 4 as voting in favor of or against, that she could 5 designate such in an orderly fashion with a proxy. So 6 those were my observations on the BAC. 7 The issue on the -- while I hate to 8 disagree with Mr. Sanderson, I think he's wrong in his 9 observation on the definitions rule. I think anyone 10 can comment on any provision in the definitions rule, 11 because the entire rule is open for consideration in 12 the APA process. Bingo chairperson -- and this was a 13 comment that I made to Mr. Sanderson yesterday -- I'm 14 considered the bingo chairperson for the ARC of the 15 Capital Area in its bingo matters as it relates to 16 River City Bingo at I-35 and Braker Lane in Austin, 17 Texas. That's the end of my advertisement for that 18 matter. 19 But some organizations, Knowles, will 20 have a highly formalistic process to designate an 21 officer. And in some non-profit corporations that I 22 have advised, the only way you can change an officer 23 is by amending sometimes the articles of 24 incorporation, which may be very difficult to do. You 25 may need two-thirds of the vote of the non-profit. 0025 1 There may be a mandatory 50 percent attendance before 2 you can vote. These are older organizations that 3 didn't give themselves maximum flexibility. And so it 4 may be problematic to even get that designation of an 5 officer. And my comments to Mr. Sanderson and 6 Ms. Joseph were, it depends on what your words mean. 7 Certainly if an organization has 8 flexibility like Knowles was talking about where the 9 bylaws can be amended just by the board of directors 10 to maintain -- or nominate a new officer, then that's 11 easy to do. But there are other organizations where 12 it's very difficult. The sense from my understanding 13 of what staff wants to do is, they want someone who is 14 invested and empowered on behalf of that charitable 15 organization to be in charge of or supervising, at 16 least, the bingo activities, and that's what they 17 anticipate the bingo chairperson to be. 18 And there have been some problems of a 19 nature with some charitable organizations -- it hasn't 20 happened very often -- but there's no one with the 21 charitable organization involved in any sense or 22 managing in any sense the charitable activities. 23 Money is missing and all of a sudden no one is in 24 charge. 25 And I think what staff is trying to 0026 1 do -- and it's a good attempt -- to, No. 1, educate 2 the organizations that you ought to be invested and 3 active; and, No. 2, that there's someone that the 4 staff can look toward in that organization if there is 5 a problem, because some of these audits that we've 6 had, no one is in charge. 7 It's kind of like Alice in Wonderland 8 where: Who approved the pricing structure? We don't 9 know. And none of the employees are coming forward. 10 Or maybe they're gone, and there are funds that -- 11 prize fees that are owed the state and the horse may 12 be out of the barn in the sense that what's been done 13 has been done. 14 But from the staff's perspective, if 15 they can identify who was in charge of and if they 16 believe that that person has culpability, then I think 17 the likely fallout is, that person will be barred from 18 being involved in bingo for a period of time, because 19 they either were consciously indifferent or perhaps 20 actively involved in things not being the way they 21 should be. 22 And so to the extent that it's 23 transparent, this is the first step in putting out to 24 the public, whoever the bingo chairperson is, they may 25 not -- and they're not. And I'm certainly not, for 0027 1 the ARC, responsible day-to-day, but I am accountable 2 in that sense to make sure -- to make inquiry, to give 3 direction, and to hopefully supervise enough without 4 being there day-to-day -- and I don't think that 5 Mr. Sanderson anticipates the bingo chairperson is 6 there day-to-day on behalf of that organization but 7 that the type of questions that are getting asked -- 8 that should be getting asked are getting asked and the 9 other rules are following up on this. 10 I mean, it's kind of a comprehensive 11 scheme, if you will, on the best practices on house 12 rules, et cetera. So it's not in isolation, I guess. 13 And to that extent, I think it's a good first step 14 that staff has come forward with, with the 15 understanding that what constitutes an officer, I 16 think there needs to be a reasonable amount of 17 flexibility, because some organizations will clearly 18 be able to nominate -- or change their structure 19 quickly and easily to accommodate a bingo chairperson. 20 Other organizations may not be able to, for whatever 21 reason. 22 And then, Phil, you've got some 23 organizations that have an unincorporated association. 24 And technically, if you have an unincorporated 25 association, there are no officers. I mean, we're 0028 1 just a group of people together. And some of the 2 volunteer fire departments, for example, I mean, when 3 you peel back the layers of the onion, you don't 4 really have an officer corps because it's -- what is 5 the volunteer fire department? Well, it's just a 6 group of volunteers who get together to fight fires. 7 And under the Bingo Enabling Act, they're authorized 8 to conduct bingo. And again, I think that's 9 consistent with what the staff's intent is. 10 I'll be happy to answer any questions. 11 MS. ROGERS: I have a question for you. 12 In your knowledge of this, do you find it necessary 13 that it has to say an officer? I'm looking at it 14 saying a member of a licensed organization. Why is 15 that not possible? And I don't know if you can answer 16 that or give me some insight on information as to the 17 legality, why they would not want to say that. 18 MR. FENOGLIO: You could easily say an 19 officer or a member or other person designated in 20 writing by the organization, et cetera. 21 MS. ROGERS: That seems like a lot 22 more leeway for the organizations, like the VFWs, to 23 be able to put a person in charge. 24 MR. FENOGLIO: And that was a comment 25 we had with the VFW, because the bingo chairperson of 0029 1 most posts starts out as an officer. But then that 2 person -- and they have a highly ritualistic rotating 3 officer corps. And I see my friend Tom Weekely and I 4 know -- I believe you're with the American Legion or 5 AmVets. And so highly ritualistic. But that person 6 was calling Stan Smith. Stan will stay on as the 7 bingo chairperson even though he doesn't have a formal 8 designation. 9 So I think that's consistent with 10 staff's intent. And I would suggest if you feel that 11 way, you should write a formal comment to that effect, 12 because we understand this is not comment on the rule. 13 We're just commenting about the BAC activities or 14 whatever. 15 But I think staff, on their side of the 16 coin -- Kim, so you understand -- I think what they 17 want to do, though, is, again, get to someone who is 18 invested in that organization's business, separate and 19 apart from a bingo employee of the hall. So you may 20 be a member, but -- and in some organizations, the 21 bingo employees are members of those organizations. 22 But are they truly invested in the organization? Some 23 I'm sure are. Others are not; they're just there to 24 do a job. And again, I think from the staff's 25 perspective, they want to get away from that type of 0030 1 member individual. 2 MS. ROGERS: Well, and that's easy to 3 say. In a couple of organizations I know that have, 4 you know, board of directors and they change every 5 year and they're very -- but you have some small ones 6 that don't -- you know, in a perfect world, sure, that 7 would be easy. But last time I checked, we don't live 8 there. 9 MR. FENOGLIO: Right. And I know 10 Mr. Sanderson is not a shy guy, and he can respond as 11 appropriate to that. But that's my understanding is, 12 they want someone, the chairperson, who is invested in 13 that organization, active with that organization, 14 separate and apart from the management of the bingo or 15 the day-to-day activities of the bingo hall itself. 16 MS. ROGERS: Thank you. 17 MS. LOPEZ: I have a question also. If 18 the bingo chairperson is an officer, then obviously 19 they're actually an approved worker, basically, 20 because when you submit your application, you list all 21 of your officers of your organization and they go 22 through -- 23 MS. TAYLOR: (Shakes head) 24 MS. LOPEZ: No? Would that not be a 25 qualification for this individual? 0031 1 MR. FENOGLIO: I don't believe so. 2 MS. LOPEZ: No? 3 MR. FENOGLIO: And Mr. Sanderson is 4 getting ready -- 5 MS. LOPEZ: Okay. 6 MR. FENOGLIO: -- to give us the truth. 7 MR. SANDERSON: You do submit your 8 officers for background checks and they get approved 9 as far as not having any disqualifying convictions. 10 But the worker registry is totally different than the 11 officers. 12 MS. LOPEZ: Okay. I just wanted to 13 make sure that that was clear. 14 MR. FENOGLIO: There would be nothing 15 that would preclude a bingo chairperson from also 16 being a worker, but they would wear two separate hats, 17 if you will. 18 Thank you. 19 MS. TAYLOR: Okay. Well, I think if 20 they're a member of the board of directors, that that 21 would be great. Being an officer, and because I know 22 the organizations I'm in, it's a pain to amend 23 anything. And if we amend all of that, then we do 24 have to send a copy of that to the Lottery Commission. 25 Is that true, if we amend our bylaws, does that come 0032 1 into the Lottery Commission? 2 MR. SANDERSON: I'll have to check with 3 Bruce Miner on that for sure. I'm not sure if it does 4 or not. 5 MS. WEAVER: Madam Chair? 6 MS. TAYLOR: Yes? 7 MS. WEAVER: We're trying to help our 8 charities -- I don't know if I'm on or not -- we're 9 trying to help our charities. We're not trying to 10 make it more difficult, make them pay for turning to, 11 to amend things that we don't have to either. In the 12 organizations that I have dealings with, not only is 13 our operator invested in each one of the charities 14 that they hold operator positions for, because maybe 15 monsignor goes, "Ahhh! I don't want to do this." But 16 he's got someone -- our operator is invested in the 17 church, but they don't hold that position. So, I 18 mean, I don't understand their operator and their 19 chairperson, I don't think that it's necessary for a 20 change of language. 21 MS. TAYLOR: Anything else on this? 22 Yes, sir, come forward. Public 23 comment. David. 24 MR. HEINLEIN: Mr. Fenoglio stated -- 25 you know, this PA system is not working. I can't hear 0033 1 y'all up there when I'm back there, very well. I 2 don't know if they need to do something to it or not, 3 but I can't hear. 4 What he said is very similar to what I 5 stated in my written comment, that we understood 6 what's being attempted, and we believe that it should 7 be. But the terminology of officer, that this bingo 8 chairperson be an officer, could present a problem in 9 an lot of different areas. 10 I brought Mr. Jim Irby with me this 11 morning, who is the bingo chairperson for his charity. 12 And I didn't know if maybe he -- because I knew he was 13 an officer when he was first elected to that position, 14 but I didn't know if he was still an officer. 15 Well, it just so happens he is in his 16 particular situation, because he goes back and forth 17 between commander and assistant commander and back and 18 forth, you know, and they don't have anybody else 19 wanting the job. So, you know, he's now got a 20 problem. 21 Well, it may not be true in all 22 situations. And I was telling Terry that one of the 23 problems in running any of these things, that we have 24 such a diversity of types of organizations, it's hard 25 to write something with just one definition. And so I 0034 1 think maybe the one term singularly of officer may not 2 be sufficient, because that may need to be a different 3 kind of a term, understanding the intent is to get 4 somebody from the organization that is responsible for 5 that bingo activity. They need to understand 6 financially they are the ones that will take a hit if 7 there is a problem. 8 I remember one time having a hard time 9 making officers of an organization understand if they 10 didn't pay their taxes on their payroll, that they 11 were personally liable for that. It was difficult for 12 them to understand that. And I think what we're 13 trying to do here is to attempt to be sure that we 14 have a go-to person -- that's what the staff wants -- 15 is a go-to person if there is a problem with any of 16 the activities of that charity. 17 And so we need to define that. And I 18 think that "bingo chairperson" does that as long as we 19 amplify who can participate in that and just be sure 20 that we are able to get someone who has the interest 21 of that charity at heart that does have an investment 22 in it who does want them to benefit financially by 23 getting charitable donations and then be responsible 24 to oversee the activity, be sure it's being done 25 legally and with integrity. And I think we need that. 0035 1 We need to define it as to who it can be. 2 MS. LOPEZ: I think one of the 3 important things that maybe we didn't talk about, too, 4 was the term of maybe this bingo chairperson, you 5 know, being that bingo chairperson for that 6 organization. Is that going to be contingent upon the 7 organization's officers' term limits, you know, 8 regarding their bylaws or is this something that the 9 Commission is wanting? You know, does the Commission 10 want this chairperson to stay on for a year, two 11 years, and then move on and have someone else come in? 12 I mean, I think that that's something that maybe isn't 13 discussed about the term limit for this type of -- but 14 again, I guess primary operators, there's no term 15 limits on that either, and so there's . . . 16 MS. TAYLOR: So as the officers change, 17 a member of the board of directors could stay on as a 18 member of the board. I have organizations that I'm 19 affiliated with also that you must -- the officers 20 have to all change out every three years. 21 MS. LOPEZ: Three years, yes, pretty 22 much. 23 MS. TAYLOR: And if you held it, then 24 you can't hold it again. So step back for a year or 25 two and then come back. 0036 1 MS. LOPEZ: Exactly. 2 Any other comment? 3 Yes, ma'am? 4 MS. JOSEPH: I would like to add -- 5 it's input on the question that Knowles raised -- as 6 to whether comments on other portions of the 7 definitions rule could be received. And I wanted to 8 clarify that right now the only portion of the 9 definition rule that is subject to the formal 10 rulemaking proceeding is the bingo chairperson 11 portion. Certainly, you know, at any time the 12 Commission is interested in hearing ideas you may have 13 for other needed amendments or improvements to the 14 rule. But the Commission could not act on any of 15 those comments during this proceeding without 16 republishing the rule. So I think kind of walk in the 17 middle -- not walk in the middle ground, but I think 18 both Mr. Fenoglio and Mr. Sanderson were correct. 19 Thank you. 20 MS. ROGERS: So I make sure I have this 21 correct, if we want to make comments on this bingo 22 chairperson, we are to submit it to Knowles -- 23 MS. TAYLOR: To Knowles. 24 MS. ROGERS: -- via e-mail. He will 25 condense it, put it together, get it over to Phil for 0037 1 the Commissioners to see. Correct? 2 MR. CORNWELL: By August 12th. 3 MS. ROGERS: By August 12th he'll have 4 something -- 5 MR. CORNWELL: Don't send it August 6 11th. 7 MS. ROGERS: I'll send it within the 8 next few days. 9 MS. TAYLOR: Okay. Everybody on the 10 committee understands what they're going to do if 11 they're interested in commenting on this rule, then, 12 any further? 13 Okay. Any other comments? Any other 14 public comments? 15 AGENDA ITEM NO. 8 16 MS. TAYLOR: Okay. If not, at this 17 time we'll move on to Item No. 8, report, possible 18 discussion and/or action on guidelines for internal 19 controls. 20 MR. SANDERSON: Members, in your 21 notebook is a copy of minimum internal control 22 standards for proper accounting for the revenue and 23 expenditures. At this time it's in draft. It is 24 hopefully to be on the agenda for the next Commission 25 meeting for their discussion. 0038 1 While this is not necessarily a rule, 2 it would go through the rulemaking process. We do 3 feel that it is important that we make it available 4 for comment from the public and the bingo industry 5 itself. Once the Commission -- if the Commission does 6 decide to adopt or to accept this guideline, then we 7 will publish it on the website. And I will be glad to 8 take your comments for any future revisions. 9 Once again, these are guidelines; they 10 are not requirements. They are highly recommended for 11 organizations. This goes hand-in-hand with the 12 Internal Audit Report of the Audit Department 13 requesting -- recommending, I guess I should say -- 14 that we make our licensees aware of, you know, best 15 practices as it relates to controls of their assets 16 and also to operate in an open and fair and consistent 17 environment. And that's what we're anticipating that 18 this guideline will do for organizations. 19 We're also in the process of drafting 20 some additional internal -- guidelines that relate to 21 inventory controls and cash register controls that 22 will be ready at a later date. 23 So with that, if you have any comments 24 on the internal control standards, I would be glad to 25 listen to those at this time. 0039 1 MS. ROGERS: I have one comment, and 2 maybe not for my organization but for many 3 organizations across the State of Texas. Once again, 4 let me say it's all well and great to say one person 5 does one job. But in this day and age, you must 6 multi-task. You have 25 jobs that need to be done at 7 the beginning of a bingo night and you may only have 8 10 people that can do those jobs. And it's great for 9 suggestions, but I personally would have a hard time 10 seeing a lot of this come into play as a rule and 11 organizations being in trouble; whereas, on Page 2 and 12 3, if do you one thing, you cannot -- if you do Item 13 11, you cannot do 13. If you do 13, you cannot do 20. 14 I mean, most bingos that play in the 15 State of Texas are not like large corporations that 16 have 50 jobs and they have 100 people to do those 50 17 jobs. It doesn't work that way. Some bingo nights 18 are run by two or three people. It's kind of like 19 being a parent. You have to multi-task. It's not 20 written anywhere in a book, you know, and bingo is a 21 lot the same way. And it changes from day-to-day -- 22 the diversity of the organizations, the diversity of 23 how bingo is run, what you do. 24 That's my first comment on this. 25 MS. LOPEZ: May I add to that? You 0040 1 know, here we try to obviously save money on payroll, 2 paying out payroll. So we try to run, you know, our 3 halls as efficiently as we can with skeleton crews. 4 And so I'm with Kim on where we have to multitask many 5 a night and making -- you know, making do with the 6 amount of people that we have working that particular 7 night. And you're right. I mean, we will duplicate 8 on many things because of the fact that we are working 9 on skeleton crews, again to save money for the 10 organizations and payroll and what we pay out in 11 payroll. 12 MR. SANDERSON: Let me, before 13 Knowles -- 14 MR. CORNWELL: No. Go ahead. 15 MR. SANDERSON: First I would like to 16 reiterate, these are guidelines. 17 MS. ROGERS: Right. 18 MR. SANDERSON: There is no 19 requirement. One of the things that the internal 20 audit recommended for the Audit Department to do is to 21 assess the controls of the organizations. And as they 22 go through the audit process, one thing they will do 23 is assess what controls the organization has in place 24 over their bingo activities. 25 If you have -- as an example, the same 0041 1 person is the head cashier, they count the money at 2 the end of the night, they make the deposit and they 3 do all the books, chances are the controls are not 4 very strong for that organization and there is 5 potential -- I'm not saying that there will be -- but 6 there is potential for some problems. 7 These are recommendations -- 8 MS. ROGERS: Right. 9 MR. SANDERSON: -- that will be 10 assessed at the time of an audit to see what controls 11 are in place, and it will be the guideline that drives 12 the scope of the audit as they review your financial 13 activities and your receipts and your expenses. 14 So you're not required to have 10 15 people do 10 different jobs. It's just strictly 16 guidelines and recommendations. 17 MS. ROGERS: Right. But I would hate 18 to see a small VFW that can only have three people be 19 looked upon -- well, you have the same person, the 20 head cashier, the same person do the night deposit, 21 the same person take the money to the bank -- to be 22 looked at differently -- or not that they would. I'm 23 not saying that. And I understand these are 24 guidelines. I just think we need to be very careful 25 with doing this to small organizations. I think 0042 1 that's who will get hurt in this -- or get caught up 2 in this. I don't want to say "hurt." I don't think 3 the lottery is going to go after -- you know, if the 4 same person does do it. But that's what I see. 5 MS. TAYLOR: I have to add, too. I 6 wish that I could pay enough people to have separate 7 people do all these jobs. But there are a lot of 8 nights we've got three or four people in the entire 9 hall. I mean, that's all the employees there are. So 10 when the deposit is getting made, you might have two 11 people making it. But one of the people is going to 12 have to take it to the bank -- 13 MS. ROGERS: Right. 14 MS. TAYLOR: -- because we sure can't 15 afford Brinks to come over to take our deposit to the 16 bank. So, I mean, somebody has to take it. The 17 deposit always goes to the bank after bingo, you know. 18 Hopefully we don't get held up some night. But if so, 19 I will make sure to get their name and number so that 20 I can turn that over, which somebody just recently did 21 get held up. They stole their car and deposits and 22 all from Wal-Mart. 23 But I did also have the same concerns. 