0001 1 TRANSCRIPT OF PROCEEDINGS 2 BEFORE THE 3 BINGO ADVISORY COMMITTEE 4 (TEXAS LOTTERY COMMISSION) 5 AUSTIN, TEXAS 6 QUARTERLY MEETING OF THE BINGO ADVISORY COMMITTEE 7 WEDNESDAY, AUGUST 5, 2009 8 9 COMMITTEE MEETING 10 WEDNESDAY, AUGUST 5, 2009 11 12 BE IT REMEMBERED THAT on Wednesday, the 13 5th day of August 2009, the Bingo Advisory Committee 14 meeting was held from 10:00 a.m. to 12:47 p.m., at the 15 Offices of the Texas Lottery Commission, 611 East 6th 16 Street, Austin, Texas 78701, before SUZANNE TAYLOR, 17 Chair. The following proceedings were reported via 18 machine shorthand by Aloma J. Kennedy, a Certified 19 Shorthand Reporter of the State of Texas, and the 20 following proceedings were had: 21 22 23 24 25 0002 1 APPEARANCES 2 BINGO ADVISORY COMMITTEE: 3 Ms. Suzanne Taylor, Chair 4 Ms. Kimberly Rogers Mr. Earl Silver 5 Mr. Thomas "Tom" Weekley Mr. Larry Whittington 6 Ms. Markey Weaver Mr. Knowles Cornwell 7 Mr. Francis M. Ciancarelli Ms. Pat Gifford 8 9 CHARITABLE BINGO OPERATIONS DIVISION DIRECTOR: 10 Mr. Phil Sanderson 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 0003 1 TABLE OF CONTENTS 2 PAGE NO. 3 AGENDA ITEM NO. 1 - The Bingo Advisory Committee will call the meeting to order...... 5 4 AGENDA ITEM NO. 2 - Consideration of and 5 possible discussion and/or action on the minutes of the May 6, 2009 Bingo 6 Advisory Committee meeting.................... 5 7 AGENDA ITEM NO. 3 - Report by the Bingo Advisory Committee Chair and possible 8 discussion and/or action on the Chair's activities..................................... 6 9 AGENDA ITEM NO. 4 - Report, possible 10 discussion and/or action on the implementation of HB 1474...................... 7 11 AGENDA ITEM NO. 5 - Report, possible 12 discussion and/or action on 1st quarter 2009 bingo conductor information................ 18 13 AGENDA ITEM NO. 6 - Consideration of and 14 possible discussion and/or action on the Bingo Advisory Committee...................... 43 15 AGENDA ITEM NO. 7 - Report, possible 16 discussion and/or action on Charitable Bingo Promotions.............................. 63 17 AGENDA ITEM NO. 8 - Consideration of and 18 possible discussion and/or action on the Bingo Advisory Committee work plan, 19 including report to the Commissioners on the accomplishments of the FY09 work plan....... 70 20 AGENDA ITEM NO. 9 - Report and possible 21 discussion and/or action on the workgroup BAC Nominations..................... 82 22 AGENDA ITEM NO. 10 - Consideration of and 23 possible discussion and/or action on a petition for rulemaking relating to minimum 24 purchase price charged for electronic card-minding devices in the San Antonio 25 Metropolitan Statistical Area................... 85 0004 1 TABLE OF CONTENTS 2 PAGE NO. 3 AGENDA ITEM NO. 11 - Report and possible discussion and/or action on the content of 4 certain bingo forms and reports............... 26 5 AGENDA ITEM NO. 12 - Report and possible discussion and/or action on the workgroup 6 New products and New Methods.................. 100 7 AGENDA ITEM NO. 13 - Report and possible discussion and/or action on the workgroup 8 Market Conduct................................ 123 9 AGENDA ITEM NO. 14 - Report and possible discussion and/or action on the workgroup 10 Prize Board Management........................ 132 11 AGENDA ITEM NO. 15 - Report and possible discussion on the activities of the 12 Charitable Bingo Operations Division.......... 132 13 AGENDA ITEM NO. 16 - Public comment........... 133 14 AGENDA ITEM NO. 17 - Consideration of and possible action on future Bingo Advisory 15 Committee meeting dates and/or items to be considered for future meetings............. 133 16 AGENDA ITEM NO. 18 - Adjournment.............. 140 17 REPORTER'S CERTIFICATE........................ 141 18 19 20 21 22 23 24 25 0005 1 P R O C E E D I N G S 2 WEDNESDAY, AUGUST 6, 2009 3 (10:00 a.m.) 4 AGENDA ITEM NO. 1 5 MS. TAYLOR: It's 10 o'clock, so I would 6 like to go ahead and call the meeting to order. 7 AGENDA ITEM NO. 2 8 MS. TAYLOR: Item No. 2 on the agenda, 9 consideration of and possible discussion and/or action 10 on the minutes of the May 6, 2009 Bingo Advisory 11 Committee meeting. These minutes were posted on-line 12 for members to read. If you have any changes, this is 13 the time to make a change. Otherwise, do I hear a 14 motion that we approve the minutes? 15 MR. CORNWELL: I move that we accept the 16 minutes as written. 17 MS. TAYLOR: Is there a second? 18 MS. WEAVER: I second. 19 MS. TAYLOR: Seconded by Markey. All in 20 favor? 21 FROM THE COMMITTEE: "Aye." 22 MS. TAYLOR: Opposed? 23 (No response) 24 MS. TAYLOR: None opposed, so those are 25 unanimously approved. 0006 1 We would like to take at this time a 2 minute to thank Commissioner Krause for being 3 present -- oh, there you are. Commissioner, we surely 4 appreciate you taking the time out of your busy 5 schedule to come for our meeting. It really means a 6 lot to all the committee members. 7 COMMISSIONER KRAUSE: Happy to be here. 8 AGENDA ITEM NO. 3 9 MS. TAYLOR: Item No. 3 on the agenda is 10 report by the Bingo Advisory Committee Chair and 11 possible discussion and/or action on the Chair's 12 activities. 13 I went to the last Commission meeting. 14 We did our annual report at that meeting and along 15 with the report of the BAC meeting. And the only item 16 that -- I think one of the items of real interest was 17 Commissioner Schenck's interest in how bingo is doing 18 and his interest in promoting bingo, which I haven't 19 heard the Commission actually talk about advertising 20 bingo. And he actually used that "A" word that I was 21 shocked to hear, because so many times I've been told 22 never to talk about advertising bingo, because there 23 is no money to do it. And I loved hearing one of the 24 Commissioners talk about the need to advertise bingo 25 and the potential for the Lottery Commission to do 0007 1 that. 2 So if you haven't read those minutes, it 3 would be very interesting to go back and read that 4 portion of the Commission meeting where Commissioner 5 Schenck was talking about helping promote bingo. 6 AGENDA ITEM NO. 4 7 MS. TAYLOR: Item No. 4, report and 8 possible discussion and/or action on the 9 implementation of House Bill 1474. 10 MR. SANDERSON: Good morning. As most 11 of you are aware, the Governor signed House Bill 1474 12 on June the 19th. The Division and staff are working 13 diligently to implement those provisions. The 14 effective date is October the 1st. While all 15 provisions will be, for all purposes, implemented by 16 that date, there may be a few that are pending 17 rulemaking. We have until April 1st to develop any 18 new rules that are required by legislation. 19 Just to kind of let you know, currently 20 we have 53 administrative rules. With the House Bill 21 1474, we'll have to develop 11 new rules, but we'll be 22 repealing three rules. And then there's 25 rules that 23 will need to be amended or revised. 24 Most of those revisions are very minor. 25 For example, some of the legislation was changing 0008 1 notification requirements from 10 days to 14 days. So 2 we had to go through the rules that we had that 10-day 3 notification and change it to 14. 4 There was, you know, the definition of 5 the bingo chairperson which was already in 6 administrative rules, so we've amended that rule. 7 So there's 25 rules that need to be 8 amended or probable moving fairly quickly. If there 9 are no substantial amendments, then we'll just submit 10 them to Legal and they'll just go through the 11 rulemaking process. If we have any rules that do have 12 substantial amendments to them, I will circulate those 13 to the BAC members individually as well as other 14 interested parties for informal comment. 15 Your next BAC meeting, if you stay true 16 to your current schedules, would be sometime in 17 November. Quite possibly there could be some of those 18 rules ready for you to discuss at that meeting, 19 particularly some of the 11 rules that will have to be 20 developed 21 We have 111 different applications, 22 forms and schedules. Forty of those will need to be 23 revised and 15 of those will be deleted or removed 24 altogether. One of the biggest changes is going to be 25 as it relates to reporting. The House Bill has 0009 1 language in there that changes the way distributions 2 are calculated and required. It allows for a maximum 3 amount of funds in your bingo account. It also 4 requires that -- bookkeepers and bingo chairpersons 5 are required to be on the worker registry. 6 We have currently submitted revisions to 7 the worker registry rule that defines a bookkeeper. 8 And what we're looking at is a bookkeeper as an 9 individual who prepares any financial records for 10 information that's reported on the quarterly report as 11 well as any individual who prepares or maintains bingo 12 inventory records. So if you have a CPA firm or some 13 bookkeeping company that actually maintains your 14 records, the only individuals that would be required 15 to be on that would be staff that actually work for -- 16 that do the paperwork for the bingo report or the 17 inventory. 18 Additionally, of course, you know 19 they've increased the number of temporaries from 12 to 20 24. That will take effect on October 1st. 21 Organizations will now be allowed to get 24 22 temporaries during their 12-month license period. 23 It changed the definition of a bingo 24 occasion that for all practical purposes put it back 25 to the way the operations have been going, bingo 0010 1 operations have been handled in the past. 2 Another requirement is, organizations 3 are required to have net proceeds over their license 4 period. You're allowed to have two days to deposit 5 your bingo proceeds instead of the next business day. 6 MR. WHITTINGTON: Excellent. 7 MR. WEEKLEY: I think that was a good 8 move. 9 MR. SANDERSON: It also authorizes 10 electronic fund transfers, EFT payments for bills. 11 And with this, it also allows the Division to begin 12 the process of moving toward electronic filing. We 13 have been working on that already, so we're keeping 14 our fingers crossed that we'll have it ready for 15 October to file your quarterly reports, but we're not 16 quite -- it depends on how the testing goes. 17 And, of course, the other item in there 18 is that the 5 percent prize fee is no longer required 19 to be withheld on $5.00 or less winners. And that 20 pertains to both pull-tabs and regular bingo, if you 21 have small regular bingo games. However, the 22 organizations are required to remit the full 5 percent 23 of all prizes awarded. So that's going to be an area 24 that we're going to have to monitor real close to make 25 sure that they actually submit the 5 percent of what 0011 1 was awarded. 2 There is no prohibition from 3 organizations collecting that 5 percent on the $5.00 4 or less winners. That's strictly up to their own 5 individual preferences, because there will be, you 6 know, some money that will come out of their 7 distributions of some manner, to cover that difference 8 between the 5 percent collected and the 5 percent 9 paid. 10 MR. WHITTINGTON: So we're not going to 11 be written up by the Lottery Commission, without 12 somebody coming in and seeing if you're going to pay 13 five cents on a dollar's worth of pull-tabs? 14 MR. SANDERSON: After October 1st. 15 MR. WHITTINGTON: Okay. Thank you. 16 MS. ROGERS: Phil, back to where you 17 said the maximum funds in an account, do you have that 18 amount yet or is that going to be set by the Division 19 or how is that going to be? 20 MR. SANDERSON: Well, I'm glad you asked 21 that question, Ms. Rogers. 22 MS. ROGERS: Oh, well, thank you. 23 That's a first. 24 MR. SANDERSON: If you read the House 25 bill, there are several places where it talks about 0012 1 license period. It talks about your expenses over the 2 license period. It talks about your net proceeds over 3 a license period. And right now we're looking at what 4 options we have to try to collect this information. 5 Now, initially, what we're working on 6 is, we'll be sending out an additional form with the 7 quarterly report that goes out in September, and it's 8 a bank reconciliation form. And they'll have to 9 reconcile their bingo account, any bingo petty cash or 10 bingo savings account and provide that information to 11 us with their quarterly report. The House bill allows 12 for a maximum of $50,000 to be kept in that account 13 or -- 14 MS. ROGERS: For charity? 15 MR. SANDERSON: For charity. 16 MS. ROGERS: Okay. 17 MR. SANDERSON: -- or the average 18 quarterly expenses of the charity, whichever is the 19 lesser of the two. 20 MR. ROGAS: Okay. 21 MR. SANDERSON: And so what we'll do is, 22 once we get the quarterly reports data entered in 23 October, we will send out a notice of what that 24 capital or operating capital is for each organization. 25 We'll send you a notice indicating that based on -- 0013 1 and we'll just use the four quarters that were 2 previously filed. Now, if you've got a license 3 renewal sometime in October, November or December, 4 then it probably won't change. If you've got one in 5 March, April or May of next year -- 6 MS. ROGERS: Right. 7 MR. SANDERSON: -- then it could change 8 at that point. We will try to work on keeping that 9 notification. You know, once the quarterly reports 10 that are filed during the license period, that would 11 cover the majority of your license period, to indicate 12 what those numbers are. 13 MS. ROGERS: Okay. 14 MR. SANDERSON: So that's a number that 15 you'll have to be, you know, conscientious of. One of 16 the things that's going to be a little bit different 17 for the organizations is that when they file the 18 quarterly report, there will have to be a bank 19 reconciliation, you know, either attached to it. 20 We're trying to incorporate it on the same form over 21 in the corner. 22 There's going to be some significant 23 changes to the quarterly report, because you've got 24 prize fees that are not being withheld -- or prize 25 fees that are not being withhold but being paid, so 0014 1 there's got to be an offset somewhere on the report to 2 accommodate that expense. You've got the amount of 3 money that should be in the bank account for the 4 reconciliation, that you can only hold up to a certain 5 amount. And then you've also got, you know, the 6 expenses that we've got to use to calculate that 7 amount as well as the gross receipts to calculate your 8 license fee. And then there are some provisions in 9 there that indicate that the prize fees that are 10 withheld are not part of this operating capital. 11 MS. ROGERS: Right. 12 MR. SANDERSON: So the report is 13 probable going to be -- the biggest change is going to 14 be in the quarterly report. 15 MS. ROGERS: Have y'all thought of 16 something, maybe just off the top of my head, a 17 different class of license, then that gives you just a 18 blank figure instead of having to figure on your last 19 expenses? And, you know, that's lot of work for 20 y'all, but it's something to think about. 21 MR. SANDERSON: It's something to think 22 about, but that's not the way the language is written. 23 MS. ROGERS: I know. Okay. 24 MR. SANDERSON: So that's the part that 25 we're working on implementing. 0015 1 MS. ROGERS: Okay. 2 MR. SANDERSON: You know, we're working 3 on -- if any of the organizations use the automated 4 forms manual that we have had developed on the 5 website, we're looking at modifications to that, that 6 will help capture the information that you need for 7 these different reports or the quarterly report. You 8 know, I just have to say we're at the point now to 9 where we're still trying to decide what it's going to 10 look like. 11 MS. ROGERS: Okay. 12 MR. SANDERSON: But there's going to be 13 a big change to that report. And the other thing, 14 like I said, is make sure, you know, your industry is 15 aware that there's going to be the reconciliation form 16 that's going to have to file that would be the 17 September 30, 2009 bank reconciliation. 18 MS. ROGERS: Okay. 19 MS. TAYLOR: Since we've stopped you, 20 let me ask a question, too. Since the charities are 21 now going to be able to have 24, does that mean as of 22 October 10th, if they've already used their 12 temps, 23 that they can go ahead and ask for 12 additional 24 temps? 25 MR. SANDERSON: If they have -- yes. I 0016 1 guess the short answer is yes, as long as their -- it 2 depends on what their license period is, they'll get 3 the 12 additional temps. If their license expires on, 4 say, October 10th, 10 days after that, they may not be 5 able to use 12 temps. 6 MS. TAYLOR: Right. 7 MR. SANDERSON: Yes. 8 MS. ROGERS: Okay. 9 MS. TAYLOR: And let me ask you one 10 other question that I thought I understood the answer 11 but now I'm not sure. The 5 percent tax on the 12 winners $5.00 and under, are you saying that that's 13 eligible to be paid out of the bingo account or we pay 14 it other means, like out of the general account or 15 from donations or -- 16 MR. SANDERSON: I would say it's 17 eligible to be paid out of the bingo account. 18 MS. TAYLOR: So we might collect $100 19 but have to pay in $110? 20 MR. SANDERSON: Yes. 21 MS. TAYLOR: And that $10 we could take 22 straight from the bingo account? 23 MR. SANDERSON: Yes. 24 MS. TAYLOR: Wow! 25 Knowles? 0017 1 MR. CORNWELL: Yes. Mr. Sanderson, 2 could you bring some clarity to the lessor rents 3 there? I understand there's been some confusion out 4 there by our friends in Austin here that have declared 5 that there was an increase in commercial lessor rents. 6 Can you bring any clarity to what House Bill 1474 did 7 to the rents to be charged? 8 MR. SANDERSON: The House bill, as it 9 relates to commercial lessor, and what payments to the 10 commercial lessor are authorized, the rent cap stayed 11 at $600 per session. There was no change in the rent 12 cap. However, it did authorize organizations to pay, 13 as a separate payment to the lessor, prorated 14 utilities, I believe property tax and insurance. 15 MR. CORNWELL: Has that been an 16 allowable expense prior to this 1474? 17 MR. SANDERSON: It has been an allowable 18 expense to the organizations but not paid directly to 19 the commercial lessor. If it's paid directly to the 20 commercial lessor, it was part of the $600 cap. 21 MR. CORNWELL: Right. So now they can 22 pay this to the commercial lessor? 23 MR. SANDERSON: Yes, they can. And 24 we're working on a rule to help define the best we can 25 what the pro rata formula would be for organizations. 0018 1 MR. CORNWELL: Thank you, Phil. 2 MR. SANDERSON: I believe that's all I 3 have as it relates to the implementation of House Bill 4 1474. We do have on the website -- if it's not there 5 now, it shortly will be -- a PowerPoint presentation 6 that lasts about probable 30 minutes, 45 minutes, 7 going over all the different changes that House Bill 8 1474 covers. 9 We will be sending out a letter to all 10 the organizations that goes into a little bit more 11 detail of what I've just talked about. And then we'll 12 also try to, you know, put out some addition 13 information as we get rules developed and so forth. 