0001 1 2 3 4 * * * * * * * * * * * * * * * * * * * * * * * * * * * 5 6 BINGO ADVISORY COMMITTEE 7 MEETING 8 9 FEBRUARY 27, 2003 10 11 * * * * * * * * * * * * * * * * * * * * * * * * * * * 12 13 14 15 16 17 18 19 BE IT REMEMBERED that the BINGO ADVISORY 20 COMMITTEE meeting was held on the 27TH of FEBRUARY, 21 2003, from 10:04 a.m. to 4:21 p.m., before Shelley N. 22 Jones, RPR, CSR in and for the State of Texas, 23 reported by machine shorthand, at the Offices of the 24 Texas Lottery Commission, 611 East 6th Street, Austin, 25 Texas, whereupon the following proceedings were had: 0002 1 APPEARANCES 2 3 Chairwoman: Ms. Virginia Brackett - Lubbock, Texas 4 Committee Members: 5 Ms. Suzanne Taylor - Corpus Christi, Texas Mr. Daniel Moore - Houston, Texas 6 Mr. Larry Whittington - Dallas, Texas Mr. Pete Pavlovsky - Rosenberg, Texas 7 Mr. Mario Manio - Garland, Texas Mr. Jack Dougherty - Austin, Texas 8 Charitable Bingo Director: 9 Mr. Billy Atkins 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 WRIGHT WATSON STEN-TEL 0003 1 INDEX 2 3 Appearances....................................... 2 4 5 AGENDA ITEMS 6 ITEM NUMBER 1.................................... 4 7 ITEM NUMBER 2.................................... 4 8 ITEM NUMBER 3.................................... 6 9 ITEM NUMBER 4.................................... 37 10 ITEM NUMBER 5.................................... 51 11 ITEM NUMBER 6.................................... 119 12 ITEM NUMBER 7.................................... 135 13 ITEM NUMBER 8.................................... 154 14 ITEM NUMBER 9.................................... 224 15 ITEM NUMBER 10................................... 232 16 ITEM NUMBER 11................................... 242 17 18 19 20 21 22 23 24 25 0004 1 February 27, 2003 2 Bingo Advisory Committee Meeting 3 CHAIR BRACKETT: Good morning. It's 4 10:00 o'clock, so we will call to order. I'm Virginia 5 Brackett, the Chair of the Bingo Advisory Committee. 6 And when you speak, please be sure 7 and -- that your microphone is on and speak into it 8 and state your name for the record. And also thank 9 you for turning off your telephones and your pagers, 10 anything that might disturb the meeting. 11 Marilyn Matthews will not be here this 12 morning. She has a business conflict, and Saleem has 13 resigned from the advisory committee. I have a letter 14 that he's submitted just stating that, by this letter 15 I give you notice effective January 31, I will no 16 longer serve as a member of the Bingo Advisory 17 Committee. He was the system service provider 18 position on the committee -- on the advisory 19 committee. 20 The second item on the agenda is the 21 consideration and possible action and approval on the 22 minutes of our last meeting, which was December 12th. 23 Does anyone want to make a motion on 24 that? 25 Do you want me to consider them 0005 1 approved by a general consensus? 2 MR. PAVLOVSKY: As printed. 3 CHAIR BRACKETT: As printed? Okay. 4 And there are no corrections, correct? 5 All right. Thank you. Then the -- the 6 minutes of the December 12th meeting are approved as 7 printed and as distributed. 8 I want to welcome Chairman Clowe. He 9 just came in. Thank you for being here. 10 Are you wanting to make some comments 11 at this point? 12 CHAIRMAN CLOWE: No, ma'am. 13 CHAIR BRACKETT: Okay. This might be 14 your only chance. 15 CHAIRMAN CLOWE: I'm just glad to be 16 here. 17 CHAIR BRACKETT: Okay. Well, we are 18 too. We are too. It's really nice to have the people 19 here that we do have because I know it was not an easy 20 time to get here with the weather like it -- like it 21 is down in this part of the state. I come from what 22 y'all consider far west Texas. We don't have a drop 23 of ice out there. It is ten degrees, but there's 24 nothing frozen. It's very, very dry. So there is 25 something to be thankful for in the desert. 0006 1 Item Number 3, Billy Atkins is to 2 report, possible discussion, and/or on an orientation 3 for members. 4 MR. ATKINS: Thank you, Madam Chairman, 5 Members. 6 Members, as you know, there's been a 7 lot of discussion over the past several months about 8 the effectiveness of the advisory committee and the 9 information that it provides the Commission. 10 Additionally, the effectiveness of the advisory 11 committee was the subject of an issue in the Sunset 12 Commission's report on the Texas Lottery Commission. 13 So what we did, as we tried to work through this 14 process, we went back and we reviewed a lot of those 15 discussions that occurred about the advisory committee 16 both in BAC meetings, as well as Commission meetings. 17 And we tried to come up with a way that we thought 18 would help address a lot of those questions that 19 seemed to be raised over and over again. 20 And one of the things that was brought 21 up, actually by someone on my staff is has -- what 22 exactly has the BAC been told are their expectations, 23 et cetera. And we got to thinking about it, and we 24 realized that, you know, there had never been an 25 orientation for the advisory committee. You know, we 0007 1 provide an orientation whenever a new committee is 2 formed about the agency and its function, but there's 3 never been anything that described exactly the 4 advisory committee and its roles and its functions. 5 So that's what we tried to put together 6 here, and we've called it a frame -- a framework for 7 success. And the reason we did that -- and it's a 8 shame that Marilyn can't be here, but I believe it was 9 at the November BAC meeting when Commissioner Clowe 10 addressed the members and he talked about from his 11 standpoint as one member of the Commission what -- 12 what he felt he would it like to get from the advisory 13 committee. And Marilyn made the statement that she 14 appreciated his comments because it gave her a better 15 framework from which to approach her responsibilities. 16 So what we would like to do is run 17 through this presentation today for the members of the 18 advisory committee, and we would think that the bulk 19 of our discussions will center around Item 7, which is 20 the work plan for the Bingo Advisory Committee. And 21 if you'll recall at our last advisory committee 22 towards the end of the meeting, there was some 23 significant conversation, discussion among the 24 committee that took place at that time. And so we've 25 incorporated a lot of that in there. 0008 1 The first thing we did is we listed in 2 your handout, several definitions that we think will 3 be beneficial to the advisory committee members. 4 These cover terms that are common to state regulatory 5 agencies and state government, in general. So we've 6 tried to cover terms that are commonly used and that 7 we think will be of benefit to the members, as you go 8 through your process of deliberation and consideration 9 of items that may come before this committee -- that 10 you may want to make recommendations to the Commission 11 on. 12 And some of these -- you know, going 13 through act, agenda, appropriation, I think they're 14 terms that you're probably generally familiar with, 15 but we wanted to include them here thinking that they 16 may provide a little more clarification to you on 17 exactly what some of the restrictions are that we 18 operate under. Some of the definitions -- for 19 example, on the advisory committee, you know, there's 20 language in the Bingo Enabling Act that's very 21 specific as to what the advisory committee is, what 22 their roles and what their functions are. 23 Again, the deliberation is the exchange 24 that takes place among the members when an item is up 25 consideration as you're working on reaching your 0009 1 decisions as you're conducting your business in an 2 open meeting before the public. The legislature, as 3 you know, is the law-making body of this state. They 4 are currently in session, and there's a legislative 5 session taking place. 6 We have on here definitions about rules 7 and statutes because it seems like the same question 8 keeps being raised time and time again as to what's a 9 rule and what's a statute, what can we do, what can't 10 we do. Again, we point out the Bingo Enabling Act is 11 the statute that we operate under, and that's what's 12 contained in this book. If there is any question, any 13 issue that the advisory committee wants to address 14 relating to the Bingo Enabling Act it's important that 15 the committee remember and understand that any changes 16 to that document are going to require legislative 17 changes. There's nothing that the Commission do to 18 enact on their own. 19 Rules, on the other hand, as you know, 20 are -- this is a -- you know, essentially the 21 definition of the rule as it appears in the 22 Administrative Procedures Act. And the rule is 23 generally a state agency's statement of -- that 24 implements, interprets, or prescribes law or policy or 25 procedure or practice. Rules generally don't deal 0010 1 with the internal management or operation of an 2 organization. 3 So one thing you might notice as you go 4 through this document, the Bingo Enabling Act, is 5 there -- there is a general provision that gives the 6 Commission broad rule-making authority, but there's 7 also specific rule making authority. You'll see in 8 the Bingo Enabling Act, the commission may or shall 9 adopt rules, et cetera, et cetera. These are the 10 administrative rules. These are, as you know, what we 11 bring before you for comment. 12 The purpose of bringing those documents 13 for you -- we now do it -- we have a process in place 14 where we bring rules before the advisory committee at 15 least two different times. So we have created what we 16 call an informal comment period, so if there are 17 questions, if there is suggested language that people 18 want to submit, this informal comment period is the 19 time for that to occur. 20 One of the items that's going to be on 21 the work plan that we'll discuss later will be the 22 development and rule of -- of -- or the development 23 and rule -- or the development and review of agency 24 rules and, you know, it may be that the Committee 25 wants to set up a process whereby after a rule comes 0011 1 before the committee for first reading, the committee 2 may want to appoint a subcommittee to then meet and -- 3 and work on that rule prior to it coming back to them 4 for a second reading. 5 I had hoped that Diane Morris would be 6 here because I wanted her to go over the Texas Open 7 Meetings Act and also the work of subcommittees in a 8 quorum. So, Madam Chair, if it's okay with you. I 9 will move ahead on this presentation, and then when 10 Diane gets here, we will go back to those. 11 CHAIR BRACKETT: That's fine. 12 MR. ATKINS: We've included the purpose 13 of both the Lottery Commission and the Bingo Advisory 14 Committee. And what we've done is we've taken them 15 straight out of statute. We think they're pretty 16 clear. We think they're pretty straightforward. The 17 Lottery Commission is a decision-making body. The 18 advisory committee, like its name implies, is an 19 advisory body. They offer advice to the Commission, 20 and with that advice, the Commission may or may not 21 take action. 22 We tried to put together what we think 23 some objectives of the advisory committee should be 24 and that by adhering to these objectives, it will help 25 improve the type of information that goes to the 0012 1 commission. It helps facilitate their decision-making 2 process. 3 First of all, I think the advisory 4 committee is an excellent means to enhance the input, 5 from the bingo industry to the Commission. A lot of 6 y'all, the majority of y'all, are active licensees. 7 You're out working in bingo on a regular basis. We 8 would hope that you would have contacts with other 9 people in the bingo industry and -- and then bring 10 that information. Forward to these meetings and have 11 deliberations over any of the knowledge that you get 12 from other licensees in this meeting. 13 We think the advisory committee can 14 serve a very important role in terms of being an 15 extension of the agency when it comes to gathering of 16 information and the specific example that I -- that we 17 have here is -- deals with surveying players and 18 licensees. And as you recall, that was discussed. 