24 Ordering the inventory shouldn't be the person that 25 does the inventory. The person that's taking care of 0043 1 the inventory book usually knows what you need. I 2 mean, I don't want you coming in and ordering my tabs 3 for me because you don't have a clue on what tabs. 4 You know, you're a different person, but you don't 5 have a clue on what we need -- 6 MS. ROGERS: Right. 7 MS. TAYLOR: -- I mean, how much paper 8 we're going to go through. So, I mean, some of 9 this -- I understand it's a guideline today. It 10 concerns me it could be a rule tomorrow. You know, I 11 just don't want to see -- because this would be very 12 difficult on most occasions. The person that does 13 their checkbook, I mean, if I'm the one taking care of 14 the check register, then when it comes time to balance 15 the check register, it's a whole lot easier for me to 16 balance it than to hand it to another person. 17 I do understand that it needs to be 18 turned over to the organizations and they get a 19 copy -- I mean, they get the whole thing after it's 20 reconciled, with a copy of all the checks and 21 everything. For me to hand it over and say, "Here you 22 go. Reconcile this," I mean, they wouldn't be able to 23 accomplish that. 24 So, I mean, take your personal 25 checkbook and hand it to me and let me see how well I 0044 1 can balance your checkbook. I mean, it's difficult to 2 do that, to have multi- -- multi-hands into the same 3 task I think also is difficult. And I sure don't want 4 somebody that's not familiar with the tabs we use 5 trying to order tabs for us, because what plays in the 6 hall across town doesn't play in our hall. 7 MS. LOPEZ: Absolutely. Everybody is 8 unique. 9 MS. WEAVER: But the reason that they 10 are head cashiers -- is this better? My mom would be 11 so proud that my voice didn't carry all over without a 12 mike. 13 Madam Chair, the reason that they are 14 head cashiers is because the charities do trust them 15 to do that job. The reason that we have a hall 16 manager is that he oversees everything. Even if he's 17 off that night on vacation, he comes in the next 18 morning and he looks at all the books to make sure we 19 did it right. The reason that we have a security on 20 duty is so he can take that -- you know, some of the 21 charities and the head cashier and take it to the bank 22 that night. And the reason we have a pull-tab manager 23 is so that manager knows what's sold and inventories 24 it and orders it. I mean, that's their job. That's 25 why the charity pays them. It is ridiculous to say 0045 1 that somebody else is going to do that job for them if 2 they're being paid for that job. 3 MS. TAYLOR: Knowles? 4 MR. CORNWELL: Yes. Thank you, Madam 5 Chair. 6 Phil, I understand -- and believe me, I 7 understand separation of duties and how that's 8 important in internal controls. But I've got a lot of 9 questions, and I don't know whether this is the format 10 or not. But, obviously, you're going to use this as 11 risk, part of your risk assessment, scope assessment 12 of your audits. Right? Is that the primary purpose 13 of this internal control? 14 MR. SANDERSON: That's one of the 15 purposes, yes. 16 MR. CORNWELL: Well, have you guys 17 tested any of this on existing or old audits to see 18 what deviations you've come up with as far as past 19 audits? Has anybody looked at it and say, "Hey, what 20 is this really going to do to me"? Because I think 21 90 percent of whatever you're going to get into in the 22 future is going to come out the end result the same, 23 is there's going to be a lot of checks in the shaded 24 area in this rule. There's a lot of head cashiers 25 that do the books. There's, you know, a lot of 0046 1 lessors that -- or someone affiliated with the lessor, 2 either directly or indirectly, is doing the books. 3 So I'm just going through item-by-item 4 here, Phil. But, Phil, I don't know whether this goes 5 to the purpose I think you're trying to get at. And I 6 think we could probably help you do a better job. 7 Madam Chair, I would like to make a 8 motion that we -- as written, as draft -- we oppose 9 this draft. And I would like to make a motion 10 requesting the Lottery Commission reopen a work group, 11 either through the BAC or through the industry, that 12 can come up with a better internal control risk 13 assessment document. 14 MS. ROGERS: I second that motion. 15 MS. TAYLOR: Okay. It was actually two 16 motions. Are you condensing that into one motion, a 17 motion to oppose the draft as written and to reopen a 18 work group to work on this? 19 MR. CORNWELL: Yes. 20 MS. TAYLOR: Okay. 21 MR. CORNWELL: A request. Well, I'm 22 not mandating. I would like to just have a request to 23 work with the Commission on a better document that 24 would assess the risk for a regulatory audit. I'm not 25 tremendously familiar with governmental audit 0047 1 standards, but I am familiar with audit standards in 2 general. And the approach, the conceptual approach to 3 this, guys -- I'll defend Phil -- is correct. The 4 practical approach to it I'm afraid is not going to 5 give you your desired results. We need to modify it. 6 MS. TAYLOR: Okay. There has been a 7 motion and a second. Any further discussion on it? 8 MS. ROGERS: I will just acknowledge 9 that I agree with Knowles. And the daily cash reports 10 that we do at the hall does have room for two 11 signatures to verify that the cash is counted. So 12 that type of double checks and balances I agree with. 13 As anyone who has ever kept any kind of books, you 14 agree with that, because anyone can make a mistake. 15 But I agree with Knowles. I think it's going down the 16 wrong path to tell small organizations as well as 17 large organizations: One person, one person, one 18 person. And today a recommendation, tomorrow a rule. 19 So that's my comment. 20 MS. TAYLOR: Okay. Do we want to vote 21 on this or would we like to hear public comment first? 22 MS. ROGERS: We can hear public 23 comment. 24 MS. TAYLOR: Okay. Public comment? 25 MR. CORNWELL: I can table my motion, 0048 1 if you care, and take public comment. 2 MS. TAYLOR: Okay. 3 MR. CORNWELL: Table my motions at this 4 time. 5 MS. TAYLOR: Okay. We're going to 6 table the motion until after public comment. 7 Any other comments from the BAC 8 members? 9 Public comment? 10 MS. WEAVER: Madam Chair? 11 MS. TAYLOR: Yes? 12 MS. WEAVER: Sorry. I was a little bit 13 slow on that. 14 May I ask who wrote this? Did someone 15 in the new part of the division, your audit, write it 16 or someone that had already been with the Auditing 17 Department? Do you know? 18 MS. TAYLOR: External auditors. 19 MR. SANDERSON: There were several 20 people that worked on this draft. They came from all 21 different divisions within the agency. It wasn't just 22 limited to the Bingo Division. 23 MS. WEAVER: Do you happen to know if 24 John Mallick had a lot of input on this? 25 MR. SANDERSON: I don't recall at this 0049 1 time if he was on this work group or not. 2 MS. WEAVER: Is it possible that if we 3 have a meeting, that someone like Mr. Mallick could 4 have input with us to maybe help go along with what 5 you're looking for also? 6 MR. SANDERSON: We can certainly look 7 at that. 8 MS. TAYLOR: Yes. Mr. Fenoglio? 9 MR. FENOGLIO: Madam Chair, Stephen 10 Fenoglio for the record. I have given an appearance 11 slip. 12 And Mr. Sanderson was kind enough to 13 send me three of the draft -- well, two of the draft 14 rules in this standard last week. And so I have 15 handed out a document and given a copy to the Court 16 Reporter of my comments that are underscored and 17 bolded and around brackets. And Mr. Sanderson and I 18 were able to meet yesterday afternoon, and I made 19 these same comments to him. I don't think that there 20 have been any changes. I've not seen what's in the 21 notebook. And he's shaking his head "No." 22 And I'll be quiet if y'all want to 23 read. I hate it when people talk when I'm trying 24 to -- 25 MS. LOPEZ: We can barely hear you, 0050 1 Stephen. 2 MR. FENOGLIO: I hate when people talk 3 when I'm trying to -- 4 MR. CORNWELL: I've never known him to 5 be quiet, you know. You need to speak up. 6 MR. FENOGLIO: All right. I'll speak 7 up. I've got a little rough throat. 8 MS. TAYLOR: Okay. 9 MS. ROGERS: Mr. Fenoglio, would you 10 mind if I give one of these to the Chairman? 11 MR. FENOGLIO: Oh, absolutely. I'm 12 sorry. 13 MS. ROGERS: Commissioner Clowe. 14 MR. FENOGLIO: I guess from an 15 observation point, these are coming from GAGAS, the 16 notion of these and some other rules from the 17 Government Auditing Standards that Mr. Sanderson has 18 talked about in both public commission meetings as 19 well as BAC meetings. And that GAGAS standard is on 20 the Commission' website as a link. It's 202 pages. 21 The GAGAS rules were referenced by the Internal 22 Auditor as the guideline that charities should embrace 23 insofar as their accounting and auditing and 24 operational systems. 25 And my first observation is, the GAGAS 0051 1 standard is written by government auditors for 2 government auditors. And while some of those things 3 with paid employees make good sense, when you apply 4 them to a VFW post in Bowie, Texas, that may conduct 5 bingo twice a week with volunteers, it gets 6 problematic with all the requirements, as opposed to 7 River City Bingo Hall that has a paid staff of about 8 eight. And that doesn't include an outside bookkeeper 9 who reports directly to our management team of the 10 five charities. 11 And so my first observation is -- and I 12 understand these are standards -- but some of these -- 13 I don't think non-profit organizations, even if 14 they're trying to do what's right, will meet those 15 standards. 16 And part of it has to do with what is 17 meant by the word, in this case in Subparagraph (c): 18 The bingo chairperson, the operator, and the bingo 19 staff are each responsible for putting into practice 20 the system of internal controls. 21 If you go to the four pages behind, 22 which is kind of the schematic of who is going to be 23 doing what, and the clear, as opposed to the shaded, 24 if it's a clear area -- and, for example, under 25 "Reports," the first one prepares the quarterly 0052 1 report -- the bingo chairperson and the accountant/ 2 bookkeeper would jointly be responsible for preparing 3 the quarterly report. The shaded areas mean the 4 people that are identified of the positions would not. 5 And so my point on this one is, read 6 literally, all of these folks are each responsible for 7 putting into practice a system of internal controls. 8 If you're a new board member or a new runner, you're, 9 read literally, as responsible for ensuring those 10 controls as opposed to the hall manager. And I don't 11 think that's what's intended, but that is one way you 12 can read that. 13 And then my next major concern is under 14 (d)(4): The bingo chairperson should review and sign 15 the bingo bank reconciliations. I've already 16 described, I'm the bingo chairperson. We have an 17 outside bookkeeper. I'm not real sure why I should, 18 quote, sign it. I'm going to confess that I can't 19 balance my own personal checkbook. I know I could 20 never balance or reconcile, without a lot of effort 21 and someone's time and expense, the bingo checkbook, 22 that we may write 100 checks a month. 23 Okay. As opposed to in our -- we have 24 an outside auditor who comes in and audits our bingo 25 accounts, or our bingo account, because three of the 0053 1 five agencies are United Way-funded, and United Way 2 mandates outside audit, as you probably know, if 3 you're going to get United Way money. So we have an 4 outside audit. The outside auditor looked at us and 5 wrote us up, that we need to have monthly our 6 bookkeeper state in writing that the bank account has 7 been reconciled. 8 So in his monthly management report, 9 which includes detailed financial statements -- it's 10 about 25 pages in length -- he states, "All bank 11 accounts have been reconciled." And so that satisfied 12 the outside auditor standard. And it occurs to me 13 that why should I have to sign it because, if I do, I 14 still haven't independently verified if the bingo 15 account has been reconciled. I disclosed once before 16 I transpose numbers like crazy, and that makes it real 17 difficult to reconcile anything. 18 So I don't necessarily disagree that 19 someone should be looking over the shoulder of the 20 bookkeeper. They should. That is a point where 21 they've seen in real life practice in audits where the 22 bookkeeper was taking money the bookkeeper wasn't 23 entitled to have. And arguably if someone -- the 24 bingo chairperson or an officer of that 25 organization -- had been looking over the shoulder and 0054 1 asking questions and making sure that if they have an 2 annual budget, that everything is compliant with that 3 annual budget, those expenditures, then I think, you 4 know, a lot of those problems would be avoided. 5 You got my comment on if the Chair 6 delegates the activities, why that requirement, all of 7 that to say -- and, Phil, I think there's some other 8 rules that I just got this morning that I haven't 9 commented on, but it seems to me that most of what's 10 in your rulemaking package -- and again, this is a 11 standard, not a rulemaking -- may be good, but I don't 12 see a distinction between a large hall that has a 13 professional staff versus a small hall that has a 14 volunteer staff. 15 And my suggestion would be, before you 16 take it to the Commission, you give the industry an 17 opportunity to get educated on this, because some of 18 these standards or rules are a dramatic change from 19 the current practice that many halls are undergoing. 20 And I'll make some comments on, for 21 example, the hall internal rules for playing bingo 22 later. Some halls have those, you know, highly 23 formalistic: These are our rules. We've got them 24 published. We keep track of any changes. But a lot 25 of other halls may change the price of paper based on 0055 1 the fact that they open, it's a bad day weatherwise, 2 and so they slash the paper price 3 Well, if it's a week in advance to 4 establish that, you're already in failure mode. And 5 so my overarching comment is, while there's lot of 6 good in the rules, I think you need to give the 7 industry more advance notice than the standard 30-day. 8 My suggestion would be, get it up on your website -- 9 there are a number of organizations that are having 10 their annual meetings. The VFW is having one next 11 week that you and I are going to be making a 12 presentation to -- to get people understanding that 13 there is this big wave coming and get some informal 14 feedback. Alternatively -- and sometimes the staff 15 nor the Commission take my advice -- alternatively, at 16 least don't make it a 30-day comment period. Give a 17 longer comment period. 18 You've got 180 days under the APA, the 19 Administrative Procedure Act. And I also understand, 20 Phil, you're also bound, seeing a number of schedules, 21 you've got an annual review or every four-year review 22 that's coming up, and you would like to get the decks 23 cleared. And if I'm in your shoes, I'm wanting to get 24 all these rules cleared before that next wave. And if 25 you have questions, Phil can explain that. 0056 1 But at the same time, this is a lot of 2 rulemaking that's coming forward. A lot of it I think 3 everyone would look at it, step back and say, "This is 4 a good" -- the overall premise is to invest the 5 charities with more active management control, asking 6 the right questions and then following up and making 7 sure those right questions get implemented or those 8 policies get implemented. But this is quite a change 9 from where many halls are today. 10 And again, I want to distinguish the 11 larger halls that are -- most of them would already 12 have these policies formally or informally in place. 13 But the smaller halls -- again, the VFW post in Bowie, 14 Texas conducts once or twice a week with volunteers. 15 They're going to be hard-pressed to look at this and 16 make any sense out of it and say, "The guy who has 17 been preparing the -- who is our cashier has been 18 preparing the deposits for 16 years or six months, 19 whatever it is. I would love to have someone else 20 come in and help him, but that's not what's going on." 21 And there may be a backdoor way to 22 get -- that when you get records from a distributor, 23 what your inventory sales, you true it up that way. 24 There may be a different way to get to the same result 25 on a random inspection basis, if you will, such that 0057 1 you don't drive the Bowie Texas VFW out of business. 2 I'll be happy to answer any questions. 3 I do not want to monopolize. That's one of the 4 reasons I put my comments in writing, so you will have 5 those. So thank you, Madam Chair. 6 MS. TAYLOR: Thank you. 7 MR. CORNWELL: I've got one question, 8 Counselor. I understand you are a graduate at the 9 University of North Texas. Is that correct? 10 MR. FENOGLIO: I am. 11 MR. CORNWELL: And that you were once 12 enrolled in the accounting school there? 13 MR. FENOGLIO: I was. 14 MR. CORNWELL: And that your 15 transposition problem caused you to vacate that 16 profession? 17 MR. FENOGLIO: It did. I got through 18 cost accounting with a B, and that was the end of it, 19 because of the transpositions. 20 MR. CORNWELL: Thank you, Counselor. 21 MR. FENOGLIO: And I try not to be an 22 accountant. 23 MS. TAYLOR: Mr. Bresnen. 24 MR. BRESNEN: Good morning. I'm sorry 25 I was late. I had a meeting up at the Capitol 0058 1 Building. My name is Steve Bresnen. I'm here on 2 behalf of the Bingo Interest Group. And I think right 3 now we're just talking about the Item No. 8, if I'm 4 not mistaken. Is that -- 5 MS. TAYLOR: You're correct. 6 MR. BRESNEN: -- guidelines for 7 internal controls? I want to underline the things 8 that Steve said and that many of y'all have said. 9 I think the wide reaction in the 10 industry will be that it's a little bit of overkill. 11 And your challenge in relating to the industry, Phil, 12 is going to be to have them understand the difference 13 between a guideline and a rule. And then your second 14 challenge will be, "Well, it's a guideline today and a 15 rule tomorrow," you know. And I think you and I 16 talked about that, and I think you understand that. 17 There's a lot of things in here I don't 18 think most people can quibble with, but I also think 19 it kind of -- the rules as a whole and the statute as 20 a whole I think embodied most of what's in this 21 internal control rule. I don't think there is any 22 doubt, as a legal matter, that the officers under (b) 23 here -- I'm starting on Line 18 -- are responsible for 24 all those things. I think that is the law. The 25 proceeds have to be used. That's down in -- where is 0059 1 it? -- down in Line 43, the bingo proceeds have to be 2 used for authorized purposes. That's required by the 3 statute. 4 Without hammering every jot and tittle 5 of it, I think there are numerous things in here that 6 really are already governed by other rules or the 7 statute. And you might want to come back and just 8 focus on some best practices and maybe use that term, 9 "best practices," instead of the title. "Minimum 10 Internal Control Standards" implies that if you're not 11 doing that, you're not doing the minimum, so you might 12 do it as a best practice. 13 I know that at one point there was a 14 proposal to specify that the bookkeeper and the hall 15 manager, I believe, couldn't be the same person or the 16 bookkeeper couldn't serve more than one function. And 17 that was much narrower than the scope of this rule. 18 And I sent y'all a letter, a couple of page letter 19 regarding that proposed rule. And I think since it 20 was pulled down that day, it may not have gone into 21 the record. I'll reproduce it and send it to each of 22 you. But I think it lays out a lot of the pitfalls in 23 legislating in this area, in the different sizes of 24 halls. 25 I talked to all the people in the bingo 0060 1 industry group that I could get ahold of about that 2 rule, that proposal. And they were like, "Well, you 3 know, we don't have the same person doing those two 4 functions. But, you know, we don't see the evil as 5 long as there's other controls in place to make sure 6 that the checkbook is reconciled, the funds are used 7 right and that sort of thing." 8 MR. SANDERSON: Could I make one just 9 clarification, clarifying a comment? 10 MR. BRESNEN: Sure. You bet. 11 MR. SANDERSON: That was a petition for 12 a rulemaking we received. It was not a proposal from 13 the Commission. 14 MR. BRESNEN: Sure. Yes. I understand 15 that and I agree. But one problem with that that I 16 noted is that, you know, none of the -- it described 17 the bookkeeper not doing more than one function, but 18 it didn't describe other people who might control the 19 bookkeeper, own the bookkeeper, who also have multiple 20 functions. 21 And as you start legislating there, 22 then you've got a problem of reaching out to: Okay. 23 What are all the permutations and combinations that 24 this can reach? So I think because there's 1,400 25 charities and 450, 500 locations, varying sizes, wide 0061 1 geographic distribution, different labor pools that 2 are available at different costs, I think legislating 3 in this area is going to be very, very difficult. 4 So I would suggest that to begin with, 5 you start with a minimal approach, not reiterate 6 things that are already required by the statute or the 7 rules, and define them as best practices, maybe 8 included -- y'all may have already talked about this 9 and, if you did, I'm sorry for being redundant -- but 10 maybe you include some of these things in the training 11 sessions that are required, maybe in your interviews 12 in the initial licensing or renewal. Or whenever you 13 talk about those things, "You really ought to be doing 14 these things." But I think you've got a real 15 communication challenge ahead of you to make people 16 aware that, you know, you're looking at guidelines. 