14 And that is my report. 15 MS. TAYLOR: Thank you. 16 David Heinlein, did you want to talk 17 about any of this? 18 MR. HEINLEIN: No. I think he covered 19 it very well. 20 MS. TAYLOR: Okay. Thank you. 21 Any other public comments? Committee 22 members? 23 AGENDA ITEM NO. 5 24 MS. TAYLOR: Item NO. 5, report, 25 possible discussion and/or action on first quarter 0019 1 bingo conductor information. 2 MR. MINER: Good morning, Chairman 3 Taylor, committee members. For the record, my name is 4 Bruce Miner, and I'm the Manager of the Taxpayer 5 Services Department of the Charitable Bingo Division. 6 And I'm here to present the first quarter 2009 7 information as reported by our licensed charities. 8 Gross receipts for the first quarter of 9 2009 are approximately 5.6 percent greater than the 10 first quarter of 2008 and 6.9 percent greater than the 11 first quarter of 2006. Instant bingo sales increased 12 from $69.1 million in the first quarter of '06 to 13 $89.3 million in the first quarter of 2009. 14 Regular card sales decreased from 15 $66.5 million in the first quarter of 2009 to 16 $56.4 million in the first quarter of 2009. And there 17 was minimal change for electronic sales during the 18 same four-year period. 19 This slide shows the prize pay-out 20 percentage for regular bingo for the first quarter of 21 2009, which was 73.3 percent of gross receipts. And 22 the prize pay-out percentages for instant bingo were 23 72.3 percent of gross receipts. 24 This chart shows the instant bingo sales 25 continue to exceed regular bingo card sales. In the 0020 1 first quarter of 2009, instant bingo sales represented 2 47.6 percent of the total sales, while regular card 3 sales represented 30 percent and electronics was at 4 22.4 percent. 5 And this slide captures the trend of net 6 receipts, which are gross receipts minus prizes, and 7 the net receipts for the first quarter of 2009 8 increased 8.8 percent over the first quarter of 2008 9 and increased 6.4 percent over the same period of 10 2006. 11 This bar chart compares each of the 12 major categories of expenses and shows the amount of 13 the disbursement for each year since 2006. As you can 14 see, the highest disbursements continue to be salaries 15 and rent payments. 16 This next slide shows the average 17 attendance per occasion as compared to the average 18 spend per player. This shows that the average 19 attendance has gradually increased since 2007. It's 20 still down from 2006. And there has been a 21.4 21 percent increase in the average spend rate per player 22 since 2006. 23 This chart shows the comparison of net 24 revenue and charitable distributions. Net revenue for 25 the first quarter of 2009 was 21.4 percent greater 0021 1 than the first quarter of 2008 and 15.2 percent higher 2 than the first quarter of 2006, while reported 3 charitable distributions have increased 7.2 percent 4 since 2006. 5 This slide illustrates the comparison 6 between reported charitable distribution as opposed to 7 the minimum amount required to be distributed by the 8 Bingo Enabling Act. Reported charitable distributions 9 increased 12.6 percent for the first quarter of 10 2009 -- or the first quarter of 2008 -- and increased 11 7.3 percent since the first quarter of 2006. And 12 you'll note that the actual reported charitable 13 distributions have been more than three times the 14 amount of the required distributions amount. 15 That concludes my report for this agenda 16 item. In your notebook is addition information from 17 an analysis performed by Arlette Taylor, our 18 Operational Planning and Performance Coordinator. 19 I am available for any questions. 20 MR. CIANCARELLI: Yes. Francis 21 Ciancarelli. I have a question on the data that's 22 under Tab 5. If we look at the first quarter 2009 23 under the "Adjusted Gross Receipts," the "Expenses" 24 column, an item for janitorial, an item of interest to 25 me. The number of interest is 9.6 percent of total 0022 1 expenses for the janitorial services. Is that 2 correct? 3 MS. TAYLOR: I'm going to let you answer 4 that. 5 MR. MINER: Well, I don't have that data 6 in front of me, but I have to base it on that it's 7 what's reported. So I have to assume that -- 8 MS. TAYLOR: There's other things, 9 Francis, that are under janitorial, like utilities. 10 That's where your utility bills -- so if anybody is 11 paying utility bills, that would go under there also. 12 The supplies, the janitorial supplies, I 13 know that from my own quarterly report there is an 14 awful lot of other items besides just this. It's not 15 just janitorial service, cleaning service that fall 16 under that line item, because there is nowhere else on 17 the report to put them. 18 MR. CIANCARELLI: That might help make 19 sense to me why it's the third highest expense there. 20 Okay. Thank you. 21 MS. TAYLOR: Put all your utilities in 22 there also. 23 MR. CORNWELL: Madam Chair? 24 MS. TAYLOR: Yes? 25 MR. CORNWELL: I have a question for 0023 1 Mr. Miner. 2 Mr. Miner, I see the word used in your 3 presentation all the time, the word "instants," 4 instants as in instant pull-tab. Would it behoove the 5 lottery to understand or break that down between what 6 we know in the industry as instants and bingo event 7 tickets? Would it be better reporting? Because I 8 don't know this for a fact, but I would say 90 percent 9 of your sales there are no longer instant sales. 10 They're bingo event tickets. 11 An instant ticket, for everybody that is 12 not following me, is that an instant ticket is a 13 ticket that you would pop open. And if you match the 14 corresponding pattern on the front of the ticket, then 15 you're a winner. Okay? 16 Well, a bingo event ticket is -- this is 17 just one of many different kinds, but this is a bingo 18 event ticket. This is where multiple people have to 19 make wagers to play the game to win the stated prize 20 amount. There are two different styles of play. 21 Would it be to the benefit of the lottery to start 22 asking charities to breaking this information out and 23 reporting it as such? 24 MR. MINER: We're in the process of 25 looking at the quarterly reports and the figures that 0024 1 would best reflect the industry. And I think we've 2 been looking at that. 3 Would you expand on that, Phil? 4 MR. SANDERSON: One of the items that 5 we're looking at in revising the quarterly report is 6 adding a separate line item for event tickets. The 7 instant -- you know, the event ticket falls under the 8 instant ticket category. You know, the statute allows 9 regular bingo and instant bingo. 10 MR. CORNWELL: Yes, sir. 11 MR. SANDERS: And so event ticket is 12 just a form of instant bingo. 13 MR. CORNWELL: I concur with that, that 14 under the statute -- 15 MR. SANDERSON: So just to be clear that 16 it's not a separate type of bingo. So it's a form of 17 instant bingo; and, therefore, it's been captured in 18 that category. However, with the popularity, that's 19 an item that we're looking at and making revisions to 20 the quarterly report, add that as a separate line 21 item. 22 MR. CORNWELL: Phil -- and the only 23 reason I say that is that the size of this market 24 compared to other markets in this nation is that we 25 did $89 million in the first quarter sales in 0025 1 primarily -- I'm going to say -- go out and step out 2 and say primarily in event tickets. The size of this 3 market and the age of maturity of where we are in this 4 market -- and we're starting to I believe drive more 5 people in to our halls with these event tickets -- 6 there is no reason why we can't double again. There 7 is no reason why this -- I originally stated when we 8 adopted the event rule that we should be doing 9 $750 million to a billion dollars in event tickets at 10 a mature market. 11 We're almost at $400 million now on an 12 annualized basis. We've got a long ways to go. But 13 is it information that you might need? And I 14 understand the statute for it. But is it something 15 that you can show the other industry -- the other 16 industry -- the other states and regulators what the 17 effect of event tickets has been in this market? I 18 know Missouri recently followed Texas and started 19 allowing event tickets. And thank you for helping 20 Jane do that, Phil. That market needed it. But it's 21 just a suggestion out there. 22 MS. ROGERS: And I will say at our hall, 23 we don't play any instant. They're total event. And 24 we've switched over completely. 25 MR. CORNWELL: There's a lot of halls 0026 1 that still -- 2 MS. ROGERS: Sure. 3 MR. CORNWELL: -- offer instants at the 4 end of the night. But yes -- 5 MS. ROGERS: Sure. 6 MR. CORNWELL: -- primary. 7 MR. SANDERSON: Well, we are looking at 8 adding that as a separate line item. I think maybe 9 two years ago, Mr. Heinlein had made a recommendation 10 that we add that as a line item. And, like I said 11 before, the quarterly report is going to be probably 12 vastly redesigned to where there's going to be a lot 13 of changes. So I think at that point there will be a 14 good opportunity to add that. 15 MS. TAYLOR: Any other comments from 16 committee members? 17 Public comment? David? 18 AGENDA ITEM NO. 11 19 MS. TAYLOR: I believe that at this time 20 we're also discussing one of the other agenda items 21 that we have been requested to put on the agenda, and 22 so we might as well go ahead and, if nobody has a 23 problem with that, add Item No. 11, report and 24 possible discussion and/or action on the content of 25 the certain bingo forms and reports to this 0027 1 discussion. 2 MR. HEINLEIN: Thank you. I'm David 3 Heinlein, designated agent for a number of bingo 4 units. 5 And I appreciate Knowles bringing up 6 that question to Bruce and that the staff is actually 7 looking at that. For myself personally, what I've 8 been looking at in the past is a comparison of our 9 numbers with the state numbers that I get, and I look 10 at some individual halls, too. But I'm unable to 11 capture all of what I need to know where I have a hall 12 that's doing all event tickets, very little instant -- 13 or maybe none -- as compared to the state number. 14 I used to track that, and it would tell 15 me whether or not I needed to look at a hall's 16 activity to be sure that all the things were being 17 reported correctly. I would capture the percentage of 18 prize payout. That's an important number. Back when 19 we were just doing instant bingo, you know, your prize 20 payout was less than 70 percent. I had a hall that 21 went up to 70 and then 72, and I said, "Man, you're 22 giving away too much. You're not selling the whole 23 box out," you know. So I would have a way of telling 24 them that they needed to do a better job of managing 25 their instant bingo. 0028 1 Well, I can't do that now because I have 2 a combination of both instant and event tickets, so I 3 don't know what that percentage is supposed to be. It 4 has risen. I think you just reported it's 72 percent 5 now. It used to be a lot lower than that. But if 6 you're strictly event tickets, it might be 75 percent. 7 And a little fractional difference in that percentage 8 tells you a lot. 9 So if our numbers go from 73 and a half, 10 say, to 74 and a half, I know something has changed, 11 and I can research that, then, and look at it. So I 12 think it would be very helpful to have that on our 13 quarterly report. And I really appreciate that y'all 14 are looking at a lot of changes to the report. I know 15 that people don't like to give all that information 16 out. We used to just have one item, "All Other 17 Expenses." 18 Well, we've divided that up into nine 19 different categories, and maybe we're going to divide 20 it into some more now. I think that's good, because 21 that really lets us look at a charity's activities and 22 be able to identify things that are out of line, like: 23 Is their labor out of line? Is their janitorial out 24 of line? You know, we can capture something that we 25 need to maybe focus on and look at. 0029 1 So I would like to see not only the sale 2 and the prize payout divided on that form, under 3 instant bingo have the instant tabs and event bingo 4 tabs, prize payout the same, and then also our cost of 5 goods sold, separate that paper cost, not just paper 6 but the paper cost and the instant cost and the event, 7 you know, cost, because those costs vary tremendously. 8 The paper is going to be a whole lot 9 cheaper, of course, percentage-wise, and we can look 10 at the paper costs as compared to their sales and know 11 if it's right. We do that already for electronic 12 bingo. We separate the sale of electronic. We also 13 separate the cost of the electronics, and we can look 14 at that. Well, it would be helpful, then, I think, 15 for the staff to be able to have those other numbers. 16 And I know that it's a lot more 17 additions to the report, but I think that's good 18 information. So I would encourage you to look 19 carefully at that and consider even breaking down that 20 cost of goods between those that you have -- paper 21 sales, electronics, instant and event. I know that's 22 four different columns where we have two now. So I 23 would recommend that. 24 MS. TAYLOR: All right. While you're 25 there, janitorial, what all do you put under 0030 1 janitorial when you're doing your reports? Do you 2 know off the top of your head? 3 MR. HEINLEIN: No, because I've got a 4 general ledger that's got a lot of different columns. 5 And out to the right, I've got Line Item 28, 28, 28, 6 28, Line Item -- you know. I know I've got janitorial 7 and utilities, like you just said, and cleaning 8 supplies. I can't remember if there's anything else 9 in that. And it's just like the one line item for 10 fees. I've got it separated into a bunch of different 11 categories, and I have to take security out and put it 12 up into -- I forgot the line item number now. 13 MS. TAYLOR: Okay. 14 MR. HEINLEIN: So, yeah, I have a 15 general ledger that I have to modify to capture the 16 numbers to the quarterly report. And I'm glad to 17 change that more and identify it, because I have my 18 ledger broken down into a whole lot more categories 19 than what we report. So I have to consolidate. You 20 know, usher, caller, cashier, I've got all that 21 separated, and we're reporting it on one line item, 22 and that's okay on that, I think. I've still got a 23 good number to compare, payroll with other people's 24 payroll, and so I think I'm okay with that. 25 MR. SANDERSON: The line item on the 0031 1 quarterly report says janitorial services and utility 2 supplies and services. So, you know, it's not only 3 just the janitorial but also the utilities. They 4 could be gas, electric, and -- 5 MR. HEINLEIN: There's another line item 6 that's kind of interesting, Phil. That's licenses 7 cost. 8 MR. SANDERSON: License fees and/or 9 other expenses. 10 MR. HEINLEIN: And/or other expenses. 11 Well, I did not know where to put the tax that we paid 12 to the state for the margin tax: "Well, where am I 13 going to put that?" Well, I put it on that line item. 14 And the first time I did it for the staff's benefit, I 15 wrote in the column, though, "We paid the margin tax 16 on this line item." And it was a big number. 17 MS. ROGERS: And I would like to say I 18 agree with you about separating out the instant and 19 the event in the paper. I started doing that because, 20 am I correct in saying at the end of the year with 21 taxes, you need to have it separated. 22 MR. HEINLEIN: Keep it separated, yes. 23 MS. ROGERS: That No. 10, I have two 24 subcategories -- 25 MR. HEINLEIN: Right. 0032 1 MS. ROGERS: -- so I can tell you 2 exactly how much we paid for paper -- 3 MR. HEINLEIN: On all of our invoices 4 from the suppliers, my staff divides up every invoice 5 to all the different columns, and then we -- 6 MS. ROGERS: Right. 7 MR. HEINLEIN: -- back it back -- 8 MS. ROGERS: Our suppliers are 9 wonderful. They send us a separate bill for event -- 10 MR. HEINLEIN: Yes. That's the best 11 way, for you to get a separate bill for each one. 12 MS. ROGERS: -- and they send us a 13 separate bill for the paper. 14 MR. HEINLEIN: Right. 15 MS. ROGERS: Mine is like -- 16 MR. HEINLEIN: We code those into a 17 column where we put them in. So I know how much we've 18 actually spent on just paper, how much we've spent on 19 instant, how much we've spent on event tickets. 20 MS. ROGERS: And I say this only so you 21 know, but some of us are actually already doing that, 22 because at the end of the year, it really does assist 23 those charities in getting their taxes done if they 24 know -- because they have to know those figures. 25 MR. HEINLEIN: Right. 0033 1 MS. ROGERS: You can't lump event and 2 paper together. 3 MR. HEINLEIN: So I think it's stuff 4 that we're already doing that we can easily provide to 5 the staff for those line items. 6 MR. SANDERSON: Well, why don't we look 7 at a -- since we're talking about Agenda Item 11 also, 8 as the Chair pointed out, if you want to create, you 9 know, a subcommittee of some sort. I think, you know, 10 Kimberly and David and anyone else that you would like 11 to have on there, up to the maximum number allowed by 12 open meetings, and we can work with them directly. 13 And it may help answer a lot of questions that we 14 have, because that's one of the things that I've had 15 to struggle with, is how much information ends up 16 being too much information? 17 MS. TAYLOR: I would, like Kimberly -- I 18 think there's an awful lot of charities -- I do the 19 same thing. I have a lot of subcategories. There's 20 2801, 2802, 2803, 2804, and everything goes under 28, 21 which is the line item it's going to correspond to. I 22 think there's an awful lot of charities that are 23 already doing this -- 24 MR. HEINLEIN: I think you need to put 25 somebody on the committee, though, that might -- 0034 1 MS. TAYLOR: I absolutely agree, David. 2 MR. HEINLEIN: -- modify my behavior, 3 because I would probably have too many line items. I 4 would like to have a four-page quarterly report. 5 MR. SANDERSON: And with the advert of 6 electronics and computerized bookkeeping, and then 7 also, as I mentioned, we're moving towards electronic 8 filing -- 9 MR. HEINLEIN: Yes. 10 MR. SANDERSON: -- that, you know, it 11 may be a situation that is not over-burdensome or 12 cumbersome for organizations to report that 13 information. 14 MR. HEINLEIN: Well, I think that would 15 get back to something that Tom Clowe talked about a 16 long time ago, is having different requirements for 17 different license classes. 18 MS. TAYLOR: You know, which brings to 19 mind something. When you were talking about that the 20 debits were now being allowed, is that -- I mean, I 21 know the federal tax deposit debit, but does that also 22 mean that the Lottery Commission, we could 23 automatically have them debit out of our account the 24 quarterly -- 25 MR. SANDERSON: That's what we're moving 0035 1 towards, yes. 2 MR. HEINLEIN: Electronic filing. 3 MS. TAYLOR: So that is proved up legal 4 now? 5 MR. SANDERSON: October 1st it will be, 6 yes. 7 MS. TAYLOR: October. Okay. Great! 