19 That was one of the items that was discussed at the 20 last advisory committee meeting. Your -- your newest 21 member, John Dougherty, has -- has already done some 22 work on that, and we'll talk about that a little more 23 when we get to the work plan. 24 I think it's very important that any 25 information that the advisory committee takes forward 0013 1 to the Commission contain four elements: that it be 2 accurate, that it be meaningful, that it be factual, 3 and that it be unbiased. That is -- the information 4 that's going to be of most benefit to the Commission 5 is going to be that factual information that isn't 6 based on what some guy told some guy who you heard 7 about but actual factual information. And, again, the 8 information that doesn't come from a self-interest but 9 from a desire to benefit the entire industry as a 10 whole. 11 Unfortunately, I think we all know that 12 in the past there may have been either members of the 13 public or -- or members of the committee who have 14 brought forward their own personal interests and tried 15 to use this forum as a means to resolve that, and 16 that's not appropriate. And what the Commission is 17 going to be looking for are industry-wide measures 18 that they can then take and consider in their meetings 19 and their public deliberations. 20 If I can now go back and ask Diane 21 Morris to come up and talk about -- and flip back and 22 go back to the definitions, have Diane talk to the 23 committee in a little more detail about the Texas Open 24 Meetings Act, subcommittees, and quorums. 25 MS. MORRIS: Good morning. First, I 0014 1 have to apologize. I'm late, and I'm sorry for that. 2 As to the Open Meetings Act, most of 3 you should be aware that the rule that the agency has 4 adopted, that the Commission has adopted, states that 5 this committee should abide by the Open Meetings Act. 6 Technically, what that means is under the law itself, 7 this committee may not be required to comply with the 8 Open Meetings Act. But the Commission, in its wisdom, 9 has adopted the rule that requires you to comply with 10 the Open Meetings Act. And so sometimes it sounds a 11 little technical, but that's why we're saying that 12 this committee is required to comply with the 13 administrative rule of this agency that imposes the 14 requirements of the Open Meetings Act on the 15 committee. 16 Do you understand that? Okay. 17 We've had discussions in the past 18 regarding the Open Meetings Act. As you know, that's 19 why I am here. There was a recommendation or an 20 acknowledgment in the Sunset documents that suggested 21 that having an attorney present for your meetings may 22 benefit. It may help insofar as the open meetings 23 issues are concerned, and that is why I'm here. 24 I think I've -- I've been coming to the 25 meetings now since August or September. And so for 0015 1 some of you, what I'm about to say may seem old or you 2 already know that. And if that's the case, I'm very 3 happy. I hope I'm boring you. I hope that you will 4 have heard this many times before, and I have nothing 5 new to add, but I'm just saying it again. 6 As part of Mr. Atkins' slides, he does 7 give the definition that is out of the Open Meetings 8 handbook. This is the handbook (indicating). You can 9 get it on line at the Attorney General's web site. We 10 have copies upstairs. The on-line version allows you 11 to do word searches and print out particular 12 sections. And so, again, that's his source for the 13 citations that he's giving. I'll say it. It's not up 14 there necessarily, but under the Open Records Act, 15 this is also the handbook from the Attorney General's 16 office if you're curious about that. 17 It goes without saying then, that the 18 BAC must comply with the terms of the Open Meetings 19 Act. In that regard, I think we'll come to some more 20 questions -- and I don't know if you would rather me 21 get into it now or later -- about subcommittees. What 22 would you like? 23 MR. ATKINS: Well, how -- are there any 24 specific requirements as to how subcommittees function 25 under the Open Meetings Act? 0016 1 MS. MORRIS: Okay. There have been 2 recent discussions with the committee on sub -- 3 subcommittees of the committee -- of the BAC. What I 4 mean is if the Chair were to say, "I would like two 5 people to be on a subcommittee, and I would like them 6 to look into," and I will just say, "progressive 7 bingo." I want them to gather information on 8 progressive bingo; perhaps, work out a discussion or 9 some points to consider regarding progressive bingo; 10 what should be the thinking of the BAC on progressive 11 bingo; whatever is, if you will, the charge given to 12 the subcommittee. 13 The concept here is -- is that the 14 chair can appoint subcommittees. She can appoint a 15 chair to the subcommittee, and she can appoint 16 members. Right now your membership, I understand, is 17 nine. Is that still a correct statement? Okay. 18 MR. ATKINS: Well, with one vacancy. 19 MS. MORRIS: With one vacancy. 20 And so the quorum of nine is five. If 21 she were to appoint a subcommittee of two people, the 22 legal lingo is, well, you know, that's less than a 23 quorum. And right now I think we all understand that 24 less than a quorum, you can talk to each other. And 25 an item, when you're less than a quorum, you can 0017 1 discuss matters that even do relate to bingo. The 2 danger, of course, and you've heard me say this, is 3 how quickly less than a quorum becomes a quorum when 4 you're walking to lunch, and how quickly less than a 5 quorum becomes a quorum when somebody walks up and 6 joins you. 7 But if the -- if the Chairman was to 8 appoint a committee of two people and say, please, be 9 on my subcommittee and look into progressive bingo, 10 then what should be in your minds should be: Do they 11 have to comply with the Open Meetings Act? Do they 12 have to post meetings? Do they have to sit in a room 13 and talk to each other in front of everybody and allow 14 the public to at least attend and hear? Remember the 15 public doesn't have the right to speak in open 16 meetings, but they do have the right to come here and 17 listen to you deliberate. You can afford them the 18 right to speak. 19 In your minds, you should be wondering, 20 "Does that mean I have to have an agenda and have it 21 posted and have a notice posted of a meeting of two 22 people." And my answer is, it depends. One person 23 appreciated that. The rest of y'all have not cracked 24 a grin yet. 25 According to the attorney general's 0018 1 office and their handbook on the Open Meetings Act, 2 whether a committee, a subcommittee of less than a 3 quorum must post their meetings and hold open meetings 4 of a subcommittee depends on whether the full 5 committee is going to, and this is the words they use, 6 rubber-stamp the decisions. This is kind of negative 7 thinking in a way or backwards thinking. If you 8 appoint a committee, a subcommittee, and that 9 subcommittee, no matter what they do, no matter what 10 they say -- I'm sorry -- the full committee is going 11 to rubber-stamp it. We agree. We agree. We agree. 12 We agree. We'll do it. We'll do it. We'll do it. 13 No deliberation. No discussion. Total trust. I say 14 the words "total abdication." If that is how you plan 15 to conduct business, then these subcommittees must 16 post their meetings. 17 So the opposite is if you're going to 18 have a subcommittee of two people and no matter what 19 wise ideas they come up with and no matter how much of 20 the -- the vast amount of research and information or 21 recommendations or plans or draft this or draft that, 22 no matter what all they come up with and all the work 23 they intend to do. If it's brought to the full 24 committee and you present it; there is deliberation; 25 there are plans to be discussion; there is in your 0019 1 minds every intent to make changes to it, if you so 2 wish and it's voted on; that there is every notion 3 that we are not going to be a rubber stamp; that we 4 are going to look at it again; that we are going to 5 deliberate, then, no, the subcommittees do not have to 6 have their meetings that are posted and open to the 7 public. 8 I cannot tell you how you plan to run 9 your meetings, and I cannot tell you how you plan to 10 you plan to treat the dignity of what the subcommittee 11 brings to you. If you plan to rubber-stamp it, then 12 those meetings must be open. You have no track record 13 with subcommittees, but I think it's fair to say that 14 you do have a track record with how you are as the 15 committee. It has been a lively debate. It is very 16 open. It is at some times, I think, contentious. 17 There is a lot of deliberation. It would surprise me 18 to think that the members of the BAC would 19 rubber-stamp anything, but I could be wrong. And if I 20 am wrong, then you need to remember that you have to 21 change your behavior. But I'm just anticipating that 22 the members of the BAC want to be actively involved 23 regardless of how much effort and work a subcommittee 24 has done on any particular issue. Is there anymore 25 discussion on that? 0020 1 MR. ATKINS: And you could, Diane, for 2 example, if you had a subcommittee of three, they 3 could conduct business over the telephone. 4 MS. MORRIS: They are not in a 5 meeting. So yes, sir, they could. Yes, sir. They 6 can have a conversation. They are not a meeting. 7 Now, remember we assume these are numbers of less than 8 a quorum. The number was five. I would -- I would 9 say to the chair as a recommendation to just as a 10 matter of practice, do not form a committee larger 11 than three just to keep your numbers down to remove 12 doubt. 13 Now, that means, though -- and remember 14 this is where the devil is in the detail. If you're 15 on the subcommittee that -- this does not give you the 16 opportunity to reach out to member four and member 17 five and member six and start gathering their 18 information and bring it. The lawyers call it a 19 conduit. Please do not become a conduit to what would 20 otherwise look like a violation of the Open Meetings 21 Act. This is where you're supposed to be doing your 22 developing policy, your debates, your deliberations, 23 your exchange among yourselves. This is where it's 24 supposed to occur because I know you've heard me say 25 it. All the people behind me have the lawful right to 0021 1 be present and to listen. Anything else? 2 I'll -- I'll be here. It's good to see 3 y'all. I'm glad y'all hopefully did not run into too 4 much snow and ice. I was worried about y'all, but I'm 5 glad it worked out better for today. So I'm glad to 6 see you. 7 CHAIR BRACKETT: Diane -- 8 MS. MORRIS: Yeah. 9 CHAIR BRACKETT: -- I wanted to ask you 10 a question. In speaking of the three members, and you 11 were referring to it as being subcommittees and that 12 bingo advisory committee members constituting and 13 associating, what if you brought in non-members of the 14 BAC really as expert people on the committee or people 15 with advice that we needed? What would that do to 16 your figures to the open meetings? 17 MS. MORRIS: I'm going to get back with 18 you on that. 19 CHAIR BRACKETT: Okay. 20 MS. MORRIS: I'm thinking it wouldn't 21 make a difference, but I want to look in the book for 22 a minute. I will get back with you today on that in 23 this meeting. 24 CHAIR BRACKETT: Okay. Thank you. 25 MR. ATKINS: Going back to the 0022 1 presentation, members, I would like to talk briefly 2 about responsibilities of members of the committee, 3 officers of the committee, and the staff and the 4 different roles that we play. 5 Again, we would emphasize as members of 6 the advisory committee, we would be looking to you to 7 bring not just your own personal interest to the table 8 but also those of the -- of the industry to the 9 whole -- as a whole and the groups that you may 10 represent. I think that there are certain 11 responsibilities the committee as a whole has, and I 12 think this committee is -- is pretty good at adhering 13 to these should the Commission assign any special 14 projects to the committee. 