17 There was one other thing here that I 18 wanted to focus in particularly. That might have been 19 one of the other rules. Anyway, I'll keep my comments 20 short on this, because I know we've got a lot to do 21 today. But thanks for listening. I'll be happy to 22 answer any questions. Thanks. 23 MS. TAYLOR: Thank you. 24 Mr. Heinlein? 25 MR. HEINLEIN: David Heinlein, 0062 1 representing the charities. I sat back there and I 2 listened to Steve and Steve, and I think they're 3 talking about me all the time, you know, because I 4 list -- see, a lot of these things listed here that I 5 do. It starts off, the first one, prepares the 6 quarterly report, and I do that. 7 And, "If an accountant or other person 8 prepares the report, list the name of person who 9 reviews and verifies" it. I'll review it and verify 10 it and present it to the membership of the 11 organization. So, you know, I do all three of those. 12 Now, I don't do that by myself, because 13 I have a staff, you know. And I've got different ones 14 in the staff that do certain things, and then I verify 15 all their work. But it just goes to underline what 16 both of them have also said, is it's something I think 17 we do need to work on to abbreviate it and bring it to 18 something that -- it's needed. We need a guideline, 19 and this is stated as a minimum. It is a minimum. 20 Of course, what you fear of is it 21 becoming a rule and we've got it like this. And I 22 would be very happy to serve on a committee, if you 23 would like to appoint a committee to review this 24 standard and, as Mr. Bresnen said, minimize it with 25 the things that are not necessary -- we already have 0063 1 the law on that -- but to give us some guidelines to 2 help some of the charities understand that there's 3 things that you really ought to take into 4 consideration to be sure that theft doesn't occur, 5 fraud. You know, there's lots of things that can 6 happen when you're dealing with money. And I think we 7 need to, the best we can, identify areas that they 8 should be encouraged to look at and see if there is a 9 way to overcome and be sure that they're filing a good 10 report that's got all their numbers verified and that 11 all the money that was supposed to be in the bank is 12 in the bank. 13 And that's really the bottom line, 14 that's what we're trying to determine. That becomes 15 an exhaustive process that Mr. Fenoglio probably 16 wouldn't be able to do, because as we receive a bank 17 statement on some of these charities, you know, and we 18 verify all the bank deposits on a daily basis to see 19 that they're exactly what went into the bank. And 20 we've had to develop spreadsheets, you know, to check 21 that: Okay. Here is what the daily cash report says. 22 Here is what the bank says. Which one is correct, you 23 know, and what's the difference in -- we have to do a 24 spreadsheet to even do all that. So, you know, it's 25 pretty consuming to do it. I worry about a small 0064 1 charity with only a few people to operate it, how in 2 the world they ever get past all of that. And if we 3 can do anything that would help them, I think we ought 4 to try to provide that help. 5 Thank you. 6 MS. TAYLOR: Any questions? 7 Okay. We have a motion and a second. 8 It was previously tabled. The motion was to oppose 9 this draft as written and request to reopen a work 10 group -- request to reopen a work group to assess the 11 risk management document. 12 Any other comments? Are we ready to 13 vote on this? 14 All in favor of this motion? 15 FROM THE COMMITTEE: Aye. 16 MS. TAYLOR: Any opposed? 17 MR. DOUGHERTY: I'll abstain. 18 MS. TAYLOR: We have one abstention, 19 Mr. Dougherty. The rest is for this motion. 20 Okay. Knowles, since this was your 21 motion, are you prepared to chair the work group? 22 MR. CORNWELL: Sure. 23 MS. TAYLOR: Okay. You have already 24 had one person that's interested in working on that, 25 Mr. Heinlein. 0065 1 MR. CORNWELL: Okay, David. 2 MS. TAYLOR: And who is the rest of 3 your workgroup? 4 MS. LOPEZ: I will work with you on 5 that, Knowles. 6 MR. CORNWELL: Got Rosie. That is, we 7 assume that the Lottery will work with us on that. 8 Right? This is a request. 9 MR. SANDERSON: Yes. 10 MS. ROGERS: I will also work on that. 11 MR. CORNWELL: Okay. Thank you. 12 MS. ROGERS: Will there be three of us 13 or no? Is that too many? 14 MS. TAYLOR: Three isn't a quorum. 15 MS. ROGERS: Okay. I'll also help you. 16 MR. BRESNEN: Madam Chair? 17 MS. TAYLOR: Yes? 18 MR. BRESNEN: If I might -- I haven't 19 talked to her about this -- but I'm going to ask 20 Sharon Ives if she would participate with that 21 workgroup. I just wanted y'all to know that. I 22 assume that would be acceptable to everybody? 23 MR. CORNWELL: It's acceptable. 24 MS. TAYLOR: Are you doing that by 25 proxy. 0066 1 MR. BRESNEN: Sort of. 2 (Laughter) 3 MS. TAYLOR: I'm sorry. You missed 4 that discussion. 5 MR. FENOGLIO: You volunteer a proxy? 6 MS. TAYLOR: Okay. This workgroup is 7 comprised of Knowles, Rosie, David, Kim and Sharon 8 Ives. 9 Okay. If there is no further 10 discussion, let's go on with the next item. 11 AGENDA ITEM NO. 9 12 MS. TAYLOR: Item No. 9, report and 13 possible discussion and/or action on draft for 14 compliance audit. 15 MR. SANDERSON: Once again, members, 16 this is a draft rule that has not been presented to 17 the Commission. It's on the agenda for the next 18 Commission meeting, so no action has been taken. I 19 wanted to provide it to you for your review and for 20 your informal comment at this point in time. And I 21 might mention that all these rules will be posted on 22 the website for informal comment, up until the point 23 in time that they get published in the Texas Register 24 for official comment. 25 MS. ROGERS: Phil, I have a question 0067 1 for you. On Page 4, Line 6, (d) "How is a licensee 2 selected for a compliance audit?" Line 11, No. 4, 3 says "in conjunction with or as a result of a 4 complaint." Is this going to be "The bathrooms were 5 dirty" complaint or is it going to be narrowed down 6 to -- I mean, in the bingo world, they're complaining 7 every day because they didn't win -- 8 MS. LOPEZ: Right. 9 MS. ROGERS: -- or because something 10 else happened. I just want to make sure that -- of 11 course, I'm sure y'all will use some type of forum. 12 But I have heard that, you know, they call the Lottery 13 and tell them, you know, "The hall wasn't clean" or 14 something of that nature, but that's not going to 15 cause an audit? 16 MR. SANDERSON: Well, first off, any 17 call that we get to our Complaint Department CAMP 18 Division, a determination is made whether or not it is 19 a jurisdictional complaint or not. 20 MS. ROGERS: Okay. 21 MR. SANDERSON: And if there are 22 complaints that are not jurisdictional, then they do 23 not proceed any farther. In fact, I don't even know 24 if I see all of them. I see some. But if it's not a 25 jurisdictional complaint, then it doesn't get logged 0068 1 into the system as a complaint. 2 MS. TAYLOR: Any other discussion? 3 We do have some public comment on this. 4 Mr. Fenoglio. 5 MR. FENOGLIO: For the record, my name 6 is Stephen Fenoglio. And this was another rule that I 7 obtained a copy of, and I've done the same signaling 8 that I did before that I described in the previous 9 rule. Some are questions; some are observations. 10 And I guess -- the procedures in the 11 compliance audit are not that different from the 12 general audit as to what is happening, but this is, 13 again, an overall comprehensive cleanup of the 14 Commission rules. My first comment is under 15 Subparagraph (b), "What is a compliance audit?" And 16 it says, Subparagraph (C), "contribute to public 17 accountability." I'm not sure what that encompasses. 18 And at the bottom of Page 3 of the 19 draft rule: Compliance audits are conducted by GAGAS. 20 Again, the document is 202 pages in length. And some 21 of the GAGAS requirements then -- not only is the 22 audit conducted pursuant to GAGAS requirements -- and 23 I told Phil when I met with him yesterday, I still 24 haven't made it through all 202 pages. I think I'm on 25 160 now. 0069 1 But I'm going to take his word for it, 2 that all of the compliance audits procedures are 3 pursuant to GAGAS. And that may be appropriate for 4 the government auditors utilizing and being in 5 conformance with GAGAS, but then some of the GAGAS 6 requirements I believe are now imposed on charities. 7 And it's kind of the same comment of, you've got a 8 professional staff employing rules designed by those 9 professionals for their own work product, now putting 10 some of those same requirements on volunteers. And 11 there is no distinction between the large halls, 12 Subclass J hall versus a Class A hall that may 13 conduct, you know, one game a month. 14 And Phil and I did go over some of 15 these. My next comment on the top of Page 4 were all 16 the Commission's policies and procedures. And his 17 response is, they're going to be up on the website 18 before the rule is implemented. And the reason I 19 raise that, obviously, the rules are published. We 20 know what those are. But part of their policies would 21 include contested case decisions that I as a lawyer 22 may be aware of, but Rosie may not be aware of because 23 she's either (A) hasn't followed that particular 24 contested case that went through, the Commission 25 issued to final order. But, nonetheless, what staff 0070 1 is going to do is, they will publish those so everyone 2 will know what they are. And no question, that's a 3 good thing. 4 In response to an earlier comment in 5 Subparagraph (d), I note that any division of the 6 Lottery can request an audit, a compliance audit. In 7 the perception of fairness where the largest 8 competitor of charitable bingo is the lottery, what 9 Mr. Sanderson stated is, it's their intent that either 10 the General Counsel might do it or the Investigations 11 Division, because they might see something that Phil 12 Sanderson's staff doesn't see. As you may know, if 13 you file a complaint, it may get to Phil Sanderson's 14 desk. Or if there is some complaint about one of his 15 employees in conjunction with something that's 16 incorrect in what's going on at a bingo hall, then 17 Mr. Sanderson's office may not see it. It may be held 18 in some other division. That makes sense. 19 But, again, generally someone from the 20 Lottery Division -- and I don't think Anthony 21 Sadberry, as the Executive Director of the Lottery, is 22 going to have a lot of his staff out filing 23 complaints. I would be shocked if he did; but, 24 nonetheless, the perception of that. 25 In Subparagraph (i) and (j), what I 0071 1 have found in audits today is, many times when the 2 Bingo Division requests the paperwork, most charities 3 give them the entire originals. They don't make 4 copies. And when I get hired toward the end of the 5 audit or at the end when there is a draft audit 6 circulated, and "Fenoglio, what do you think?" And 7 many times my response is, "Well, let me see the 8 records that lead the auditor to conclude that this is 9 wrong." 10 "We don't have them." 11 "Well, who has got them?" 12 "The auditor does." 13 And my sense is, mostly that's what 14 happens. There aren't copies made where the Lottery 15 gets a copy. My advice, as the lawyer is, you keep 16 the original and give the Lottery a copy. In the case 17 of one that I attended, an audit with Richard Bunkley 18 of the Rotary Club of Odessa, when I went to the exit 19 interview, they had the records in the Lottery 20 Commission's office there, and they were about five 21 feet high of documents. I mean, it was tens of 22 thousands of pages of records that were requested. So 23 it makes it problematic, in that at the very end of 24 this, the charity only has a limited amount of time to 25 decide go or no-go as far as contesting or making a 0072 1 response, and I may not have records to support that. 2 And one observation -- and it was a 3 similar observation we made in the audit rule and the 4 staff made changes -- the ARC of the Capital Area has 5 records of its charitable activities that the 6 Commission requested as a part of a general audit. 7 And part of those records are exempt from federal 8 disclosure under HIPAA, the Health Insurance 9 Portability Act. It's a federal standard, a federal 10 law, that if it's a health care record and we're using 11 some bingo money to implement or to make a -- or to 12 assist an individual as it relates to their medical 13 condition, we can't give those records away. We can 14 get in real trouble with the feds. And so I think the 15 rule needs to be modified for that. 16 Kim Kiplin has told me, the General 17 Counsel, "Well, if the federal law says we can't have 18 it, we can't have it." Well, okay, that may be true. 19 Well, why don't we just put that in the rule? And 20 then under Subparagraph (m), the following individuals 21 from the organization are required to attend. And if 22 this were a unit, you would have to mandate the bingo 23 chairperson. And, again, you see why he's naming the 24 chairperson in an earlier rule. 25 I don't disagree that you shouldn't 0073 1 name it. But primary operator and the unit manager 2 all must attend. Now, if they've hired someone like 3 me and one of those three is attending, why do you 4 need now four people's schedules to coordinate, busy 5 individuals, I would question whether you need 6 From the staff's perspective, I think 7 what they want to make sure is, someone who is 8 invested and is responsible for the organization is 9 there every step of the way to be able to at the end 10 of it, say, "Okay. Yes, we agree. No, we don't. 11 We're going to hearing," and not have staff at the end 12 of the final result where they're revoking the license 13 because of multiple demonstrated violations and the 14 board of that organization saying, after the entry of 15 the final order, coming to a Commission meeting 16 saying, "We had no idea any of this was going on." 17 And I'm sympathetic to the staff's 18 position if that's the position that that 19 organization's board is in. But again, if you've got 20 one of those individuals who staff has verified are 21 invested with authority to act with or without outside 22 counsel -- maybe it's a bookkeeper; maybe it's a 23 CPA -- why do you need all four? Sometimes you may 24 want all four, but there are other times that you 25 don't need all four. 0074 1 And then I'm not going to make a 2 comment on every one, because you've got them in 3 writing, but in Subparagraph (s) and (t), my comments 4 is, this is a very short period of time for a licensee 5 to, in the case of (s), disagree with the draft audit. 6 Again, this is when I usually get called. The draft 7 audit has been presented to the charity. The 8 bookkeeper may have a pretty good idea of what -- 9 because of the communication that's gone on between 10 the auditor and the bookkeeper, through requesting 11 records and the dialogue that occurs, but the bingo 12 chairperson, the board may not be that involved. And 13 so they get an audit. It scares them to death. They 14 contact someone who has some knowledge. And, yet, 15 within 10 calendar days from the date of the exit 16 conference, the licensee has to make a decision to 17 request a meeting. And again, they're at the point 18 trying to figure out, "We don't understand what 19 happened. Can someone please help us?" But there is 20 that 10-day period, clock running. 21 And, similarly, in (t), in Subparagraph 22 (t), if they're going to respond, they must do it in 23 writing and it has to be sent to the auditor no later 24 than the 20th calendar day from the date of the exit 25 conference, and it's beneficial if you include 0075 1 documentation. 2 Well, again, the 20 days may be a very 3 short period of time. It usually is. And beneficial, 4 including documentation in support, my sense is, in 5 some of the exit conferences, the records are made 6 available to the charity. But in other exit 7 conferences, they're not. So if you're trying to 8 attach records, the charity doesn't have them. They 9 can't produce them to me. And the last thing I want 10 to do to Mr. Sanderson, using the Rotary Club as an 11 example, is, "Phil, can you box up all those 30,000 12 pages of records and have them delivered to my 13 office," because I've got now five business days to 14 respond. And, you know, you see the problem? 15 But the good news for this compliance 16 audit, it's not that different from what charities are 17 doing today. I think there are other rules that are 18 more problematic 19 With that, I'll be happy to answer any 20 questions or sit down and read the other draft rules 21 that I'm working through now. 22 MS. ROGERS: I don't have a question, 23 but do I have a comment that I didn't make earlier. I 24 agree, on Section (m), I have a hard time with it 25 saying required those three people, because most 0076 1 people who are on boards and are involved in charities 2 have jobs. And if you say they're required -- and 3 most compliance reviews that I've been through have 4 been during the middle of the day, between 8:00 to 5 5:00. So that would be very difficult. 6 I'm not against having the same person 7 go through the audit; whereas, it would be the same 8 person handling it through the end if it came to 9 hearing, et cetera, being designated a person. But to 10 say required three people, that's going to be -- I 11 find that tough. That that's going to be hard on 12 charities. 13 MS. LOPEZ: And I guess that would 14 depend on, you know, who the auditor is and if, you 15 know, you can work a flexible schedule. But then we 16 all know that board members obviously, again, are 17 volunteers and they all have daytime jobs, and so it's 18 very difficult. 19 MS. TAYLOR: Any other comments from 20 the BAC? 21 Okay. Once again, is this one also 22 going to be the August? 23 MR. SANDERSON: This is on the agenda 24 for the July Commission meeting. 25 MR. CORNWELL: That's July 25th? 0077 1 MR. SANDERSON: It is tentatively 2 scheduled right now for July 25th. If the notice gets 3 posted this afternoon, then we'll know for sure. 4 MR. BRESNEN: Madam Chair, did I sign 5 up for this one? Can you add it if you would. My 6 comment will be very brief. I just have a quick 7 question. 8 Phil, I'm looking on Page 3, Line 23. 9 It says compliance audits are conducted in accordance 10 with these government accountability -- the government 11 auditing standards. That seems to be the way that's 12 worded, a requirement for the Commission's conduct. 13 MR. SANDERSON: That is correct. 14 MR. BRESNEN: Okay. So -- 15 MR. SANDERSON: The recommendation from 16 the Internal Audit was that we adopt the GAGAS to 17 conduct our audits by. I'm not aware at this point in 18 time if non-profits are required to follow GAGAS. I 19 don't think they are. I know there has been some 20 discussion about it, but that's just my understanding 21 of what the requirement is. 22 MR. BRESNEN: Well, you know, I was 23 given a series of reports on audits that the IRS did 24 of a bunch of the charities in North Texas, and that 25 got up to be about 45 or 50. And just so y'all will 0078 1 know, not a single one of those charities was found to 2 have been doing anything wrong, with some minor 3 exceptions of things like they transposed some numbers 4 or put the wrong number in the 990 form. They might 5 have put wages in the wrong block or something like 6 that. Every one of them was given a clean bill of 7 health. There were some of them that were both just 8 tax exempt and also had foundation status, and they 9 determined them not to be foundations, had no bearing 10 on their tax-exempt status or what they did. They 11 just weren't foundations, it turned out. 12 At no time during the extensive 13 involvement that Sharon Ives was reporting to me with 14 those did any of these standards ever come up. I'm 15 raising this issue out front here. It might be 16 smarter just to lay low and let it be your problem 17 later on. 18 But it seems to me this is a 19 requirement imposed on the agency, the way this is 20 written, and not on the charities. If that's the 21 intention, you know, let 'er rip. I think as far as 22 we're concerned, let 'er rip. But if it comes down 23 later on, then, that the way the charities are 24 conducting themselves doesn't sync up with the audit 25 standards in that document and that becomes a problem 0079 1 and then that 202 pages gets imposed on the charities, 2 I can see a train wreck coming. 3 But if y'all are saying that there is 4 an external reference, these government auditing 5 standards, that you're going to conform your conduct 6 to and that's what this rule means for the bingo 7 interest group, then I think that I'm okay with that. 8 And I would agree, I think with 9 Steve's -- I agree with Steve's comments, and I think 10 those need to be addressed in the comment period. But 11 this is one of them I feel a little more comfortable 12 going forward with. 13 My final comment would be, I think your 14 communication challenge with the industry is going to 15 be for them to see, you know, what's new, what's new 16 here that we're not already doing. And is this just 17 another -- you know, we went through a series of 18 rulemakings that had to do with auditing and things. 19 And I think they may not see if there is something 20 additional that they're supposed to be doing here or 21 if this is a reiteration of your current practice in a 22 more understandable, plain language sort of forum. 23 Thanks. 24 MR. CORNWELL: Madam Chairman? 25 MS. TAYLOR: Yes, sir. 0080 1 MR. CORNWELL: Phil, I don't know -- I 2 understand you've got the internal control audit, was 3 issued by your internal accounting folks, auditors. 