8 Great! That's something I've already called y'all 9 about, because the IRS requires that tax payments be 10 made that way, and that's something that worried me, 11 is that we've got a requirements that we're making 12 them that way; and, yet -- I believe I talked to you 13 about that, that we're having a problem with that. 14 MR. MINER: And we appreciate that. We 15 couldn't do it before. We had rules that we were 16 trying to promulgate to do that. Those were put on 17 hold. And now with the statute changing, that allows 18 us to move in that direction. So between forms and 19 programming and, you know, research, we're going to 20 get that out there as quickly as possible. 21 MS. TAYLOR: That's great. That's 22 great. 23 MR. WHITTINGTON: I'm going to ask a 24 question. On the instant and event tickets, of 25 course, in order for the Lottery Commission to have 0036 1 the right figures and now that they've started, is it 2 going to be some kind of requirement for the charities 3 to separate the pull-tabs -- I mean, instant pull-tabs 4 as well as event tickets for y'all to have the right 5 figures? Because it's going to depend on the 6 charities that send them in to y'all in order for 7 y'all to have the right figures on that quarterly 8 report. 9 MR. SANDERSON: And currently that's the 10 way it is now. I mean, anything -- 11 MR. WHITTINGTON: I'm saying, but -- 12 MR. SANDERSON: Everything that's on the 13 reports that we generate as sales and prizes is based 14 on what's reported to us. 15 MR. WHITTINGTON: Exactly. 16 MR. SANDERSON: And, of course, when we 17 do audits, we make verifications of those and some get 18 adjusted and some don't. So it's what's actually 19 reported, yes. 20 MR. WHITTINGTON: Well, I understand 21 that. But, like Knowles said, all of it is under 22 instant -- not event, not instant. They're just 23 instant bingo. I'm saying is that going to be a 24 requirement for a charity to separate those so y'all 25 know what's instant and what's not -- event? That's 0037 1 all I'm saying. 2 MS. TAYLOR: Towards that end, Larry, we 3 are going to go ahead and put a work group together 4 here. 5 Obviously, David, we would like you to 6 serve on that work group. 7 MR. HEINLEIN: Yes, I would like to 8 serve on it. 9 MS. ROGERS: Chair it, please. 10 MS. TAYLOR: Can David chair the work 11 group or does it have to be a BAC member? 12 MR. SANDERSON: I don't know. I think 13 it could be either one. 14 MS. TAYLOR: Okay. David, would you be 15 interested in chairing that work group? 16 MR. HEINLEIN: Yes, I would be glad to. 17 MS. TAYLOR: Kim is also interested in 18 serving on that work group with you. I would like the 19 people that serve on the work group -- hopefully BAC 20 members -- is somebody that is involved in the 21 preparing of your quarterly report. I don't know 22 which of you do or don't work with that. 23 Earl? Anybody else, I mean, besides 24 Kim? Kim and myself, I know we both do quarterly 25 reports. But does anybody else work with the 0038 1 quarterly report? 2 MS. WEAVER: I'm not allowed to. 3 MS. TAYLOR: Anybody else? 4 Okay. Then I'm going to serve on that 5 work group with Kim. 6 And, Knowles, I would like you also to 7 be on that work group. 8 MS. ROGERS: You can give us the view of 9 distributor, the different categories. 10 MR. CORNWELL: Yeah, yeah, yeah, yeah. 11 MR. HEINLEIN: Can you modify my 12 behavior? 13 MS. TAYLOR: I tell you why, my thoughts 14 on that, Knowles, is because you work with a lot of 15 organizations and you hear from people griping day in 16 and day out. 17 MR. CORNWELL: I do. I hear that every 18 day. 19 MS. TAYLOR: I mean, you know what's 20 going on in the industry with more than just -- I'm 21 only really aware, you know, with my hall. And Kim 22 knows what's going on with her hall. 23 MR. CORNWELL: I'll be glad to serve on 24 the committee with you guys, sure. 25 MS. TAYLOR: Okay. Terrific! 0039 1 If anybody else would like to serve on 2 that work group, please contact David and let him know 3 that you would like to be on the work group. 4 MR. CORNWELL: Is there a point person 5 in the staff you want us to work with, Phil? Would 6 that be -- 7 MR. SANDERSON: Right now you can work 8 with me -- 9 MR. CORNWELL: Okay. 10 MR. SANDERSON: -- work with me on that. 11 MR. MINER: And everybody realizes the 12 short suspense, because we have a lot to do between 13 now and 1 October. And we rely on other staff members 14 to develop the forms and IR programming, et cetera. 15 MR. SANDERSON: Now, I will say this: 16 The report that you're going to file for the third 17 quarter 2009 is going to be this current quarterly 18 report. We're not going to have the time to make 19 programming changes and other changes to have a new 20 form by that point in time. 21 So, you know, my goal is to hopefully 22 have the design of the report, what it's going to look 23 like, so that we can modify our on-line filing that 24 we've already started working on and then move forward 25 with whatever programming changes we need and, you 0040 1 know, implementation of the actual report for the next 2 quarter. 3 MS. TAYLOR: Understood. 4 MR. HEINLEIN: Well, I'll probably start 5 with you, Phil, to find out when you'll be available 6 and we'll accommodate your schedule. 7 MR. SANDERSON: We may can get together 8 briefly after this meeting here, for at least a little 9 intro meeting. 10 MR. HEINLEIN: That sounds good. 11 MR. CORNWELL: I think it would be good 12 to set the standards, yes. 13 MS. TAYLOR: Terrific! Thank you. 14 Any other public comment? 15 MR. CORNWELL: We're still on Bruce 16 Miner. Right? 17 MS. TAYLOR: We still are. We're 18 combining these two items together. 19 MR. CORNWELL: Bruce, have you looked at 20 the instant sales for the second quarter? What are 21 the preliminaries showing? Do you know? 22 MR. MINER: No, I haven't. And I would 23 have to assume that every quarter they're increasing 24 or -- I mean, it's -- 25 MR. CORNWELL: Well, it's off season, 0041 1 bingo. The first quarter is always your best quarter 2 usually. 3 MR. MINER: Right. We only got them in 4 last week -- 5 MR. CORNWELL: Yes. It hasn't been 6 long. 7 MR. MINER: -- so, no, I have not looked 8 at them to see. 9 MR. CORNWELL: Okay. That's all right. 10 I just thought maybe you had a preliminary number. 11 MR. SANDERSON: I think I took a brief 12 look the other day, and I want to say that there was 13 about a $4 million increase. 14 MR. CORNWELL: In the second quarter? 15 MR. SANDERSON: In the second quarter it 16 went from like 70 to 74. 17 MR. CORNWELL: Wow! That's good. We're 18 headed to $750 million or a billion dollars in tab 19 sales. 20 MR. SANDERSON: I can check real quick. 21 That information is on our website. 22 MR. CORNWELL: It should be, yes, I 23 know. And I should have checked. 24 While you're looking, Phil, once again, 25 I know it's been two -- what was it, 2002, that we 0042 1 adopted these rules? 2 MR. SANDERSON: September of 2002, yes. 3 MR. CORNWELL: I just want to thank the 4 Commission in their wisdom in allowing us to have 5 these event tickets. Once again, I know it's six 6 years later, but thank you. It's the greatest thing 7 that's happened to bingo in -- as long as I've been 8 around it. 9 MR. SANDERSON: Okay. This one does not 10 have -- it's not updated yet. The unit returns have 11 not been data-entered. So it's -- 12 MR. CORNWELL: Okay. It will be 13 significantly higher. 14 MS. TAYLOR: Since you said the word 15 "unit," are the number of units increasing -- 16 MR. WEEKLEY: Yes. 17 MS. TAYLOR: -- or has that reached a 18 steady area? 19 MR. SANDERSON: As far as I can tell, 20 it's kind of plateaued. There haven't been very many 21 new units created. There's been a lot of unit 22 revision -- members moving, members added, dropped and 23 so forth. But as far as actual locations, I guess, 24 taking advantage of unit accounting, has reached a 25 plateau. 0043 1 And I failed to mention -- and David did 2 mention it in his brief comments -- that House Bill 3 1474 did repeal the margin tax on the units. 4 MR. CORNWELL: Right. 5 AGENDA ITEM NO. 6 6 MS. TAYLOR: Okay. Then if there's no 7 other discussion, committee members, on Item either 5 8 or 11, then we'll move on to Item No. 6, consideration 9 of and possible discussion and/or action on the Bingo 10 Advisory Committee. 11 This was an item that Commissioner 12 Schenck had asked us to put on the agenda. And I'm 13 just going to read you briefly to remind you what he 14 talked about at our last meeting. He advised the 15 committee members the Commission was requesting input 16 from the BAC members as to what information should be 17 conveyed, and to whom, relating to fitness for service 18 of individual members on the BAC. Items that could be 19 considered include civil allegations, convictions, 20 felonies, allegations of criminal wrongdoing with 21 connection with any kind of moral turpitude, gambling- 22 related offenses or violations of the Texas gaming 23 laws. And members were requested to have their 24 thoughts and comments ready for the next meeting, 25 which is now here three months later. 0044 1 So I think individually if you have any 2 comments on this, I would like to hear them, the 3 Commissioner would like to hear them. And he really 4 requested from the entire committee your thoughts on 5 this. 6 MS. ROGERS: I would be happy to start. 7 MS. TAYLOR: Kim. 8 MS. ROGERS: Thank you. 9 I read through this the other night. 10 And when you submit your nomination for the BAC board, 11 just as the same as when you submit for a license or 12 anything, you know you cannot have a conviction of a 13 felony. But I have a hard time with allegations in 14 this. Allegations are allegations. I mean, it's our 15 constitutional right. Until you have a jury say that 16 you are guilty of something, you are not guilty, you 17 have innocent. 18 And I would hate to see, because someone 19 said, "They did something wrong," I can turn around 20 and say someone out there did something wrong. It's 21 an allegation. It's accusing them of something. That 22 doesn't mean they're guilty. It doesn't mean they did 23 anything illegal or wrong. 24 In the Bingo Enabling Act, the one word 25 that says until you're convicted. And if you're not 0045 1 convicted of a felony, then you are fit. I think all 2 of us sit up here, we're typical average people of, 3 you know, the bingo world. And we donate a lot of our 4 time, let me tell you. 5 So I feel that putting something in 6 there to say that the fitness or the allegations I 7 think is very wrong. I think it's against our 8 constitutional right for us and anyone else who tries 9 to serve on the BAC. So I would be very disappointed 10 to see something like that. 11 That's my thoughts. 12 MS. TAYLOR: Francis, do you have any 13 thoughts on this subject? 14 MR. CIANCARELLI: I think the background 15 investigations seem to be pretty thorough that's 16 performed before you are appointed to this position. 17 And I personally believe that I live my life right, 18 and so I don't have any worries. But I think it may 19 be overstated for volunteer people. 20 MS. TAYLOR: Pat? 21 MS. GIFFORD: I agree with that -- 22 MS. TAYLOR: Make sure you speak up so 23 the court reporter can hear you. 24 MS. GIFFORD: I thought they did a 25 thorough background investigation already. I can't 0046 1 see that that would change. But I do agree with Kim. 2 MS. TAYLOR: Earl, your turn. 3 MR. SILVER: Well, Kim said it 4 perfectly. An allegation is an allegation. You can 5 say something about any individual, and it's just 6 hearsay or just a comment. It's not facts, it's not 7 based on anything until the evidence is proven. So 8 the perfect example, I mean, it's an allegation. And 9 I would have an issue with somebody putting an 10 allegation, because I'm sure people have said things 11 about me that weren't true, called me names or 12 something like that. 13 But other than that, I mean, I just 14 would have an offense to that. Francis said there is 15 a thorough background check, and I agree. So we've 16 all been -- our backgrounds have gone through. If 17 something new comes up, then it has to be a 18 conviction. 19 MS. ROGERS: Like the constitution says, 20 until a jury of your peers says that you are guilty, 21 you are not guilty. 22 MR. SILVER: Correct. 23 MS. ROGERS: And I believe we still live 24 in America where you are innocent until proven guilty. 25 So . . . 0047 1 MS. TAYLOR: Larry, any thoughts? 2 MR. WHITTINGTON: Well, the word 3 "allegation" is basically it can be written in some 4 court of law. But, like you said, if they said "not 5 guilty" after it is written and you go to Court, 6 you're not guilty. So a lot of people look at that, 7 but they don't look at the "not guilty" part. They 8 looking that you've got an allegation, you're wanted 9 for this, you're wanted for that, but you weren't 10 guilty. 11 So that's where I think it's coming 12 from. You are seeing this on some type of record of 13 somebody, but it's not a felony just because it's 14 written there. If they have a not guilty or it was 15 waived or thrown out, that person is innocent. And 16 that's the way it should be, and I think that's what 17 "allegation" means. They see this on some type of 18 court record, and that's an allegation. Okay? 19 But maybe it might be in process or 20 maybe it might be done. But the final verdict is, if 21 you're not guilty, there's no allegations, everything 22 should be thrown out, and you shouldn't have that over 23 your head hanging just because it's stated on some 24 piece of paper. 25 MS. ROGERS: And I might say one more 0048 1 thing, and maybe it's because someone had some 2 information that was incorrect. 3 MR. WHITTINGTON: Yes, exactly. 4 MS. ROGERS: That's why they're called 5 allegations. 6 MR. SANDERSON: May I interject? 7 MS. TAYLOR: Yes, sir. 8 MR. SANDERSON: I think the purpose of 9 this agenda item is not to discuss what would 10 constitute an individual being actually removed. 11 Currently right now there's two items that can cause 12 removal from the BAC. One, of course, is a conviction 13 of a felony, crime of moral turpitude and other 14 activities. And then the other is failure to attend 15 two consecutive meetings. 16 Now, after that, the committee members 17 serve at the pleasure of the Commission. And I think 18 what Commissioner Schenck is requesting is what 19 activities or what activity of a BAC member should the 20 Commission be made aware of so that they can make that 21 determination of whether or not they continue to serve 22 at the pleasure? 23 I don't think they're looking at saying 24 that because there is an allegation, that they're 25 going to remove you automatically. But I think it's a 0049 1 situation to where they've got to have that 2 understanding of what has transpired. And there may 3 be something else other than allegations. I don't 4 know. And I think that's what he was asking the 5 committee members, was to discuss this and say: Okay. 6 You know, what action by a particular member or 7 members should they make the Commission aware of that 8 activity so that they can talk with that member and 9 decide if they want them to continue to serve at their 10 pleasure? 11 MS. ROGERS: I would have to ask you, 12 Phil. I mean, was he referring to if I join some kind 13 of cult and someone else on the board doesn't think 14 that's correct, I mean, or is he talking just in 15 gaming? Is he talking just in business? Is he 16 talking in taxes? I mean -- 17 MR. SANDERSON: Well, I think that's -- 18 and I think that's what he wants to hear from the 19 committee members, is what -- you know, if you joined 20 a cult, as you said, I don't know if that's something 21 that would necessarily rise to that. 22 MS. ROGERS: Or maybe he's very against 23 the cults. You know, I mean, that's kind of -- I feel 24 this is a little bit crossing the line as far as 25 saying -- and I don't mean to be rude, I promise, but 0050 1 I feel this is crossing the line. 2 I have three children, a husband of 22 3 years. I live my life great. Like Francis said, I 4 live my life, I have nothing to be ashamed of. But I 5 feel like this is kind of crossing the line to say, 6 "Well, if you don't live your life like the 7 Commissioners see you should live your life, then they 8 can remove you from the board." 9 I don't think that's what we're here 10 for. I think we are here to bring bingo information 11 to the Commissioners, because they don't play bingo. 12 They don't work it every day seven days a week like so 13 many of us do or so many people that we dealt with do. 14 I feel that's what we're here for. We're here to say, 15 "Commissioner, this is what we need." Legislatures -- 16 or we can't talk to Legislatures, but you know what 17 I'm talking about. 18 MR. SANDERSON: Yes. And I -- 19 MS. ROGERS: I'm telling you, "Phil, 20 this is what we need. We need a quarterly report that 21 says this," not whether or not one of us had an affair 22 or joined a cult or whatever. 23 MR. SANDERSON: Well, and I'm trying to 24 pull up the transcript from the last BAC meeting. 25 MR. WHITTINGTON: Well, while you're 0051 1 pulling that up, No. 1 is, I drive six hours to come 2 here. I drive down here. And, believe me, it's 3 voluntarily, and I'm here to try my best to make sure 4 that not just one bingo hall or one city, every city 5 and town in Texas gets a fair shake when it comes to 6 bingo activities. These charities need help. And 7 believe me, I'm volunteering this. So believe me, if 8 I wasn't on the BAC, it wouldn't change my life one 9 bit. I would still be working bingo. But I'm here 10 for a purpose. I've been here for about six or seven 11 years, or eight years. And that's all I'm here for, 12 just to help do the best I can to make it better for 13 charitable bingo in Texas. That's what I'm here for. 14 MR. SANDERSON: This is the transcript 15 from the May 6th BAC meeting and this is Commissioner 16 Schenck. And he said, 17 "I would ask you to consider the 18 possibility of advising us, through perhaps Phil or 19 perhaps Kim Kiplin or someone else . . . of any 20 developments that could raise questions about our 21 fidelity to our mission or fitness for service of any 22 particular members on the BAC. In connection with 23 that, you might want to consider civil allegations, 24 you might want to consider convictions. You might 25 want to consider convictions only of felonies. You 0052 1 might want to consider allegations of criminal 2 wrongdoing in connection with any crime of moral 3 turpitude, in addition to any felonies or 4 gaming-related offenses. 5 "My view -- I think I've been fairly 6 clear on this. And again, this is just my view and at 7 this point looking forward to your advice on this -- 8 is I think it would be in the interest of the 9 Commission and the Bingo Division to be advised of any 10 allegation of moral turpitude, felonious conduct or 11 violations of Texas gaming laws, given the particular 12 nature of what we do." 13 MR. WHITTINGTON: So a gaming felony? 