15 Again, if there are any individual 16 complaints, compliments, suggestions, et cetera, those 17 should be referred directly to the division. I think 18 that once decisions are made, either by this committee 19 or the Lottery Commission, I think there is an 20 expectation that they be supported. 21 Again, we would encourage you to get to 22 know your respective groups, those -- particularly 23 those folks you represent. I think we're getting a 24 lot better at getting information regarding agendas 25 and -- and travel information into staff and following 0023 1 meeting guidelines. These are just suggestions about, 2 you know, again ways that we think you can accomplish 3 some of these. We, again, would encourage you to be 4 out in your communities and talking to folks about 5 their needs and their interests. And, again, if you 6 have -- if there are specific items that you would 7 like to see addressed, you should submit those either 8 to the chair or myself for a consideration of 9 inclusion on a future agenda. 10 Again, I think each of us has a 11 specific role to play. All of you as members, I think 12 need to and, for the most part, have made the 13 commitment to attend the meetings and participate in 14 those meetings. The -- the committee is going to be 15 asked to prepare at the end of their year an annual 16 report on their activities. We would like for all of 17 you to participate in that, stay informed of committee 18 matters, as well as being prepared for committee 19 meetings. 20 The chair, in her unique role, has 21 certain requirements to operate the meetings. She 22 works with the division on scheduling meetings and 23 getting the agenda set. As Diane mentioned earlier, 24 the Chair may appoint subcommittees, those members, 25 and establish clear goals for the subcommittees. She 0024 1 serves -- the Chair serves as a focal point, I guess, 2 of communication between the committee and the 3 Commission and staff. And one of the things we would 4 like to see, in addition to the updates that she 5 regularly gives the Commission on the activities, we 6 think it would be beneficial to start including 7 something in the Bulletin also on the activities of 8 the committees. 9 Of course, the vice-chair in the 10 absence of the chair performs those responsibilities. 11 Diane talked about this a little earlier. She is here 12 to ensure that the committee stays in accordance with 13 the Open Meetings Act as we work through our agendas. 14 One of the things that we're going to 15 do to help facilitate a lot of this process is to 16 appoint a staff liaison to work with the committee. 17 And I've talked to Norma Quezada, who's one of our 18 audit managers and is seated next to Chairman Clowe to 19 start serving in this capacity. And she'll work with 20 the committee to make sure that you get information 21 necessary on any agenda items that may come up, work 22 with us to facilitate the scheduling of meetings, et 23 cetera. And also she will help by providing the sense 24 of continuity by starting to develop files of all of 25 the work that's done by the committee and have that 0025 1 information in one central location, so it could be 2 easily accessed by any members that may need it. 3 I'm going to go pretty quickly through 4 a lot of this information on the meetings itself 5 because again a lot of this comes straight from the 6 Bingo Advisory Committee rule, and we have handed out, 7 I think, the latest copy of that that was adopted by 8 the Commission at their -- at their last meeting and 9 encourage you to read that. But we have listed some 10 things that we think would result in more effective 11 meetings and a lot of it deals to, again -- or deals 12 with us encouraging members to make sure that you're 13 well-prepared for meetings as they come up and the 14 items on the agenda and what is expected from the 15 discussion of -- of that item. 16 There, I think, are three things that 17 are necessary for members in order to be a successful 18 participant in any meeting, and that's knowledge of 19 the subject that's being discussed. It's knowledge of 20 parliamentary rules, and we'll discuss that in a 21 little more detail later on. But also knowledge of 22 problem solving and decision making. 23 We've talked a lot in the past about 24 tendency of some folks to come before the committee 25 and say item X is broke and just kind of leave it 0026 1 hanging out there like that. I think committee 2 members if there's an issue that they see needing to 3 be addressed, I think they need to be prepared to come 4 forward with one or more recommendations to address 5 the issue that's being addressed -- that's being 6 discussed. 7 There, again, are several reasons that 8 an item can be on the agenda: to share information, 9 to brief members for informational purposes, to make 10 recommendations, et cetera. And, again, if there are 11 issues that are too big for the advisory committee to 12 take up in a lot of detail in one of their meetings, 13 we would recommend the appointment of a subcommittee 14 to look into those in a little more detail. 15 Regarding the minutes, as you know, we 16 had these meetings transcribed and you approve those 17 with or without changes at your following meetings. 18 Also, we would encourage the advisory committee, as 19 they do consider items that come before them, these 20 two issues, those that preserve the fairness and 21 integrity of the bingo industry and what's best for 22 the entire bingo industry as a whole. 23 Again, working with the staff liaison, 24 we're going to work to make sure that prior to 25 meetings, the members have any documentation that they 0027 1 may need, including copies of statutes, rules, if 2 there's any research that we're aware of that's been 3 done anywhere else, we'll make that available to 4 committee members or subcommittee members, as the case 5 may be. 6 Now, the next couple of slides are 7 items that we actually took, I think, straight out of 8 Robert's Rules of Order. And we can actually get you 9 larger copies of these slides just to have for 10 reference purposes. But, again, we've noticed on 11 occasion as we've gone through meetings, there's 12 sometimes been a question as to, you know, what needs 13 to be done exactly on any given motion, et cetera. So 14 these are six steps that -- that are associated with 15 making a motion. And these are also motions that can 16 be made in order to bring about a -- a specific 17 activity. So you know, a -- a committee member could 18 make a motion to request information, et cetera. I 19 think probably the most popular one is always the one 20 to terminate a meeting, when someone makes a motion to 21 adjourn. And I think everyone is well aware of that 22 particular motion. 23 Now, I would like to talk for a little 24 bit about the work plan. And, again, we took a copy 25 of this draft work plan to the Lottery Commission at 0028 1 their last meeting in January. We e-mailed a copy of 2 that out to all of y'all earlier. We told the 3 Commission that our desire would be to get that to 4 y'all, get any input from it, and then take that back 5 to the Commission for their final improvement. 6 The work plan that we've identified so 7 far, it consists of three main elements. The first 8 being the statement of the issue is going to be 9 considered or studied. We think each one should come 10 with some type of timeline so that the committee and 11 the Commission is able to evaluate and judge and make 12 sure that these items are being addressed and included 13 with that is a progress report of what's been done on 14 a particular issue or what's being planned for the 15 upcoming issue. We think that the work plan can 16 provide several benefits to the committee. One is, as 17 you know, the Chair gives regular reports to the 18 Commission on the activities. Excuse me. We think 19 the work plan can serve as a means to do that. At 20 each meeting that work plan can be updated on the 21 status of activities and that can essentially become 22 with maybe just the addition of an introductory 23 paragraph the Chair's report to the Commission. 24 Also, as you know, from the newly 25 adopted advisory committee rule, the advisory 0029 1 committee is to prepare an annual report for 2 subcommission to the Commission. And we think that 3 the work plan can serve as the basis for that annual 4 reports to be built off of. 5 Now, this is under the work plan, but I 6 would like to talk a little bit about the annual 7 report. There's no mandatory forum for the annual 8 report, but, you know, there are some things that we 9 think you should consider as you start to work through 10 this new process and develop the report. It doesn't 11 necessarily need to be a long, detailed document, but 12 it needs to be long enough to present the committee's 13 finding to the Commission in a clear and concise, 14 easily understandable format. 15 And, again, we will have staff 16 available to assist the Commission or the committee on 17 the development of the report. And in addition to the 18 discussion of the committee's activities during the 19 year, et cetera, it should include any findings that 20 the committee has made during the year for the 21 Commission to consider. These are, again, some of the 22 elements that we think should be included in the 23 annual report. You'll notice the last one in 24 executive summary isn't always necessary, just 25 depending on how long the annual report itself turns 0030 1 out to be. It's usually a good idea to have an 2 executive summary. 3 Another thing you might want to keep in 4 mind is as the committee works through the work plan 5 this year, it may be that they're not able to get to 6 all of the -- all of the issues that were identified 7 on the work plan. So they may want to make a 8 recommendation that future advisory committees address 9 some of those issues in -- in their work plan and 10 their subsequent annual reports. 11 Again, we just threw in three 12 frequently asked questions that we think seem to come 13 up, again, repeatedly: the difference between a rule 14 and a statute. And I think we discussed that in some 15 detail. The statute being what is adopted by the 16 legislature versus a rule which is adopted by the 17 Commission. The difference between the Lottery and 18 Charitable Bingo seems to be a common question that 19 comes up. Each activity operates under a different 20 statute, and it has a different -- both have unique 21 funding mechanisms that have been created by the 22 legislature for the funding of those activities. And 23 then finally there seem to be, you know, some issues 24 that come up repeatedly that, again, the Commission 25 can't necessarily address, but we think would 0031 1 probably -- just because the Commission doesn't have 2 the authority to -- to address or necessarily make any 3 changes on an issue, that doesn't mean that it's 4 something that might not be eligible for a 5 subcommittee for the reason that the subcommittee, in 6 working through the issue, could come up with 7 alternatives that could be implemented. 8 So when -- when staff or someone says 9 that an issue that's been raised is something that may 10 be outside the purview of the Commission, we're not 11 necessarily saying, you know, just flat out, that -- 12 that issue shouldn't be addressed. But we are saying 13 that we would encourage the committee or any 14 subcommittees to consider some alternatives to those 15 specifics. 16 And, Members, that is the orientation 17 that we had planned. I'd be happy to answer any 18 questions that any of you may have about it. If you 19 think that there are -- if it raised more questions 20 than it answered or if you have any questions about 21 anything that we covered in it. 22 MR. MOORE: Good morning, Billy. 23 MR. ATKINS: Hi. 24 MR. MOORE: When you were mentioning 25 about the rule-making process, I really have never 0032 1 understood where we fit into this thing, whether we're 2 involved during the first reading, second reading, 3 third reading. So that -- this did help enlighten me 4 that you mentioned that we would step in after the 5 first reading if we wanted to get involved and I just 6 don't think I've ever about been clear on that 7 subject. So that's one thing that stuck out to me. 8 MR. ATKINS: Okay. And -- and I think 9 that's a fair question, Danny. And let me tell you 10 why. There's two reasons. First of all, I think that 11 we are working on a process that is developing, to 12 some extent. 