4 But I don't see there -- and Steve is right. You're 5 locking yourself in. If you put this thing in, you 6 could be locking yourself into some principles there 7 that don't apply. 8 But if you would change that rule to 9 sit down and say that you would -- you're going to 10 follow these Generally Accepted Governmental 11 Accounting standards in their priorities, their 12 purpose and their principles, then it would give you 13 enough wiggle room to sit down and say, "You know, I'm 14 following the intent of these standards, but I don't 15 necessarily have to follow them verbatim." So I don't 16 know. That's your call. 17 MS. TAYLOR: Any other comments? Any 18 motions? Any -- 19 MS. ROGERS: I make a motion that we 20 approve this, with Steve Fenoglio's comments. 21 MS. LOPEZ: I second. 22 MS. TAYLOR: Incorporating? 23 MS. ROGERS: Incorporating his 24 comments. 25 MS. TAYLOR: Okay. The motion is to 0081 1 approve this draft, incorporating Steve Fenoglio's 2 comments. All in favor? 3 FROM THE COMMITTEE: Aye. 4 MS. TAYLOR: Opposed? 5 MR. DOUGHERTY: I'll abstain again. 6 I'm way over my head. 7 MS. TAYLOR: Okay. One abstention. 8 Okay. Moving on to our next agenda 9 item -- before we do this, does anybody want to take a 10 break? Do the members of the committee want to take a 11 lunch break today? Do you want to forge straight on 12 through? 13 MS. ROGERS: Let's go a couple more, I 14 think. 15 MS. TAYLOR: Do you need a break? 16 THE REPORTER: I'm fine now. 17 MS. TAYLOR: Okay. Then we're going to 18 continue on. 19 AGENDA ITEM NO. 10 20 MS. TAYLOR: Item No. 10, report, 21 possible discussion and/or action on draft rule for 22 dispute resolution. 23 MR. SANDERSON: Members, once again, in 24 your notebook is a draft rule that is scheduled to be 25 on the agenda for the next Commission meeting. This 0082 1 lays out the dispute resolution process. Once again, 2 this was a recommendation from the Internal Audit that 3 we have a process in place for organizations to 4 dispute an audit finding. We've also incorporated 5 some other activities that may be offered up in the 6 dispute that are not necessarily audit-related. But 7 for the most part, this would follow the process of 8 disputing an audit finding. 9 It goes in conjunction with the 10 compliance audit. The ending of the compliance audit 11 rule talks about an informal conference with the audit 12 manager, and the dispute resolution process would then 13 pick up after that conference with the audit manager, 14 if it did not resolve all the issues. 15 And with that, I'll leave that for 16 your -- open it up for your comments. 17 MS. TAYLOR: Any comments from BAC 18 members at this time? 19 MR. CORNWELL: Yes. Under (b) on the 20 start of the rule, "Who may request a dispute 21 resolution conference?" you have, "A licensed 22 authorized organization . . ." Right? And, yet, over 23 here in your chart, you add a commercial lessor and 24 don't have anything in there for manufacturers or 25 distributors. 0083 1 MR. SANDERSON: Our first draft was 2 primarily for the licensed authorized organizations, 3 since those are our most licensees. I think when we 4 were looking at the who must attend or how do I 5 request, we incorporated the commercial lessor. 6 Probably, in my recollection, that's because there are 7 some licensed authorized organizations that hold a 8 commercial lessor license. 9 MR. CORNWELL: So it is -- that's my 10 question. 11 MR. SANDERSON: And normally we do both 12 of those licenses, we're auditing those at the same 13 time, if we do an audit on -- 14 MR. CORNWELL: So it is contained 15 strictly to licensed authorized organizations that can 16 hold a commercial lessor license. Right? 17 MR. SANDERSON: That's the way it's 18 drafted at this point in time, yes. 19 MS. ROGERS: Phil, I have a question 20 for you. As written right now, does it say must 21 attend and required, or is that something you're 22 changing and adding, like down under (g) on Page 5? 23 I'm still just having a hard time with that for -- 24 MR. SANDERSON: Well, you know, once 25 again, this goes hand-in-hand with the compliance 0084 1 audit rule, and those are the same requirements for 2 the -- 3 MS. ROGERS: Same thing? 4 MR. SANDERSON: -- entrance conference 5 and exit conference. So, yes, it would be the same at 6 this point in time. 7 MS. ROGERS: Can I ask that y'all will 8 please think about that, though, that saying just 9 required, I mean, because if they don't, then they're 10 breaking -- you know, I think it's just hard for that 11 many people to get off and find, when you have one 12 person who could maybe -- or two that can do it. 13 MS. TAYLOR: Any other comments from 14 BAC members? 15 Public comment. Mr. Fenoglio? 16 MR. FENOGLIO: I'm sorry. I heard my 17 name and I was just -- 18 MS. TAYLOR: We're on Agenda Item No. 19 10, dispute resolution. 20 MR. FENOGLIO: Oh, I do. This is the 21 third rule that I actually got a copy of before, so I 22 have -- take one down and pass it around, one for the 23 Court Reporter. 24 FROM THE AUDIENCE: That's beer. 25 MR. FENOGLIO: No comments from the 0085 1 peanut gallery. 2 I have written comments similar in 3 fashion on this draft rule. My first observation is, 4 the dispute resolution officer is going to be a 5 Commission employee. I was hoping we would have a 6 SOAH judge. And then Phil explained to me that SOAH, 7 State Office of Administrative Hearings, which is a 8 state agency on equal footing with the Lottery 9 Commission, that provides hearings officers, 10 Administrative Law Judges to hear contested cases, 11 they're charging the agency $200 an hour for a hearing 12 officer, and I was surprised at that number. 13 But if that's the case, I can 14 understand why Mr. Sanderson's budget doesn't really 15 want to incur that kind of cost, as opposed to an 16 employee of the Lottery Commission who would act as a 17 dispute resolution officer. That, for the purposes of 18 the record, is on Page 3 of the rule, Subparagraph 19 (a)-(f). 20 And again, the perception being this is 21 a Lottery Commission employee that's being the dispute 22 resolution officer. Perception-wise, would that 23 person be perceived as fair and impartial? Some 24 people may believe that; some people won't. 25 What Mr. Sanderson also observed was, 0086 1 they would receive training in dispute resolution/ 2 mediation, which would certainly be a good thing. And 3 my experience in both arbitrators and mediators, is if 4 they're really well schooled in their craft, they can 5 get two parties who can't stand each other to at least 6 talk to each other about their differences. And 7 sometimes even people who hate each other can come to 8 an amicable resolution. 9 And, you know, if it's $200 an hour, 10 then that means -- there may be times when 11 Mr. Sanderson, because of the nature of the mediation, 12 may want to incur that cost, the agency might want to 13 incur that cost. But for the routine, I would guess 14 no, they wouldn't. 15 The form that I indicate in 16 Subparagraph (c), I would kind of like to see what the 17 forms are before I agree on the language. And Phil 18 says those are coming shortly. 19 And jumping now to the bottom of Page 5 20 and the top of Page 6, my same observation that I made 21 in the last rule about there are certain named people 22 who must attend. And again, I understand what the 23 staff's concern is. But many times you don't need the 24 officer, the director and the primary operator to 25 attend all three of those if one of those clearly is 0087 1 invested in the organization and authorized to speak 2 on their behalf, and so I won't regurgitate my 3 comments earlier. 4 And in Subparagraph (j), to follow up 5 on a comment I made earlier about audits, is that 6 sometimes the charities don't have access to those 7 records. And my observation is, if you're going to 8 have this, then make sure that the charities have the 9 appropriate documentation so they can have the 10 ammunition, if you will, when they go to this forum of 11 dispute resolution. 12 I would be happy to answer any 13 questions. 14 Thank you. I will sit down. 15 MS. TAYLOR: Thank you. 16 Any other questions or comments? 17 MR. CORNWELL: What do y'all think? 18 You know, I don't ever get involved with these audits, 19 you know, for the charities. But don't you think this 20 is a good concept? It seems like it's a good concept, 21 to have an ability to dispute these -- 22 MS. TAYLOR: I agree with the ability 23 to dispute. I also agree with Mr. Fenoglio on the 24 fact that it's hard to have all the records, because 25 sometimes when they come to do an audit, you don't 0088 1 realize that they're going to want to take the books 2 and records, so you don't have a copy prepared. And 3 you've got boxes of paperwork. 4 And if you think they're just going to 5 come and it's going to be, you know, a two- or three- 6 hour process and the next thing you know they're 7 saying, "You know what, this is going to take too 8 long," so they want to box up everything and take it, 9 so there isn't a copy. 10 So, I mean, I think it is a problem, 11 that if they decide that there is a determination made 12 that they need to take the books and records, the 13 organizations need to be given an opportunity to go 14 copy the records. I have stuff that's been gone over 15 a year now, and not necessarily because of my audit, 16 because they were using mine as a comparison for 17 another organization of what in this instance voids 18 ought to have been and what the voids from one of the 19 organizations were. And I haven't seen my paperwork 20 back, and it's been over a year now. It was over a 21 year February. 22 MR. SANDERSON: Have they had the exit 23 conference? 24 MS. TAYLOR: No. 25 MR. SANDERSON: Okay. Once the exit 0089 1 conference is held, you'll get the records back. And 2 then all this process takes after that point. So 3 there should not be any reason that an organization 4 does not have their records for any of the conferences 5 that are after the exit conference. 6 MS. TAYLOR: Well, it's difficult, 7 though, when everything is gone and it's gone over the 8 course of a year, you know. The books and records, I 9 mean, it is a problem. And it's not that they found 10 any problems with the books and records of the 11 organization, my audit. They were just using them as 12 a -- I can't think of the word. 13 MS. ROGERS: For an example. 14 MS. TAYLOR: Of where it should have 15 been. 16 MR. CORNWELL: Baseline. 17 MS. TAYLOR: Yes, a baseline, and they 18 requested to keep them. But, once again, there's no 19 records. I mean, there's nothing there for the whole 20 previous year. So I do think that as an organization, 21 you know, they need to be given an opportunity, 22 because it's a huge expense to copy all that stuff. 23 And if they need to take them, then I 24 agree with -- and here it talks about providing the 25 table and chairs so they can do the audit there, but 0090 1 that doesn't mean that the audit is going to stop 2 there. You know, it's a shame to make copies of 3 everything if they come in and everything is fine and 4 there is no problem and they stay for two or three 5 hours and leave, like they always have before. But 6 then if they determine that they need to take the 7 books and records, it's a huge expense to make copies 8 of all of that, time and effort -- 9 MS. LOPEZ: Time. 10 MS. TAYLOR: -- expense. So I wish 11 there was a way to give the organization, say, "You 12 know, okay, well, we need all the stuff for 48 hours." 13 But, you know, maybe they find something and they need 14 them right then. But it is tough. And I think that 15 it would be hard to dispute if you can't take your 16 stuff to another bookkeeper and say, "Do you see 17 something wrong with this?" or to Mr. Fenoglio and 18 say, "Do you see anything, that we've been doing 19 anything wrong?" 20 If you don't have the records, it would 21 be very hard to create a letter to dispute it, because 22 maybe you are wrong. I mean, you don't want to 23 dispute it if you're wrong. But if you feel like 24 you're right, it would be nice to be able to have 25 somebody else look at it and say, "Yes, I do believe 0091 1 that you were in the right." So, I mean, I don't know 2 what the answer to that is, except that -- 3 MR. SANDERSON: Well, the only answer 4 that I can provide is that if you dispute an audit 5 finding and you do not have the records, I would like 6 to know that, because until they present that -- when 7 they present that audit finding to you, you should 8 have the records by your side as they do that. 9 MS. TAYLOR: And they're left there 10 with you at that point? 11 MR. SANDERSON: And they're left there 12 with you at that point. So I'm not aware of any 13 records not being returned to an organization at the 14 time that the exit conference was held. 15 MS. TAYLOR: Okay. 16 MS. ROGERS: And, Knowles, the only 17 thing I see in it is when you say "required," like 18 Mr. Fenoglio, why all these people? If one or two or 19 three of the four can handle it and are invested in 20 it, once you say "required," they can stand there and 21 say, "You are breaking the rule, because we said 22 'required.'" So that's my problem with it. 23 MR. CORNWELL: I just wanted to know -- 24 I mean, this seems like a good thing, of having the 25 ability to dispute these things in front of somebody 0092 1 that should be somewhat neutral. I just want to make 2 sure they're neutral. I always thought maybe, you 3 know, it would be nice to have an ombudsman for Texas 4 charities that worked for the Texas Lottery. You 5 know, that would be a great thing to put into the 6 budget if we could ever get the Commissioners talked 7 into it. 8 Go ahead, Phil. 9 MR. SANDERSON: The budget is done by 10 the Legislature. 11 MR. CORNWELL: Okay. Well, you make 12 your request on that. 13 Where is Nelda? 14 MS. TREVINO: Right here. 15 MS. TAYLOR: Appropriations. 16 Okay. Any other comment? 17 Is there a motion? 18 MR. DOUGHERTY: Madam Chair, since I'm 19 not getting into all of this, I just want to clarify 20 one acronym that Mr. Fenoglio had on Page 3, because 21 I'm trying to understand it. Okay? Line 11, Page 3, 22 will somebody straighten out SOAH for me, please? 23 MR. CORNWELL: State Office of 24 Administrative Hearings. 25 MR. DOUGHERTY: Thank you, sir. 0093 1 MR. FENOGLIO: Jack, that's the state 2 agency that -- 3 MR. DOUGHERTY: State Office of 4 Administrative Hearings. 5 MR. FENOGLIO: -- employs 6 Administrative Law Judges to hear cases that in the 7 case of the Lottery Commission, if this were an audit 8 and they believed there was a violation of law and the 9 charity disagrees, then that agency is going to employ 10 a person who is a lawyer who is going to act as a 11 judge in the case -- 12 MR. DOUGHERTY: Okay. 13 MR. FENOGLIO: -- hear the evidence, 14 issue a formal report that is then brought to the 15 Commissioners for their consideration. 16 MR. DOUGHERTY: Thank you. I just 17 couldn't find a definition of it, and I don't know 18 anything about judges. 19 MR. FENOGLIO: And I should have 20 pointed out, Madam Chair and members, I do like the 21 idea of a dispute resolution rule. It's a good step 22 forward. It just needs, from my perspective, what I 23 consider minor tweaking. 24 Phil has been pushing to have this 25 process in place, notwithstanding he didn't have a 0094 1 rule. I don't think he needed one necessarily. But 2 they have encouraged charities to come forward, have 3 an informal conference. This is going to formalize 4 that process in a more structured manner. It still 5 wouldn't keep if a charity wanted to, while this audit 6 is pending, send out the necessary paperwork, perhaps 7 they engage an attorney or CPA or bookkeeper, but 8 still wouldn't keep them from having an informal 9 conference short of something like this. And, you 10 know, the staff might decide, "No, we don't want to do 11 it" or, "Sure. Come on in. Let's talk informally 12 about it." So it's a good idea. 13 MS. LOPEZ: I have to say that this 14 dispute really is more of even an educational tool 15 also for the organizations, for some of us that have 16 gone through, for example, findings and audits. We 17 obviously learn from those violations not to repeat 18 some of those -- or not to repeat the violations. But 19 I think that the dispute resolution allows us just one 20 step further to be able to come forward if we feel 21 that, you know, we've done everything that we possibly 22 could do correctly and just failed to make an error 23 and, you know, be able to come again before the 24 dispute resolution committee and make those 25 statements. 0095 1 MS. TAYLOR: Were you going to say 2 something, Kim? 3 MS. ROGERS: I make a motion to accept 4 this -- if I state it correctly, once again -- with 5 Mr. Fenoglio's comments. 6 MS. LOPEZ: I second. 7 MS. TAYLOR: All in favor? 8 FROM THE COMMITTEE: Aye. 9 MS. TAYLOR: Opposed? 10 MR. DOUGHERTY: Abstain. 11 MS. TAYLOR: Okay. Item No. 11 is the 12 next one. Do we want to go into Item No. 11 now? 13 MS. LOPEZ: I think we should. 14 MS. TAYLOR: Do you need a break? 15 MS. ROGERS: Take a 30-minute break? 16 MS. TAYLOR: Go to lunch real quick? 17 If we take a break for lunch, are the 18 members of the audience that are sitting out there 19 going to come back after lunch? 20 Mr. Heinlein and Fenoglio and Bresnen? 21 Are you going to be coming back after lunch, 22 everybody. 23 MR. BRESNEN: I might be a little bit 24 late. I've got to go get a legislator . . . 25 MS. TAYLOR: Okay. Because we would 0096 1 sure like it if you would come back and not desert us 2 during the lunch break. 3 MR. BRESNEN: Okey-dokey. 4 MS. ROGERS: 12:30? 5 MS. TAYLOR: Okay. Then we're going to 6 take a break until about 12:45. 12:45. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 0097 1 (Off the record: 11:55 a.m.) 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 0098 1 AFTERNOON SESSION 2 TUESDAY, JULY 17, 2007 3 (12:53 p.m.) 4 MS. TAYLOR: We have an quorum back, so 5 we're going to call the meeting back to order. I see 6 that we've lost some people out of the audience, but 7 hopefully they'll be back here soon. It's about seven 8 minutes until 1:00. 9 AGENDA ITEM NO. 11 10 MS. TAYLOR: We're going on with Item 11 No. 11, report, possible discussion and/or action on 12 draft rule for books and recordkeeping requirements 13 for conductors. 14 MR. SANDERSON: Members, in your 15 notebook behind Tab No. 11 is a draft rule for books 16 and recordkeeping requirements for conductors. This 17 is an initial draft. It is just now being circulated 18 for internal comments. And we will post it on the 19 website to receive informal comments from the 20 industry. We would like to have this placed on the 21 agenda for the August Commission meeting. 22 So I will leave that up to you how much 23 discussion you want to have on this at this point in 24 time. But that's where we are with this particular 25 rule 0099 1 MS. TAYLOR: Okay. So we won't be 2 having another meeting where we could discuss this 3 prior to August anyway, then? 4 MR. SANDERSON: Currently your next 5 scheduled meeting is tentatively the first Wednesday 6 in November. I don't think there is anything that 7 would preclude you from having any additional 8 meetings. That will be at your call. 9 MS. TAYLOR: Okay, members. So if you 10 want to discuss it, I would suggest that you do it at 11 this time. 12 Mr. Fenoglio has some items that he 13 needs to talk about? 14 MR. FENOGLIO: Yes. And on this one -- 15 and, Phil, I'm glad to hear you say that it's not 16 going to come up to the Commission in July, because 17 what I would like -- and this is the first time I've 18 seen it. I'll renew my request for an e-mail, on 19 these and the rules that follow. 20 But I would prefer not to make a lot of 21 comment. What I would like to do is have a couple 22 of -- one of the employees at River City Bingo and 23 then some other hall managers, employees, look at it 24 and figure out what they're capturing today. My sense 25 is, most of the data is being captured in one fashion 0100 1 or another, but I would like to get real life 2 experiences. I'm not competent to be a floor 3 salesperson or an usher or what have you. 4 And then the other thing, what the BAC, 5 Madam Chair, if you choose to do so, is to appoint a 6 subcommittee that could meet between now and the 7 August Commission meeting and have detailed comments 8 prepared, again at the subcommittee level, Madam 9 Chair. 10 In answer to Phil's conversations, 11 there's nothing that precludes currently you from 12 having another meeting, or you could appoint a 13 subcommittee of the whole and get around that. So 14 there are a couple of other rules, depending upon what 15 Phil says, that follow that I may have the same 16 observations. If they're not coming up to the 17 Commission in August (sic), then I think the better 18 thing is to, if they're big picture items for the BAC 19 to address, do it now but, otherwise, appoint a 20 subcommittee, let the sub- -- make sure you get the 21 subcommittee members appointed to those committees, 22 Madam Chair, who will actually show up and attend. 23 I love Larry Whittington, he is a good 24 friend of mine, but his activity in being active in a 25 subcommittee is checkered. Sometimes he's very arrive 0101 1 and sometimes he isn't. So if you're going to appoint 2 a subcommittee, make sure you know who the 3 subcommittee members are and they're going to be 4 active. And I would like to be -- if you're going to 5 have a subcommittee, I would like to be a part of that 6 subcommittee for any of these that follow. 7 Thank you. And I'll be happy to answer 8 any questions. I'm going to sit down. 9 MS. ROGERS: I would like to comment 10 that I agree with Mr. Fenoglio. I would like to see 11 individuals that work in a day-to-day grind of bingo 12 participate in assisting staff with things that need 13 to be on here. 14 MS. LOPEZ: I agree. 