14 That's basically what he's saying, a gaming felony. 15 MR. SANDERSON: So that's -- 16 MS. ROGERS: I agree with the portion of 17 if you commit a felony, which we are all grown adults, 18 we know if we commit a felony, we're in trouble, we're 19 removed from the BAC. I agree moral turpitude, 20 however you say it. 21 Whether or not they would like to be 22 advised if someone has an allegation against them, 23 that's okay. We can't stop that. But to act on 24 something like that, I would strongly ask the 25 Commissioners to think about that prior to doing 0053 1 something like that. 2 MR. SANDERSON: As I say, I don't think 3 it's a -- 4 MS. ROGERS: Right. 5 MR. SANDERSON: I think it's just 6 something that they want to be made aware of so they 7 can make an informed decision. 8 MS. ROGERS: That's fine. 9 MR. WHITTINGTON: Well, like I said, 10 most is gaming involvement, some type of small gaming 11 thing when it comes to bingo if it's dealing with 12 8-liners or anything like that, because it's part of 13 bingo as far as I'm concerned, if you do it legally 14 and the way they want. But if you get convicted as a 15 felony, you're off anyway, so that's it. It's as 16 simple as that. 17 MR. SANDERSON: And to end his statement 18 and direction at that meeting on May the 6th, 19 Commissioner Schenck says, 20 "And so what I'm looking for, for advice 21 from you on this, is what it is we should be looking 22 for from you. And I can't guarantee you that I will 23 agree with that advice, but I think it's only fair for 24 me to give you that opportunity to advise us before we 25 take any action. 0054 1 "And I'm happy to take any information 2 that you think will be useful for us to consider 3 before we come to any final decisions (sic) about any 4 of this." 5 So I think that's what he's looking for, 6 for Suzanne or her designee to report at the 7 Commission meeting, is that the committee has met and 8 discussed this issue. And we feel that these are 9 items that should be brought before the Commissioners 10 or that a member of the BAC should disclose upon that 11 occurrence to the Commission or to, as he mentioned, 12 myself or Kim Kiplin. 13 MR. WHITTINGTON: I guess we need to 14 just come up and say, "I got a felony. I can't be on 15 the BAC anymore," and that's it? 16 MS. WEAVER: It is my understanding that 17 if you are convicted of a felony, you cannot hold a 18 license. Is that still true? So you're not just out 19 of BAC, you're out of -- 20 MR. WHITTINGTON: Bingo. Right. 21 MS. WEAVER: -- bingo, period, so that's 22 very understandable. An allegation -- and I'm going 23 to step in with Kim -- is I've just spend the last 15 24 months of my life being accused of several different 25 things, not felonies, but with Adult Protective 0055 1 Services and Child Protective Services, as I gained 2 custody of my two grandchildren. 3 And I have missed -- and it is on 4 record -- the last two BAC meetings. I called 5 Worlanda, I called Suzanne and I said, "Look, this has 6 taken precedence. All I can do is run my bingo hall 7 right now, take care of my other businesses and now 8 three children, just finished radiation treatment, and 9 that's all I've got on my plate. Would you like me to 10 resign?" The answer was "No." 11 Okay. I am sorry, but I was accused of 12 several things from an 83-year-old grandmother, 13 because the social worker says I'm her primary care- 14 giver. That is an allegation. Adult Protective 15 Services, of course, cleared me, because I just spent 16 15 months with Child Protective Services getting 17 custody of two children. 18 An allegation is a terrible thing. It 19 broke my heart. And my grandmother has got dementia, 20 and she didn't even realize what she had done, what 21 kind of turmoil she put in my life, you know, just 22 going through those. Allegations are a terrible 23 thing. And it wasn't even, you know, any kind of 24 felony or anything like that. But an allegation is 25 something that can change a person's world. 0056 1 But a felony conviction removes you from 2 bingo, period. We all know that. We live by those 3 rules. We do that every year when we renew our 4 license. And I think I speak for Suzanne and Kim and 5 Earl and Tom and everybody on this board, that we 6 either participate in charities or run a hall of the 7 utmost standings, and that's what we want for all the 8 halls in the State of Texas. We want them to prosper. 9 Now, I know there are some people out 10 there that don't, and they take advantage of their 11 charities, but that's not what this board is about. 12 We all want them to grow and their proceeds that 13 they're able to receive to, you know, keep growing 14 also. 15 So "allegations" is a terrible word. 16 MS. TAYLOR: Tom, it's your turn. 17 MR. WEEKLEY: We have an instance in the 18 Rio Grande Valley with a police officer who was 19 arrested for beating his wife, and the DPS put him on 20 suspension. He's also a member of the Football 21 Officials Association, and he would be working with 22 high school students and middle school students. 23 And our organization put him on 24 suspension, and he did not receive a schedule for this 25 fall, until such court action proves or disproves the 0057 1 allegations against him. I think a suspension could 2 possibly be in order, until the court action 3 determined the fate or the outcome of the accusation. 4 MS. TAYLOR: Okay. And Knowles? 5 MR. CORNWELL: Well, I'm not going to 6 address any specifics today. But we can't forget, 7 none of us, and we ought to take this a lot more 8 serious than we do take it today. But the founding 9 principles behind this country, and our founding 10 fathers' principles, there were basically four of 11 them. That's the law, freedom, morality and 12 education, all under faith. 13 And I think when you get into the 14 freedom side of this thing, you've got to understand 15 the founding fathers understood the difference between 16 peace -- and it's a delicate balance between peace and 17 tyranny. 18 I think the Commissioner has taken one 19 step. He has got the full ability to authorize an 20 investigation into any of us, for his own benefit. 21 But I think the Commissioner is beginning to err 22 towards tyranny by asking us these questions or coming 23 up with a rule. 24 There's other comments he made in that 25 transcript that give me concern. You take the comment 0058 1 that he said we all need to move in the same 2 direction. I take that comment simply, "Well, yes, we 3 need to all work together," is what I take it. But 4 you could take that statement, that he wants us all to 5 think like they think. And that's not democracy. In 6 democracy, you have diversity. 7 And if we're moving in that direction, 8 then, gentleman, no, I'm 110 percent against this. 9 It's wrong. We've got to maintain our freedoms as 10 individuals. Our civil liberties do not need to be 11 violated. We need to educate the Commissioner. We 12 need to have everything we do with full morality, and 13 we need to abide by the law. The law is also a 14 balance between mercy and justice. 15 So I would say I don't believe this 16 committee, as individuals on this committee, should 17 report, have an obligation to start down the path of 18 reporting our individual activities. I think it's 19 wrong. It's a violation, because the next thing you 20 know, they'll be asking us, "What church do you go to? 21 Well, I don't like that church." No, we're not going 22 down this path. 23 I think he can -- if he wants an 24 investigation of us and our individual activities, 25 then I think that's Phil's job to take care of and do 0059 1 it, to be honest with you. 2 MS. ROGERS: I have one more thing I 3 would like on the record. Suzanne, if you are the one 4 that goes to this meeting, please remind the 5 Commissioners what we're here for. Once again, we're 6 human. We're here to advise them on the bingo world. 7 And I don't think that we should be held to this 8 higher standard than anyone else. 9 And I agree with Knowles wholeheartedly, 10 and everyone else. 11 MS. TAYLOR: Okay. I, too, say I have 12 to agree with the thoughts of the rest of the 13 committee. We are innocent until proven guilty. Your 14 bingo players in your hall could allege that you're 15 cheating because they missed their bingo and you 16 didn't stop and you didn't pay them out. I know I've 17 had people call up, or when they call up to complain 18 about us because they didn't get the paper receipt or 19 the tacos were too hot or we didn't pay them out 20 because they missed their number, you know, that's an 21 allegation of wrongdoing, that we cheated, and that's 22 cheating in the gambling world. So I, too, believe 23 that -- I believe it's already been addressed by the 24 Legislature. If you're convicted of a felony, it is 25 your duty to immediately notify the Commission. And I 0060 1 don't believe they should have to remove you because 2 at that point, then your resignation should be there, 3 along with the notification. It's already been 4 addressed and thought out, and I don't believe that 5 there is a need to go any further than is already in 6 place. 7 But I do need to have something to give 8 to the Commission at the Commission meeting. So if 9 there's a sentence that we would like to -- I mean, 10 after this meeting I think some of us are going to be 11 staying around, so maybe we can put something together 12 that expresses this thought, if that's okay with the 13 rest of you, unless you want to work on something 14 right now. 15 MR. WHITTINGTON: Well, I mean, Suzanne, 16 I hear you talking, I mean. But in all actuality, 17 they can have my name -- middle name and last name -- 18 my address, my phone number, and they can pull the 19 record on me, anything about my background. And I 20 think that if they don't see no conviction, that's it. 21 I mean, I'm a model citizen. Never mind what I've 22 been involved with or what I went to court about, what 23 got thrown out, I wasn't convicted. That's all that 24 matters, and they can pull that. That's not hard to 25 pull. That's a background check. 0061 1 MS. TAYLOR: Let me ask you something. 2 Phil, what is your recommendation, that we should put 3 something together right now? 4 MR. SANDERSON: I think you need to have 5 something together right now, because you're going to 6 present it as coming from the committee. 7 MS. TAYLOR: From the committee. Okay. 8 MR. SANDERSON: And to get together 9 after the meeting to discuss something, then that 10 doesn't necessarily come from the committee at that 11 point. 12 MS. TAYLOR: Okay. Then my 13 recommendation, let's take a 15-minute break. During 14 that break, I would like a couple of us to stay here 15 and put something together. Then when we come back 16 from the break, you guys, whoever stays or doesn't get 17 a break, we will present this to the whole committee 18 and make sure that we all agree on it. Is that -- 19 MR. CORNWELL: It would only be what, 20 four of us. Right? 21 MS. TAYLOR: Right. 22 MS. ROGERS: I'm staying. 23 MS. TAYLOR: Okay. Does that meet with 24 the approval of the rest of the committee? 25 Okay. Then we're going to take a 0062 1 15-minute break. We'll meet again at 20 after. 2 Is that legal? 3 MR. SANDERSON: I believe my counsel is 4 saying you can do that. 5 MS. TAYLOR: A quorum of four. 6 MR. SANDERSON: Four. 7 (Off the record: 11:05 a.m. to 8 11:20 a.m.) 9 MS. TAYLOR: Okay. We would like to go 10 ahead and call the meeting back to order. 11 MR. CORNWELL: Larry! 12 MS. TAYLOR: We need one more member 13 back over here, Larry. 14 Okay. During the break, committee 15 members, this is what we've come up with. Please -- 16 if this is not your views, please let me know. If you 17 would like to add to it, let me know. What it says 18 is, 19 "Allegations of wrongdoing are no reason 20 to deny a person membership on the BAC. Our state has 21 existing law that prohibits certain individuals from 22 holding a bingo license or being listed on the worker 23 registry. These existing provisions are sufficient." 24 Members, does that express our views? 25 Is this the message we would like to take back to the 0063 1 Commissioner? 2 MR. CORNWELL: I move that we accept 3 that. 4 MS. ROGERS: And I second that. 5 MS. TAYLOR: Okay. All in favor? 6 FROM THE COMMITTEE: "Aye." 7 MS. TAYLOR: Opposed? 8 MR. CIANCARELLI: This is Francis. I'm 9 abstaining. 10 MR. WEEKLEY: I abstain also. 11 MS. TAYLOR: Okay. We have two people 12 abstaining. That's Francis and Tom Weekley. 13 Okay. Anything else on this agenda 14 number? 15 Any public comment? 16 AGENDA ITEM NO. 7 17 MS. TAYLOR: Then we will go on with 18 Item No. 7, report, possible discussion and/or action 19 on charitable bingo promotions. 20 MR. CIANCARELLI: I will move over here. 21 Let me know if Bruce comes back in. 22 Okay. This is Francis Ciancarelli. I 23 guess -- I hope this is going to be a little 24 uplifting. I think we need a little boost now. And a 25 couple of things were encouraging to me before I 0064 1 launch into this presentation. It's about promotion 2 of bingo. And I heard our chairwoman tell me that she 3 went to Commissioners' meeting and was encouraged that 4 there was discussion about having some monies maybe 5 allocated to advertise bingo, promote bingo. 6 The last meeting we were here, we all 7 saw some public service announcements, which I don't 8 know about the rest of us, but I tried to send those 9 out to generate information and interest in bingo. 10 And I liked hearing Larry's comment that he not only 11 wants his hall to do well, he wants all the halls to 12 do well, because if you look at the quote there from 13 President John F. Kennedy, "A rising tide lifts all 14 boats," and basically as one does better, I think the 15 rest of us do better. 16 So again, we're talking about promotion 17 of bingo. There is not any one idea to say this is 18 it. Some of these were stemmed from the interest of 19 ideas, exchange of ideas. I visited I-35 Bingo after 20 the last BAC meeting. And from those discussions 21 about many topics, a couple of promotion ideas came 22 up, and maybe the idea of just promoting bingo is 23 really important. So I'm going to try to address 24 three items, which is targeting new markets, 25 heightening interest to play and self-sustain. 0065 1 Basically promotion of bingo involves 2 getting the word out there. Those public service 3 announcements did it. It's hard to get, you know, TV 4 and radio stations to play those, but there's things 5 that we can do to help promote bingo. 6 And again, what are we after? We're 7 after rewards. I know every time I speak to people 8 that are not within bingo and I tell them why I do it, 9 I said, "I do it because last year this organization 10 and this industry gave away $32.7 million to charity." 11 And I also tell them the story, how I worked on the 12 car wash the first year I was in Rotary, and we made 13 88 bucks, and we worked our rear ends off. So I said, 14 "I had rather do this." 15 So from that discussion with Kris 16 Keller -- and we were just knocking some things 17 around -- I happened to be in San Antonio going to a 18 convention, and I said to him, "Gee, do you ever go 19 out there and seek conventioneers? Do you ever try to 20 bring in that crowd?" 21 And first you say, "Well, that's like a 22 one time, they're going to come and go." But also 23 conventions are looking for after-hour events, they're 24 looking for stuff for spouses and guests to do, so 25 there's some opportunity. And you know what? Maybe 0066 1 those people go back and talk to the people that are 2 there from Texas and say, "Oh, I had fun at bingo." 3 So again, I also say, like in the bottom, I think like 4 there is no box. I think it's even better than 5 thinking outside the box. 6 I asked the question of Mr. Keller, I 7 said, "What's like one significant time that you lose 8 people on your average attendance?" And, actually, I 9 didn't even give him time to answer. I said, "What 10 happens on the weekends that there is the Texas school 11 tax holiday?" And he said, "Oh, attendance goes 12 down." I said, "Huh! Maybe we ought to see if we can 13 work with our Legislature to put together something 14 that would allow us to have tax-free bingo days as a 15 draw, the idea of just being there, that maybe the 16 weekend before the bingo -- I mean, people are going 17 to go buy the clothes for the kids. But maybe the 18 weekend before, you can lure some people in to play 19 bingo. And then once you get them there, then all 20 these new ideas and all these things, event games and 21 instant games and all that, you know, then they say, 22 'Oh, it's changed.'" 23 Texas sales tax holidays have worked for 24 Texas. Now we're on into the 11th year. And again, 25 I've got to point out that this is being only offered 0067 1 as an example. But this has a got big impact. It 2 sort of like changes what happens to Texas for that 3 weekend. Again, being the 11th year, we know there's 4 HB, House Bill 1801. They're still tweaking this 5 thing. But look here, they're still changing the 6 things. And I don't know if the rest of you know 7 about this change for this year. They can get breaks 8 on the new stuff. It's of interest to people, so 9 people look at it and follow it. There's actually 17 10 states that have programs similar to this, and they do 11 it more for than just the school things. Again, it's 12 a promotion and it's a break. 13 So I don't know. Would a tax-free bingo 14 day help us? I think sometimes money motivates. I 15 always tell my wife it's a short-term motivator, but 16 it does motivate. So would those tax-free bingo days 17 bring people in, because they would get to keep that 18 5 percent of the prize money that is taken away in 19 taxes? It might. 20 And this little slide shows you that 21 there is an impact outside of the State of Texas 22 where -- and again, I'm talking about using, as an 23 example, Texas holiday tax break, the school taxes. 24 But the fiscal notes had this information, that 25 actually we draw in from all the states around us 0068 1 because they wanted to take advantage of that special 2 thing, sort of the same time in promotion of bingo. 3 Actually, you could add Mexico in there on that. 4 So again, the last thing is 5 self-sustain. Call it however you want. That's like 6 you've got to work at it yourself. But sometimes it 7 doesn't hurt -- like Larry says, let's talk about the 8 good ideas. We're a big state, but we all want to 9 keep that $32.7 million up. So maybe some exchanging 10 of ideas without adversarial competition will be 11 affecting profitable ideas for all of us. 12 So again, I just wanted to bring a few 13 ideas and hope it generates some interest and then 14 questions again. None of these are exactly, you know, 15 things that we're going to do. 16 MS. TAYLOR: Thank you, Francis. That 17 was very interesting. 18 MR. WHITTINGTON: That was good. 19 Could I ask a question, Phil? On the 20 charities that still got the $250 door prize, per se, 21 is there any way that could be used towards paying the 22 taxes one day, for the 125 on the $25 session payout? 