13 What I do want to go back is I want to 14 talk about this slide again, real briefly. The 15 purpose of the advisory committee, specifically the 16 second bullet. The comment on rules involving bingo 17 during their development and before final adoption, 18 unless an emergency, requires immediate action. 19 Now, let me talk in general about the 20 process that we've tried to put in place. Yeah, as 21 you know, we now, again, try and bring rules before 22 the advisory committee at least twice. This is an 23 informal comment period. And what we would hope would 24 occur is that after that first reading, you'll notice 25 that the rules, as they come out to you, have across 0033 1 the top of them "Draft For Discussion." That's what 2 we're trying to generate is discussion, as much 3 discussion up front as we can and get any changes that 4 we're able to incorporate into the rule, into the rule 5 for the BAC to consider on a second reading. 6 After that second reading, the staff 7 would then take that rule before the Commission to 8 vote to publish in the Texas Register which would 9 begin then a formal -- a formal comment period. And 10 that period, you know, the Administrative Procedures 11 Act sets up requirements and timelines for comments to 12 be received, responded to, et cetera. And the rules 13 have to go through this formal comment period before 14 the Commission can vote to adopt the rule and -- and 15 make the rule effective. 16 So, yes, our plan is when we bring a 17 rule to the advisory committee on first reading, that 18 either members of the committee who have, you know, 19 interest in that rule or, you know, any members of the 20 public who may have interest in that rule, then begin 21 a process where they say, "Hey, we have comments on 22 that." They can contact me. They can contact Phil, 23 you know, and say, "When can we start getting together 24 on that." 25 But I'll let you know from the staff's 0034 1 position is we think we're driving this issue by 2 bringing it forward to the advisory committee on first 3 reading. I don't know that we necessarily feel it's 4 our responsibility to make people respond after that. 5 You know, if there are folks that want to respond, 6 great. We want to get those comments. You know, some 7 folks may want to suggest that we have a work group 8 and get groups of people together to sit down and talk 9 about the rule. That that's fine. This informal 10 comment period is going to do it. It's going to start 11 to get a little frustrating to the staff if, you know, 12 people want to wait and do that, you know, after 13 second reading. I -- I don't know if that answers 14 your question. 15 MR. MOORE: No. That answers it. I 16 just don't think I really understood where we can get 17 involved, you know. And I think we do want to be 18 involved, at least some of us do, I think, in 19 certain -- you know, whatever is interesting to the 20 party. And I think I just -- I missed that, and I 21 just want -- I'm curious where we fit in. 22 So after the second reading, there's 23 still a period where we can write in and make 24 comments, and there can be changes to these rules at 25 that point also. 0035 1 MR. ATKINS: Yeah. Oh, yeah. Yeah. 2 It's just -- I -- I -- we're hoping will be a lot 3 easier to do a lot of this work up front. And let me 4 give you a little more history, Danny. I may be -- I 5 may be boring you to death, you know. 6 MR. MOORE: No. That's all right. 7 MR. ATKINS: We have -- since the 8 committee -- advisory committee was formed, we have 9 always brought rules to the advisory committee prior 10 to bringing them to the Commission, but in the past 11 what we would do is just bring them to the advisory 12 committee once. And based on comments that 13 were -- may or may not have been received at that 14 time, we may or may not have made changes prior to 15 them going to Commission in the formal comment period. 16 And it was -- I saw him earlier. He 17 may have left. I think it was Steve Bresnen who, at 18 an advisory committee -- one of the committee 19 meetings, started a discussion on some of this. 20 And -- and I -- I made the recommendation based on my 21 old legislative days of bringing the rule before the 22 committee, you know, a couple of times. And that's 23 kind of how it was, you know, born that -- so not just 24 the advisory committee but members of the public could 25 have a little time to see the rules beforehand. 0036 1 But, again, just let me get back to, 2 the staff is going to be mindful -- and a lot of this 3 is still developing. But the staff is still going to 4 be mindful of not letting rules get bogged down during 5 that informal period. 6 MR. MOORE: Yeah. I think that's 7 fair. I -- I really do. I -- I think it's clear to 8 me now where I need to get involved and when I need to 9 get involved. At least, I'm comfortable with that. 10 So thank you. 11 MR. ATKINS: Good. 12 CHAIR BRACKETT: Are there any other 13 questions or comments while we have Billy on this 14 subject, while he's here? Okay. Thank you, Billy. 15 MR. ATKINS: Thank you. 16 CHAIR BRACKETT: Well, we're going to 17 go right on to the work plan now, aren't we? 18 MR. ATKINS: Yes, ma'am. 19 CHAIR BRACKETT: Okay. 20 MR. ATKINS: And if you can give me one 21 second. Hopefully, it will take less than that. 22 This is the members' -- the plan that 23 is in your notebook, and you can follow along either 24 on your notebook or in the -- on the screen as I go 25 along. 0037 1 CHAIR BRACKETT: Okay. Now, we would 2 like to say this is Item Number 4 on the agenda, for 3 anyone who's keeping up with the agenda. 4 MR. ATKINS: And again, Members, what 5 we did is we did -- we did, I guess, two things. We 6 looked to -- in previous discussions that had occurred 7 in the advisory committee, in the Commission, or 8 things that the staff in general had just been talking 9 about and trying to incorporate those in here. We 10 have on this list nine items. This committee may 11 think that's too much. They may think it's not 12 enough. They may think that, you know, in the past, 13 yeah, they -- they thought this was necessary. Now 14 they don't. I can -- I can go through them one by one 15 or... Let me -- let me start -- let me start doing 16 that, and if -- if there are any questions... 17 The first item is actually a 18 requirement in the new advisory committee rule. We 19 have this listed as -- as something that is to be done 20 annually. However, you know, we would expect that the 21 committee would not want to wait all of a sudden until 22 the end of the year to work on this. For example, 23 it's the staff's intent to continue to provide the 24 advisory committee with regularly quarterly updates on 25 this type of information. Again, comment on the 0038 1 proposed rules. This is in line, I think, Danny, with 2 the conversation that -- that we had. This would be 3 something that would be ongoing for the committee. 4 And we have -- you'll notice, Members, 5 under each one, we have an item that we've labeled 6 work group. Actually, probably a better description 7 may be subcommittee. These would be the individuals 8 of the advisory committee and depending on what Diane 9 says about the membership of -- of other members who 10 would be working on these issues outside of these 11 meetings to come back and make reports and 12 recommendations to the committee, to go on to the -- 13 to the advisory committee. 14 The review of the operator training 15 program. We put this item on here because I don't 16 know if there are any members that were members of -- 17 of that specific advisory committee. But we actually 18 developed the operator training program in conjunction 19 with a subcommittee of the Bingo Advisory Committee. 20 Now, of course, we update the advisory 21 committee as there are changes to rules, et cetera. 22 And we also go through a process where every two years 23 we try and tweak the format of the operator training 24 program to try and keep it fresh, et cetera. But we 25 think it would be a benefit to have a subcommittee of 0039 1 the advisory committee to sit down and go through the 2 entire operator training program and make comments and 3 recommendations on that. And we even discussed, you 4 know, the fact that there maybe some benefit to having 5 the advisory committee at one of their meetings, go 6 through the operator training program as a whole. 7 The review of the Bingo Bulletin. As 8 you know, it's -- the Bingo Bulletin is an 9 informational news letter that we send out to 10 licensees. We can, through a subcommittee, sit down 11 and talk about the development over the years, not 12 just at this agency but other agencies prior to it 13 being at the Lottery Commission, get input, which we 14 think would be beneficial from licensees on the 15 content of the Bulletin and see if there are any 16 recommendations or suggestions for that information 17 that we put in there. 18 Number five, the alternative styles of 19 bingo not currently available in Texas. Again, this 20 is something I think that Diane referred to in her 21 comments. This is definitely the type of item that we 22 think would be beneficial for a subcommittee. If 23 you'll recall several meetings ago and, Danny, you may 24 have suggested it for the folks that came down and 25 gave a presentation on linked bingo. I think that 0040 1 entire presentation, including questions, et cetera, 2 lasted an hour, an hour and a half. I don't really 3 know if that's enough time to get into that type of 4 proposal in any real detail and be able to make really 5 informed decision or discussion on that. 6 So we think that that's the type of 7 issue where a subcommittee looking at those types of 8 gaming in great detail can come back to the advisory 9 committee with -- with some real concrete information 10 that they could use in making recommendations to the 11 Commission. 12 Number six, the survey of players and 13 licensees. Again, this is one of the issues that was 14 discussed at the last BAC meeting. And I think as a 15 lot of you know, your new member kind of took that on 16 and moved forward with that. He's met with us. The 17 staff has gone ahead and done some work with that. 18 Again, should the advisory committee choose to appoint 19 a -- a subcommittee to work on that issue, I think 20 that's one of those that we're actually already pretty 21 far along on and should be able to make fairly quickly 22 some recommendations the advisory committee. 23 Number seven, the review of the 24 charitable bingo forms. We have, at the staff level, 25 gone through all of our applications, all of our 0041 1 forms. We've, you know, made them as -- as readable 2 and as easy to understand as we think we can. Again, 3 we think there's definite benefit from getting 4 comments from the people that actually fill out the 5 forms. So we would like to -- I don't know if this 6 would necessarily need to be an annual activity, but 7 we would at least like the opportunity to sit down 8 with a subcommittee, provide them all of our forms, 9 and get feedback on those, on any suggestions they may 10 have. 11 Review of the web site. I put that up 12 here because we are currently in the process of 13 changing the vendors, the person who maintains our web 14 site. The staff has developed, I guess, for lack of a 15 better word, a wish list of what we would like to see 16 the web site be able to do. Again, we'd like to work 17 with a subcommittee and get input from the licensee's 18 perspective, what they would like to see on the web 19 site and be able to access, et cetera. 20 And then, finally, the last item that 21 we have identified. For any of you bingo old-timers, 22 you may remember that previous agencies, I think -- I 23 don't recall if the comptroller's office did. I know 24 TABC had a manual that they called an operation's 25 manual that was supposed to really be a how-to book 0042 1 for bingo operators. And we would put forward to this 2 committee that that could be one of those items that a 3 subcommittee could work on with staff on developing 4 a -- a new and detailed operations manual, not just 5 for current licensees but also for any organizations 6 who may be considering conducting bingo. It would be 7 kind of be a step-by-step guide for them also. 8 So, Members, these were the 9 recommendations that we put forward. And we would be 10 interested in any comments from the committee on these 11 items. 