15 MS. ROGERS: And so if there is a 16 subcommittee, I would like to bring someone who works 17 very long and hard where we play to assist with that, 18 that has more knowledge than I do. But I could, of 19 course, come with them but not chair. 20 MS. TAYLOR: Personally, I did the same 21 thing on this draft rule. It's pretty yellow, because 22 I used a highlighter for all the items that were 23 worrisome on here. Also some things like, for 24 instance, that each serial number must be recorded on 25 a separate sheets. That was on No -- that's on (f). 0102 1 I mean, we have some papers that, you know, we 2 originally used that were in a workbook years and year 3 ago the Lottery Commission provided. And I believe 4 that's three separate places for three different 5 serial numbers on the same page. 6 I mean, there's an awful lot in this 7 rule, too, that concerns me. I don't know how much 8 room you have on the front page to try and put all of 9 this -- some of this stuff on the front of the paper. 10 And as long as the information was included -- always 11 before the staff has said, as long as it's included 12 with your daily paperwork, which, I mean, by the time 13 our paperwork is finished, you know, it's got a lot of 14 pages in each daily paperwork. But everything that's 15 on the front page is substantiated by the papers 16 following. But there's only so much room to write on 17 a front paper. So I'm very concerned with this rule 18 myself, this draft. 19 MS. LOPEZ: I agree. I think as I read 20 through this over the weekend -- I, you know, again 21 have a lot of yellow sticky notes on mine, not yellow 22 highlighters but just a lot of the different, in the 23 different categories, just a lot of concerns or 24 worries as well that, you know, some of these -- while 25 I'm all for implementing, you know, preventive 0103 1 measures, some of these items need to be tweaked 2 somewhat to be able to flow consistently with the 3 day-to-day operations, whether it be a small hall or a 4 large hall, medium sized hall. I see some concerns. 5 MS. TAYLOR: Pull-tab summary is 6 another one that caught my attention. The perpetual 7 inventory of pull-tabs is supposed to -- I wanted to 8 show you, on instant tabs, I pulled a sheet out of our 9 inventory book. This half of the paper is one box of 10 tabs that we are still continuing to use, because 11 that's how many instant tabs we use nowadays. I mean, 12 day after day after day after day after day we use it. 13 And I can't imagine on this piece of 14 paper also trying to list out how many prizes are left 15 in if, in the inventory. You know, I understand 16 keeping -- you know, we do keep paperwork that shows 17 what prizes have been paid on what's left. But, I 18 mean, this same box of instant tabs has been open 19 since January -- January. We're still using it. You 20 know, and this is just -- if you can see this, this is 21 all the little writing day after day after day after 22 day. 23 They started with 3,000, minus 190, 24 equals this much money and this equals this much, you 25 know. And it's perpetual inventory of that box of 0104 1 tabs. But in this rule, you would have to write down 2 how many prizes have been paid out on each one of 3 these occasions on this same piece of paper. 4 The stuff where they want in this 5 particular form that a record listing of bingo balls 6 called for each bingo game or pull-tab game, and the 7 balls must be listed in the order called and they must 8 be attached to the occasion cash summary. On rapid 9 bingo nights, we play probably 60 bingo games. And 10 our balls that we're calling during the event, if we 11 leave the ball -- I can't remember what the name of 12 it's called -- on -- 13 MR. CORNWELL: The rack. 14 MS. TAYLOR: -- the ball rack on, it 15 messes up the electronics, because it wants to keep 16 carrying us forward into all the other bingo games. 17 We turn the ball rack off to play your event tabs. It 18 doesn't keep a list of the order of the number that 19 the balls are called. When you go back to playing the 20 bingo game, so that everything works again, then the 21 ball rack gets turned back on and then it does, 22 indeed, list all the balls that are called and the 23 order in which they were called. 24 But we play in excess of 60 bingo games 25 on those nights. You know, I can't imagine trying to 0105 1 have somebody sitting there keeping track of all of 2 the games, because we play tabs, we play them by the 3 bundle on those nights, because this is a small 4 attendance. And we'll play them -- you know, like 5 Quick Cash, we'll play Letter A and then Letter B and 6 then Letter C and then Letter D, because everybody 7 wants one of each of the letters, so we play them by 8 letter. 9 But, I mean, you're talking -- we could 10 play 24 to 30 Quick Cash, not counting any other tabs 11 that we've played, which means I would have to have 12 somebody sitting there writing down every single ball 13 that comes out of the blower. And we only have four 14 people there, so everybody is pretty busy already, you 15 know. 16 MS. LOPEZ: Yes. 17 MS. TAYLOR: So there's a lot in this. 18 I really would like to see a workgroup formed, 19 because, I mean, that's only the tip of all of the 20 other problems that I highlighted in here. And I know 21 that some of them are a problem for my hall; some of 22 them would be a problem for other people's halls. On 23 rapid nights, we don't keep a list of the people 24 that -- we do on normal games have it where people 25 sign when they receive the money from the bingo games. 0106 1 On rapid night we don't, because it's fast and it's 2 rapid. And I think, depending upon the halls, that, 3 you know -- anyway. 4 MS. LOPEZ: Again, we're trying to make 5 every use of every minute while we're trying to sell 6 as many pull-tabs as we possibly can, and that is 7 totally going to slow us down and lose a lot of 8 revenue in sales that the organizations could again be 9 spending -- that the workers could be spending time on 10 selling the product that we've got. So I'm in 11 agreement with Suzanne on that. 12 MR. CORNWELL: The bigger question 13 here -- okay? -- is obviously the Lottery would like 14 to have all these records. It makes good compliance. 15 But the big question is, to get the technology that 16 you need to keep up with all these records, you're 17 going to have to have the Lottery -- these are common 18 things, Phil, that you see in a back office in a, 19 quote, an Indian bingo casino hall. And the 20 technology is out there to do a lot of this stuff for 21 you, but it usually comes with a price of higher speed 22 games and more content games. 23 So there comes a real question of if 24 you want the records or is the Lottery going to allow 25 bingo to evolve to a higher level of play? And it's a 0107 1 chicken and egg thing. You're not going to get these 2 technologies to do all these things for you without 3 some big cost or more content, more faster velocity 4 games, Phil. 5 MS. TAYLOR: So I just feel like -- I 6 think that most of the items that they're requesting 7 are somewhere within the day's paperwork but not all 8 on the front page. I don't know how you find enough 9 room on the front page, in addition to everything 10 else, to put all the series numbers and the colors and 11 what's in and out, all on the very first page for 12 every single paper you sell. I mean, on rapid bingo 13 night, we sell over 30 different sheets -- 30, 17 -- 14 MR. CORNWELL: You use the 34 -- 15 MS. TAYLOR: 34 -- 16 MS. LOPEZ: Yes. 17 MS. TAYLOR: -- for that one session. 18 And I think by the time I have these lines, that 19 people are going to be over there with magnifying 20 glasses trying to read it, because I know that I 21 already have trouble reading that sales journal, since 22 it's like gotten so tiny that I have to break down by 23 month. But I would like to see us put a subcommittee 24 together to look at this rule. 25 The next Commission meeting is on the 0108 1 17th. I know this doesn't go to the Commission until 2 in August. But I don't foresee us getting together as 3 a committee as a whole again prior to next month. If 4 it is the will of the committee to do that, I'll be 5 here, but I just don't see it happening. 6 MS. LOPEZ: I'm available. I mean, to 7 me this is important, because that deals with our 8 day-to-day operation. And I'm willing to, you know, 9 come and meet with whoever wants to be on this 10 committee wherever it may be. I mean, that's 11 important to me. 12 MS. ROGERS: The meeting next month, I 13 could come with a workgroup and work on it. 14 MS. TAYLOR: Okay. 15 MR. CORNWELL: You don't have long. 16 You know, today is the, what, 17th? 17 MR. WEEKELY: 17th. 18 MS. ROGERS: We would have to meet in a 19 couple of weeks. 20 MR. CORNWELL: The Lottery meeting is 21 the 17th, so not a lot of time. 22 MS. ROGERS: Right. 23 MS. LOPEZ: When is the August 24 Commission meeting, Phil? 25 MR. WEEKELY: The 17th. 0109 1 MR. SANDERSON: They have not 2 officially set a date. Historically it's been the 3 third Wednesday, which would have been the 15th of 4 August. But I've heard that there may be conflicts. 5 It could be the next week after that. 6 MS. LOPEZ: But not prior to 7 August 15th? 8 MR. SANDERSON: Not prior to 9 August 15th, no. 10 MS. LOPEZ: And this will go to them on 11 August 15th? 12 MR. SANDERSON: Our goal is that at the 13 August meeting, that this be on the agenda for their 14 discussion. 15 MS. ROGERS: Would staff be available 16 to work with some of us? 17 MR. SANDERSON: Oh, yes. 18 MS. LOPEZ: We would need to meet like 19 before the end of the month. 20 MS. TAYLOR: Okay. So we're going to 21 put a subcommittee together. And Mr. Fenoglio I 22 believe has already asked to be on this committee. 23 And Mr. Fenoglio is being designated as chair for this 24 workgroup. 25 (Laughter) 0110 1 And his other members that are going to 2 be on the workgroup, we're going to have Rosie on that 3 workgroup with you and Kim. And I would also like to 4 serve on that workgroup. 5 Are there any other -- Mr. Heinlein, 6 did you want to be on that workgroup also? 7 MR. HEINLEIN: Yes. 8 MS. TAYLOR: Okay. Mr. Heinlein. 9 (Multiple people talking) 10 MR. CORNWELL: Madam Chairman? 11 MS. TAYLOR: Yes? 12 MR. CORNWELL: Can you make sure that 13 we can bring other folks in. Like Kim indicated, she 14 would like to bring in, she -- 15 MS. TAYLOR: Yes. I absolutely agree 16 that these people that serve on it, that if they have 17 other people that have the information that will be 18 pertinent and helpful to this workgroup, then I would 19 hope that they would drag those -- I mean, invite 20 those folks to this meeting and then drag them here. 21 Mr. Fenoglio? 22 MR. FENOGLIO: Would you repeat who all 23 is on the committee? 24 MS. TAYLOR: You are, Rosie, Kim, 25 myself and then David Heinlein, and any other folks 0111 1 that you can drag here. 2 MR. FENOGLIO: Okay. 3 MR. HEINLEIN: Maybe we can go together 4 to buy an apartment building over here. 5 MR. FENOGLIO: Yes. 6 MS. TAYLOR: Well, I think that most 7 everybody -- not most everybody -- but Mr. Heinlein -- 8 David, are you planning to come to the next Commission 9 meeting, the one that's July something? 10 MR. HEINLEIN: I'm not sure. 11 MR. SANDERSON: 25th. 12 MS. TAYLOR: July 25th, next Wednesday. 13 MS. LOPEZ: No. It would be the week 14 after. 15 MS. TAYLOR: No? 16 MS. LOPEZ: That would be next 17 Wednesday. 18 MS. TAYLOR: Next Wednesday. 19 MR. WEEKELY: Next Wednesday. 20 MR. HEINLEIN: Got a meeting the 23rd, 21 the 24th and 25th. 22 MS. TAYLOR: I've got the 23rd and 23 24th, but he's free on the 25th. 24 MS. LOPEZ: Perfect. 25 MS. TAYLOR: Mr. Fenoglio, if you'll 0112 1 arrange that. 2 MR. FENOGLIO: Yes. 3 MS. TAYLOR: But some of the folks will 4 be already here in Austin for a Commission meeting 5 next Wednesday. 6 MS. LOPEZ: The 25th. 7 MS. TAYLOR: So it might be a nice day 8 to go ahead and have that meeting. And those folks 9 that couldn't be here, maybe we could just be on the 10 telephone, like after the Commission -- after the 11 bingo portion of the Commission meeting. 12 MR. HEINLEIN: Right. 13 MS. LOPEZ: What time is the Commission 14 meeting, at 10:00? 15 MS. TAYLOR: Is it 9:00? 16 MR. SANDERSON: They normally start at 17 9:00 a.m. 18 MS. TAYLOR: Okay. So after that. The 19 bingo portion is usually finished within the first 20 hour, or five minutes. 21 MS. LOPEZ: Okay. 22 MS. TAYLOR: Okay. Is there any other 23 discussion? 24 One other thing. Is the 25 subcommittee -- in case we don't have another meeting, 0113 1 are they prepared to go with the recommendations of 2 the subcommittee to the Commission at the August 3 meeting? 4 Okay. Is that a motion by somebody? 5 MR. CORNWELL: Yes. I'll make that 6 motion. 7 MR. WEEKELY: And I'll second it. 8 MS. TAYLOR: Okay. So all in favor? 9 FROM THE COMMITTEE: Aye. 10 MS. TAYLOR: Opposed? 11 Okay. The recommendation of the 12 subcommittee will be given to the Commissioners at 13 their August meeting. 14 AGENDA ITEM NO. 12 15 MS. TAYLOR: Then we will go on with 16 Agenda Item No. 12, report, possible discussion and/or 17 action on draft rule for conduct of bingo. 18 MR. SANDERSON: Once again, members, 19 this is a draft rule. And as earlier comments were as 20 it related to the books and records and this conduct 21 of bingo and the house rules, these are all 22 anticipated to be on the August Commission meeting; 23 they're not on the July Commission meeting. 24 The conduct of bingo rule deals with 25 laying out hopefully what would address fair conduct 0114 1 of the game. As with the previous rules, this was a 2 recommendation from the Internal Audit Report, that we 3 provide guidance to organizations to help them 4 maintain fair competition for the players as they 5 compete in the bingo games. 6 MS. ROGERS: Well, I'll start off with 7 a few comments. I have a hard time with (b)(E) -- No. 8 2, I guess, (E). You have to -- on your schedules, 9 you have to pay admission fees. I mean, what if you 10 decide on Monday to have a sale on Thursday, you're 11 just -- you're making it -- that's something that's 12 really difficult to do. 13 Next page, (J), "The caller can not 14 have access to cell phones..." Well, callers at our 15 hall all have children. Their cell phone is in their 16 pocket because their kids are sick -- on vibrate. I 17 mean, I don't see why you have to tell a caller you 18 cannot have your cell phone. I know some halls, you 19 know, I communicate and go up there. I'm sure them 20 being on the telephone talking, you know, to someone, 21 making a reservations to fly somewhere out of town is 22 not appropriate. But, you know, I don't find that... 23 No. 6(C), Phil, is that saying that 24 they cannot accept tips? 25 MR. SANDERSON: Which (C) are you 0115 1 talking about? 2 MS. ROGERS: 6(C) -- 3 MR. SANDERSON: 6(C). 4 MS. ROGERS: -- as in "Charlie." 5 MS. LOPEZ: Volunteers/workers must not 6 accept anything of value, other than payment for bingo 7 cards and supplies, from players. 8 MR. WEEKELY: Well, that's okay. 9 MR. SANDERSON: That is the initial -- 10 MS. ROGERS: I mean, it is typical when 11 someone wins $200, $500, they do give tips back. And 12 the hall -- I'm assuming that's a house rule. 13 MS. LOPEZ: House rule. 14 MS. ROGERS: It's a business decision 15 whether it's split amongst each one or the employees 16 are able to keep that tip or something of that nature. 17 Is that what this is saying, though, that they would 18 not be allowed to accept tips? 19 MR. SANDERSON: That's the way I read 20 it, yes. 21 MS. ROGERS: Okay. I have a problem 22 with that one. And then (D) -- 23 MS. LOPEZ: I agree. 24 MS. ROGERS: In our hall, it's 25 separated, smoking and non-smoking. And sometimes 0116 1 invariably everybody wants in smoking, or everybody 2 wants the non-smoking. Well, if that happens to be 3 the time when the auditor walks in for a compliance 4 review, a spot check, whatever, he says, "Hey, well, 5 your non-smoking has no one in there," technically you 6 would be breaking the rule. 7 And I have a hard time with putting 8 things like this that's going to hurt the halls and 9 the charities, when typically I'm sure the auditor 10 would walk in there say, "Well, why isn't anyone in 11 this hall?" And they would just say, "We all got 12 called into here," and they probably would not put 13 them in violation, but they could. This gives them 14 that authority, and I have a problem with that. 15 Next page, (d) as in "David," No. 2, 16 "Bingo balls must be changed at least every 50 17 occasions or 6 months, whichever is less," may I ask 18 the reason for that? 19 MR. SANDERSON: Primarily because they 20 get worn out and dirty. 21 MS. ROGERS: Okay. I know the balls at 22 our hall are cleaned at least once every two to three 23 weeks. This would make -- I called and found out this 24 would make us have to change balls every three weeks. 25 And they range in price, somewhere about $25. 0117 1 MR. CORNWELL: Gone up, yes. 2 MS. ROGERS: I mean, that's an expense 3 that charities I don't think need to be paying. If 4 they're cleaned, they're verified that they're all 5 there, they're in a good machine, I think that's -- 6 we're not helping charities here; we're hurting them. 7 We're adding more cost; we're adding more paperwork, 8 and I have a real problem with that. 9 MS. WEAVER: I agree. 10 MS. LOPEZ: I think you've addressed a 11 lot of the same ones that I had, Kim. I think the 12 only other one, too, is, you know, you have to give an 13 effective date as to when your schedule is going to 14 change. And again, I don't think that leaves us 15 flexibility. If you, you know, happen to have a bad 16 week, it's the middle of the month and you want to 17 throw in a special next week, you can't, because 18 you're tied down to that, you know, effective date. 19 And so what do you do? 20 I mean, I've got to wait, you know, 21 whatever the time frame is to be able to give the 22 customer notice that, "By the way, you know, it's 23 going to be two weeks before I can have a special," or 24 whatever. So I see that there is no flexibility there 25 in allowing us to, again, be creative in drawing more 0118 1 customers and additional revenues. I mean, got to 2 keep the customer enticed and engaged in the game at 3 all times. 4 MS. TAYLOR: I agree with you. Going 5 back to item under (b)(2) on Page 1, "Provide all 6 players a bingo program . . . which includes the 7 following information:" 8 Have you read it? All of the games to 9 be played. That's okay. Order of the games, the 10 combination that's needed to win. The prize 11 structure, including if there is more than one winner. 12 The admission fee -- I don't know why 13 that's on a program -- the number of admission cards 14 that will be given for the admission price, the price 15 of each type of bingo card that is offered for sale, 16 including the color, the paper, the border, the number 17 of sheets, the effective date. 18 What is a bingo program? A bingo 19 program should be showing your players what games are 20 going to be played and how to daub the winning 21 pattern. And I don't understand why all the rest of 22 that -- I mean, you're going to have to have multiple 23 programs in every hall because the first session has 24 one color paper, second session has different color 25 papers. 0119 1 So you've got a huge amount of program 2 cost. And we don't give all players a program. I 3 mean, most of the players are there day after day 4 after day, and they're not interested in a program. 5 And if you give it to them, they throw it straight in 6 the garbage can, because they don't look at it. They 7 know the same six games we play day in and day out. 8 We don't switch our program. They don't want us to 9 switch the program. 10 We have the programs available. And 11 when somebody asks for the program, we give them the 12 program. Or as to a new player, we always hand them a 13 program. But all of this information isn't -- I don't 14 know why this all would need to be contained on a 15 program if all you're trying to do is show them what 16 the winning patterns are. 17 I think most halls that I've ever 18 walked into, somewhere on the wall behind the 19 cashiers, there's a sign that says how much the books 20 are and how much the computers are and what's included 21 in each of those packages, you know. So I've never 22 needed to see that on a program because it's right 23 there on the wall so that I can read it. 24 Once I've purchased my stuff and I have 25 my program, it's too late. I already purchased the 0120 1 stuff up at the counter, and I wouldn't be able to 2 read all this little writing on the program anyway, 3 because, you know, to conserve paper, we've got them 4 four to a page. 5 MS. LOPEZ: And let me take it one step 6 further. You know, in West Texas we have a lot of 7 non-English speaking individuals that come into our 8 hall. Can you imagine having to translate all of that 9 information into Spanish to get some folks to be able 10 to understand all of the, you know, different changes 11 in the program? I mean, again, that would I think be 12 another challenge in that respect and not trying to 13 leave that type of customer out. 14 MS. ROGERS: And in San Antonio, 15 usually you promote how much you're going to have it 16 for, you know, on the telephone or on the wall, like 17 Suzanne just said. I agree. 18 MS. TAYLOR: Under 5 and going on to 19 Page 2, (G), "If there is not a valid bingo, then the 20 caller must state, 'There is no valid bingo.'" I 21 mean, may state there is not a bingo, there is not a 22 good bingo, that was not a bingo. But I hate to have 23 specific words, because I have a hard time getting my 24 caller to say any specific words. You know, depending 25 upon who is up there, Denise might say "No Bingo from 0121 1 the TV." and you might have the other caller that, you 2 know, in very sad English will say that, "We don't 3 have a bingo." But I really hate to see the "must." 4 On (H) of that, "After all bingos have 5 been verified and the game closed, the caller must 6 announce the number of winners in each prize category, 7 the amount of money or prize each winner has won, and 8 the total amount of money or prizes awarded for that 9 game." 10 My caller doesn't have any idea whether 11 it was a full pay or a half pay, because that prints 12 up at the front counter where the money is and where 13 we're keeping track of how many winners there were and 14 what was full and what was half. The caller doesn't 15 know that. So first I would have to stop the bingo 16 games in order to get that information up to the 17 caller, because, remember, they don't have a cell 18 phone or any other means of communication, according 19 to the next rule, you know, on (D) -- or what is that? 20 No glasses. 