23 Can we use that just to have a tax-free day? I mean, 24 just throwing that out, can we use that as a door 25 prize, the $250 to pay the taxes? 0069 1 MR. SANDERSON: No. If I understand 2 your question, the 5 percent prize fee tax is a 3 legislative requirement, so there is nothing we can do 4 to change -- 5 MR. WHITTINGTON: But what I'm saying, 6 if it's paid through a door prize, like $250 set aside 7 for that so we can give that to the people for a 8 tax-free bingo day? 9 MR. SANDERSON: The statute requires you 10 to withhold the 5 percent prize fee -- 11 MR. WHITTINGTON: I know. 12 MR. SANDERSON: -- from the winner. 13 MR. WHITTINGTON: Okay. From the 14 winner. Okay. 15 MS. WEAVER: It does state from the 16 winner? 17 MR. SANDERSON: I believe it does, yes. 18 I'll look it up real quick. 19 MS. WEAVER: As long as we're throwing 20 out ideas, I mean, if you're going to put something 21 towards the Commission, could we not put that we would 22 like to raise the $2,500 a session or increase our 23 prizes from that cut-off at 750? I mean, those are 24 things our players want. That's why they go to 25 Louisiana or why they go to Oklahoma and why they go 0070 1 to New Mexico. I don't think anybody comes in to 2 Texas to play bingo. I think they get on the buses 3 and leave on a regular basis, because their prizes are 4 not capped like ours are. 5 MS. TAYLOR: Any other discussion on 6 Francis' presentation? 7 MR. SANDERSON: Let me answer Markey's 8 first question. 9 MS. TAYLOR: Okay. Thank you. 10 MR. SANDERSON: The statute says, "A 11 licensed authorized organization shall collect from a 12 person who wins a bingo prize a fee in the amount of 13 five percent . . ." 14 MS. WEAVER: Thank you. 15 MS. TAYLOR: Okay. Any other 16 discussion? 17 Any public comment? 18 Then we'll go on to the next agenda 19 item. 20 MR. CORNWELL: What's that cite? 21 MS. TAYLOR: I'm sorry? 22 MR. CORNWELL: What's that cite? 23 MR. SANDERSON: That's Section 2001.502. 24 AGENDA ITEM NO. 8 25 MS. TAYLOR: Then Item No. 8, 0071 1 consideration of, possible discussion and/or action on 2 the Bingo Advisory Committee work plan, including 3 report to the Commissioners on the accomplishments of 4 the Fiscal Year 2009 work plan. 5 If you remember, at the last meeting we 6 reviewed the work plan that we had for the '08-09 year 7 and had decided that it pretty much was inclusive of 8 the items that we would like to continue to work on 9 and that we would like to present this to the 10 Commissioners for their approval for this next year, 11 for the '09-10 year. What we didn't discuss at the 12 last meeting was putting together the accomplishments 13 for the year. And I cannot remember who worked on 14 that last year. 15 MS. WEAVER: Rosie. 16 MS. TAYLOR: Rosie. Rosie worked on 17 that last year. So do we have any volunteers? I 18 guess we need to put a work group together to work on 19 this. So do I have any volunteers for this work 20 group? 21 MR. SANDERSON: Then this will be on the 22 agenda for the August 18th -- that's tentatively 23 scheduled August 18th Commission meeting. 24 MS. TAYLOR: So does the approval of the 25 work plan and the accomplishments have to be on the 0072 1 agenda together or can they go separately? 2 MR. SANDERSON: I think the 3 accomplishments is what we look for first. The 4 Commissioners will look at how you accomplish the work 5 plan that you had in place for the fiscal year. And 6 then based on that, they'll make a determination of 7 accepting or recommending any changes to the work plan 8 you have proposed. 9 MS. ROGERS: I would volunteer to put it 10 together, if I could have someone just help me do a 11 little bit of research. 12 MS. TAYLOR: Okay. I'm sorry, Phil. 13 When did you say this was supposed to be, on their 14 next agenda? 15 MR. SANDERSON: It's tentatively 16 scheduled for August the 18th. 17 MS. TAYLOR: And our next meeting isn't 18 scheduled until November? 19 MR. SANDERSON: Correct. 20 MS. TAYLOR: So how can we have a work 21 group to do this? 22 MR. SANDERSON: That's why I was 23 bringing it up. 24 MS. TAYLOR: Okay. I mean, it's not 25 something, obviously, unless we're going to go down 0073 1 these items one-by-one today and discuss them or -- 2 MR. SANDERSON: You can do that, you 3 know, briefly to get comments on each of the eight 4 items or you could, you know, just go back and have 5 some individuals draft up a report that you could 6 probable present to the Commissioners that indicate 7 the activities that you performed on these eight 8 items. 9 MS. ROGERS: Right. If we can just 10 briefly go down -- nothing long -- all the items, I'll 11 take notes and I'll draft it together and I'll be here 12 to submit it to them August 18th. 13 MS. TAYLOR: Okay. The first item on 14 our work was, "The BAC will review and comment on 15 charitable bingo, gross receipts, charitable 16 distributions, expenses, attendance and any other area 17 requested by the commission." 18 And, obviously, we did do this. We 19 submitted an annual report and we commented on all 20 those four areas -- five areas -- four. And there 21 were no other areas requested by the Commission at 22 this time. 23 Any other input? 24 Item No. 2 was the comment on existing 25 and proposed rules. "The BAC will review existing 0074 1 rules and offer comments or recommendations for 2 change. The BAC will review draft rules and offer 3 comment prior to their presentation to the commission 4 unless an emergency requires otherwise." 5 Obviously, this is something that we 6 have been doing all year. We've been working closely 7 with the staff on new and proposed rules and have 8 offered our recommendations. 9 MS. ROGERS: Anyone -- 10 MR. CORNWELL: So you wouldn't have 11 anything, any numbers, new rules we've adopted -- 12 MS. ROGERS: Right. 13 MR. CORNWELL: -- in the last year, 14 would you? 15 MR. SANDERSON: I can get that. You can 16 go back and look at the four agendas that y'all had 17 over the time period. 18 MR. CORNWELL: Yes. But how many of 19 them ultimately became rules? 20 MR. SANDERSON: I would say probably in 21 the last year -- 22 MR. WHITTINGTON: Six. 23 MR. SANDERSON: -- six or eight. 24 MR. CORNWELL: Yes, it's at least six or 25 eight. 0075 1 MR. SANDERSON: Yes. 2 MS. TAYLOR: So you will get those 3 numbers to Kim? 4 MR. SANDERSON: I can do that, yes. 5 MS. TAYLOR: Thank you. 6 MS. ROGERS: Thank you. 7 MS. TAYLOR: Okay. The third one is 8 comment on the effect of administrative rules and 9 regulations on bingo operations. "The BAC will review 10 the effect current administrative rules and 11 regulations have on bingo operations and potential 12 effects new rules will have on licensees and their 13 bingo operations." 14 Any comments? 15 MR. WHITTINGTON: It seems like that's 16 just an ongoing thing, though. I mean, there's really 17 no follow-up to that. It just goes on and on. We are 18 going to always do that. 19 MS. ROGERS: Maybe once Phil gives me 20 the information of the rules, I can go back to the 21 minutes and see if there's any comments that we had -- 22 "This rule will help us with this" -- and maybe just 23 take some of those out of quotes. 24 MR. WHITTINGTON: Yes. 25 MR. CIANCARELLI: Madam Chairman? 0076 1 MS. TAYLOR: Yes, Francis? 2 MR. CIANCARELLI: Under -- if this 3 helps, in Item No. 2 that we were discussing, under 4 Tab 15 there's interoffice memos from the staff, but 5 they talk about rule development, and it gives total 6 numbers of rules for certain months. It may be 7 helpful. 8 Thank you. 9 MS. TAYLOR: Thank you. Thank you. 10 Item No. 4, study of alternative styles 11 of bingo games not currently available in Texas. "The 12 BAC will investigate, review and comment on 13 alternative styles of bingo games that would benefit 14 licensees, including not limited to linked bingo, 15 progressive bingo, instant bingo cardminders, etc. 16 Additionally the BAC will stay appraised (sic) of any 17 technological changes in the bingo industry." 18 MS. ROGERS: Didn't we have a -- 19 MS. TAYLOR: Knowles, do you comment on 20 this? 21 MR. CORNWELL: We had a tab box. We've 22 had a presentation of the tab box, which was 23 subsequently approved by the Lottery Commission, and 24 that's that tab dispenser that Gameco put in. We've 25 had the development, the further development of what 0077 1 Gameco calls V2, which is your video confirmation of 2 an event style game that has no bearing on the outcome 3 of the game. But it's a video confirmation of the 4 winner. 5 What other products have we had up here? 6 MS. ROGERS: What happened with V2? Did 7 anything go with that? I don't know about that. 8 MR. SANDERSON: It's approved. 9 MS. TAYLOR: It's video verification. 10 MS. WEAVER: And I have one of the boxes 11 at our hall and the players love it. 12 MR. SANDERSON: Can you talk into the 13 mike, please. 14 MR. CORNWELL: Can't hear you. 15 MS. WEAVER: I said I have one of the 16 instant tab boxes in our hall, and our players love 17 it. 18 MS. ROGERS: Okay. 19 MS. TAYLOR: Okay. Then Item No. 5 is 20 review of new legislation, including utilization and 21 impact study. "The BAC will review new legislation 22 and study the impact the new legislation has on bingo 23 operations." 24 I don't believe we had any new 25 legislation this last year, so that item was not 0078 1 worked on. 2 MS. ROGERS: Okay. 3 MR. WHITTINGTON: We'll talk about it 4 next year. 5 MR. CORNWELL: Suzanne? 6 MS. TAYLOR: Yes, sir? 7 MR. WHITTINGTON: Go ahead. 8 MR. CORNWELL: Did we not have 1474 that 9 we looked at and reviewed? 10 MS. TAYLOR: I don't recall reviewing 11 it, but I did miss one of the BAC meetings. 12 MR. CORNWELL: I think we talked about 13 it in May. I don't know. I've slept since then. 14 Pardon me, Chairman. 15 MR. SANDERSON: I think y'all did 16 discuss House Bill 1474 as it was going through the 17 process during the legislative session. 18 MS. ROGERS: Okay. Would it be fair to 19 say that quite a few things in 1474 will assist us in 20 bingo? 21 MR. CORNWELL: Well, yes. It's 22 streamlined licensing finally. 23 MS. ROGERS: Okay. 24 MR. CORNWELL: And you can also -- and 25 it's my constant harassments of Nelda. 0079 1 MS. TAYLOR: Okay. Item No. 6 was 2 review specific recommendations for positive public 3 awareness of charitable bingo. "The BAC will review 4 and comment on specific recommendations that would 5 improve charitable bingo through positive public 6 awareness initiatives." 7 I know that we've commented on the new 8 PSAs that the Lottery Commission has made available to 9 the licensees. 10 MR. SILVER: We also talked about it at 11 the last meeting, I thought also. 12 MR. SANDERSON: Yes. And also I think 13 Mr. Ciancarelli's presentation just moments ago. 14 MR. WEEKLEY: Yes. 15 MR. SILVER: Yes. 16 MS. TAYLOR: Are you getting all this 17 down? 18 MS. ROGERS: I've got it. 19 MS. TAYLOR: Do you need another piece 20 of paper? 21 MS. ROGERS: No. I'll just use this 22 one. 23 MS. TAYLOR: Okay. Item No. 7 was 24 review specific recommendations for improvement of 25 bingo operations. "The BAC will review and comment on 0080 1 specific recommendations that would improve bingo 2 operations by increasing gross receipts, charitable 3 distributions and attendance." 4 Knowles, was your work group -- 5 MR. CORNWELL: No. We -- 6 MS. TAYLOR: I mean, pretty much 7 coincides with your -- 8 MR. CORNWELL: Yes. We're currently 9 working on a project of prize board management. Okay? 10 I haven't got a lot to report, but we're currently 11 working on that. The other things that we could 12 possibly put in there would be -- we're about to have 13 a presentation by Markey regarding reverse raffles. 14 And I'm sure we've had plenty of presentations. Just 15 my memory is failing. 16 MR. SANDERSON: You also have a work 17 group for Market Conduct that I think could also fall 18 under that category. 19 MR. CORNWELL: Yes, that, too. 20 MS. TAYLOR: Okay. Item No. 8, advise 21 the Commission on the needs of the bingo industry for 22 operator training. "The BAC will make recommendations 23 to the Commission on beneficial items for inclusion in 24 operator training programs." 25 MR. WEEKLEY: That's moot. 0081 1 MS. TAYLOR: I know that we've talked 2 about the operator training. We've talked about the 3 changes that they have made, the number of people who 4 pass and don't pass the on-line training which is now 5 available. 6 MS. ROGERS: I know I went on personally 7 and viewed it. I don't know who I was talking to -- 8 maybe one of the auditors in San Antonio -- and then 9 came to the BAC meeting and spoke about it. 10 MS. WEAVER: We actually hosted a new 11 meeting in our hall where they came for the people 12 that were scared of it, and they actually -- the 13 meeting was that on-line. I mean, it was the exact 14 same thing. Because I had already sat through and 15 flipped through it, everything on-line, and I was 16 quite surprised to find that that was exactly what 17 they were using. 18 MS. TAYLOR: Did you take the test in 19 your hall? 20 MS. WEAVER: No. 21 (Laughter) 22 MS. TAYLOR: Okay. 23 MS. ROGERS: Thank you. 24 MS. TAYLOR: Then if it's agreeable, Kim 25 will put these thoughts together in a report, and 0082 1 we'll have it for the next Commission meeting. 2 Any other discussion? 3 AGENDA ITEM NO. 9 4 MS. TAYLOR: Then we'll go on to Item 5 No. 9, report and possible discussion and/or action on 6 the work group -- BAC nominations. 7 MS. ROGERS: This was discussed at the 8 last meeting that I did not attend. Earl is the 9 Chair. I offered to present this to y'all. 10 We have gone over the three nominations 11 that we've had. We have three positions that will 12 become available. And our three nominations for those 13 positions have been Suzanne Taylor, Larry 14 Whittingham -- "Whittingham" -- 15 MR. WHITTINGTON: Whittington. 16 MS. ROGERS: Whittington -- 17 Whittington -- and Knowles Cornwell. And Earl and I 18 have discussed this. We spoke with all three of these 19 individuals. And over the years, their time, their 20 effort that is put into the BAC, it is our 21 recommendation that we would like to present to the 22 Commissioners that we put them back on the BAC board 23 for another term. 24 So I guess I would ask if someone would 25 like to second that? 0083 1 MS. WEAVER: I would love to. I don't 2 think the BAC would be what it is without Suzanne 3 Taylor and, of course, both Larry and Knowles, too, 4 but she's our backbone. 5 MS. ROGERS: Yes, I agree. 6 MS. TAYLOR: How many nominations were 7 received? 8 MS. ROGERS: Three. 9 MR. SILVER: Three. 10 MS. ROGERS: And that would be yourself, 11 Larry and Knowles. 12 MS. TAYLOR: And I don't really -- I 13 don't even need -- I guess nominations, the forms are 14 called nominating forms. So there was no other 15 interest expressed in the BAC by other individuals? 16 MR. SILVER: No, ma'am. 17 MS. TAYLOR: How sad. 18 MR. WHITTINGTON: I think they all 19 called the Lottery Commission and they told them there 20 was no way they can win, so the -- 21 (Laughter) 22 MR. SANDERSON: I can assure you that 23 didn't happen, Larry. 24 (Laughter) 25 MS. TAYLOR: Honestly, I mean, this is 0084 1 really -- it's discouraging -- 2 MR. CORNWELL: It is. 3 MS. TAYLOR: -- because these nomination 4 forms have gone out. You know, I've seen them and I 5 know that they've gone out to all the licensees, and 6 it's very discouraging that there's so little interest 7 in the BAC. I feel that the board is operating now -- 8 I mean, I've been on the BAC for quite a few years. 9 And this first several years, Phil and I were 10 discussing, I don't believe that we were -- 11 MR. SANDERSON: Focused. 12 MS. TAYLOR: -- as productive, 13 productive and focused as we are now. It mainly was a 14 gripe session. And I don't believe that we helped 15 make the changes that, you know, and where there is a 16 source that we should have been. But I'm discouraged 17 that there is not more interest in the BAC from 18 licensees across the state. 19 MS. ROGERS: And I would agree with you. 20 Nine years, when I came to my first BAC meeting, 21 there was a lot of not very nice discussion. But, you 22 know, it's a lot of time, it's a lot of time and 23 effort. And I think a lot of people, maybe they don't 24 have that. And I would ask the Commissioners to 25 really focus on that, how much we do give up of our 0085 1 time, because we all have lives, we all have family. 2 And so . . . 3 MS. TAYLOR: Okay. There has been a 4 motion and a second. I would like to do the vote now. 5 All in favor? 6 FROM THE COMMITTEE: "Aye." 7 MS. TAYLOR: Opposed? 8 (No response) 9 MS. TAYLOR: And I abstain on this vote. 10 AGENDA ITEM NO. 10 11 MS. TAYLOR: Okay. Then, we'll go on to 12 the next item number. Item No. 10, consideration of 13 and possible discussion and/or action on a petition 14 for rulemaking relating to minimum purchase price 15 charged for electronic card-minding devices in the 16 San Antonio Metropolitan Statistical Area. 17 And, Earl, you have this agenda item. 18 MR. SANDERSON: Let me help Earl out a 19 little bit. 20 MR. CORNWELL: Thank you. 21 (Laughter) 22 MS. TAYLOR: Okay. 23 MR. SANDERSON: Earl was put on this 24 agenda item since he is the Chair of the subcommittee 25 that is market conduct. And I believe this was 0086 1 something that was discussed as part of market conduct 2 at the last BAC meeting. And Mr. Keller has filed 3 this petition for rulemaking which has a time line 4 that the Commission has to act on. So it will be an 5 item on the next Commission meeting for the 6 Commissioners to discuss and consider his petition. 7 We were adding this as an agenda item 8 for the BAC to offer input as it relates to some of 9 your work plan on rule developments and impact on the 10 industry. So that's the purpose of this item on the 11 agenda, is for the committee to discuss and 12 potentially have input and provide their 13 recommendation or their information that the 14 Commissioners may want at the next Commission meeting. 15 MS. ROGERS: And since I'm in San 16 Antonio, may I start with a question? 17 MR. SANDERSON: Yes. 18 MS. ROGERS: And I don't see Kris here. 19 Okay. 20 MR. CIANCARELLI: Let me add -- this is 21 Francis Ciancarelli -- I spoke to Mr. Keller 22 yesterday, and he apologized. His brother had to be 23 away, so he wasn't able to leave the business. So he 24 said he would miss the meeting today. 25 MS. ROGERS: That's fine. 0087 1 My only question is -- and I'm asking 2 this I guess to you, Phil. By the way it's written 3 with the underlying information there, there can never 4 be a coupon or a sale day that your price of your 5 computers would go down below $10. Correct? 6 MR. SANDERSON: I believe that may be a 7 way to interpret that, yes. Yes. It says no 8 discounts, so -- 9 MS. ROGERS: Okay. And you cannot -- 10 because it says "or in conjunction with the sale." 11 Would you be able to sell your paper and your computer 12 for $10 or the computer itself would have to be $10? 13 MR. SANDERSON: I have not analyzed 14 that. I believe this is -- there again, I was hoping 15 that Mr. Keller was here. And hopefully he'll be able 16 to attend the Commission meeting when it takes place. 