12 CHAIR BRACKETT: I have a comment. I 13 made a note when I was reading this. Now, would -- 14 would a work plan be limited to this or could things 15 be added as they occur? 16 MR. ATKINS: That said, yes, that's an 17 excellent point. I think they could, and I think they 18 would need to go through the -- kind of the same 19 process we're going through. I think we would -- 20 whatever that item is would be need to be identified. 21 It would need to be explained, et cetera. You know, 22 timelines and progress reports would need to be 23 developed for it. And we think, also, just like with 24 this one, that it would need to go, you know, for 25 final approval before the Commission. 0043 1 CHAIR BRACKETT: Okay. And how would 2 the subcommittee assignments be made? How would 3 members be assigned to the different tasks? 4 MR. ATKINS: By the Chair. 5 CHAIR BRACKETT: Okay. 6 MR. ATKINS: We -- we were assuming 7 that there would be certain members who would 8 volunteer for -- for certain items. 9 CHAIR BRACKETT: I was too. Like from 10 the last time. 11 Okay. And I'd like to hear from anyone 12 else on the committee. Any comments on this? 13 One question I have of the committee 14 members. Is this a fair work plan? Do you feel like 15 you can do this? Do you want to do it? I mean, want 16 to and can are rather different questions, with your 17 work loads and everything that's going on. 18 Also, I have a question. Can -- since 19 Danny is chairman of something or in charge of some 20 work plan, then he can recruit people who are not 21 members of the committee to work with him? 22 MR. ATKINS: And I think -- I might 23 have to defer that to Diane Morris. 24 CHAIR BRACKETT: And that was the 25 question I have too. You know, if -- is a work 0044 1 group -- what are they subject to? 2 MR. ATKINS: Yeah. I'm going to say 3 this, and I may be punished by Diane afterwards, but 4 that's fine. I'm used to being punished. I would -- 5 CHAIR BRACKETT: We'll come visit you 6 in jail. 7 MR. ATKINS: Okay. I would assume and 8 I would think there would be a real benefit, for 9 several reasons, to have non-BAC members on the 10 subcommittee. My only caveat would be that, again, 11 it's a BAC subcommittee and so, in my opinion, the 12 majority of that subcommittee should be BAC members. 13 CHAIR BRACKETT: Okay. Larry? 14 MR. WHITTINGTON: Well, you can see. 15 It varies from the bingo interest -- the bingo people 16 all around Texas as whole because that's going to be 17 basically focused on bingo in Texas. So I'm sure 18 everybody could be definitely a part of that and give 19 us some advice that we can all be together to come up 20 with a solution. 21 CHAIR BRACKETT: So sending out a 22 survey by mail or internet or anything of that type -- 23 MR. WHITTINGTON: Yes, ma'am. 24 CHAIR BRACKETT: -- would be -- that 25 would be fine. 0045 1 MR. ATKINS: And I might -- 2 CHAIR BRACKETT: And it should be 3 encouraged, I think, too. 4 MR. ATKINS: -- and I might, if I -- if 5 I can talk a little more since by the luck of the draw 6 or whatever it is, you know, just how it occurred, 7 the -- the survey and really some of the discussions 8 and some of the work that's -- that's gone on since, 9 you know, again, you know, a giant took that ball and 10 started to run with it and made some recommendations, 11 came in, met with staff, staff took his 12 recommendations, and we actually went so far as to 13 meet with the agency's statistician who has extensive 14 experience in surveys, et cetera. And we worked with 15 Doctor Jambora over several weeks to develop what we 16 believe would be a true benchmark survey of bingo 17 players in the state of Texas. And Doctor Jambora 18 actually came up to me after -- after we had -- had 19 worked on this survey. And she said, you know, I've 20 done some research, and -- and there is no research 21 like that. I mean, if the advisory committee moves -- 22 moves forward on that, that's seminal work that 23 apparently has been done nowhere else. 24 So we worked on refining that survey. 25 We have worked on refining the survey process. We 0046 1 still need to work on the survey sample, et cetera. 2 But, again, one of the real benefits to that is, you 3 know, again, in our informal discussions with Jack is, 4 you know, he's looking forward to -- now, this is 5 going to be a lot easier for him because he lives in 6 Austin. He can actually come in and help with data 7 entry, things like that. So, you know, on all of 8 these things, it's going to have to be, at some level, 9 a collaborative effort. I know y'all aren't going to 10 be able to do everything. We're not going to be able 11 to do everything, but where we can work together like 12 that, I think this -- this is an excellent example. 13 CHAIR BRACKETT: I do too. Welcome 14 aboard, Jack. You're just not done yet. 15 MR. DOUGHERTY: I'm just absorbing all 16 this, but I'm very glad that the committee has 17 accepted this as a -- as a procedure, and I think it's 18 badly needed. And if at any time I have some new 19 drafts and new ideas, I'd like to, you know, go over 20 them with you when it's appropriate. 21 CHAIR BRACKETT: Any other comments 22 from anyone on the committee? Do you have anything 23 else to say on answer or anyone on your staff? 24 MR. ATKINS: I don't know if -- 25 CHAIR BRACKETT: Did Diane? 0047 1 MR. ATKINS: -- I mean -- 2 CHAIR BRACKETT: I mean, I didn't see 3 you, Diane. 4 MS. MORRIS: Oh, that's all right. 5 CHAIR BRACKETT: The lights were out. 6 MS. MORRIS: Thank you for the -- for 7 the time for me to go ask some of the attorneys in the 8 room and others. I hope they thought about the 9 question that was raised. If I understand the 10 question, it was: Can we have subcommittees that are 11 made of less than a quorum? And I'll use the example, 12 again, two members from the BAC -- can we add third 13 parties to that group? And the answer is yes. And if 14 we do, can that -- what if we add three or two more to 15 that group and we get close to, if you will, the magic 16 number called a quorum, does that become a quorum and 17 then do we have to post the meetings of the 18 subcommittee? And my answer is again, no. I looked 19 in the Attorney General's Open Meetings handbook, and 20 the third parties do not add, if you will, to the 21 quorum. The quorum is this body's quorum. 22 And I'll say, again, in visiting with 23 some of the attorneys, I'm reminded again of the 24 beginning of my talk when I said, it depends. I am 25 making an assumption that the BAC will continue to 0048 1 operate in the future as it has somewhat in the past 2 regarding the -- the airing, the debating, the full 3 deliberation in the open of these issues and that the 4 full committee would not serve as a rubber stamp to a 5 subcommittee's decision making. 6 There are some AG opinions that talk 7 about even when you're less than a quorum, if you're 8 making decision that you're imposing responsibilities 9 or duties or assessing, exercising jurisdiction on 10 behalf of the fuller body, then you have to comply 11 with the Open Meetings Act. But I say again, given 12 the limited exposure I've had, I think the committee 13 is very active and wants to remain all very active. 14 Are there any other questions? 15 MR. MOORE: I have one. Can these 16 subcommittees be formed outside of this room here? 17 Can Virginia get a committee together? Does 18 everything have to take place here to get the ball 19 rolling because we only meet supposedly maybe once 20 every quarter? So -- 21 CHAIR BRACKETT: Are -- are you saying 22 that -- that we have to make a public announcement at 23 these quarterly meetings? 24 MR. MOORE: Yeah. Exactly. 25 CHAIR BRACKETT: That's a good 0049 1 question. 2 MS. MORRIS: I think the better 3 practice would be that you do because it would 4 establish why are you meeting -- 5 MR. MOORE: Okay. 6 MS. MORRIS: -- on the telephone. We 7 are not meeting on the telephone. 8 MR. MOORE: Okay. 9 MS. MORRIS: Why were you exchanging 10 information? We are not deliberating. We are not 11 circumventing. We are a newly appointed committee, 12 and that is why two are talking as much as we're 13 talking. And we do not believe that we're subject to 14 the Open Meetings Act. So I -- I would -- I would 15 have to say I think the better recommendation is that 16 she use these opportunities to formally appoint 17 members. 18 MR. MOORE: Okay. 19 CHAIR BRACKETT: Any other questions or 20 comments? 21 Thank you, Diane. And thank you, 22 Billy. 23 MR. ATKINS: Thank you, Madam Chair, 24 and I'm very -- I'm very glad to hear that at least, 25 Danny, we were able to answer one question. 0050 1 MR. MOORE: Sure. 2 MR. ATKINS: Because I also want to 3 thank the members of my staff that have worked very 4 hard on putting this together, and it was -- it was 5 really an aha moment for me when we first had this 6 discussion. And it was Norma -- again, I'm sorry 7 she's not here -- but it was Norma who said, "Have 8 they been told what's expected from them," and I said, 9 "Well, no, not really." And she said, "Well, you 10 know, you can't blame anybody then." 11 So our hope is that this again will 12 just help y'all in your meetings and make them more 13 effective and productive and meaningful for all of 14 them and I don't know if you want to now go through 15 some or -- or all of these and see if you have folks 16 that want to work on them or what. 17 CHAIR BRACKETT: Do you want to do that 18 now, or do you want to do that later in the day? Or 19 some of you probably know immediately what you want to 20 work on as well as what you do not want to work on. 21 Now, a lot of you have already spent 22 time on these subjects: alternative methods of bingo, 23 proposed rules. 24 MR. ATKINS: On most of the -- on the 25 proposed rules, those may be on a -- on a case-by-case 0051 1 basis. 2 CHAIR BRACKETT: I -- I think so -- 3 MR. ATKINS: Yeah. 4 CHAIR BRACKETT: -- as they come up. 5 And then also why don't you bear this in mind and 6 let's -- can we bring this back up later on this 7 agenda? Okay. We'll come back to this, but I just be 8 thinking about it while you're listening to everyone 9 else or everything else that's been going on. 10 We have been meeting for about an hour 11 and 15 minutes. Let's take a ten-minute break to help 12 the court reporter. And then we'll be -- come back 13 and then we'll be on Item 5. 14 (Recess.) 15 CHAIR BRACKETT: Let's call back to 16 order. 17 All right. Let's move on to Item 18 Number 5. And, Roy, we would like to hear from you at 19 this point. 20 MR. ATKINS: And if I can -- if I can 21 leave that out, Members. This is an item that you'll 22 recall was the Sunset Advisory Committee made a 23 recommendation that the agency consider the concept of 24 unit accounting, whether or not there was merit to it 25 and whether it would require legislation in order to 0052 1 act. 2 We discussed this at the December 3 advisory committee meeting where a recommendation was 4 made to put a work group together to work on this 5 issue. We did that. The work group met several 6 times. I'm not sure exactly how often or -- or 7 whatever. Roy may have more details as to that actual 8 working of the groups or whatever. What's in your 9 notebook is what has been provided to the -- the 10 sponsors of the Sunset legislation, Senator Jackson 11 and Representative Solomons. 12 I know there are at least still two 13 outstanding issues relating to this item. I'm going 14 off memory now. One deals with the concept that the 15 staff proposed of a unit manager, and that individual 16 being responsible for the activities being licensed, 17 et cetera. There have been recommendations that the 18 organizations be allowed to choose between either a 19 unit manager or a requirement that all of the 20 organizations of the unit be made joint in several -- 21 severally liable for the activities of the unit. And 22 I believe there's still an issue relating to if all of 23 the organizations in a whole would be required to form 24 a unit or if a number less than the full complement of 25 organizations could do that. 0053 1 Again, those are the two issues that I 2 recall still outstanding. There -- there may be 3 more. Hopefully, I didn't misstate any of those, but 4 I think that Roy can -- can provide a little more 5 detail on that issue. 