21 MS. ROGERS: (J). 22 MR. WEEKELY: (J). 23 MS. TAYLOR: -- on (J). I can't 24 communicate with them, so they're going to have to 25 told the bingo games for me to do that. And, 0122 1 secondly, if you go to a full pay/half pay hall, or go 2 to Las Vegas or Oklahoma, and they do not announce to 3 the population in whole, "That was a Level 1. That 4 was a Level 2. That was a Level 3." That's not 5 something that you announce in a hall -- in most 6 halls. 7 So I can't understand why I would close 8 the game and say, "Okay. Well, there were three 9 winners and they were all half, so everybody only got 10 $125." I mean, I don't understand where that's coming 11 from, that you want us to make that kind of 12 announcement in any full pay/half pay hall. I think 13 that that's proprietary information, you know, that 14 shows up. 15 I mean, when they sign the paper, they 16 know what they got. But even on rapid bingo games, 17 you know, we have full pay/half pay on those English 18 bingo nights. And, I mean, it's quick. And the 19 caller has got to get to that next game or we can't 20 get all the games played within the session, the 21 limit. 22 MS. ROGERS: That's exactly what I was 23 going to say. Like, the thing is, at the hall, we 24 would have to figure -- and we don't know when we're 25 going to have 10 people win on a seven fifty. You 0123 1 know, that's not foreseen. You don't know when you're 2 going to have five people win on a two fifty. Then we 3 have to communicate that to the caller, wait, and then 4 we're going in jeopardy of running over our time. 5 Well, then, we've broken another rule. So, you know, 6 I agree with you -- 7 MS. LOPEZ: And again, the importance 8 is to try to sell as many pull-tabs of floor cards on 9 the floor or the computers, and so some of these 10 things are going to hold us up, and time restraints, 11 where again, that obviously leaves us less room to 12 sell -- 13 MS. TAYLOR: Mr. Fenoglio? 14 MS. LOPEZ: -- less time to sell. 15 MR. FENOGLIO: I think this is another 16 rule that's ripe for a subcommittee and -- 17 MR. CORNWELL: You can chair it. 18 MR. FENOGLIO: -- I'll chair it, and 19 I've already got one. And again, if Mr. Sanderson 20 will e-mail me, then we can get everyone to weigh in 21 with comments and get something back by the next 22 Commission meeting. And I like the idea of having an 23 initial subcommittee meeting at 1 o'clock, 2 o'clock, 24 the 25th of July, with the idea that if you can't 25 participate in person, again, we've got e-mails. 0124 1 Everyone is using e-mails, and it's pretty easy to -- 2 I'll volunteer my secretary to keep track of all of 3 that so we can get one document circulated. 4 I think, you know, what -- I think what 5 staff is trying to do is, they get a lot of 6 complaints. I talk a lot about my side of the table 7 versus Phil's. And I see stuff that he doesn't see, 8 and he sees stuff that I don't see. They're seeing a 9 lot of complaints that take agency time, because 10 whatever bingo hall didn't follow the rules. And from 11 the Commission staff's perspective, No. 1, what were 12 the rules? Well, it's unclear. And, yet, they're 13 expected or maybe it's a legislator who has called in 14 because someone explained -- 15 MR. CORNWELL: Right. 16 MR. FENOGLIO: -- and they've got to 17 generate some sort of a report. And their response 18 back could be, "We don't know if the complaint is 19 valid, because we can't find out what the rules were. 20 So if we don't know what those rules were, then we 21 don't know whether there was a valid complaint or 22 not." 23 And having worked for a state agency 24 before, I can tell you that when those kind of calls 25 come in, you want to be able to respond. I think part 0125 1 of this is too much detail oriented. And I think the 2 best thing that the industry could do is weigh in to 3 Phil Sanderson in detail in writing saying, "This is a 4 good -- these provisions we don't have a problem with. 5 But these provisions, we do have a problem with. 6 They're too nitpicky" or "Phil, you're unaware of what 7 the hall in Corpus Christi or San Antonio does." 8 And part of his challenge is, one size 9 fits all. He's got to have that because, otherwise, 10 he's criticized, sometimes by me, for being arbitrary, 11 and so he's trying to establish a standard. And I 12 think the best thing we can do is tell him what 13 specific in a detailed, comprehensive fashion. 14 I've got a lot of comments on the 15 rules, but I'm going to withhold, because he's doing 16 us a big favor, I think, in telling us now as opposed 17 to what might have happened a year ago, we wouldn't 18 know until the Commission meeting. We're now six 19 weeks out, and he's telling us, "This is what I'm 20 wanting to propose to the Commission." And so my view 21 is -- my vote is, let's work with him. Let's get a 22 subcommittee formed and move. 23 MS. TAYLOR: Okay. If the committee 24 that's already going to be here -- 25 MR. WEEKELY: Take that task also. 0126 1 MS. ROGERS: Madam Chair? 2 MS. TAYLOR: Yes? 3 MS. ROGERS: And I just want to say, I 4 do agree with Mr. Fenoglio. 5 MS. TAYLOR: Agreed. 6 MS. ROGERS: Hopefully Phil does not 7 think that we're just attacking him. And I'm all for 8 rules, which I think everyone else on the board is for 9 clear-cut rules -- 10 MS. TAYLOR: I agree. 11 MS. ROGERS: -- as long as it's not at 12 the stake of costing the charities, making, you know, 13 funds and costing them more. So I agree with the 14 workgroup, and we can work on it. 15 MR. FENOGLIO: And I don't want y'all 16 to think that I want to be the chair. I don't. 17 MS. WEAVER: Yes. 18 MR. FENOGLIO: If Tom wanted to be the 19 chair, my secretary would lend the support for it -- 20 and, Tom, throw me a lifeline -- but I'm not trying to 21 run them. But I do want to participate, because I 22 think I can bring to the table the big hall, the small 23 hall, the VFW post that's not really a hall, 24 et cetera. 25 MS. LOPEZ: I have to agree with 0127 1 Mr. Fenoglio, that, yes, Phil, we're not, you know, 2 basically throwing darts at you. But, you know, these 3 are things that I know that I feel, you know, 4 personally and on behalf of the charities that I 5 represent that, you know, I'm all for, you know, 6 enforcement and rules and regulations. I think I've 7 spoken about that at many a meeting. But I think that 8 some of those are just a little harsh. So we can work 9 on making them or modifying them to where it will work 10 for everybody, I think. 11 MR. FENOGLIO: Yes. We're still in the 12 honeymoon, Phil. The darts are coming. It's just not 13 right now. 14 (Laughter) 15 MS. TAYLOR: Okay. I'm sorry, Markey. 16 MS. WEAVER: I have not volunteered for 17 any of the subcommittees, because I think I'm going to 18 be out of town the 25th. But if it turns where I can 19 and I show up, is it going to be a quorum? 20 MS. TAYLOR: Right now we have three 21 people, so we could have one more -- one more 22 (multiple people talking). 23 MS. WEAVER: And I can volunteer. But 24 can someone else -- you know, can I send someone else? 25 MR. FENOGLIO: Or Markey, again from my 0128 1 perspective, if I'm chairing it, if you weigh in with 2 your written comments, e-mailing to me, then I'll have 3 them ready, and those are Markey Weaver's. I mean, 4 you're not technically present, because you're out of 5 town. But, you know, your vote is being heard, 6 et cetera. And we're had that before in some of the 7 workgroups that we had two or three years ago where 8 someone couldn't attend, they sent their comments, and 9 so we considered them. 10 MR. SANDERSON: And I'll look to Sandy, 11 just to make sure, but I think no more than four of 12 the BAC members can be together at the same time in 13 the same room or conference call on the phone handling 14 discussions -- 15 MR. FENOGLIO: That's my understanding. 16 MR. SANDERSON: -- at any point in 17 time. 18 MS. WEAVER: That would take four of 19 us. 20 MS. TAYLOR: Okay. 21 MS. WEAVER: I also have something else 22 that I want to say on this particular thing. On Page 23 1, (b), No. 1, it says follow your hall rules 24 strictly. Mr. Sanderson does not know what my hall 25 rules are any more than he knows what Kimberly's is or 0129 1 Suzanne's are. 2 MR. SANDERSON: If you look at the next 3 rule, we will. 4 (Laughter) 5 MR. CORNWELL: We might as well just 6 have the same discussion on the next rule. 7 MS. TAYLOR: Okay. So we are going to 8 have a subcommittee. Markey, if you can, you would 9 like to serve on it? 10 MS. WEAVER: I really want to be on the 11 one previously also, but I just didn't know. 12 MS. TAYLOR: Okay. Tom, you also 13 wanted to serve on this subcommittee? 14 MR. WEEKELY: I can. I'm not really 15 active in the hall itself because -- 16 MS. TAYLOR: Right. 17 MR. WEEKELY: So I don't know what 18 changes need to be made. 19 MS. TAYLOR: Okay. Markey, you feel 20 like you know -- okay. Then let me put Markey on it 21 if you work more in the day-to-day operations. 22 MS. WEAVER: Yes. 23 MS. TAYLOR: Okay. We'll put you on 24 it. If you can't attend -- 25 MS. WEAVER: I'll send notes. 0130 1 MS. TAYLOR: -- send written notes and 2 notify Tom -- 3 MS. WEAVER: Okay. 4 MS. TAYLOR: -- as your alternate. 5 MR. FENOGLIO: And so, Madam Chair, who 6 is the subcommittee for the conduct of bingo? 7 MS. TAYLOR: Rosie, Kim, Suzanne, 8 David -- right, David? He's already going to be 9 here -- and Markey, with Tom as an alternate, with you 10 as chair. 11 MS. LOPEZ: And we're planning to meet 12 at 1 o'clock if that was -- is that what was 13 determined, at 1:00? 14 MS. TAYLOR: Yes. Mr. Fenoglio asked 15 for 1 o'clock. 16 MS. LOPEZ: Okay. 17 MR. FENOGLIO: And again, if it's 18 something you're not coming in for, if you just let me 19 timely know, then we can, you know -- 20 MS. LOPEZ: That's fine. 21 MR. FENOGLIO: Okay. 22 MS. LOPEZ: I'll take a later flight. 23 MS. TAYLOR: Okay. Any other 24 discussion on Item 12? 25 We're going to leave this item. Steve 0131 1 Bresnen has said he would like to make a public 2 comment. 3 MR. FENOGLIO: And he called me. He 4 will not be available. 5 MS. TAYLOR: Okay. 6 MR. FENOGLIO: His concern was, we're 7 moving too fast. And I think we can address that with 8 this subcommittee. Neither one of us understood, 9 before the lunch break, that these weren't coming up 10 in July. 11 AGENDA ITEM NO. 13 12 MS. TAYLOR: Okay. Then we'll move on 13 to Item No. 13, report, possible discussion and/or 14 action on draft rule for house rules. 15 MR. SANDERSON: Members, in your 16 notebook is a rule that identifies house rules for 17 your games and your operations. I don't believe it 18 requires -- it requires some information, but it 19 doesn't exactly tell you what you have to have on 20 there. One of the main requirements is that you must 21 follow your house rules. 22 This rule, along with the previous one, 23 the conduct of bingo rule, is driven, a lot of the 24 information, primarily from complaints that we get. 25 And this not only will help us address those 0132 1 complainants but also it goes back to our statutory 2 charge to try to ensure that bingo is conducted 3 fairly. 4 So with that, I'll open it up for 5 discussion. 6 MS. TAYLOR: One thing. You said that 7 this doesn't necessarily have to be followed, but it 8 shows things that should be there? 9 MR. SANDERSON: There are -- 10 MS. TAYLOR: Because it says it shall 11 contain the following information. 12 MR. SANDERSON: There's requirements of 13 what has to be in the house rules. But it's not a -- 14 the way I remember reading most of it, it's not a 15 verbatim requirement. It just says you have to have 16 the effective date. We don't tell you what that date 17 is. You know, there's certain items in here. 18 There are some requirements for the 19 house rules to be announced and posted, but most of 20 the requirements are that you have to have something 21 in your house rule, for example, that no one under 18 22 can participate. Or if you have a minimum age 23 requirement, the house rule has to say, "No one under 24 12 can participate." If you are requiring all people 25 to purchase a buy-in pack, then the house rules have 0133 1 to say that you require everyone to purchase a buy-in 2 pack and so forth. 3 MS. ROGERS: What about like No. 14, 4 "Contingency plan for inclement weather, power 5 outages, equipment failure and other emergencies"? 6 That's something that may change from time to time. I 7 mean, you know, is this stating that it has to be up 8 there, I guess is what I'm asking? 9 MS. LOPEZ: So "Due to inclement 10 weather, we will be closed?" I mean, is that as 11 simple as that? 12 MR. SANDERSON: Well, you know, it 13 depends on what, you know, the inclement weather is. 14 I mean, it's -- 15 MS. LOPEZ: Tornado weather, flash 16 flood -- 17 MR. SANDERSON: Sure, or hurricane 18 or -- 19 MS. LOPEZ: -- stuff like that, you 20 know? 21 MR. SANDERSON: You know, one of the 22 things I think is a contingency plan for what happens 23 if it occurs during the bingo occasion. 24 MS. ROGERS: So this is stating that 25 you have to post that up on your wall? 0134 1 MR. SANDERSON: Yes. 2 MS. TAYLOR: And how about No. 4, "The 3 winner is determined by the last number called?" Not 4 all halls require the number -- I mean, can it just 5 be -- 6 MR. SANDERSON: If you require that, 7 then it has to be on your house rules. 8 MS. TAYLOR: But it does not have to 9 say that if it's not required? 10 MR. SANDERSON: Well, what you would 11 have on there is that the winner must have the last 12 ball called, or it doesn't matter if they have the 13 last balance called. 14 MS. TAYLOR: Okay. 15 MS. ROGERS: No. 8, "The Payout Prize 16 Form must be signed by the player(s) in order to be 17 paid for prizes with a value greater than $99." May I 18 ask why, where this came from? 19 MR. SANDERSON: Where it came from is 20 from complaints, from other jurisdictions and other 21 gaming activities that require signature for prize 22 payouts. 23 MS. ROGERS: Okay. I would like to go 24 on the record and state that -- I mean, doing this, 25 once again, when you have four or five people on the 0135 1 floor selling event tabs, you're taking away time. 2 MS. TAYLOR: Or hire somebody to go 3 make your payouts for you. 4 MS. WEAVER: Finish that, please. 5 MS. TAYLOR: Markey, what is your 6 thought? 7 MS. WEAVER: Go ahead. Finish it for 8 me. The Lottery Commission, if you play scratch-offs, 9 you don't have to sign anything unless it's $599 or 10 above. You're wanting a bingo customer who probably 11 isn't going to want to sign it, or they're going to 12 sign it "Joe Smith," because they're trying to find 13 out why you want their signature. If the Lottery 14 Commission doesn't do it for scratch-offs or payouts 15 if it's under $599, then why do the bingo 16 organizations need to do it for $99? 17 MS. ROGERS: I agree. I'm sorry, 18 Markey. I forgot to finish that. 19 MR. SANDERSON: Once again, it's 20 primarily based on the complaints that we receive. 21 MS. ROGERS: When will this go to the 22 Commissioners? August? 23 MR. SANDERSON: The plan is for the 24 August meeting, yes. 25 MS. ROGERS: I'm sorry. I missed 0136 1 hearing that. 2 MS. TAYLOR: One other thing. In (h) 3 it says, "The house rules shall not be in conflict 4 with the act, these rules, or directives of the 5 Commission." So in Kim's hall, since you don't have 6 to bingo on the last number called, that is in direct 7 conflict with these rules as they're written here. 8 That's what worries me, because it keeps saying "these 9 rules," and this might not necessarily be your house 10 rule. This is an oxymoron. The state is telling us 11 what our house rules are; whereas, house rules should 12 be the house rules. 13 (Multiple people speaking) 14 MS. WEAVER: I'm never going to 15 understand what our house rules are. 16 MS. TAYLOR: I don't have a problem 17 with sending a copy of our house rules with our 18 license every year, you know, if that would help. I 19 mean, I don't see a problem making them available. 20 But my house rules are not the same as yours, and 21 they're not the same as yours. 22 MS. LOPEZ: No, no. 23 MS. TAYLOR: My house rules, they're 24 house rules that work where we're located, and they're 25 probably the same as most every other house rule in 0137 1 Corpus. You know, we all have the same house rules, 2 which are not the same as the house rules in 3 San Antonio. 4 MS. WEAVER: Well, if you want to put 5 our house rules on file so when someone calls to have 6 a complaint -- 7 MS. LOPEZ: That's what you would do. 8 MS. WEAVER: -- you're welcome to pull 9 them up; you would have them on file. But my house 10 rules are not going to be the same as Kimberly's house 11 rules, because our areas are different. 12 You know, I don't have a lot of 13 competition in our area, so my house rules are going 14 to be different, for that reason alone. It's going to 15 be for security reasons, because of where I'm located. 16 You know, my house rules state that I've got security 17 on premises at all times. She may not have that in 18 her house rules. 19 You know, my house rules state that if 20 you're under 18, because we are under a smoking 21 ordinance, you're not allowed to come into our hall. 22 You know, on family nights -- it states that the first 23 Monday of every month is a family night, but there's 24 no smoking in the hall at all, so anybody above the 25 age of 4 could come into the hall. Now, if it's a 0138 1 smoking hall all the time and nobody has that, then 2 that's not going to be part of their house rules. 3 MS. ROGERS: I agree. And back to the 4 signature. If I have someone and they win $250 and 5 they sign "Pocahontas" and we have a complaint and you 6 go back and you audit and you look at that and you 7 say, "Okay. Pocahontas signed it," it's not going to 8 do us much good. 9 MS. TAYLOR: I mean, I wouldn't have a 10 problem with providing a copy to the Lottery 11 Commission of the house rules, so that everybody 12 knows -- you know, we know, the players know the house 13 rules -- and having them posted. Yes, the house rules 14 should be posted. But once again, house rules are 15 house rules. And to have required house rules, well, 16 this is no longer rules; this is Lottery Commission 17 rules. This is not our rules for playing bingo at our 18 facility. On different nights, I mean, on our English 19 Bingo Nights, you don't have to bingo on the last 20 number called like you do on our pattern game nights 21 with slow calling. 22 MS. LOPEZ: I agree. 23 MS. TAYLOR: And those are my concerns. 24 MS. LOPEZ: And maybe that would be 25 kind of an addition to, you know, the renewal of 0139 1 licensees, to add that as an addendum to the 2 application. You know, you've got the application and 3 you've got the approved registry workers form. Maybe, 4 you know, an addendum to that: You need to send in 5 your house rules for that charity's hall. 6 MS. TAYLOR: Any other discussion? 7 Yes, sir? 8 MR. McDADE: Good afternoon. I'm 9 Marshall McDade, Audit Manager. 10 Just to clarify for some of the 11 discussion we had this afternoon regarding the house 12 rule, at Section (f), what we're trying to go for is a 13 minimum, kind of a minimum list of things that we want 14 you-all to think about including in your house rules. 15 Your house rules may be twice as long. 16 But as Phil mentioned, a lot of these issues are 17 things that we come across in complaints from patrons. 18 We're trying to address some of those issues to help 19 make sure that everyone understands how bingo is being 20 played at your location. 21 Your house rules may be different for 22 every location, and we recognize that. But we want to 23 provide patrons with information so when they come to 24 your hall, they know how bingo is being played. 25 MS. TAYLOR: You know, Marshall, I love 0140 1 the way you said that. And if this had said like, 2 "When a bingo is valid" instead of "A bingo must be 3 called on the last number called," then I would 4 understand, you know, what you're going for, because 5 that makes perfect sense, except for the wording in 6 these rules that says that it must say these things. 7 So, I mean, if it just said that our 8 house rules have to contain something that says, "When 9 a bingo is a valid bingo," then I don't have a problem 10 with that, because Kim can do it whenever and I can do 11 it on last number called. You know, as long as we 12 tell people, I don't have a problem with that. I just 13 hate to try and conform. 14 MR. McDADE: And that's one that maybe 15 we can modify. Most states do require last number 16 called, and they have it -- I think that was picked up 17 from a lot of other states where they specifically 18 state that, to sort of make bingo consistent across 19 their jurisdictions. 20 MS. TAYLOR: I have been in halls in 21 San Antonio that they don't call "Bingo," they call 22 "Possible." Have you been in those halls? 23 MR. McDADE: I've heard about those. 24 MS. TAYLOR: They call "Possible." And 25 they have to call "Possible" because it's not a bingo 0141 1 until it has been verified and it is indeed a bingo. 2 And, I mean, the players all call "Possible." 3 MS. ROGERS: You know, maybe if this 4 was looked at and written, whereas, if the hall wants 5 to require -- 6 MS. LOPEZ: The last number. 