17 MS. ROGERS: Would Legal be, would they 18 be able to interpret that -- 19 MR. SANDERSON: I don't -- 20 MS. ROGERS: If we were just assuming 21 this went into play -- no? 22 MR. SANDERSON: I don't think so. Not 23 at this time, no. 24 MS. ROGERS: Okay. Okay. Those would 25 be my two questions for this. 0088 1 MS. TAYLOR: I read that, because of the 2 "further," the last sentence, I read it that you could 3 not have anything in conjunction with this card- 4 minding device. 5 MS. ROGERS: Right. And trust me, in 6 San Antonio, we would love to sell our computers for 7 $50 apiece. Is it going to happen? I don't think so. 8 $10 apiece? Hopefully so. There are halls that sell 9 it substantially lower. And I see where Mr. Keller -- 10 I know where Mr. Keller is coming from. 11 But to completely say you can never have 12 a special or never have a sale or never drag in -- 13 like Francis was saying, you drag in those people that 14 one time, maybe it will stick with them, maybe they 15 will come back two weeks from now because, hey, they 16 had such a good time, I would be a little bit leery of 17 that. I'm not leery of saying you have to charge $10 18 per computer. That's fine with me. And I will say 19 that I like that he included the seven areas around 20 Bexar County so you can't just move on the outside of 21 the line. 22 That's my comments about it. 23 MR. SANDERSON: And I don't know, Earl 24 or Francis, if there were any comments at the meeting 25 that y'all -- or conference call y'all had that Kris 0089 1 may have expressed in his desire to request this 2 petition. 3 MR. SILVER: At the meeting, he 4 initially was going to discuss it. But when we got to 5 the meeting, he didn't want to talk about it. We had 6 other issues we wanted to cover, so that's when we 7 went ahead and took are of a request for rule change. 8 So we didn't discuss it at the meeting. 9 MR. CIANCARELLI: This is Francis. I'll 10 just add a couple of comments. 11 One of the reasons I went to I-35 Bingo 12 was because Mr. Keller was here, had come to the three 13 meetings I had attended since I joined the committee 14 and it was a good opportunity to hear from his 15 standpoint what he as talking about. And I think all 16 of his comments to me were always addressed to the 17 card minders and the concern about the cost, the low 18 cost. At that time it was $5.00, plus the second 19 machine for a penny. 20 And I heard yesterday it was $4.00 now 21 in some cases. So again, he was looking for something 22 that would be fair for all, knowing that it would be 23 very hard to administer, like county lines, region 24 lines and all that kind of stuff. 25 MS. WEAVER: I've got a comment I would 0090 1 like to make. Markey Weaver. I am really glad to see 2 this out of the market conduct and on its own. I 3 think it's very well-written. But I still have the 4 same question with this agenda. Maybe I wouldn't be 5 so hard on it if I had this issue in my area. 6 But is it still not written and is it 7 still not price-fixing, I mean, or am I just wrong? 8 Do I just not know what that is? But as I read it and 9 go through it, this is still price-fixing. Now it's 10 only localized to one area that he's requesting this 11 for. Is that correct? 12 MR. SANDERSON: There has been some 13 discussion of whether or not it would fall under that, 14 under price-fixing. I don't know if a determination 15 has actually been made. 16 MS. ROGERS: But does the BEA not say 17 that you can, the Commissioners can set limits? 18 Right? So this will be the Commissioners setting 19 limits, not the distributor saying, "Joe, here is 20 yours for X and, Joe, here is yours for X." You know, 21 that's -- 22 MS. TAYLOR: It would also not be the 23 halls agreeing with each other they're automatically 24 going to charge $10, because I'm sure that there are 25 halls that charge more than $10. 0091 1 MS. WEAVER: Right. 2 MS. TAYLOR: So it's not the halls 3 agreeing to charge a particular price, it's just the 4 sales minimum at which they can charge a price. 5 MR. WEEKLEY: Yes. 6 MR. CORNWELL: And Kris' argument simply 7 is that it's a minimum; there is no price being set, 8 it's a minimum. 9 MS. ROGERS: Right. 10 MR. CORNWELL: And under Section 11 2001.056, the Commission does have -- may set, "may" 12 set price or adopt a scheduled prize -- price -- 13 excuse me. I said "prize," but it's "price." 14 So I think there's some statutory 15 authority, but that's not our job. You know, it would 16 be lovely if the entire Bexar County community could 17 show up at the Lottery Commission and beg them for it. 18 MS. ROGERS: I will be there. 19 MR. CORNWELL: Yes. That's Kris' 20 whole -- 21 MS. ROGERS: I can tell you, coming from 22 Bexar County, this will be helpful. If this was 23 passed, it would be tremendous. But it doesn't say 24 that we -- our charities can't charge $12, $15 -- 25 MR. CORNWELL: Right. 0092 1 MS. ROGERS: -- which we do and have 2 done. But it will say that everybody across the 3 board. It will get rid of -- we have a problem in San 4 Antonio right now. As Francis said, if you buy one 5 computer, you get another one for a penny. You buy 6 paper, you get a computer for free. 7 MR. CORNWELL: Right. 8 MS. ROGERS: I have made it a very good 9 work ethics that you never say "free" in bingo, ever. 10 There is nothing free in bingo. 11 MR. WHITTINGTON: That's true. 12 MS. ROGERS: There should never be 13 anything free in bingo. But people have a way of 14 doing that, and that's what this is trying to get rid 15 of. 16 MS. TAYLOR: Is what we're looking for 17 here is whether we agree or disagree with this 18 petition for rulemaking or is this just informational; 19 purposes letting us know this is going to the 20 Commission? 21 MR. SANDERSON: Well, first off, it's 22 informational purposes, letting you know that it's 23 going to the Commission. Secondly, I could see a 24 Commissioner asking a BAC member, "What are your 25 thoughts or what are the BAC's thoughts on overarching 0093 1 the Commission taking the policy to start setting 2 prices for bingo products?" 3 You know, Suzanne is well aware of the 4 history. You know, it started in '95 or '97 in Corpus 5 Christi. And there have been several petitions for 6 the Commission to set prices or to set a price or set 7 a minimum price. And the Commission has -- 8 MS. TAYLOR: Declined. 9 MR. SANDERSON: -- declined to do so. 10 MS. TAYLOR: Yes. 11 MR. SANDERSON: However, we do have new, 12 you know, Commission members, three new members on the 13 board, and they may have different points of views. 14 MS. ROGERS: Earl, is there a reason why 15 Kris went just Bexar County and the seven counties 16 around it, why he did not shoot for statewide? 17 MR. SILVER: He was concerned about 18 Bexar County and what was happening in San Antonio. 19 And if you choose the seven counties around it, that 20 would eliminate people traveling from Bexar County. 21 MS. ROGERS: Right. I understand why he 22 encompassed the seven counties around it. But I'm 23 wondering if the Commissioner would not look better 24 upon it if it was statewide, because maybe Dallas has 25 the same problem. Maybe the Valley has the same 0094 1 problem. I don't know if they do. 2 MR. WHITTINGTON: No. 3 MR. SANDERSON: Well, to help answer 4 some of that question, Kris filed a petition for 5 rulemaking I believe in -- I want to say like December 6 of '07 or somewhere in that time period, of statewide 7 minimum price, and the Commissioners chose not to 8 grant the petition. 9 MS. ROGERS: Okay. So they chose not to 10 grant. So he went just down from there? Okay. 11 MR. SANDERSON: But as again, that was a 12 different Commission makeup, member makeup. 13 MS. ROGERS: Okay. 14 MR. CIANCARELLI: And, Madam Chair, may 15 I make two more comments, please? I would like to ask 16 that our committee refer to approaching this as price 17 stabilization rather than price-fixing, because that 18 gives me the shivers. And I think that's what 19 Mr. Keller is after, is that there's a minimum price 20 and not to say, "This is the price." So, in other 21 words, nothing to go below. 22 And the second thing is, after my 23 presentation, I heard some comments about the other 24 states. So I thought maybe it was worthy to mention, 25 in the San Antonio area, that there is another source 0095 1 of competition there amongst bingo halls, and that's 2 two out of the five military bases operate bingo games 3 and the prizes are reportedly $20,000. That's from 4 Mr. Keller. I can have him verify that. 5 MS. ROGERS: I think that's Lackland. 6 They have their own. But since they are a military 7 base, they are not under the jurisdiction. Right? 8 Yes. Yes, I have heard that. But they wouldn't be 9 affected by this because they're not under the 10 jurisdiction of -- 11 MR. CIANCARELLI: Right. I think the 12 point there is that they're losing business, and maybe 13 that's where some of it has gone. Maybe it's not just 14 the competition among card-minder prices. 15 MS. ROGERS: Because I-35 is near Fort 16 Sam, and they do it. 17 MR. CORNWELL: Let me also -- I want to 18 comment to the federal. What I have found, at least 19 in the Killeen area, Fort Hood, Fort Hood, under 20 their -- well, let's see -- what is a morale, welfare, 21 health division operates bingo over there. And if 22 other operators, if they're doing something in the 23 area that is affecting the other operators, they're 24 very sensitive to that. 25 And I just want to sit down and tell 0096 1 you, you can always go talk to those people if they're 2 getting a little -- you know, being a little 3 uncompetitive because they don't follow the same rules 4 as we do. They're very sensitive to that, so don't be 5 afraid to approach them. 6 MS. TAYLOR: Is there any other 7 discussion by the committee on this topic? 8 Any public comment? 9 And do I hear a motion? 10 MS. WEAVER: I make that motion. 11 MR. CORNWELL: Second. 12 MS. TAYLOR: What is that motion? 13 MS. WEAVER: That we accept Kris 14 Keller's -- 15 MS. TAYLOR: Are you saying the BAC 16 supports Kris Keller's petition for rulemaking? 17 MS. WEAVER: Yes, if he wants to put it 18 out there. 19 MS. TAYLOR: Okay. Is there a second to 20 that motion? 21 MS. ROGERS: I second. 22 MS. TAYLOR: Okay. All in favor? 23 MR. WEEKLEY: May I ask a question? 24 MS. TAYLOR: Yes. 25 MR. WEEKLEY: Are we voting in support 0097 1 of the contents or just to the transmission of the 2 petition? 3 MS. TAYLOR: It would be of the contents 4 of the petition. 5 MR. WEEKLEY: Okay. 6 MS. WEAVER: Now, I want to say, like I 7 said before I made the motion to accept, this is 8 because it will help bingo in the State of Texas. 9 Even if it's not in my area, it's in Bexar, if it 10 helps Kim and if it helps whoever. And if that's what 11 Kris needs, then, you know, and they don't say that 12 it's price -- what is the word you want me to say? 13 MR. CIANCARELLI: Stabilization. 14 MS. WEAVER: -- price stabilization, 15 then I'm all for it. 16 MR. WEEKLEY: So that's your motion? 17 MS. WEAVER: That's my motion, as long 18 as they don't start doing it everywhere in Texas. 19 MS. TAYLOR: Okay. So we've had the 20 motion to support the contents of the petition, and it 21 has been seconded. All those in favor? 22 FROM THE COMMITTEE: "Aye." 23 MS. TAYLOR: Opposed? 24 (No response) 25 MS. TAYLOR: It passes unanimously. 0098 1 Item No. 11 we've already talked 2 about -- I'm sorry. 3 MR. SANDERSON: Can I just ask you one 4 question on that also? 5 MS. TAYLOR: Yes, sir. 6 MR. SANDERSON: You know, I think you 7 need to make sure overarching, is this something that 8 the BAC also feels like that the Commission should be 9 involved in setting a price, whether it's Bexar 10 County, whether 1its the Southwest Region, whether 11 it's the Panhandle, whether it's the entire State of 12 Texas? Does the BAC feel like that that's something 13 the Commission should seriously look into? 14 MS. TAYLOR: My personal -- I'll talk on 15 this first. My personal opinion is, area-by-area, 16 region-by-region, I personally feel the Commission, if 17 there is a problem with some entities trying to put 18 other bingo halls out of business by unfair pricing 19 practices, the Commission should be able to step in 20 and help those organizations. 21 So, Earl, what do you think? 22 MR. SILVER: Would this rule change be 23 as written or would it go through a rulemaking 24 process? His request for rule change, will be as it 25 states in the notebook? 0099 1 MR. SANDERSON: The process will be, 2 first the Commissioners would either vote to reject 3 the petition or accept the petition. Then it would go 4 through the rulemaking process, which at that point in 5 time public comment would be taken and so forth. 6 MR. SILVER: Because that's why the 7 market conduct group was initially started, was 8 because of this. And further on in Agenda Item 13, we 9 may have some other things that can coordinate with 10 this also. 11 MR. SANDERSON: And there may be a 12 situation that, you know, he's requesting it be put in 13 a specific rule, which is the general conduct of bingo 14 rule -- 15 MR. SILVER: Yes. 16 MR. SANDERSON: -- depending on what the 17 Market Conduct Committee has. There may be another 18 rule that would be more overarching as a market 19 conduct activity. So I'll wait for your report on 20 that. 21 MR. SILVER: Okay. 22 MS. WEAVER: Then I would hate to see 23 the Commission start setting our prices overall. I 24 think their hands are quite full enough from what 25 they've got on their plate. I would not like to see 0100 1 them doing that all the time but to help out in a 2 certain area. As you very well stated, I think that's 3 a very good thing. 4 MS. TAYLOR: Any other comments? 5 Okay. So I know your thoughts if I'm 6 asked. Okay. Great! 7 AGENDA ITEM NO. 12 8 MS. TAYLOR: Item No. 11 has already 9 been covered, so we'll go to Item No. 12, report and 10 possible discussion and/or action on the work group -- 11 new products and new methods. Markey and Knowles. 12 MS. WEAVER: I was lucky enough to 13 attend a very exciting new idea that Tossup started. 14 I don't know exactly when he started. I've got a 15 notebook and things and went and watched a raffle in 16 Conroe. And my manager, my hall manager, went and 17 watched a raffle in Victoria, and we thoroughly 18 enjoyed it, both of them. 19 Am I not close enough? Okay. 20 I met Mr. Clay Adair, and I thought it 21 would be something that would excite -- put excitement 22 into your hall and in your area. I know I spent a 23 whole lot of money that night and very much enjoyed 24 it, even though people made fun of me, but it was 25 exciting. And, you know, whether we're doing a 0101 1 scavenger hunt or a hula hoop or karaoke or whatever 2 we're doing in our hall to make our players excited, 3 because we know they spend more money when they're 4 excited and when they're having fun, and this was very 5 exciting. 6 This is Mr. Clay Adair, and I'll turn it 7 over to him. 8 MR. ADAIR: Markey, thank you for the 9 introduction. Thank you for allowing me to speak 10 today. 11 What I've done is create a raffle 12 company, and I'm trying to help charities raise money. 13 It brings in a lot of excitement into the bingo halls, 14 and we offer large prizes. Raffles are a lawful game 15 of chance allowed in your bingo hall per 2001.416. 16 A reverse raffle creates additional 17 revenue, excitement and fun while creating new bingo 18 customers. We've seen this. I've done approximately 19 seven. I've done some in Abilene, Conroe and then 20 Victoria. I've got some more scheduled, just would 21 like to tell you about a few of the events that's 22 occurred. 23 The allowable rule, Section 2002 of the 24 Occupations Code, governs raffles. I know you know 25 this better than me. I'm not a bingo person; I'm a 0102 1 raffle person, so I'm not going to read that word-for- 2 word. 3 The reverse raffle, we have limited 4 entries. Most of them that we're running right now -- 5 and let me make it clear. I do not organize or 6 conduct these. I bring the equipment in. I have 7 special software that is proprietary software, and I 8 lease this to the charities that want to hold these 9 events. And then I also sit down with the charities 10 prior to the event and teach them how to be successful 11 at each event 12 The prizes offered throughout the event, 13 we frontload some prizes. We also have a nice dinner 14 for people so when they show up early, a lot of the 15 event tickets that are being sold that have been 16 talked about here today are sold earlier, and the 17 customers are outside lined up to get into this event. 18 Eliminated participants can reenter many times 19 throughout this fun. We have a very good exciting 20 finish, and the last participant standing wins. 21 That's the way it differs from a regular raffle. 22 Raffles provide additional revenues to 23 the charity's general fund. Charities participate in 24 the elevated revenue from the bingo activities in the 25 hall that night. Usually the attendance is up quite a 0103 1 bit from the ones that I've run, and they're all there 2 for a social event. 3 The raffle is run in conjunction and 4 simultaneously with the bingo activities. This 5 particular software, we do not even have to speak. 6 The emcee for the charities does not even have to 7 speak. It is all automated and can be run at the same 8 time as bingo. 9 New players are brought into the hall by 10 each raffle ticket. It includes dinner for two for 11 you and a guest. The dinner is usually a very nice 12 dinner. It's something that they cannot get at the 13 hall normally. Promotions, fliers and posters are 14 distributed before the event, usually six weeks prior. 15 Advertising and sponsorship at each event can create 16 extra revenue. And I can assist the charity with 17 procuring that advertising and sponsorship. 18 We have a very high percentage payout on 19 the raffle. The reverse raffle is really for bringing 20 in the new bingo customers to continue to buy the 21 event tickets and bring in new customers that have 22 never been into your hall. 23 The buildup of excitement to see who 24 will win, making the top 10. When we down to the top 25 10, as Markey said, we seat them up in the front of 0104 1 the bingo hall and all eyes are on them, and you're 2 trying to get, you know, closer and closer to it. 3 It's kind of like Deal Or No Deal, you're trying to 4 get closer and closer to the grand prize. 5 The extra chance opportunity is one of 6 the games that you can come in and buy an extra chance 7 ticket, and that will allow you to be in the top 10, 8 who wins that particular event. 9 I spoke briefly about the software. 10 We've created a very integrity-based software system 11 designed specifically for reverse raffles. It offers 12 the highest form of security and integrity. People 13 cannot palm chips. They cannot lose anything. It 14 allows the charity to ensure the highest level of 15 integrity 16 Anticipation of the event, new games in 17 the hall, new faces, new money in the hall, new 18 experiences in your hall, the awarding of more prizes 19 and larger prizes. That is many of -- several of the 20 bullets that create excitement inside of your hall 21 Why run a raffle? Just said new fun, 22 new people, new money, new success. 