6 MR. GABRILLO: I can answer any 7 questions that you may have about -- 8 MR. ATKINS: Would you identify 9 yourself for the record, please. 10 MR. GABRILLO: Yes. I'm sorry. My 11 name is Roy Gabrillo, G-a-b-r-i-l-l-o. I'm senior 12 audit manager for the Charitable Bingo Division. 13 As -- as Billy explained, this is what has been 14 drafted to allow organizations to share revenue. The 15 concept behind it was in some halls, some 16 organizations do, a lot more organizations don't as 17 far as the revenues of bingo, and so some have 18 problems, for lack of a better word, surviving 19 especially if they don't have particularly good nights 20 during the week. You know, where one organization 21 might have Friday and Saturday nights where you have 22 pretty good attendance, and then during the week, 23 Mondays, Tuesdays, maybe are not very good nights. So 24 the organizations that -- that don't have those good 25 nights have trouble either meeting expenses or even 0054 1 meeting their charitable distributions. 2 Going these routes, revenue sharing and 3 expenses will allow all the organizations to hopefully 4 prosper, and they would all be on an even keel. They 5 would share equally in all the revenues and all the 6 expenses. As far as the distributions would go, they 7 would be able to -- the unit itself would be 8 disbursing the money to the organizations for their 9 purpose to distribute to charitable purposes 10 throughout the -- well, in their area or through the 11 state. 12 MR. PAVLOVSKY: Roy, do all the -- 13 every -- all are the -- thank you. Do all 14 organizations that play bingo at that hall are going 15 to have to belong? 16 MR. GABRILLO: Well, that's the issue 17 that -- that -- that's one of the issues that Billy 18 was -- was mentioning right now. 19 MR. PAVLOVSKY: Yeah. 20 MR. GABRILLO: Right now the -- our 21 proposal would be that they all participate mainly 22 because of the simplicity of auditing the unit. If we 23 could do -- do an audit of a particular location, if 24 all the organizations are participating, it would be 25 easy just to -- to know that all of the organizations 0055 1 are participating rather than, well, only two or 2 three, out of, say, six or seven in that hall are 3 participating. So it -- of course, for simplicity 4 sake, yeah, it -- it would be best the bet to get all 5 the organizations participating in the unit 6 accounting. 7 MR. PAVLOVSKY: I -- perhaps, I read in 8 a -- in a previous draft. I -- I -- and I could have 9 swore I read somewhere that all organizations must 10 participate. And, again, I -- maybe it was a draft 11 that I read way back when. 12 MR. GABRILLO: That may have been. 13 MR. PAVLOVSKY: Or it may have been in 14 some of the minutes. 15 MR. GABRILLO: That may have been. I'm 16 not sure if that -- if -- if that was possible, but 17 there's some other -- that -- now, that might be 18 something that was possibly addressed in a rule. 19 If -- if it's not here, we may address that in a rule 20 if this -- if this legislation passes. 21 MR. PAVLOVSKY: How has the -- the 22 people that would -- that would be affected by this, 23 are -- are they in favor of unit accounting? 24 MR. GABRILLO: The feed -- some of the 25 feedback that we've gotten from members of the work 0056 1 group have said that they're -- that this would be 2 beneficial. But, again, it might be beneficial to 3 some organizations, to some halls, and not to others. 4 And, again, it's not -- and it's not going to be 5 something that's going to be mandatory throughout the 6 industry where we're going to require every hall 7 that -- to participate in this system. It's going to 8 be strictly optional. As far as, again, like I 9 mentioned, or what your question was as far as who can 10 participate. All may participate. Like -- like I 11 said, for simplicity sake, it would be best for all to 12 participate. 13 MR. PAVLOVSKY: Okay. 14 MR. MANIO: I have a question, Roy. 15 MR. GABRILLO: Yeah. 16 MR. MANIO: It pertains to item -- is 17 it letter D -- the bingo manager, the license holders 18 would be required to post a bond pursuant to section 19 2001.514. 20 MR. GABRILLO: Yes. 21 MR. MANIO: Is -- is all -- under 22 circumstances is some licensed organizations required 23 to post a bond? Is that right? 24 MR. GABRILLO: Yes. Well -- well, 25 yes. Most organizations that -- that conduct bingo -- 0057 1 well, even lessors have to post a bond -- 2 MR. MANIO: Lessors. 3 MR. GABRILLO: -- for -- for rental 4 tax. Money for prize fees and -- and lessors for the 5 rental tax. 6 MR. MANIO: Oh. Okay. 7 MR. GABRILLO: So... 8 MR. MANIO: Is this going to be over 9 and above what we've been requiring for the license 10 organizations? 11 MR. GABRILLO: That's something that 12 we're going -- that we will probably have to research 13 as far as setting a limit that could -- you know, 14 what -- what that limit would be as far as a bond 15 amount would be. That's something we'll have to 16 research. We'll have the -- to look through either -- 17 to either other state agencies and licensed 18 individuals that require bond -- 19 MR. MANIO: Right. 20 MR. GABRILLO: -- or even other 21 jurisdictions that -- that they're to do the same 22 thing, like for individuals and -- and what their bond 23 requirement could be. 24 MR. MANIO: All right. The -- the -- 25 well, pursuing this line. If a licensed organization 0058 1 is required to post a bond, the unit manager is a 2 reported or liable -- responsible to the licensed 3 organization. Would be -- would you still require the 4 unit manager? 5 MR. GABRILLO: This is what this 6 requirement is. This pertains to the unit manger. 7 This section pertains to the unit manager. The unit 8 manager would have to post a bond because of the fact 9 that he or she is going to be responsible for the 10 fiscal activities of the -- of the unit. And so if 11 there's a problem with a default as far as the prize 12 fees aren't paid or -- or anything like that -- 13 MR. MANIO: Right. 14 MR. GABRILLO: -- we would look to the 15 unit manager rather than going to the organizations 16 individually because -- also, as far as reporting 17 goes, it all will be -- all the activities, the 18 financial activities will be -- will be filed. It 19 will be a quarterly report that would be a combination 20 of all the organizations. In other words, each 21 organization won't have to file a quarterly report. 22 The unit will file one as a unit. We'll have to 23 modify the report or create a report to show that this 24 particular organization is -- is participating in unit 25 accounting, and it's going to -- we'll have a section 0059 1 there where we'll list the names of the participating 2 organizations. 3 So, again, it would be the -- the unit 4 manager is who we would look to if there were any 5 problems as far as reporting on the prize fees or 6 failure to pay the prize fees. We would look to the 7 unit manager rather than looking to the organizations 8 of the unit. 9 MR. MANIO: Okay. 10 MS. TAYLOR: Would the bond from the -- 11 for the unit manager come out of bingo proceeds, or is 12 that something that the individual bingos would be 13 proposed to do? 14 MR. GABRILLO: It would have to be the 15 individual. As far as -- I mean, that's what we're 16 looking at right now, is that the individual would 17 have to do that. 18 MS. TAYLOR: So the organizations would 19 no longer be required to post a bond individually? 20 MR. GABRILLO: Right. If the -- if 21 they have -- if they implement a unit manager. 22 MR. MOORE: Roy, can the unit manager 23 come from the hall as an employee of the charities 24 that are currently existing right now? For instance, 25 most of the commercial halls have an operator that's 0060 1 there every evening and pretty much runs the 2 operation. Can this individual come -- could that 3 person be the unit manager? 4 MR. GABRILLO: Well, in section, in 5 fact, it's 6(a) -- well, not 6(a). 6(b) and (c), a 6 person is not eligible for a license under the 7 subchapter if the person -- if an owner, officer, or 8 director of a licensed commercial lessor or halls are 9 listed -- is listed on another license under this 10 chapter. So if that individual is listed as an 11 operator or even a worker on all of the organizations 12 that are participating, that are conducting bingo in 13 that hall, that person could not be the unit manager. 14 MR. MOORE: So they would have to hire 15 another employee? 16 MR. GABRILLO: It would have to be 17 someone outside, you know, that has no affiliation 18 with the organizations at that hall. 19 MR. MOORE: That sounds like a lot of 20 cost to the charities to me. 21 MR. GABRILLO: And that's something 22 that we're -- that -- that we're looking for input in. 23 As -- as far as -- as far as -- I don't know. And let 24 me ask you this. How would that be a cost to the -- 25 the charities? 0061 1 MR. MOORE: Well, that's -- first of 2 all, they have to train somebody that probably would 3 come from outside the bingo industry. The operator is 4 already in place. 5 MR. GABRILLO: Right. 6 MR. MOORE: This person has probably 7 been in most of these halls over three -- three to ten 8 years, a lot of these people. And they have the 9 ability to run a bingo hall obviously. It makes 10 common sense to me that that would be the person that 11 would be the unit manager, if you want to call them 12 that. 13 Why would we go outside of that person 14 now to run a bingo hall? It doesn't make any sense to 15 me. 16 MR. GABRILLO: Well, and then the other 17 thing -- what I was going to say was that the -- that 18 the following section, Number 7, calls for the unit 19 manager to complete eight hours of training pursuant 20 to Section 2001.107 of the -- of the Act, which is the 21 operator training program. 22 MR. MOORE: Sure. 23 MR. GABRILLO: So that person would 24 receive some kind of training to familiarize or get -- 25 or be orient -- orientated on the operation of bingo. 0062 1 But I think either way, if that person is either 2 familiar with bingo or is not familiar with bingo, if 3 that person is going to be compensated by the 4 organization, he's going to be -- he's going to be 5 compensated by the organization whether, you know, 6 they are affiliated with -- whether they have bingo 7 experience or not. Either way it's going to be an 8 expense to the organization -- 9 MR. MOORE: Sure. But -- 10 MR. GABRILLO: -- to pay that 11 individual. 12 MR. MOORE: But the operator becomes 13 obsolete. So you're putting a bunch of people out of 14 work, it sounds like to me. If -- if the hall chooses 15 to go this route. 16 MR. GABRILLO: Well, the organizations 17 will still have to be -- have to require to have 18 operators. I think it's in their best if -- if the 19 organizations that are conducting on -- on their 20 nights, that they still have someone from their 21 organization at that occasion so that they know that 22 everything is being done correctly and that, you know, 23 the paperwork as far as the funds go, all the funds 24 are accounted for. 25 And there is a section in here where 0063 1 the -- the unit manager has to provide reports to the 2 organizations as to -- as to how their financial 3 records are. Well, let me see. I think that was in 4 here. It was -- no. That's right. We took it out, 5 therefore we -- we decided that we were going to 6 address that through a rule that the -- that the unit 7 manager would have to -- he would be held accountable, 8 and he would have to file or give reports to the 9 organizations as to their financial standing. 10 MR. WHITTINGTON: Roy -- 11 MS. TAYLOR: I have to agree with -- I 12 have to agree with that. To bring an outsider who's 13 not familiar with the hall and the operation of the 14 hall, it's not just the training. It's -- it's like 15 bringing in any outsider. I mean, it would only make 16 sense to make this person who's going to be 17 responsible to make sure this business works and works 18 correctly, somebody who's already familiar with the 19 operation. I -- I agree with Danny on that one. 20 MR. SANDERSON: Phil Sanderson, 21 Assistant Director of the Charitable Bingo Division. 