7 MS. ROGERS: -- the last number called, 8 they can do that. If a hall wants to require that a 9 signature is down, that you post that and something in 10 the fact of saying that you post that. I mean, I 11 don't have a problem with that either -- 12 MS. TAYLOR: Excuse me. We just would 13 like to make an announcement. Larry is here. It is 14 1:40. Thank you, Larry. 15 MS. LOPEZ: Yeah, Larry! 16 (Applause) 17 MS. ROGERS: -- and give the suggestion 18 that they post something due to inclement weather, 19 what will happen. But to put it in this form, like 20 Suzanne says, if this becomes a rule, then, I mean, 21 you have to follow this if you're going to follow the 22 rule. 23 And that's where this goes. Correct? 24 It goes to the Commissioners and then becomes a rule. 25 Correct? 0142 1 MR. McDADE: (Shakes head) 2 MR. DOUGHERTY: Suzanne, did you say a 3 while ago that on the quick or rapid game, like maybe 4 one card, that you do not require last ball called? 5 MS. TAYLOR: No, we don't. It's fast; 6 it's fast, fast bingo. 7 MR. DOUGHERTY: So if it comes up in 8 the monitor, a guy can holler "Bingo"? 9 MS. TAYLOR: No. If they pass by you. 10 Some people sleep through their bingo. You were 11 waiting for 60 and they called 60 and they called 59, 12 because it's fast. It's like 60, 59, 24, 32. If you 13 miss your bingo and you go, "Oh, my God, I needed 60 14 and they already called it," you can call "Bingo" -- 15 MS. LOPEZ: Right. 16 MS. TAYLOR: -- even though the last 17 number called was 32 and you bingoed on 60, 60 has 18 already been called, your card was covered; therein, 19 you can have your bingo. 20 MR. DOUGHERTY: That's just speed 21 bingo, is where you're going to -- 22 MS. ROGERS: In our hall, that's all 23 the time -- all the time. If you're sitting there and 24 you're daubing, like she said, and they call 16 and 25 you daub 54, and you go, "Oh! He's already called 0143 1 54?" And you're like, "Oh, okay. Hey!" 2 MR. DOUGHERTY: But you can get paid 3 for that? 4 MS. ROGERS: Sure. Sure. 5 MR. DOUGHERTY: All right. 6 MS. ROGERS: Now, if someone bingos 7 on -- if you needed 60 and you missed it and 16 was 8 called and someone bingoed on that, you can still call 9 "Bingo." You have a legitimate bingo and they do, 10 too, so you have to share it; whereas, if you would 11 have paid attention and called it on 60, you would 12 have gotten it. 13 MR. DOUGHERTY: And that's different at 14 River City, because it has to be the last number 15 called. 16 MS. TAYLOR: The house rules. 17 MR. DOUGHERTY: If you miss, you don't 18 get paid. 19 MS. TAYLOR: House rule. 20 MR. DOUGHERTY: House rule. 21 MS. ROGERS: Once again, that's why 22 it's a house rule. 23 MR. DOUGHERTY: Don't get paid. 24 MS. ROGERS: Children are allowed to 25 play in a lot of halls. Children are not allowed to 0144 1 play in a lot of halls. House rules. 2 MS. LOPEZ: I mean, I have to say at 3 our hall, I mean, a lot of single parent moms, they 4 bring their kids. 5 MS. ROGERS: Sure. 6 MS. LOPEZ: Again, they're 8 and over, 7 and they sit next to Mom. And as long as they have a 8 card and they're daubing. But guess what? You know, 9 again that's revenue. And another dollar card or five 10 dollar card that that kid is playing, that's 11 additional revenues that's being brought in. 12 MR. SANDERSON: But what you're saying 13 is what we're asking you to do, put it in your house 14 rules. That's all we're asking. We're not telling 15 you what age. We're not telling you what you have to 16 require or don't require. But what you do, put it in 17 the house rule. A good example is what Kimberly was 18 just talking about when two people bingo on two 19 different numbers. 20 You have in your house rules that -- 21 MS. ROGERS: Yes. 22 MR. SANDERSON: -- the second person 23 gets paid, even though the first one bingoed before 24 him? 25 MS. ROGERS: It's a split, yes. 0145 1 MR. SANDERSON: Okay. There are a lot 2 of places that don't. And our biggest complaint is 3 that type of game where one or the other person did 4 not get paid. And we say if they don't have it in 5 their house rules, there's nothing we can do. Even if 6 you had it right now in your house rules, there is 7 nothing we could do. 8 MS. ROGERS: I personally like the idea 9 that Rosie and Suzanne had said about submitting. I 10 will submit you a copy of our house rules, because I 11 have received numerous compliments from auditors about 12 how they are defined. Now, they're not going to apply 13 for every hall in the State of Texas, but I would like 14 for you to see those so you can maybe see and get an 15 idea, because the auditors seemed to like them. 16 MR. SANDERSON: And I would like for 17 you to take those house rules and look at this list 18 and check off what's on your house rules and what's on 19 this list. 20 MS. ROGERS: Eight is not there. 21 MR. SANDERSON: And I bet there's 22 halls -- 23 MS. ROGERS: Fourteen is not there. 24 And No. 1 is sure not there. 25 MS. LOPEZ: Yes. No. 1 is not on ours 0146 1 either. 2 MS. TAYLOR: Most of the places that I 3 have gone to play bingo have their house rules posted 4 like a picture on the wall. 5 MS. WEAVER: I was going to say, as 6 soon as you walk in my front door -- 7 FROM THE COMMITTEE: I grab a program. 8 (Multiple people talking) 9 MS. WEAVER: -- 8-foot fall and 4-foot 10 wide. 11 MS. TAYLOR: But it doesn't have the 12 name and license numbers of the organization 13 conducting the bingo session. 14 MS. WEAVER: That is on our program. 15 It's not on our house rules, and it's also on our 16 ceiling -- or not our ceiling but one of our main 17 halls. 18 MR. WHITTINGTON: Ceiling? 19 MS. WEAVER: Well, they're hung from 20 the ceiling. They're brand-new. They're big. We 21 usually put their -- yes. 22 MS. TAYLOR: All I'm asking in this, 23 Phil, is that this shall contain the following 24 information. And on the back page where it says 25 "these rules," I just want to make sure that it's the 0147 1 rules of the bingo hall, you know, the way they do 2 their bingo. 3 MS. ROGERS: Kind of like 10 and 11, 4 what you just said, you put whether persons are 5 allowed. 6 MS. TAYLOR: See, I like that. 7 MS. ROGERS: It leaves it for me to say 8 children under the age of 18 are allowed to play as 9 long as they have a package. When you start saying 10 how a prize will be split and you're really -- these 11 are being specific -- not you individually -- but this 12 is being very -- I mean, this is how you have to say 13 it, and it doesn't fit. Mr. Fenoglio said it best. 14 You have the toughest job, making it fit for the 15 entire state; whereas, we're not all the same. 16 MR. WHITTINGTON: Well, I want to say 17 something. I'm sorry I'm late, but I was reading this 18 book last night, and I really wasn't looking at the 19 date. We usually have our meetings on Wednesday. So 20 I thought, "Okay. I'll be here you tomorrow." I was 21 so dumfounded from what I was reading, I said, "Man! 22 Somebody must have been reading a bingo book and 23 decided to write some rules," because I was really -- 24 I said, "What is this?" I mean, I really was stunned 25 by some of the stuff that I read. And basically 0148 1 that's why I drove two and a half hours, 80 miles an 2 hour, to get here to say that. 3 MR. CORNWELL: Never admit to it, 4 Larry. 5 MR. WHITTINGTON: I'm admitting to it. 6 But just some stuff, I don't know where it come from, 7 who got together and wrote this. Just a few things. 8 I mean, I'm sure y'all covered most of that. But 9 bingo operations in my hall is completely -- 10 completely different from what was written here. And 11 we have been doing it for 15 years now. And it just 12 totally -- I know I'm behind the 8 ball on this. I'm 13 sure y'all have discussed this. 14 MR. FENOGLIO: We beat it to death. 15 MR. DOUGHERTY: Give us an example, 16 Larry, of what is different that you do that's not -- 17 MR. WHITTINGTON: Well, first of all, 18 under the books and records, I was just really looking 19 at that. 20 MS. TAYLOR: And what agenda item is 21 that, Larry? Read your tab. 22 MR. WHITTINGTON: I'll let you know in 23 a minute. It won't take long. 24 MS. TAYLOR: Okay. Committee, do you 25 have a problem with going back for two minutes? Larry 0149 1 has two minutes. 2 MS. LOPEZ: How about 11, Larry? 3 MS. TAYLOR: Is there a problem with 4 that? 5 MS. LOPEZ: That's books and records. 6 MS. TAYLOR: Larry has got two minutes 7 to go back, if everybody is in agreement. 8 AGENDA ITEM NO. 11 (continued) 9 MR. WHITTINGTON: No. (b), "Licensees 10 must maintain the following records for each bingo 11 occasion:" I'm looking at "(A) the printed name, 12 register number, position, time in and time out, total 13 hours worked, signature of the worker." Where does 14 that come from? Where does that come from? 15 MS. WEAVER: Madam Chair, why don't you 16 tell him what we did with these. 17 MS. TAYLOR: What we've done with some 18 of this is, we've made subcommittees that are going to 19 look at these rules. They're going to meet here in 20 Austin and look at the rules and make some changes, we 21 hope, working with the staff. And that is one of the 22 ones that we've got a subcommittee set up for, with 23 Mr. Fenoglio chairing it. 24 MR. WHITTINGTON: Well, I just wanted 25 to know, because somebody must have been looking at 0150 1 some mom and pop bingo hall. There's some down in -- 2 MS. TAYLOR: I believe Markey asked the 3 same question, that she would like to know where -- 4 MS. WEAVER: I didn't ask it quite like 5 that. 6 (Laughter) 7 MS. TAYLOR: Markey said that it would 8 be of interest to her to know where the rules came 9 from or who had a hand in writing these. 10 MR. WHITTINGTON: Well, let me just 11 take two minutes. I'm going to just go through -- 12 MS. TAYLOR: Well, you're down to a 13 minute and a half. 14 MR. WHITTINGTON: Okay. First, 15 (inaudible) signature, number one. We pay by session. 16 Our cashiers do all the bookkeeping. They do all the 17 log-in. And I've got three or four cashiers that come 18 behind each other, so everything has got to be in 19 place: Inventory, cashier. They take the money. 20 They log in all the cards. They put up the floor 21 workers' cards. Everybody is kept by session. They 22 get paid by session, each worker. Each worker's name 23 is notated on the daily, who worked that day. So 24 basically it's for cashiers' concern about who is 25 working, did they time in to the bookkeeper which cuts 0151 1 the checks? Everything is done is the process and 2 all. Okay? 3 MS. TAYLOR: Keep going. 4 MR. WHITTINGTON: Then I'm looking at 5 occasion paper floor sales, et cetera, inventory. 6 That's well and good, until I get to (G) where it says 7 the usher print his name and signature. 8 The cashier does that. She signs that; 9 she signs that paper daily, because she is in control 10 of the ushers and the people who are selling this 11 paper. She has got to keep up with it. So it's done 12 by her at the end of the day, because she is 13 responsible to make our deposit. And that bank 14 deposit account got to match what that bookkeeper 15 check it. It got to be in that bank the next day and 16 it got to match. Okay. Inventory is set up. Every 17 day they go in the hall, they pull their cards, they 18 count the (inaudible). They take the amount out 19 they're going to sell. 20 MS. TAYLOR: Okay, Larry. We talked 21 about that one and we expressed concern. We talked 22 about No. 4 with the occasion balls called sheet. We 23 worked on No. (5)(D) and some of the other stuff, and 24 we went over and decided that the best thing to do 25 would to be set up a subcommittee that's going to meet 0152 1 here next Wednesday afternoon. 2 And if you have any written comments 3 for that, we need you to get them in writing and get 4 them to the subcommittee that will be in here next 5 Wednesday. You can send them to Mr. Fenoglio, e-mail 6 them to him, and we will include those. Every comment 7 that you have -- every comment you have -- I mean, you 8 need to go line-by-line and express your concerns at 9 whether you like it or don't like it. And we will put 10 that in with the subcommittee that's going to meet 11 next week. 12 MR. WHITTINGTON: Okay. I've got 30 13 seconds. 14 I just think that -- I mean, we got 15 bogged down in paperwork already. And, like I said, I 16 don't know who is looking at this and actually put 17 this in writing. I mean, did they know anything about 18 bingo? Were you in a meeting with this guys, Phil, or 19 what? I don't understand. 20 MS. TAYLOR: He's the new director. 21 Don't throw darts at him. 22 MR. WHITTINGTON: I know it. I love 23 him. 24 MR. SANDERSON: First off -- and there 25 again, I'll go back to the Internal Audit. And a lot 0153 1 of things that they wrote up in there was that we were 2 citing people for violations of a rule that did not 3 exist, and a lot of it dealt with recordkeeping 4 requirements, that organizations were keeping records. 5 And they have the records. They may not be called a 6 cash disbursements journal or may not be called 7 something else. 8 And these are requirements for 9 recordkeeping that organizations should keep for their 10 bingo activities. And for the most part, they're 11 doing it now in some form or fashion. There is not a 12 requirement that you use a specific form. We have 13 forms available, but you are not required to use that 14 form. As long as you have a record that encompasses 15 this information, like she does, that's all it's 16 asking. 17 MR. WHITTINGTON: So these are just 18 recommendations? Most of these are not written in 19 stone in our rules? This is recommendations y'all 20 just require? 21 MR. SANDERSON: I think it's more than 22 a recommendation, I mean. But if you go through your 23 records, I'm willing to bet you've got 99 percent of 24 this in some form or fashion. 25 MR. WHITTINGTON: Well, basically I'm 0154 1 talking about what I just pointed on, the signing in, 2 the hours worked, the occasion bingo ball sheet, 3 et cetera, stuff like that. I mean, I've never heard 4 of stuff like that; I mean, counting the balls. 5 MR. SANDERSON: Do you have a time card 6 for your employees? 7 MR. WHITTINGTON: We don't have a time 8 card. 9 MR. SANDERSON: How do you keep track 10 of when they work? 11 MR. WHITTINGTON: They work per 12 session. They come in and the cashier put their name 13 down. 14 MR. SANDERSON: They write it on a 15 form? 16 MR. WHITTINGTON: Yes. 17 MR. SANDERSON: And their name? 18 MR. WHITTINGTON: Yes. 19 MR. SANDERSON: What day it was? 20 MR. WHITTINGTON: But they don't sign 21 it and all this stuff like that, no. Signature is not 22 required. We've got their name; we've got the 23 registration date they registered with the State of 24 Texas to work bingo. So that's all we need. 25 MR. SANDERSON: Okay. Now, what about 0155 1 the complaints that we get where they paid somebody 2 for not being at the occasion, how would we verify 3 that if they didn't sign that log? 4 MR. WHITTINGTON: Well, I don't know 5 what kind of halls y'all are dealing with. That's the 6 problem. Maybe I'm just -- our hall is completely 7 Greek to most of these halls y'all deal with, because 8 we know who signed in. I mean, their name better be 9 on there. It better be on there right if they come to 10 work. When they show up for work, my cashier better 11 write the right name on that form. 12 MR. SANDERSON: That's all we're 13 asking. 14 MR. WHITTINGTON: Okay. 15 MS. TAYLOR: Okay. Your two minutes 16 are up. 17 MR. WHITTINGTON: Okay. 18 MS. TAYLOR: Put all those comments 19 down. 20 MR. WHITTINGTON: That's fine. Like I 21 said, I drove an hour and a half -- three hours. 22 MS. TAYLOR: Larry, but what you're 23 expressing concern about, the rest of the BAC members 24 already expressed concern about the same items. 25 MR. WHITTINGTON: Right. Now you got 0156 1 another one. 2 MS. TAYLOR: But we do need that in 3 writing so we can put it with the report. 4 AGENDA ITEM NO. 13 (continued) 5 MS. TAYLOR: Okay. We're on -- what 6 are we on? We're on No. 13, the house rules. As long 7 as these house rules are recommendation or we need to 8 include the policy for our particular hall for each of 9 these individual things, I don't think it's a problem, 10 as long as it's not "shall contain the following," 11 because the "shall" has -- it has me worried, that one 12 word. 13 Any other comments? 14 MS. LOPEZ: Are we going to add this to 15 the workgroup as well? 16 MS. TAYLOR: I think that that's fine 17 to do. We're already going to be here. 18 So once again, Larry, if you have any 19 comment, this one, too. The Workgroup is going to be 20 covering all of these next week, next Wednesday. 21 MR. WHITTINGTON: Who is in the 22 workgroup? 23 MS. TAYLOR: Steve Fenoglio, Rosie, 24 Kim, myself. Markey, and as her alternate, Tom. 25 MR. SANDERSON: And David Heinlein. 0157 1 MS. TAYLOR: And David Heinlein, yes. 2 And any other members -- 3 MR. HEINLEIN: And Mr. Fenoglio asked 4 if someone else would chair the house rules. 5 MS. LOPEZ: He wants someone else to 6 chair. 7 MR. CORNWELL: Share the house rules. 8 MS. TAYLOR: Okay. Kim said she will 9 chair the house rules. 10 MS. ROGERS: Pick on me. 11 MR. WHITTINGTON: So how many people 12 can be in this? Is it at least -- 13 MS. TAYLOR: Right now we have the 14 maximum number of BAC members that can be on the 15 committee. But please do, Larry -- I'm chair of the 16 house rules -- e-mail me your ideas, e-mail me your 17 comments. That way I can bring them up next 18 Wednesday. 19 MR. WHITTINGTON: I'll do that, 20 comments. 21 MS. TAYLOR: Any other comment? Any 22 comment from any public comment? 23 Any other BAC comment? 24 AGENDA ITEM NO. 14 25 MS. TAYLOR: Then we're going to go on 0158 1 with Item No. 14, report, possible discussion and/or 2 action on nominations and appointment and/or 3 nomination and appointment procedure on the Bingo 4 Advisory Committee. 5 MR. SANDERSON: Earlier there was the 6 rule on the BAC, Bingo Advisory Committee, that 7 incorporates the nomination process. In your notebook 8 are the nominations that we received at the beginning 9 of the year, I guess towards the end of 2006 and the 10 beginning of this year. We're in the process of 11 contacting these individuals to see if they still have 12 a desire to serve on the BAC. We've got responses 13 back from most of them. This is for your information 14 to -- I believe you still have a subcommittee, 15 Kimberly. Is that correct? 16 MS. ROGERS: Yes, sir. 17 MR. SANDERSON: So if y'all would like 18 to get together and discuss these individuals, we will 19 plan on making our recommendation at the August 20 Commission meeting. And we will also provide the 21 Commissioners an opportunity to interview those 22 candidates that they wish to interview, prior to that 23 date. 24 MS. ROGERS: Okay. So you would like 25 for me to speak back to the individuals that were 0159 1 grouped with me, in reference to these individuals? 2 Some of these have already had interviews, with our 3 form that we were given before, but we are okay to 4 call them again if we would like? 5 MR. SANDERSON: That is correct, yes. 6 MS. ROGERS: And then bring -- during 7 the August Commission meeting, I could present to them 8 who the BAC would like to see on the board? 9 MR. SANDERSON: Yes, ma'am, that's 10 correct. 11 MS. ROGERS: Okay. 12 MS. TAYLOR: As a recommendation. 13 MS. ROGERS: As a recommendation. 14 MR. SANDERSON: That's correct. 15 MS. WEAVER: Kimberly, who is on that 16 committee? 17 MS. ROGERS: I'll have to look on my 18 book. I did not bring that with me. I apologize. I 19 know that Tom is. I know myself. And I think, 20 because it used to be -- 21 MS. WEAVER: Danny. 22 MS. ROGERS: -- Danny Moore. 23 MS. WEAVER: Yes. 24 MS. ROGERS: So we lost one. So now 25 there's just the two of us. 0160 1 MS. WEAVER: I would like to be on that 2 committee. 3 MS. ROGERS: Larry, were you on there? 4 MR. WHITTINGTON: I don't think so. 5 MS. ROGERS: I don't think so either. 6 So Markey would like to be there. Okay. There's 7 three of us. I will chair it. 8 MS. TAYLOR: Okay. On once again, this 9 group will not be meeting prior to the August meeting. 10 So is there a motion to accept the recommendation of 11 the subcommittee for presentation to the Commissioners 12 at their August meeting? 13 MR. CORNWELL: Yes, there is. 14 MS. ROGERS: Yes, there is another 15 opening on that committee. 16 MR. CORNWELL: What are the openings? 17 MR. SANDERSON: Well, first off, the 18 nomination committee is Kimberly, Thomas Weekely and 19 Larry Whittington. 20 MS. ROGERS: It was you, Larry. 21 MR. WHITTINGTON: Okay. 22 MR. SANDERSON: The openings are the 23 current vacant SSP and the public member, which is 24 Jack's position. Suzanne's position expired actually 25 a year ago, so she is into an extra year term. 0161 1 Larry's position, Kimberly's position, and that's it. 2 MR. CORNWELL: Suzanne, what position 3 do you currently hold? Is it a commercial lessor? 4 MR. SANDERSON: She currently holds a 5 commercial lessor position. And the general public 6 position is Jack's. Charity position is Larry. A 7 conductor/lessor position is Kimberly. And, of 8 course, the SSP position is the fourth vacancy -- 9 fifth vacancy. The current draft rule or rule that's 10 been published -- 11 MR. CORNWELL: We'll take care of that, 12 yes. 13 MR. SANDERSON: -- has addressed the 14 SSP. Additionally, it has changed the makeup to not 15 be as -- required two commercial lessors, one 16 conductor/lessor. You know, if there is a candidate 17 that is beneficial to the industry or the Commission 18 or the committee or the organizations, then they can 19 fill one of those other positions. 20 MS. ROGERS: I have one more question 21 for you, Phil. All the individuals on these 22 applications here are still willing to serve? 23 MR. SANDERSON: Like I said earlier, 24 we've contacted -- we're waiting on a response from, I 25 believe, three of the individuals. We sent them a 0162 1 message, or we've left them a voice mail message, and 2 they've not gotten back to us yet. 3 MS. TAYLOR: One other thing. I put in 4 to represent charity and not commercial lessor. 