23 I welcome any questions and thank you 24 for this brief opportunity to speak to you. 25 MS. ROGERS: Okay. They purchase 0105 1 tickets, they purchase raffle tickets? 2 MR. ADAIR: Correct. There's several -- 3 MS. ROGERS: Kind of walk us through 4 what a person would do. 5 MR. ADAIR: Okay. There's several ways. 6 We can give away a raffle ticket through an event 7 ticket prior to this event, say four to five weeks, 8 once I meet with the charity. What we're doing right 9 now is, I can say, "Let's use one of your event 10 tickets to" -- you say, "This prize is a chance or is 11 a ticket to be in this reverse raffle," so that's one 12 way. And then the other way is for the charity to 13 sell the raffle ticket. 14 MS. ROGERS: Okay. 15 MR. ADAIR: I cannot be involved in any 16 of that. 17 MS. WEAVER: And let me address that 18 real quick, just because we just had a meeting on this 19 past Monday and we set a date for our first raffle, 20 September the 26th, after watching it, like I said, 21 and then sending my hall manager to another one. And 22 we had a whole lot of fund. 23 What I did was, our particular hall has 24 five charities, and I took our five charities and 25 broke up our tickets. We have 100 tickets. Each 0106 1 ticket is sold for $100. You have a chance, if you 2 sell that ticket for 100 -- now, this is how I have it 3 set up. It could be set up for $50 or $75. But our 4 grand prize is $5,000. 5 So our tickets are set up for $100. You 6 can have a chance for a second ticket for $25. Now, 7 you can't buy that second ticket unless you buy that 8 first ticket. So essentially you get two tickets for 9 125 and two dinners for great barbecue with sausage, 10 potato salad, beans, whatever, and it is a very good 11 meal. 12 Each charity took a packet of 10 13 tickets, which was really 20 tickets, but the second 14 chance may not be purchased. They don't have to 15 purchase it, but they may purchase that first one. So 16 each charity got 10 tickets to sell. And then my 17 manager took 10 and I took 10. So we had 70 tickets 18 out there. That left 30 tickets for our big money 19 people in the hall to get a chance to win those 20 tickets through a game, an event ticket called "Money 21 Talks" -- is that correct? -- which we have not 22 introduced in our hall yet and we're not going to 23 introduce it until all 70 of those tickets are sold. 24 That will be the last couple of weeks before our 25 raffle is done on the 26th. It happens to coincide 0107 1 with our 21st anniversary for Brazos Bingo. 2 We've already sold I think pretty close 3 to almost all those tickets already, and we started 4 selling them Monday. Actually, as I was telling one 5 of my charities about it, one of her customers was 6 sitting there and handed me $125 for the first raffle, 7 and I got the raffle ticket that afternoon. 8 So, I mean, the people are excited. 9 They're not bingo customers. These people are selling 10 outside of our hall, so we get a chance of bringing in 11 125 new customers that night. And if they're having 12 as much fun as I think they're going to have, as much 13 fun as I had, then they're going to come back. They 14 may not come back all the time, but if they come back, 15 you know, every once in a while and see what kind of 16 fun we had that night, then, you know, it's more 17 revenue for our charities on a regular basis. 18 I think that not only is it good for 19 bingo for that night for the raffle and people winning 20 money, but the deposits have been very good for the 21 charities that night also, because there's so much 22 excitement going on those event tickets that we're 23 talking about are out the roof. 24 MS. ROGERS: So the fun you're talking 25 about is the process of you drawing names out and now 0108 1 you're eliminated -- 2 MS. WEAVER: Right. 3 MS. ROGERS: -- so you're still in? 4 MS. WEAVER: -- well, the first one 5 that's out of the box or out of the bag, actually, 6 they may win a cap or a t-shirt or a coupon for a free 7 meal or something that's been donated by a local 8 company in your area, or they may win a chance to get 9 their money back on their ticket. That's one of the 10 options. But they may not win anything. And so as 11 it's coming up, it's a big -- it's up on the screen in 12 your hall. It's -- how do I say it? It's like 13 this -- 14 MR. ADAIR: It's a projection; it's a 15 10-by-10 projection. 16 MS. WEAVER: Thank you. Projection 17 system up on the wall, and your names are already up 18 there of whoever purchased the ticket. And they're 19 randomly done up there or they can be done like ours 20 are, assigned. We make them go in order. Even the 30 21 tickets that we have set aside for our big money 22 players in the hall, those people, what we found out, 23 they're scared they might not win since we just have 24 30, so they're trying to buy the tickets that our hall 25 manager had. 0109 1 So that answers some question. 2 MR. ADAIR: Ms. Rogers, yes, the closer 3 you get to the last, there is more trading and there's 4 lots of room for the charities to raise more money for 5 this event. Instead of a normal raffle, the first 6 ticket out wins, it's over. 7 MS. ROGERS: Right. 8 MR. ADAIR: So it creates a lot of 9 excitement and takes about two to three hours. 10 MS. ROGERS: And those 125 people are 11 playing bingo throughout the night, or no? Maybe? 12 MR. ADAIR: Yes, ma'am. 13 MS. WEAVER: Yes, they have to play. I 14 mean, does your hall not say that if you come in you 15 have to play? So they're playing in our hall that 16 night. 17 MR. CORNWELL: Let me clarify a little 18 bit. I think they sell 95. 19 Don't you sell 95 of the 100 tickets 20 and -- 21 MS. WEAVER: No. I have 100 tickets. 22 MR. CORNWELL: Don't you save back five 23 for auctioning off during the night? 24 The whole fun is, during the night 25 you're going to have auctions of additional tickets, 0110 1 and it lets people who want -- who have been drawn to 2 get back into the game. 3 MS. ROGERS: Okay. 4 MR. ADAIR: Correct. There's five 5 additional tickets. We structure these differently. 6 And I didn't want to go into a long set of fits 7 today -- 8 MR. CORNWELL: Right. 9 MR. ADAIR: -- which y'all are asking 10 specific questions. There's five tickets at normal, 11 and we allow the charity to stand up and auction those 12 to the highest bidder, so that goes all into the 13 charity fund. That also creates just excitement. And 14 the last one of those that's introduced could be for 15 fifth place, which is into where the prizes are. 16 MS. ROGERS: Okay. 17 MR. SILVER: All that generates 18 excitement, because we had the raffle in Conroe, and 19 our charity did fair on the raffle. But what it did 20 in the hall was tremendous. Our attendance increased, 21 went up 239 percent on the raffle night. Our instant 22 sales increase went up 439 percent. Our deposit 23 increase went up 426 percent over a sample of two 24 months of Thursdays. 25 So it really generated excitement in the 0111 1 hall. It brought a lot of new people in the hall. We 2 had our charities, such as Markey's charities, go out 3 and sell tickets to get people who don't normally come 4 to the hall to come to the hall. Now, the barbecue 5 dinner was a great enticement. We worked a deal with 6 our deli down there. We had a chicken alfredo dish as 7 well as a pork loin dish, something they couldn't 8 normally get in a bingo hall. I don't know of a bingo 9 hall that sells pork loin. 10 But that's what brought people into the 11 hall, and it generated excitement. And from the time 12 they got there -- we amended licensed times and 13 everything. By the time they got there, they started 14 playing event tickets. 15 MR. ADAIR: We pick a slow night for the 16 charity. 17 MR. SILVER: Yes. This was a Thursday, 18 a Thursday night. It wasn't a big whopping Saturday 19 or special Sunday or Friday night, it was a Thursday 20 night. And the people who were there had a real good 21 time. When bingo was over, we had probably close to 22 200 people still in the hall playing event tickets, 23 buying event tickets and waiting for the raffle 24 results. 25 And Clay has done a real good job in 0112 1 consulting the charities on how to maximize their 2 income to go into their general fund. But our focus 3 was not to put money in the general fund; our focus 4 was to increase attendance in the hall so that the 5 charities can make more money. 6 As a hard number, that one night they 7 sold $41,000 in pull-tabs, event tickets, which was a 8 tremendous feat by the staff, and they did a real good 9 job. And that goes to show all the numbers from 10 making a paltry sum in a raffle, they were able to 11 deposit in their bingo account a large sum of money. 12 MS. ROGERS: That's awesome! 13 MR. SANDERSON: Earl, I had a question. 14 How long ago was this raffle that you had? 15 MR. SILVER: July 9th. 16 MR. SANDERSON: Okay. So it was just 17 recently. Have you seen any numbers -- 18 MR. SILVER: I looked at that. And Kris 19 Keller brought it to my attention that, "Well, why 20 don't you check the next nights to see if there was a 21 decline in attendance, a decline in deposits." And I 22 talked to our managers up there that said, "No. It 23 just kept on for the weekend." 24 And we have been on and off throughout 25 the week. Our weekdays have been normal, but we've 0113 1 only had two Thursdays since then, and our Thursday 2 attendance has spiked just a little bit. So I really 3 don't have enough data to say that it was all because 4 of the raffle that Thursdays are saved. But we do 5 have some empirical data to say that there is a slight 6 increase. 7 MR. SANDERSON: And I don't know. I 8 know a lot of times in bingo halls, you've got 90 9 percent regular customers. 10 MR. SILVER: Yes. 11 MR. SANDERSON: And so if you increased 12 your attendance, there were several new players. 13 MR. SILVER: Yes, sir, there were a lot 14 of new players. 15 MR. SANDERSON: I was wondering -- 16 MR. SILVER: And our management has 17 noticed there are new players in the hall. And we try 18 to continually go out and actively seek new players -- 19 MR. SANDERSON: Okay. 20 MR. SILVER: -- for both of our bingo 21 halls. 22 MS. TAYLOR: Any other questions? 23 Very interesting. Thank you. 24 MS. WEAVER: Thank you, Clay. 25 MR. ADAIR: All right. Thank you. 0114 1 MR. CORNWELL: I've got a question. Do 2 you have a website? 3 MR. ADAIR: I do. I have a website that 4 just got live this week. It's tossupconsulting.com, 5 all run together. 6 MS. WEAVER: Is it in here somewhere? 7 MR. ADAIR: No, it's not. 8 MS. WEAVER: Do you have business cards? 9 MR. ADAIR: It just got live. I have a 10 card, but it doesn't have it on there. It's 11 tossupconsulting.com. And I will get new cards. 12 MS. WEAVER: Do you think maybe you 13 could write it on there and hand it out to anybody 14 that would be interested? 15 MR. ADAIR: Sure, I have a card. But 16 yes. Thank you. 17 MS. TAYLOR: Knowles, did you have 18 something to add? 19 MR. CORNWELL: No, I don't. My folks 20 from FortuNet could not make it, unfortunately, at the 21 last minute. And they plan on being here, they 22 promised me, on the November meeting. 23 Phil, the product is a bar-coded paper 24 and a tracking system -- excuse me. The product is 25 bar-coded paper and a tracking system. The bar-coded 0115 1 paper, the only way you can verify the paper is to 2 scan it in. The blower is a hand-free; it's 3 automated. But they give a full presentation in 4 November on that one. 5 MS. WEAVER: Has that been approved? 6 MR. SANDERSON: The paper that FortuNet 7 has submitted has not been approved at this time. 8 MS. WEAVER: Do we have any idea when it 9 might be approved? That will save our charities a 10 whole lot of money. 11 MR. SANDERSON: I don't know at this 12 point in time how far down the line it is for 13 approval. 14 MS. WEAVER: Thank you. 15 MS. TAYLOR: Okay. Then we'll go on to 16 Item No. 13, report and possible -- 17 MR. CORNWELL: Wait, wait, wait. 18 MR. HEINLEIN: I have -- 19 MR. CORNWELL: Suzanne, we have public 20 comment. 21 MS. TAYLOR: I'm sorry. Public comment. 22 MR. HEINLEIN: I should have given this 23 to Earl before you . . . 24 I have a son who is a computer 25 programmer, and he calls me his computer illiterate 0116 1 dad. 2 I'm sorry. I'm David Heinlein, speaking 3 for the charities. I wish I could do this PowerPoint 4 like Mr. Ciancarelli, because it would be a lot easier 5 to present it. 6 I have done some -- the question that 7 just came up is the question I want to answer. And 8 that is, yes, things went very well the night of the 9 raffle. But did it cannibialize the activities of the 10 subsequent sessions over the next few days? And I 11 think that what I have here answers that question. 12 I did it for two different halls. I 13 called the first hall Bingo Hall A. They held this 14 reverse raffle on a Wednesday on July the 1st. And I 15 asked the question -- I was very skeptical about them 16 doing this, because I thought, "Oh, yeah, they might 17 do real well on that particular night, but what's that 18 going to do to the rest of the week? They'll probably 19 have nobody come to the hall. You know, they'll all 20 have spent all their money on that one." Well, I was 21 wrong, and I've been very impressed with what 22 happened. 23 So on Wednesday before the raffle, that 24 hall's average deposit was $2,020 a session. And 25 their average deposit for the Thursday through the 0117 1 Sunday following this week before the raffle was 2 $2,072. 3 All right. The day of the raffle on 4 that Wednesday, their deposit average was $4,134, for 5 a total deposit of $12,402, and their instant sales 6 was over $30,000. Their Thursday through Sunday 7 increased by 18 percent on deposit, to $2,447 average. 8 And the subsequent weeks after the raffle, that 9 increase continued. It wasn't as high, but they had a 10 six percent increase on deposits for that Thursday 11 through Sunday in the next week and the following week 12 5 percent. And I'll continue to track that. 13 And if you'll notice, then the deposit 14 averages on those Wednesdays went up from the $2,020 15 total deposit to $4,000 on Wednesday afterwards and 16 $4,222. So it seems to be sustaining. So they took a 17 bad day and turned it into a good day. 18 So I think for that hall, you have to 19 conclude that the reverse raffle was a tremendous 20 success, and it improved their subsequent activity by 21 increasing attendance and net deposits. And also the 22 charity that was the sponsor of the raffle deposited 23 $1,300 into their bank account. So not only did the 24 unit benefit but so did that charity that was the 25 sponsor of the raffle. 0118 1 Now, in Bingo Hall B -- you'll never 2 guess which hall this is, after the testimony of Earl 3 Silver. Bingo Hall B held its raffle on Thursday, 4 July the 9th, and the following is the results: 5 On the Thursday prior to the raffle, 6 their average deposit was $3,872, for a total deposit 7 of $11,816. On the day of the raffle, their average 8 deposit was $5,945, and the total deposit was $17,835. 9 See, I'm a numbers man, and what means 10 most to me is how much money goes to the bank. And 11 that's where the charity is going to get its 12 distributions from, so I'll always track that. That's 13 the most important number to me. And, of course, 14 attendance is important, because it produces that. 15 Their instant sales that night was over 16 45 -- almost $46,000 for instant sales. Now, the 17 weekend that followed Friday through Sunday, their 18 deposit average went up from $2,421 to $3,445, a 42 19 percent increase. Wow! The next week the deposit 20 average for the Thursday was $3,183. They put $9,549 21 in the bank, which is an increase. Then on the Friday 22 through Sunday, they had a 36 percent increase in the 23 deposit average, and the week after that a 30 percent 24 increase in deposit average. 25 So far the statistics they're showing to 0119 1 me, that since that raffle, both these halls are 2 continuing to benefit by the increase in their bingo 3 deposits, which is the most important number. And 4 that particular charity that sponsored that raffle put 5 $2,500 in their bank account. 6 I'll be glad to answer any questions 7 that you might have. 8 MS. TAYLOR: I have a question from 9 something you were just saying. 10 MR. HEINLEIN: Sure. 11 MS. TAYLOR: So the individual charity 12 is sponsoring a raffle. Don't the sales of raffle 13 tickets have to be made by members of the one 14 organization? 15 MR. HEINLEIN: No. They can be made by 16 others. Each of the -- 17 MR. CORNWELL: Or agents. 18 MS. TAYLOR: Okay. Okay. 19 MR. HEINLEIN: Or agent. 20 MS. TAYLOR: Okay. That just made me 21 wonder about Markey, since each of her organization 22 was taking tickets. 23 MR. CORNWELL: They designate those as 24 agents. 25 MR. HEINLEIN: Yes. 0120 1 MS. TAYLOR: And so one of your 2 organizations actually receives the proceeds from the 3 raffle? 4 MS. WEAVER: Right. 5 MR. HEINLEIN: That's right. It's that 6 sponsor that's holding that raffle -- 7 MS. TAYLOR: Okay. 8 MR. HEINLEIN: -- and they are the ones 9 that will provide the prizes and they will get the 10 money that's left and put it in their bank. But 11 that's not the whole reason for the raffle. 12 MS. TAYLOR: Right. 13 MR. HEINLEIN: You know, that's to get 14 the people in. And, yes, the charity can put a little 15 bit of money in their bank account. But, actually, 16 Patel put too much money in their bank. That $2,500 17 was more than they should have. If they measure it 18 downward -- 19 MS. WEAVER: It's never more than they 20 should have. 21 MR. HEINLEIN: Well, I know. But the 22 fact is, to make the raffle more successful, you give 23 away a little bit more in prizes, and that generates 24 more excitement. And I think Markey is going to see 25 that in her raffle, that she's going to actually bring 0121 1 more people in now. 2 MS. WEAVER: St. Joseph's church is 3 doing our raffle, and they've asked the rest of our 4 unit to help them sell their raffle tickets. Just as 5 we are having a raffle to see who went first, second, 6 third or fourth or fifth within our hall, then each 7 individual charity that actually does the raffle will 8 ask the other members of the unit to help them sell 9 their tickets also. 10 MR. SANDERSON: I just want to make sure 11 everyone is aware and is remindful of the fact that a 12 raffle can be conducted during the bingo occasion, 13 during the licensed times of the organization 14 conducting bingo, but it must be conducted in 15 accordance with Chapter 2002. So, you know, if it's 16 not -- if it doesn't meet the elements of Chapter 17 2002, then it would not be considered a lawful raffle 18 and, therefore, the organizations would be in 19 violation. 20 MR. WEEKLEY: That's right. 