22 First off, let me make sure that 23 everybody is clear on the unit manager, and that is an 24 individual that is strictly responsible for reporting 25 and the record-keeping and the payment of expenses and 0064 1 taxes and prize fees. 2 It has nothing to do with the operation 3 of the games. The games are still conducted by the 4 organizations, whoever their workers are, their 5 primary operators, and their operators. It's two 6 separate activities. The conduct of the games, how 7 the games are played, running the games, making sure 8 the workers are there and so forth is still the 9 organization's responsibility and their operators that 10 they have listed on the record. 11 The unit manager is someone that takes 12 the reports, files them with the Commission, takes a 13 daily cash report, and handles the profit and loss 14 statements, so to speak, for the organizations. So 15 does that help answer your question? 16 MR. MOORE: Yeah. It helps. I -- that 17 individual still has to be paid. In a lot of cases 18 that person isn't involved in halls right now. I 19 thought the whole process of unit accounting was to 20 bring more money to the bottom line for the charities, 21 and I -- I just see an added expense here. 22 MR. SANDERSON: In most cases, that 23 person is already being paid. You've got some -- 24 you've got some bookkeepers that are keeping books for 25 30 and 40 organizations. 0065 1 MR. WHITTINGTON: They can be a unit 2 manager? 3 MR. SANDERSON: And that's the unit 4 manager, so to speak. 5 MR. WHITTINGTON: Okay. Good. That's 6 all I wanted to ask. That was my -- 7 MR. MOORE: I understand. 8 MR. WHITTINGTON: -- because my 9 bookkeeper is basically that. 10 MR. ATKINS: And I think -- if I can 11 follow up on -- on what you said about what your 12 understanding of unit accounting was, not that I'm 13 saying that your understanding is incorrect -- 14 MR. MOORE: Okay. 15 MR. ATKINS: -- but, you know, keep in 16 mind then whether the -- one of the great examples is 17 with the pull-tab rule. We were all for the new 18 pull-tab rule, but we're the regulator. And we want 19 to make sure that there are controls in place. And so 20 we're all for the bottom line going up as long as 21 those controls are in place. 22 MR. MOORE: I can appreciate that. 23 MR. ATKINS: And that's where we came 24 up with the concept of the unit manager because we're, 25 you know, very afraid of, you know, individuals 0066 1 popping up and getting organizations in trouble and us 2 not being able to reach those individuals. 3 MR. MOORE: I can appreciate that. 4 MR. WHITTINGTON: Okay. So if my hall 5 wanted to go to unit accounting or either one of the 6 halls we got, basically all I got to do is tell my 7 bookkeeper she needs to apply for the unit accounting 8 manager? 9 MR. SANDERSON: Yes. 10 MR. WHITTINGTON: Okay. 11 MR. DOUGHERTY: Roy, I have a 12 question. The unit manager is a person designated for 13 many, many charities. Are they regionally oriented or 14 are they just in each city? 15 MR. GABRILLO: It -- I would just say 16 it was probably someone -- it -- like -- like 17 Mr. Whittington just commented that his -- you know, 18 bookkeeper could be the -- the unit manager. So it's 19 someone who's -- who's familiar to the charities. 20 But, again, like Phil stated that he or she would not 21 have any control over the games. It could be someone 22 that does -- that does the financial reporting for the 23 organization. Now, as far as you know where they 24 would be located, I mean, again, if it's someone that 25 is familiar -- it would make sense for them just to be 0067 1 someone that centrally located or located in the same 2 area as the organizations themselves. 3 MR. DOUGHERTY: And can work for 4 numerous bingo charities -- facilities. 5 MR. GABRILLO: Right. They could be 6 unit manager for -- for several organizations. 7 CHAIR BRACKETT: Any other questions? 8 MR. ATKINS: I -- I'm sorry. 9 CHAIR BRACKETT: Go ahead. 10 MR. ATKINS: I -- I knew, Members, 11 there was going to be an issue that I forget, and I 12 don't know if you covered it, Roy. 13 In the work group session that met on 14 unit accounting, one of the members raised potential 15 federal implications. 16 MR. GABRILLO: No, we didn't discuss 17 that. Thank you, Billy. 18 MR. ATKINS: Yeah. And I think that 19 that is still being researched also, and I don't know 20 if you can comment on that a little bit more, Roy. 21 MR. GABRILLO: Yes. One of the members 22 brought up the fact that since all the organizations 23 are -- are 501(c) tax exempt organizations, that as 24 far -- it could affect that status since it -- since 25 they would not be sponsoring, for lack of a better 0068 1 word, the -- their -- the bingo. In other words, it 2 wouldn't be reporting at all. They would be reporting 3 it individually as they do now. Where if they go into 4 the unit accounting system, everything would be 5 reported under one -- as one rather than as an 6 individual or each individual organization. So 7 that's -- the consideration is that it -- it could 8 affect their 501(c) status because it's -- they are 9 not actually conducting the activity. So that's 10 what -- we're still researching that as to whether 11 that will have any implications on their 501(c) 12 status. 13 CHAIR BRACKETT: They are actually 14 conducting the activity. It's just that they're 15 not -- they're like farming out the book work, so to 16 speak. 17 MR. GABRILLO: Right, but it would be 18 filed under one -- 19 CHAIR BRACKETT: One number? 20 MR. GABRILLO: -- one report. Right. 21 It would be -- it would be reported under one -- one 22 report as opposed to their activity being reported 23 right now. 24 CHAIR BRACKETT: I would think that 25 would be a problem with that. 0069 1 MR. GABRILLO: Well, having said that, 2 that's still being researched as to what kind of 3 impact that's going to have on the -- on their tax 4 exempt status. 5 CHAIR BRACKETT: Okay. Any other 6 questions of Roy? No. 7 All right. Thank you. 8 MR. GABRILLO: Thank you. 9 CHAIR BRACKETT: We'll have public 10 comment now. Steve Bresnen. 11 MR. BRESNEN: Thank you. My name is 12 Steve Bresnen. I'm here on behalf of the Bingo 13 Interest Group. 14 And, Madam Chair, I appreciate you 15 taking me up first because I've -- I've got to make 16 another appointment and then come back later. 17 I want to talk about unit accounting 18 now. I think we've come a long way. I think there 19 was universal acceptance that the way the industry is 20 currently organized is extremely inefficient, and I 21 would venture to guess that there are millions of 22 dollars out there that are currently being absorbed in 23 a regulatory system that's highly fragmented and just 24 plain doesn't make good sense. I think it's expensive 25 for distributors. I think it's just expensive for the 0070 1 charities, and it's expensive for the state. And so 2 I'm really glad to see everybody centering in on that 3 same concept. 4 The concern that I have about limiting 5 the conduct of the unit to a unit manager is that the 6 potential to have the cost of that unit manager go 7 through the roof. There's going to be a limited 8 number of people having those licenses out there 9 especially at the early point in the implementation of 10 this, and the cost could be extremely high for anybody 11 that wants to do it. 12 We're -- Steve Fenoglio and I have been 13 working on a redraft that, I think, retains about 90, 14 95 percent of the draft that you have in front of you, 15 but it would have a couple of wrinkles to it. And 16 what it would say is, you may use the unit manager, in 17 which case that person puts up the bond. They have 18 the license. The agency would look to them for 19 compliance with all the financial reporting rules and 20 accounting rules, and that person would be responsible 21 and the person that the agency could go to and jerk 22 their license or sanction them or -- and be -- and the 23 state would be protected through the bond. 24 If charities choose not to do that, 25 then they could operate as unit. They would have to 0071 1 designate someone who was going to be responsible to 2 the Commission for giving access to the records and 3 that sort of thing. If there's noncompliance, 4 financial, or not coming up with the records or not 5 filing the quarterly report or whatever, those five 6 charities or seven at a hall are all on the hook. Any 7 action that can be taken against a charity today for 8 not complying with any of those rules can be taken 9 against all five or all seven of them. 10 So your trade off would be that I 11 can -- I can alleviate myself of the responsibility 12 and the liability by using the bonding mechanism and 13 the licensed unit manager, or I can accept the 14 responsibility for knowing who my partners are, that 15 if something goes off the hook because charity A 16 doesn't cooperate or charity B doesn't cooperate, then 17 C, D, E, and F are on the hook as well. 18 I think people will police themselves 19 that way and will clearly give the agency the control 20 that we think they rightly need and give them a 21 designated person to look to in order to go to find 22 the records and not have to get rabbit-trailed from A 23 to B to C to D and E. In fact, I think you have more 24 control than you have now because I you go to the unit 25 and have the impact over five or several licenses -- 0072 1 five or seven licenses instead of having to go 2 one-by-one in a hall with individual parties. 3 So I think that's a workable thing. It 4 gives a little of a safety valve so the unit manager 5 concept doesn't allow the -- the price of that 6 position to be -- to outpace the benefits of it. 7 With respect to the tax issue, one of 8 the things that's been kicked around of having some 9 sort of the unit actually being in an actual trust 10 agreement between the charities. And Steve Fenoglio 11 and I are looking into that as well. I do think 12 that's an important issue and one that we have to 13 figure out how to address. 14 My final comment would be to say while 15 we're talking about this, let's be sure that the 16 inventory that has to be purchased and maintained, and 17 the records for which have to be kept is also part of 18 this, that it's not just dollars into a bank account 19 and dollars out of a bank account. I think there's a 20 lot of slack in the system out there with the 21 maintenance of multiple inventories of products and 22 multiple reporting and inventorying of products that 23 could be reduced and a lot of money to be saved there. 24 So I wouldn't want it just be the paycheck or the 25 check going to the distributor but the actual 0073 1 commodity that's being sold out there could be 2 maintained and documented in one unit as well. 3 I would be glad to answer any 4 questions. 5 MR. PAVLOVSKY: Steve, are you putting 6 that in your -- in your draft? 7 MR. BRESNEN: Yes, sir. And that's 8 simple. That's simple. 9 MR. PAVLOVSKY: Yeah. 10 MR. BRESNEN: Basically, you just add 11 the word "inventory" in a number of places and 12 "records of inventory," and that's simple. It's 13 actually fairly easy to take what the staff did and 14 add this concept of a group being jointly and 15 severally liable. I think what you'll find over time 16 is people will probably gravitate to the unit manager 17 concept. It's going to be easier for them. 18 I do think it needs to be people who 19 are familiar with the hall. Maybe it's the 20 bookkeepers. Maybe it's the operator. I personally 21 don't think you lose anything on the control side if 22 it's the operator. I think you have some redundancy 23 that can be eliminated and -- and your efficiency can 24 be maximized by doing that. And I would like for us 25 to do it. I would like to see us -- see us go that 0074 1 way. 2 But the short answer is our draft will 3 have the inventory concept in it as well. I'm finding 4 members of the legislature very receptive to this. 5 Once you explain -- you don't have to really get too 6 far into it to find them going, well, that's 7 ridiculous. And I think there's a willingness to 8 change if we can all come together on a concept that 9 will work. 10 MS. TAYLOR: I have a question. 