5 MR. CORNWELL: Okay. 6 MS. TAYLOR: So this workgroup was 7 comprised of Larry, Kim -- and I'm sorry? 8 MS. ROGERS: Tom. 9 MS. TAYLOR: Tom? 10 MR. SANDERSON: Yes. 11 MS. TAYLOR: Are we keeping the same 12 composition? Are we adding? 13 Markey is going to be added to the 14 workgroup. Is that -- 15 MS. ROGERS: Yes, that's fine with me. 16 MS. TAYLOR: Okay. So there was a 17 motion by Markey, seconded by Knowles, that the 18 workgroup will present their recommendations to the 19 Commissioners at their August meeting. 20 Is there any other discussion? 21 MR. DOUGHERTY: What date is that 22 meeting, please? 23 MS. TAYLOR: Tentatively August -- 24 MR. SANDERSON: Tentatively it's 25 probably going to be the week of August the 22nd, 0163 1 somewhere in there. 2 MR. DOUGHERTY: The 2nd? 3 MR. WEEKELY: Wednesday the 22nd. 4 MR. SANDERSON: Don't hold me to that 5 date. That's just a best guess at this point in time. 6 MS. TAYLOR: Okay. Any other 7 discussion? 8 Then we need a vote. All in favor? 9 FROM THE COMMITTEE: Aye. 10 MS. TAYLOR: Opposed? 11 It's unanimous. 12 AGENDA ITEM NO. 15 13 MS. TAYLOR: Item No. 15, consideration 14 and possible discussion and/or action on the Bingo 15 Advisory Committee Workplan. 16 MR. SANDERSON: In your notebook is the 17 2007 draft workplan that y'all had discussed I believe 18 back at the May meeting. The Commission at that point 19 in time did not take any action on the workplan, 20 pending adoption of the current rule that's been 21 published. 22 I have added Item No. 8. I believe 23 from the last meeting, y'all had -- 24 MR. CORNWELL: Right. 25 MR. SANDERSON: -- indicated that you 0164 1 wanted to add a workplan item to advise the Commission 2 on the needs of the industry for operator training, 3 and for other training programs, I guess. You may 4 need to come up with some language to put underneath 5 it. I didn't have that, from the comments. 6 This would be a workplan that you would 7 present to the Commissioners at their August meeting. 8 So one thing to keep in mind, Suzanne -- I think, 9 Kimberly, y'all were at the meeting when they 10 discussed the workplans -- is they would like to see a 11 report of how you did on the 2006 workplan, before 12 you, you know, recommend the 2007. So you might want 13 to review that. 14 MS. TAYLOR: And the meeting is 15 Wednesday -- 16 MR. SANDERSON: August -- 17 MS. TAYLOR: -- next Wednesday, or is 18 this for the August meeting? 19 MR. SANDERSON: This is for the August 20 meeting. 21 MS. TAYLOR: Okay, group. Who would 22 like to be on that workgroup? 23 MS. LOPEZ: Go ahead. You're looking 24 at me. 25 MS. TAYLOR: Rosie. And you are going 0165 1 to chair it? 2 MS. LOPEZ: Sure. 3 MS. TAYLOR: Thank you. What other 4 members are you picking for your workgroup? Look at 5 all of these faces of volunteers. 6 MR. SANDERSON: The current workgroup 7 is Suzanne and Kimberly. 8 MS. LOPEZ: Oh, okay. So Suzanne. 9 MS. ROGERS: I'm already on three. 10 MS. LOPEZ: Okay. 11 MS. ROGERS: So I need to pay attention 12 to those. 13 MS. LOPEZ: Anybody else want to serve 14 with me? 15 MS. ROGERS: Knowles would be 16 wonderful. 17 MR. CORNWELL: Be glad to help you, 18 Rosie. 19 MS. LOPEZ: Need three folks over here. 20 Knowles, Markey and Larry. And that's to come up with 21 the verbiage for No. 8 -- right? -- for the work -- 22 MS. TAYLOR: No, no. That's to come up 23 with -- you have to take last year's workplan and you 24 have to write a report on how we did under each one of 25 those items. 0166 1 MS. LOPEZ: Okay. 2 MR. WHITTINGTON: And if you need any 3 help, just call me. 4 MS. LOPEZ: So we self-analyze 5 ourselves. Right? 6 (Laughter) 7 MS. ROGERS: If I could -- and Phil can 8 maybe help me with this. I was the one who read this 9 to the Commissioners. And what I got from them is 10 like Comment No. 1, "Comment on improvement and status 11 of the bingo industry," read that, tell them what we 12 did in '06 in that area. 13 MS. LOPEZ: Okay. 14 MS. ROGERS: If we didn't do anything, 15 tell them we haven't needed to do something. 16 MS. LOPEZ: Okay. 17 MS. ROGERS: Let them know that there 18 was a workgroup formed, this is what they came up 19 with. They just want an idea. 20 Am I correct, Phil? 21 MR. SANDERSON: I believe that's the 22 understanding I've got. 23 MS. ROGERS: Okay. 24 MR. SANDERSON: One thing they looked 25 at, they said, "Well, this was the same workplan as 0167 1 last year. So did y'all not do anything last year?" 2 And so I think that's what they want to see, is what 3 you did under each one of these items because they 4 are -- some of them are ongoing. 5 MS. ROGERS: I was going to say, please 6 let them know. Please include in your report -- 7 MS. LOPEZ: Some of them are ongoing. 8 Okay. 9 MS. ROGERS: They're the day-to-day 10 things. They're very broad, so we can include a lot 11 of stuff. 12 MS. LOPEZ: Is there a minimum? Do 13 they want it on one page, two page? 14 MR. SANDERSON: Probably a one-page 15 sheet. 16 MS. LOPEZ: One page. 17 MR. CORNWELL: At most. 18 MS. LOPEZ: One page. 19 MS. TAYLOR: Bullet points. 20 MS. LOPEZ: Right. 21 MR. SANDERSON: One other thing to keep 22 in mind from the combined meeting that was held I 23 believe in 2004, one of the items that came out of 24 that was that the workplan does drive the agenda 25 items, for the most part. And, you know, like today, 0168 1 the comment on bingo rules, No. 2, took up most of the 2 agenda today. 3 MS. ROGERS: It has to fall under here, 4 as we were saying, in order to be on our agenda. 5 MS. LOPEZ: Right. 6 MS. TAYLOR: Okay. Any other 7 discussion on this? 8 In addition, since you're already doing 9 that, I think it would be nice if you would come up 10 with some verbiage. 11 MS. LOPEZ: The verbiage for No. 8. 12 Okay. 13 MR. SANDERSON: Additionally under this 14 item, I believe Rosie had some comments she wanted to 15 make about some education for the industry, I believe? 16 MS. LOPEZ: Yes. And I think that's -- 17 again, you know, at the last BAC meeting, we obviously 18 had requested that we add the No. 8, I guess, workplan 19 topic to the BAC. And with that, I mean, I just have 20 to say that I think education -- and we all agree -- I 21 think education or educating the organizations, and 22 even all of these proposed administrative rules that 23 are being looked at to at some point being adopted, 24 that we are all going to actually come out with a lot 25 better knowledge, you know, together as what works for 0169 1 the bingo industry. 2 And so with that, I think that working 3 together, one of the things that we did just recently 4 at our hall was to have an external audit done by an 5 actual auditor. And I have to tell you that that's 6 been the most beneficial tool that has really engaged 7 board member activity with our bingo hall. 8 And so I think one of my 9 recommendations, to add to a component of the 10 educational aspect of this, is to, you know, recommend 11 or encourage either halls, if at all possible, if they 12 have the means of being able to have an external audit 13 done at their hall, to have it done because, again, 14 it's been a very valuable tool for -- again, at 15 recruiting the board members from each of the four 16 organizations to become more engaged and more 17 involved, asking more questions, I mean, because I 18 think that we all know that this is a very, you know, 19 challenging industry and people sometimes don't 20 understand it, and so they stay away from it. And, 21 you know -- and I know that that happens, especially 22 on boards. And I think that this has been a very 23 valuable tool for us. 24 MS. ROGERS: Who did you have do -- was 25 it your CPA? 0170 1 MS. LOPEZ: We actually -- the CPA that 2 did our audit has been doing our 941 and our 941P 3 taxes for the past 10 years. So when we became a unit 4 a year ago in 2006, we decided to go ahead and have 5 the external audit done since we became a unit. But 6 before that, we were individual entities, and that 7 would be very difficult to do that. 8 So with us becoming a unit, it really I 9 think was -- it's just brought more forefront and more 10 light to the operations, the financial operations of 11 the hall. And like I said, it's really engaged more 12 board members. It's brought them more knowledge. 13 Again, they're asking more questions. They're getting 14 more involved, and that's what it's all about. I know 15 that that's why all of these administrative rules are 16 basically being proposed, is to actually have more 17 involvement from the charities. 18 And so I have to say that on our side, 19 that's one tool that we've been using, and it's 20 working. And I brought a copy of our audit. If 21 anybody would like a copy of it. I've got them up 22 here available. 23 MR. SANDERSON: And also I would like 24 to -- you know, she said actual auditors. It's just a 25 different type of auditor. 0171 1 MS. LOPEZ: Right. 2 MR. SANDERSON: The auditors that did 3 this particular audit are more financial auditors. 4 MS. LOPEZ: Right. 5 MR. SANDERSON: They review the 6 financial statements for misstatements and 7 misrepresentations, where the audits that our staff 8 does are more compliance and regulatory in nature. 9 MS. LOPEZ: That's true. 10 MR. SANDERSON: So it's different types 11 of audits. 12 MS. LOPEZ: That's correct. 13 MR. WHITTINGTON: As far as the 14 workplan of the Bingo Advisory Committee, I can't -- I 15 really can't see it changing at all. We might add on 16 something, but it's going to be an ongoing thing of 17 all these things we've got listed. Probably for the 18 next 10 years, we're going to be talking about the 19 same thing that's on these workplans. We're probably 20 going to add something onto it, but it's probably 21 going to be basically the same thing. 22 MS. LOPEZ: I agree. And, like we 23 said, you know, a lot of it is ongoing. 24 MS. TAYLOR: Because we can talk about 25 stuff that's on the workplan, I wanted to draw your 0172 1 attention to Item No. 6, "Review specific 2 recommendations for positive public awareness of 3 charitable bingo." And we're trying to have specific 4 recommendations that would improve charitable bingo 5 through positive public awareness initiatives. 6 And I have one that we can do -- the 7 Lottery Commission could do today, and that's the 8 Bingo website under Headline News, two of the first 9 three are about people stealing money from bingo. One 10 is from Canada and one is from Kentucky; but, yet, 11 that's on our bingo website. Like when anybody logs 12 on, that's the first thing they get to see, is about 13 the theft from bingo, which just doesn't seem like 14 very positive public awareness. 15 MS. LOPEZ: It doesn't. 16 MS. TAYLOR: So I wanted to see if the 17 Lottery had anything about the retailers who have 18 stolen money, because every time I come to the 19 meeting, there's a whole list of people that are in 20 trouble. And I don't see one negative thing on the 21 Lottery website. It tells us about people who have 22 won money and all these wonderful winners. 23 So I would like to see the Bingo 24 website have positive public awareness initiatives on 25 the front page and not talk about the people from 0173 1 Canada that stole $189,000. 2 MS. LOPEZ: I agree. 3 MS. ROGERS: Because those bad apples 4 make us all look bad. 5 MS. TAYLOR: Because it's very 6 negative. 7 MS. LOPEZ: Because that kind of should 8 be -- 9 MS. TAYLOR: Two out of the top three 10 Headline News is talking about people that are thieves 11 on our Bingo website. So I would request, since I can 12 bring that up under this workplan, that we put some 13 positive feedback. 14 MR. SANDERSON: If you look at it right 15 now, the first item is a news report that was done in 16 Corpus Christi. 17 MS. TAYLOR: And what is the second 18 item? 19 MR. SANDERSON: It's about millionaire 20 parties. 21 MS. TAYLOR: And that's great. I think 22 positive, positive -- I couldn't print this up because 23 I was already out of town. And I was just shocked 24 when I had seen it. I asked Rosie to print this for 25 me. I'll be glad to give it to you. But this was the 0174 1 top three items on the Bingo website. 2 MS. ROGERS: Maybe the BAC could just, 3 under this item, ask that we don't put negative? 4 MS. TAYLOR: Yes. I would sure like to 5 have positive public awareness of bingo also. And the 6 people in Canada that are stealing money, I don't care 7 what they're doing in Canada. 8 MR. SANDERSON: Or Kentucky. 9 MS. TAYLOR: Or Kentucky, you know. 10 And I would hope that the thieves are punished here in 11 Texas but that we don't have to put it on our front 12 page of the website for the public to read, because 13 it's truly a negative image of bingo. 14 MS. LOPEZ: That could be saved for 15 maybe the Bingo Bulletin that -- 16 MS. TAYLOR: And I think it's good. I 17 really do think it's good in that Bingo Bulletin to 18 put that kind of stuff, because it makes people look 19 aware. It makes them aware of: This is how somebody 20 has been caught, and this is how somebody has been 21 caught. And it gives you some good things to look for 22 that somebody might try at your hall. So that's a 23 good place, but that doesn't go out, you know. 24 Okay. Anything else besides the 25 workgroup that Rosie is chairing and Knowles, Larry, 0175 1 Markey are on, they're going to add 8 verbiage and 2 they're going to go through this workplan and tell 3 what we've done this past year on it? 4 Something that might help: I'll send 5 you the copies of what -- so that you're not trying to 6 read though a jillion pages of minutes, I can send you 7 the condensed minutes that I do for the Commissioners. 8 And every time we've formed a workgroup or make a 9 motion, it's in those minutes. And they're only about 10 a page to a page and a half of each meeting. 11 MR. CORNWELL: Can you copy off -- 12 MS. LOPEZ: Bless you! Thank you. 13 MS. TAYLOR: Well, I actually had asked 14 previously if those could be part of the book, because 15 it would be a good summary to just read back over what 16 we had said the previous meeting, but they're never in 17 the book. So I don't know. 18 MR. SANDERSON: I never got that 19 message. 20 MS. TAYLOR: I have asked. 21 MR. SANDERSON: Okay. 22 MS. TAYLOR: I have asked because, I 23 mean, for whoever is going to be doing it, it's a 24 quick read to remember what we did three months ago. 25 MR. CORNWELL: It is. 0176 1 MS. TAYLOR: They're very small and 2 condensed, and there's just a little paragraph under 3 each item. 4 Okay. Nothing else, group? 5 AGENDA ITEM NO. 16 6 MS. TAYLOR: Okay. Then let's go on to 7 Item No. 16, report and possible discussion on the 8 activities of the Charitable Bingo Operations 9 Division. 10 MR. SANDERSON: In your notebook is a 11 report of the activities of the Charitable Bingo 12 Operations Division. 13 Allocations were made at the first 14 quarter of 2007. There was also a press release 15 issued when allocations were made. And we have seen 16 several newspapers that picked it up. I think Odessa, 17 we got a copy of the Odessa paper where they had a 18 real nice article. 19 We've updated items on the website. 20 We've added a section that highlights new pull-tab 21 games, if you've had an opportunity to go look at 22 that. We try to keep it updated twice a month with 23 the games that have been approved for the previous 24 two- to three-week period. 25 Charitable distributions have exceeded 0177 1 $844 million now, since 1982. And we've updated 2 approximately three to five additional forms to be 3 interactive on our website, and we continue to update 4 those as we make changes. 5 I've also included in your notebook the 6 most recent copy of the Bingo Bulletin that was mailed 7 out, I believe, last Friday, or Friday before last, 8 the 6th, if you haven't already received it. 9 And with that, that is all the comments 10 I have. 11 MS. TAYLOR: Any comments? 12 AGENDA ITEM NO. 17 13 MS. TAYLOR: Okay. Let's go on to Item 14 No. 17, public comment. Do we have any public 15 comment? 16 Hello, Carol. Thank you. 17 MS. LAUDER: For the record, my name is 18 Carol Lauder, and I come from the Controller's Office 19 and serve as an observer and consultant for the 20 processes that you use. 21 I really don't have a whole lot for you 22 today. It is evident to me that the Bingo Division is 23 under the gun to get a lot of things done in a short 24 amount of time, in response to some audit or some 25 other thing that's happened. And I want to commend 0178 1 the BAC on your willingness to act quickly with your 2 recommendations back to the Bingo Division, because 3 I'm not sure they have a lot of time, apparently, from 4 the timelines that I see. So that's great that 5 everybody is joining subcommittees and willing to 6 provide input. 7 A couple of times today people got 8 really excited and multiple people talking at once. 9 It's human nature; it's going to happen. But I think 10 it's really difficult for the recorder, and she 11 probably has to go back and listen to the tape over 12 and over. So just to keep that in mind. 13 Larry, we're glad you joined us. 14 Better late than never. 15 And I would like to know if there's 16 any questions that you have about process and what 17 could improve your meetings? 18 Okay. That's it. Thank you. 19 MS. TAYLOR: Thank you, Carol. 20 MR. WHITTINGTON: Still have some time. 21 AGENDA ITEM NO. 18 22 MS. TAYLOR: Item No. 18, consideration 23 of and possible action on future Bingo Advisory 24 Committee meeting dates and/or items to be considered 25 for future meetings. 0179 1 MS. ROGERS: Do you have a calendar? 2 MR. WHITTINGTON: Can I say something? 3 MS. TAYLOR: Yes. 4 MR. WHITTINGTON: On these books, could 5 we please put like Wednesday or Tuesday on them, 6 because if I would have seen Tuesday, I would have 7 been here. 8 MS. TAYLOR: Now, Larry, I would let 9 you off on that, except that I personally made a phone 10 call to you Friday. 11 MR. WHITTINGTON: But you didn't tell 12 me no date. 13 MS. TAYLOR: And I said -- 14 MR. WHITTINGTON: No. 15 MS. TAYLOR: -- "Please read the book 16 for the meeting on Tuesday." And I asked that you 17 would read the book. 18 MR. WHITTINGTON: Oh, you did? 19 MS. TAYLOR: I asked every committee 20 member to read the book except you. But I called and 21 left a message for every other member to please read 22 their book prior to Tuesday so that they would be 23 informed -- 24 MR. WHITTINGTON: You said, "Did you 25 read the book?" I said, "No. I'm busy right now. 0180 1 I'll call you back later." Okay. You did not tell me 2 the date. 3 MR. DOUGHERTY: All right, Larry. I 4 had to call down here to find out which day we were 5 meeting, because it's a conflict between Page 1 and 6 Page 2. You're right. 7 MR. WHITTINGTON: Got it. 8 MS. TAYLOR: Also I was just asking 9 Phil, did everybody not get the same e-mail I received 10 that said, "Just wanted to let you know. Remember 11 your meeting is moved to Tuesday, July 17th"? 12 MS. ROGERS: I did receive it. 13 MS. TAYLOR: Okay. 14 MR. WHITTINGTON: I probably have not 15 opened it yet. 16 MS. TAYLOR: Okay. Because, in truth, 17 I was reminded myself. 18 MS. ROGERS: Do you have a calendar? 19 MS. WEAVER: Also got the book really 20 early this time and had plenty of time to read it -- 21 MR. WHITTINGTON: That was very nice. 22 MS. WEAVER: -- which was a really 23 great thing. 24 MS. ROGERS: Thank you, Worlanda, 25 wherever she is. 0181 1 MR. SANDERSON: I would like to say, 2 Worlanda came in while on vacation to make sure it got 3 out. 4 MS. ROGERS: Did she? 5 MR. DOUGHERTY: Well, she did great! 6 MS. WEAVER: Kudos to Worlanda. 7 MS. LOPEZ: Did she really? Tell her 8 we said thank you very much. 9 MR. WHITTINGTON: And for the record, 10 I'm going to just put the reason why I really didn't 11 know it was today, I forgot, because you made me read 12 this book so quick, you made me open this book so 13 quick when you said that. Okay? 14 MS. TAYLOR: Open the book and read it. 15 This is big book. Everybody needs to have read it 16 before the meeting. 17 Okay. We are on our consideration of 18 and possible action -- I believe we have a calendar 19 here. 20 MR. SANDERSON: The next date that 21 keeps along with the outline at the beginning of the 22 year is November the 7th. 23 Wednesday, Larry, November the 7th. 24 MR. WHITTINGTON: Thank you. 25 (Laughter) 0182 1 MS. LOPEZ: Is that on your calendar? 2 MR. SANDERSON: That is the first 3 Wednesday, yes. 4 MS. LOPEZ: The subcommittee is meeting 5 here next Wednesday, the 25th. 6 MR. SANDERSON: I believe you indicated 7 you wanted to subcommittee here at 1 o'clock on 8 Tuesday -- I'm sorry -- Wednesday -- 9 MS. LOPEZ: Wednesday. 10 MR. SANDERSON: -- the 25th, July 25th. 11 MR. WHITTINGTON: Okay. 12 MS. TAYLOR: If you want to come 13 earlier, remember, the Commission meeting is -- 14 MS. LOPEZ: I will. 15 MS. TAYLOR: -- earlier that day, 16 9:00 a.m. 17 MS. LOPEZ: I'll be here. 18 MS. ROGERS: Wednesday, November 7, 19 2007, is fine with me, Madam Chair. 20 MS. TAYLOR: Okay. That's our next 21 date. Besides the items that we said we're going to 22 be considering, is there anything else that anybody 23 wants to put on the agenda at this moment? 24 Okay. Items that are not currently 25 ongoing items, if you want them on the agenda, you 0183 1 need to notify Phil or myself. 2 MR. SANDERSON: We would need agenda 3 items by October the 22nd. And anything that you 4 would have to be placed in the notebook, we would need 5 by Friday, October the 26th. 6 MS. TAYLOR: Any other discussion? 7 Questions? 8 AGENDA ITEM NO. 19 9 MS. TAYLOR: Then we'll adjourn the 10 meeting. It is 2:20. This meeting is now adjourned. 11 (Meeting adjourned: 2:20 p.m.) 12 13 14 15 16 17 18 19 20 21 22 23 24 25 0184 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 31st day of July 2007. 15 16 ________________________________ 17 Aloma J. Kennedy Certified Shorthand Reporter 18 CSR No. 494 - Expires 12/31/08 19 Firm Certification No. 276 Kennedy Reporting Service, Inc. 20 Cambridge Tower 1801 Lavaca Street, Suite 115 21 Austin, Texas 78701 512.474.2233 22 23 24 25