21 MR. SANDERSON: So I just wanted to make 22 everyone sure that they follow up on that. 23 MS. TAYLOR: So does the actual raffle 24 have to be done during the session of the charity that 25 is the sponsor of the raffle? 0122 1 MS. WEAVER: Yes. 2 MR. HEINLEIN: No. I mean, the raffle 3 can be sponsored by any organization, doesn't even 4 have to be a charity that's playing bingo at the hall. 5 MS. WEAVER: We could bring an outside 6 person in. Is that what you're asking? 7 MS. TAYLOR: No. I'm asking if the 8 raffle has to be done during one of St. Joseph's 9 licensed times or can it be done during one of the 10 other organization's licensed time? 11 MS. WEAVER: No. 12 MR. HEINLEIN: There is no relationship 13 between the bingo activity and the raffle. 14 MS. TAYLOR: Okay. 15 MR. HEINLEIN: They're separate. 16 MS. TAYLOR: Okay. 17 MR. HEINLEIN: They're totally separate. 18 But there is another issue that I did investigate that 19 hasn't been brought up by Tossup or others that I 20 talked with. What concerns me is, our charities were 21 going to be giving away prizes, I got concerned about 22 the old IRS. And, you know, you always have to worry 23 about unintended consequences. 24 There are some statutes under IRS that 25 for certain prizes, you've got to withhold from the 0123 1 winners. You've got to fill out a W-2G. But these 2 raffles have been designed so far so that they do not 3 pass that threshold. We currently don't sell event 4 tickets or instant bingo with prizes more than $599, 5 because if we sold for $600, you would have to fill 6 out a W-2G and withhold either 28 percent, if they 7 give you their identification, or 31 percent if they 8 don't. 9 Well, that same thing will have to apply 10 to their raffle prizes as well. But the raffle prize 11 can up go to $5,000. $5,000 and above, you're going 12 to have to fill out a W-2G. So you want to be sure 13 that you design your prize payout downward from that. 14 Okay. Any other questions? 15 MS. TAYLOR: No. Thank you very much. 16 Any other public comment? 17 AGENDA ITEM NO. 13 18 MS. TAYLOR: Okay. Then next item, Item 19 No. 13, report and possible discussion and/or action 20 on the work group -- market conduct. Earl. 21 MR. SILVER: Well, I apologize I didn't 22 have this ready for your notebooks in time. Worlanda 23 give me plenty of notice, but I didn't have it 24 prepared. 25 We had a meeting on the 13th and we 0124 1 discussed some of the issues that were covered on the 2 previous BAC meeting. And what we need is pretty much 3 help from the staff and the Legal Department of the 4 lottery, because we came up with a list of possible 5 infractions or possible events that could happen that 6 by themselves are not illegal. But the consensus of 7 the group is that if you combine one or two or more 8 together, it could create a barrier to entry or even 9 put people in a non--competitive situation. 10 Would you like me to read those, 11 Suzanne? 12 MS. TAYLOR: Yes. Go ahead and read 13 them on into the minutes. 14 MR. SILVER: Okay. It should be a 15 violation of the Bingo Enabling Act if the following, 16 in some predefined form or combination, occurs by one 17 person, corporation, including a subsidiary or holding 18 company, limited liability company, partnership, 19 limited partnership or other legal entity, 20 collectively a person. 21 "1. The person guarantees or gives 22 assurances that a licensed authorized organization 23 will earn a minimum stated amount; 24 2. The person buys bingo products 25 (paper, pull-tabs, or leases card-minders) more than" 0125 1 certain number of times in a calendar year -- or 2 calendar quarter; 3 "3. The person causes licensed 4 authorized organizations to lower the price of bingo 5 products by more than" a certain percent on more than 6 a certain number of sessions in a calendar quarter; 7 "4. The commercial lessor rotates more 8 than 'X' {number of} licensed authorized organizations 9 in a calendar year at a bingo hall where an 10 organization is forced to use bingo proceeds earned 11 from one bingo hall to pay bingo expenses in a 2nd, 12 3rd or more bingo halls. 13 "The consensus of the group is that a 14 Market Conduct rule needs to contain a minimum of the 15 conditions above. We understand that each individual 16 action alone is not illegal. However, some form of 17 combination could pose a problem by creating a barrier 18 to enter the market or even be competitive." 19 And that's why we would like to refer 20 back over to Ms. Joseph and your staff to help us 21 develop a rule that makes sense or someplace where we 22 can start and start mulling it over. 23 MS. TAYLOR: Could you explain Item 24 No. 2? 25 MR. SILVER: If an organization does not 0126 1 make enough money to have a deposit or fulfill its 2 requirements that an entity would come in and buy 3 paper, not use it, or buy something, or however they 4 want to do it in order to prop up the charities over 5 and over again, that's why the X number of times in a 6 calendar quarter. 7 MS. ROGERS: So you're saying like a 8 charity is not making enough money in the bingo hall 9 where they play and some individual or entity comes 10 and buys paper from Goodtime, Moore Supplies, whoever, 11 and gives it to the charity to play? 12 MR. SILVER: No. Buys from the charity. 13 MS. TAYLOR: So you're talking that an 14 individual would come in the hall and buy 100 books 15 and throw them in the garbage? 16 MR. SILVER: Possibly. 17 MS. TAYLOR: Is this what you're talking 18 about? 19 MR. SILVER: That could be a scenario, 20 yes, ma'am. 21 MS. TAYLOR: Just to put money into the 22 bingo bank account? 23 MR. SILVER: Yes, ma'am. 24 MS. TAYLOR: Okay. I get that. I 25 understand that. 0127 1 MR. SILVER: And let me emphasize -- 2 MS. TAYLOR: So not necessarily the 3 person but you're talking an agent of -- are we 4 talking of the commercial lessor? Is that what we're 5 talking about here -- 6 MR. SILVER: Possibly. 7 MS. TAYLOR: -- an agent of the 8 commercial lessor -- 9 MR. SILVER: Yes, that could be one 10 example. 11 MS. TAYLOR: -- or of the 12 organization -- 13 MR. SILVER: Yes, ma'am. 14 MS. TAYLOR: -- buys paper they don't 15 intend to play? 16 MR. SILVER: Correct. That could be one 17 example. 18 MR. WEEKLEY: That's a violation. 19 MS. TAYLOR: Or computers that will not 20 actually be played? 21 MR. SILVER: Yes, ma'am -- 22 MS. TAYLOR: Okay. 23 MR. SILVER: -- or even event tickets or 24 pull-tabs, however it works out. 25 MS. TAYLOR: Okay. 0128 1 MS. ROGERS: Maybe it's just in our 2 hall, but there is not a rule that you can't leave 3 with paper? It's only in our hall and we do it. 4 Okay. 5 MR. WHITTINGTON: They leave with paper? 6 MS. ROGERS: Well, if they went in and 7 bought 100 books, I wouldn't see them playing all of 8 them, would you? 9 MR. WHITTINGTON: No. I guess -- what 10 you going to do, burn them, throw them away, what, 11 tear them up there or -- 12 MR. SILVER: We don't partake in that 13 activity, so that's possible. 14 MS. WEAVER: It was brought to our 15 attention that it's happening, and we wanted to make 16 sure that we could keep it from happening. 17 MR. SILVER: And, like I said, it could 18 go back to one of the previous topics we talked about 19 with Mr. Keller. Somebody could be lowering their 20 price in order to drive out competition. 21 MR. WEEKLEY: Predatory pricing. 22 MR. SILVER: That's why we went ahead 23 and went through lowering -- causing a licensed 24 authorized organization to lower the price of bingo 25 products by more than X percent on X number of 0129 1 sessions in a calendar quarter. 2 We don't have those specifically 3 defined, but it can go along with Mr. Keller's issue 4 that somebody could be selling a computer for $2.00, 5 giving the second one way for a penny and buying 100, 6 200-300 books they don't intend to use in order to 7 boost it back up. 8 MS. ROGERS: Wow! Okay. 9 MR. SILVER: So we would like assistance 10 from staff and legal. 11 MS. ROGERS: So Bexar County in San 12 Antonio is not the only place, apparently, that has a 13 problem with people doing this. Okay. That's new to 14 me. Okay. 15 MR. SILVER: Yes, it was new to me also. 16 MS. TAYLOR: So this is something that 17 y'all have been working on, but you're not ready 18 actually to bring it -- this is what you've been 19 working on, but it's not ready, actually, for the 20 group to vote on proceeding with, because you still 21 need the staff's help to -- 22 MR. SILVER: We would like the staff to 23 assist us in a rule. 24 MS. TAYLOR: Okay. 25 MR. SILVER: Or just something to start 0130 1 with, with these conditions in mind, or if something 2 they would like to add that we can develop, because 3 I'm not an attorney and I wouldn't know how to proceed 4 that way. 5 MR. SANDERSON: I see this as a report 6 from the Market Conduct Subcommittee, and they're 7 asking the BAC to take their recommendations and vote 8 on those recommendations, depending on the outcome, 9 and move with requesting the Commission to begin 10 drafting a rule that would encompass the work group's 11 recommendations. 12 MS. TAYLOR: Is that it, Earl? 13 MR. SILVER: Exactly, Phil. 14 MR. SANDERSON: I thought I read his 15 mind. I'm sitting here, you know, thinking, and I had 16 to pause a minute because he drifted off somewhere. 17 MS. ROGERS: Well, as someone who has 18 this happen in Bexar County, if this is happening 19 other places, I would like to see staff assist in 20 writing some type of rule. 21 MS. TAYLOR: Is that a motion? 22 MS. ROGERS: That is a motion for staff 23 to assist in writing a rule to be presented to the 24 Commissioners to have these illegal activities. 25 MR. SILVER: Well, it would be a rule to 0131 1 go into a work group. 2 MS. ROGERS: Work group? 3 MR. SILVER: Correct. 4 MR. SANDERSON: We could draft a rule 5 and circulate it back to the work group and then bring 6 it back before the BAC at, you know, hopefully the 7 next meeting; if not, you know, the one after, 8 depending on how much impact House Bill 1474 has on 9 other activities. 10 MR. WHITTINGTON: Right. 11 MR. SANDERSON: But, you know, I think 12 this is something that, Kimberly, in your report on 13 the activities of the BAC for their work plan would 14 also be very beneficial to add in your comments. 15 MS. ROGERS: I motion to do what Phil 16 just said. 17 MS. TAYLOR: Okay. There was a 18 motion -- 19 MS. WEAVER: I second that. 20 MS. TAYLOR: -- and a second. So all in 21 favor? 22 FROM THE COMMITTEE: "Aye." 23 MS. TAYLOR: Any opposed? 24 (No response) 25 MS. TAYLOR: Okay. Any other public 0132 1 comment? 2 AGENDA ITEM NO. 14 3 MS. TAYLOR: We'll go on to Item No. 14, 4 report and possible discussion and/or action on the 5 work group -- prize board management. Knowles? 6 MR. CORNWELL: I'm sorry, Madam Chair. 7 I have not been able to get to that project, and I 8 have no report today. And my apologies. 9 MS. TAYLOR: No problem. 10 MR. CORNWELL: Thank you. 11 MR. WEEKLEY: We're moving right along 12 here today, real quick. 13 AGENDA ITEM NO. 15 14 MS. TAYLOR: Item No. 15, report and 15 possible discussion on the actions of the Charitable 16 Bingo Operations Division. 17 MR. SANDERSON: Members, in your 18 notebook is a copy of the memo that I prepared for the 19 Commissioners on the activities of the Bingo Division. 20 I believe y'all have had an opportunity to review it. 21 There's actually two in here. There's one for the 22 month of May and one for the month of June. And if 23 you have any questions, I'll be glad to answer them. 24 MS. TAYLOR: No questions? 25 MS. ROGERS: I don't have a question, 0133 1 but I would like to say that it was very interesting 2 to read through this, and I appreciate that. 3 MR. SANDERSON: Once we started putting 4 down numbers, we realized how much work we actually 5 do. 6 (Laughter) 7 MS. ROGERS: Pat on your back. 8 MR. CORNWELL: Where is the 9 Commissioner? 10 MR. WHITTINGTON: Obviously y'all saved 11 some paper by not putting the little pie charts in the 12 report anymore. That's great. 13 Thank you, Bruce. That was good. 14 MS. TAYLOR: Any other comments from the 15 committee? 16 Public comment? 17 AGENDA ITEM NO. 16 18 MS. TAYLOR: Item No. 16, public 19 comment. Any public comment? 20 AGENDA ITEM NO. 17 21 MS. TAYLOR: If there's none, we'll move 22 to Item No. 17, consideration of and possible action 23 on future Bingo Advisory Committee meeting dates 24 and/or items to be discussed for future meetings. 25 November will be our next meeting, 0134 1 tentatively. 2 MS. WEAVER: Suzanne, can I ask a 3 question? 4 MS. TAYLOR: Yes. 5 MS. WEAVER: Sometimes we're trying to 6 get things done, and I know especially for you and Kim 7 who seem to do a lot of the paperwork, trying to get 8 the minutes and stuff done and prepared for the 9 Commission, would it be possible to roll back each one 10 of our meetings on the month or actually previously? 11 So instead of meeting in November next, if we met in 12 October, that way you have more time for the next 13 meeting? 14 Or like this one, you've only got two 15 weeks, like there was something that we were really 16 wanting to get done and now we're having to crunch it 17 to get it done, Kim. Is that a possibility, to roll 18 each meeting backwards a month? Instead of hitting, 19 you know, in May, it would be in April. And November 20 would be October? Is that something feasible or not? 21 MS. TAYLOR: Does the Commission 22 normally meet monthly now? 23 MR. SANDERSON: The Commission meets 24 monthly. And I was actually going to bring this up 25 also, so thank you, Markey. 0135 1 The Commission, they're scheduled to 2 meet on a monthly basis. The last discussion that 3 they had, I believe they were looking at meeting on 4 the second Thursday of each month. Now, however, in 5 August, it's going to be on Tuesday the 18th, so 6 you've got to realize that it may change. But, you 7 know, they're looking at planning on meeting on the 8 second Thursday of each month. 9 So in looking at that, that time line, 10 the October meeting would be the 15th, the November 11 meeting would be like the 19th. So you would just be 12 barely two weeks with the November meeting before that 13 Commission meeting. And I was thinking along the same 14 lines of Markey, in looking at maybe moving the 15 meeting back to maybe the third Wednesday of each 16 month. 17 MS. TAYLOR: That's when it used to be, 18 wasn't it? 19 MR. SANDERSON: I think so. And I say 20 that because then that would in most cases give you 21 about three to four weeks to get items prepared for 22 the next Commission meeting and not having to wait a 23 full month or more, you know, to have that 24 presentation. 25 MS. ROGERS: So like moving our next 0136 1 meeting to October 21st, which would be the third 2 Wednesday of October? 3 MR. SANDERSON: Yes, October 21st. 4 MS. ROGERS: And then we would have 5 almost a month. 6 MR. SANDERSON: And the tentatively next 7 scheduled meeting for the Commissioners then would 8 be November the 19th. So, yes, you would have like, 9 you know, 28, 29 days -- actually, less than that if 10 you wanted to put items in their notebook, which we 11 would prefer. But, you know, that would give you at 12 least a couple of weeks to get the information 13 together. 14 MS. ROGERS: I'm fine with that. 15 MS. TAYLOR: Fine with me. 16 MR. WHITTINGTON: When, October 21st? 17 MS. TAYLOR: Is it okay to change the 18 meeting for everybody? Not a problem? 19 MR. WHITTINGTON: It would be a 20 Wednesday? 21 MR. SANDERSON: It would still be a 22 Wednesday. If that's the desire, it would still be a 23 Wednesday. If we look at meeting like October the 24 21st and then January the 20th -- 25 MR. WHITTINGTON: Then January. And so 0137 1 on and so on. Okay. 2 MR. SANDERSON: -- April the 21st and 3 July the 21st. And I don't think any of those -- none 4 of those fall within any holiday periods or right 5 before or after holiday periods, so there shouldn't be 6 any conflict. 7 MS. TAYLOR: Do we have to do this with 8 a motion or can we say that we've agreed to move the 9 meetings? 10 MR. SANDERSON: Well, I think you need a 11 motion to say it, motion that you would tentatively 12 like to schedule the meetings. 13 MS. TAYLOR: Okay. Do I hear a motion 14 that we would like to tentatively schedule our meeting 15 for October 21st? 16 MS. WEAVER: I make that motion. 17 MR. WHITTINGTON: Second. 18 MS. TAYLOR: All in favor? 19 FROM THE COMMITTEE: "Aye." 20 MS. TAYLOR: Opposed? 21 (No response) 22 MS. TAYLOR: None. Okay. Our next 23 meeting will be tentatively scheduled for 24 October 21st. Items to be considered at this next 25 meeting, of course, will be prize board management. 0138 1 MR. CORNWELL: Thank you. New game. 2 MS. TAYLOR: New game. 3 MR. CORNWELL: Yes. New products. 4 MS. TAYLOR: New products. 5 MR. CORNWELL: FortuNet promised me they 6 would be down here. 7 MR. SANDERSON: You may have a report 8 from the committee on the bingo -- the quarterly 9 report, as well as market conduct. 10 MR. CIANCARELLI: When is the next 11 Commissioners meeting in place? 12 MR. CORNWELL: The 18th. 13 MR. SANDERSON: Tentatively right now 14 the next Commission meeting is August the 18th. 15 MS. TAYLOR: Thirteen days. 16 MR. CIANCARELLI: They have it here? 17 MR. SANDERSON: Here, yes. 18 MR. CIANCARELLI: Thank you. 19 MS. TAYLOR: Yes. Are we going to talk 20 about House Bill 1474 again or -- 21 MR. SANDERSON: We definitely can have 22 that as an agenda item, yes, any updates on where 23 we're at with the implementation of it. 24 MR. WHITTINGTON: That county-to-county 25 thing is involved in that bill -- right? -- counties 0139 1 touching counties and so -- 2 MR. CORNWELL: Right. 3 MR. SANDERSON: Conducting bingo in a 4 contiguous county? 5 MR. WHITTINGTON: Yes. 6 MR. SANDERSON: Yes, that's part of that 7 bill -- 8 MR. WHITTINGTON: That's great. 9 MR. SANDERSON: -- as long as it's 10 legal -- 11 MR. WHITTINGTON: Huh? 12 MR. SANDERSON: As long as it's legal in 13 that location. 14 MR. WHITTINGTON: Oh, yes. 15 MR. SANDERSON: There are some counties 16 where bingo is not legal. 17 MR. WHITTINGTON: I'm talking Dallas, 18 Tarrant and Dallas. We've got one of our charities 19 moving to Tarrant County. 20 MS. TAYLOR: I'm sorry, Markey. Could 21 you speak up, please. 22 MS. WEAVER: I said would you like to 23 know how the raffle comes out at the next meetings? 24 MS. TAYLOR: Of course we would. 25 Okay. If there's any other items 0140 1 besides the regular ones that we normally have on the 2 agenda that you would like to see on there, if you 3 would get ahold of Phil or Worlanda or myself and let 4 us know you would like to have them on the agenda. 5 And other than that, any other comment? 6 AGENDA ITEM NO. 18 7 MS. TAYLOR: Then we'll adjourn this 8 meeting at 12:47. 9 (Meeting adjourned: 12:47 p.m.) 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 0141 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 14th day of August 2009. 15 16 17 ________________________________ 18 Aloma J. Kennedy Certified Shorthand Reporter 19 CSR No. 494 - Expires 12/31/10 20 Firm Registration No. 276 Kennedy Reporting Service, Inc. 21 Cambridge Tower 1801 Lavaca Street, Suite 115 22 Austin, Texas 78701 512.474.2233 23 24 25