11 MR. BRESNEN: Yes, ma'am. 12 MS. TAYLOR: So the inventory, all the 13 charities work off the same inventory. One charity 14 wouldn't have to close out pull-tabs between sessions? 15 They could use the same tabs throughout the entire 16 evening? 17 MR. BRESNEN: I -- I think it could be 18 would an option. You know, whatever makes since in 19 the marketplace. 20 MS. TAYLOR: Okay. 21 MR. BRESNEN: You know, and I said 22 wherever -- what we're trying to do is something that 23 makes sense. I know why the system is fragmented. 24 I've been around long enough to know. And there may 25 have been some initial good reasons for that. But 0075 1 this is a mature, declining revenue industry, and we 2 can't keep bashing the charities for not getting 3 enough to the bottom line and then filter all this 4 money out through all this regulatory apparatus. 5 It's -- it's inefficient and extreme, and I know of no 6 other industry that's really faced with that. 7 So I would encourage y'all -- yes, 8 sir? 9 MR. PAVLOVSKY: How soon will you have 10 or will y'all have -- have the draft of that available 11 for staff and -- 12 MR. BRESNEN: I would expect in the 13 next day or two. I'm -- I've actually got a rough 14 draft of it here, but Steve pointed out that I've got 15 a couple of problems that I didn't clean up. And I 16 hate to get something floating around that's -- that's 17 inaccurate. But we'll distribute it to you 18 individual -- I guess what I would ask the BAC to do, 19 if it's appropriate at this meeting, is to, number 20 one, recommend that the unit accounting manager forum 21 not be the only way to go, that that be included 22 but -- but optional and that the second option on 23 joint several liability, in effect, a partnership. 24 If you and I are partners, and -- and 25 our partnership incurs an obligation and I go 0076 1 bankrupt, you're on the hook for it. If the four of 2 us are in a partnership and I go bankrupt, the three 3 of y'all are on it -- on the hook for it, including my 4 part. So this is not a novel concept. It's not -- 5 nothing -- anything we're inventing out of thin air 6 here. It's the way business is done. 7 So I'll -- we'll have that to you 8 within a day or two. The other thing I would for you 9 to recommend is that the concept of the inventory be 10 added to the draft, just so it's clear. And, thirdly, 11 that -- that consideration be given to allow the 12 operator and the unit manager to be the same person, 13 not requiring them but allowing them to do that. Then 14 if it's appropriate for a bookkeeper, an operator, or 15 whatever it might be, then, you know, then so be it. 16 I appreciate your time and thanks again 17 for letting me -- 18 MR. ATKINS: Steve? 19 MR. BRESNEN: Yes, sir. 20 MR. ATKINS: Can I ask you something? 21 MR. BRESNEN: Yes, sir. 22 MR. ATKINS: You and I had talked 23 briefly about joint and several liability. 24 MR. BRESNEN: Yes, sir. 25 MR. ATKINS: And I want to go back to 0077 1 make sure I understand it. So the -- the -- this unit 2 would appoint an individual to be responsible. That's 3 who the agency would look to. 4 MR. BRESNEN: Yes, sir. 5 MR. ATKINS: But if any organization 6 became liable for any violation of the Act or rule, 7 all of those organizations in that unit could be held 8 responsible. 9 MR. BRESNEN: Well, sir, I -- I've -- 10 I've done -- let me see if I can -- if -- if you -- if 11 security came into the hall one night and somebody was 12 rigging the game, then the other four or five 13 charities are not going to be responsible. 14 MR. ATKINS: Okay. Again, I'm -- I -- 15 I'm -- 16 MR. BRESNEN: Yeah. This -- I'm -- 17 MR. ATKINS: -- anything financial with 18 the unit like -- 19 MR. BRESNEN: Yes, sir. Yes, sir. 20 MR. ATKINS: Okay. 21 MR. BRESNEN: If, for example, the 22 prize fees don't get remitted. 23 MR. ATKINS: Okay. And what if it 24 turns out that the reason the prize fees didn't get 25 remitted was not because of the organizations but 0078 1 because of this individual? What would happen to that 2 individual? 3 MR. BRESNEN: Those -- those 4 organizations -- well, if the person stole them, I 5 would suggest that you file a criminal charge against 6 them. What -- what do you do now? If a designated -- 7 MR. ATKINS: We basically -- 8 MR. BRESNEN: -- if a designated 9 person -- every -- every charity has a designated 10 representative, right? 11 MR. ATKINS: Right. 12 MR. BRESNEN: So -- 13 MR. ATKINS: And an operator. 14 MR. BRESNEN: Right. If the prize fees 15 don't get remitted, you contact that person and what 16 you do then is you don't go after that person unless I 17 guess you knew that he stole the -- the money, you 18 would go against the charity. 19 MR. ATKINS: Right. 20 MR. BRESNEN: And what I'm saying is in 21 this case you have five to seven charities to go 22 against where the prize fees weren't permitted. If 23 the designation person is some -- is your contact 24 person so you don't have to chase A, B, C, D, E, and F 25 around the block to find the records or -- or to find 0079 1 out what's going on. You can't find that person. 2 Supposedly, the person leaves town. They haven't 3 re-upped and designated. You can't find anybody. You 4 send five to seven charities a notice and said -- say, 5 "You know, you're up for," whatever sanction you can 6 implement now, and "we're -- we're doing it, and come 7 show case cause." If any A, B, C, D, and E decide 8 that, you know, they don't want to go down the tubes, 9 they may -- they'll come up with the money. 10 MR. ATKINS: Well, my only issues 11 remains that individual. And, you know, let's say 12 that individual leaves town and we go after the 13 charities and that individual shows up in another 14 town, and I would hope that your draft would have 15 something in there that would, you know, prevent 16 something like that from happening. 17 MR. BRESNEN: Well, I'm -- I'm open to 18 it. If I can figure out a way to do it that doesn't 19 bring up the evils that, I think, when you create the 20 monopoly -- what I think of as a monopoly on the unit 21 manager concept that's -- that's been talked about so 22 far -- as it's been talked about so far. 23 But I would say this, you know, if we 24 don't pass this, you can't do anything about that 25 now. And you won't be able to do anything about it in 0080 1 the future, and we'll still have the same inefficient 2 grossly wasteful system that we have today. The 3 perfect is the enemy of the good. And I understand 4 your -- I understand why you want to do that. And -- 5 and I think there's something to it. I just don't 6 think it ought to swallow the whole concept because 7 there's a down side to it as well. 8 MR. ATKINS: Well, and I -- I don't 9 think, you know, just because it's not perfect now, we 10 shouldn't strive for it. 11 MR. BRESNEN: Oh, I agree. 12 MR. ATKINS: So I don't think, you 13 know, that we should -- 14 MR. BRESNEN: That's what I'm doing. 15 MR. ATKINS: -- that we should move 16 forward on this. If there's a flaw that we know of, I 17 don't think we should forward with something that 18 would perpetuate that. And that's -- 19 MR. BRESNEN: It -- 20 MR. ATKINS: -- that's all I'm saying, 21 and that's why -- that's what our continued position 22 is going to be. 23 MR. BRESNEN: Sure. 24 MR. WHITTINGTON: Steve -- 25 MS. TAYLOR: Billy, as long as it's 0081 1 somebody that is current that is on the license or is 2 eligible -- eligible to be on the license, wouldn't 3 that keep them from showing up in another town. I 4 mean, if they took off -- 5 MR. ATKINS: Not necessarily. 6 MS. TAYLOR: Well, when they were sent 7 that on the next license, you know, to be one of the 8 individuals on license, y'all would send it back 9 saying no way. 10 MR. ATKINS: Why would we do that, 11 short of any specific statutory -- well, regulatory 12 language that says, you know, if you've been involved 13 in another that goes belly up, that's it. You're 14 gone. 15 MR. BRESNEN: Well, that's a good idea. 16 That's what I'm saying. I'm -- I'm open to those kind 17 of deals. I just said not -- not to dig your heels in 18 and say bring it to me. Let's think of ways that we 19 can do that, because the more options we have, the 20 more efficient this can be. 21 MR. ATKINS: Yes, sir. 22 MR. WHITTINGTON: Well, I think there's 23 a lot in the way because I sure want -- wouldn't want 24 the charities, you know, falling back and being in 25 trouble because of the unit account manager 0082 1 disappearing and something happens, and everything 2 comes back on the charities. 3 MR. BRESNEN: Well, the -- the normal 4 of the story is know who you do business with. 5 MR. WHITTINGTON: Right. 6 MR. BRESNEN: These problems -- you 7 have these problems now. You have people in the hall 8 that run off with the money, don't file the form, 9 whatever, you know. If nothing passes, you'll have 10 the same problems that you're raising now and none of 11 the benefits from gaining these efficiencies. And 12 ladies and gentlemen, it's the end of February. This 13 legislative session is going to be over. 14 MR. ATKINS: Right. 15 MR. BRESNEN: We're way tardy on doing 16 this. We need to get there. If we can't close up 17 every evil, maybe you can do it by rule. Okay. We 18 need to have something to stick in there, and you can 19 come back and close that hole by rule. All I'm saying 20 is don't create a monopoly that drives the price up 21 and leave with one option. The market will give you 22 options that will drive efficiency if you'll just 23 believe in them. Thank you. 24 CHAIR BRACKETT: Any other questions? 25 Okay. Thank you, Steve. 0083 1 Steve Fenoglio. 2 MR. FENOGLIO: Thank you, Madam Chair. 3 For the record, my name is Stephen Fenoglio. I'm an 4 attorney in Austin. And I'm going to amplify a couple 5 of things on what was just said. 6 First, as to the issue of a potential 7 problem, Larry, I mean, you've got that in your hall 8 today. And nothing that the unit manager proposal 9 could solve would erase the problem. But your 10 charities have got to make sure that they know who 11 they're doing business with. 12 MR. WHITTINGTON: Right. 13 MR. FENOGLIO: And as I look at it 14 in -- from the River City Bingo Hall approach, and 15 most of y'all have heard my speech about that, and I 16 won't bore you about -- with those details. But we 17 were already doing that in effect at River City, and 18 that's Janis Woods. And some of y'all may recall her 19 as one of the first BAC members. 20 The way I envisioned this would be 21 started is that Janis would, in effect, or her -- 22 she's been getting up in years at some point, her 23 successor would be the unit manager. The way the 24 draft reads now, she can't do both. She can't be an 25 alternate operator for the Arc of the Capital Area and 0084 1 the unit manager. And I think that's wrong. I think 2 you're adding that level of cost. 3 We're going to have to bring in, you 4 know, someone who goes through eight hours of 5 training. And I am not going to feel comfortable with 6 doing all the duties that we anticipate a unit manager 7 to do. And I see Larry nodding his head and Suzanne 8 nodding her head. You know what I'm talking about. 9 It's going to be one of the big -- if you do this in a 10 bingo hall, it's going to be one of your senior 11 employees, your entrusted employees. 12 The way the draft reads today -- and 13 I'm looking at subparagraph (a), subsections (2) 14 through (4) and subparagraph (h) -- it cannot be Janis 15 Woods. I'm sorry. Strike that. That's where you 16 have to have a licensed unit manager (a)(2) through 17 (4) and subparagraph (h). And I don't think you need 18 that. 19 What -- what we talked about with the 20 legislature and the Sunset Advisory was the 21 flexibility to do it the way it makes the most sense 22 for every hall. I would point out that under 23 subparagraph (a)(6)(c) -- again, we're talking about 24 the employee of the charity that cannot be the unit 25 manager but an employee of a commercial lessor could 0085 1 be the unit manager. Think about that for a moment. 2 Or an employee of a -- a distributor, not someone 3 who's on their license but someone else could be the 4 unit manager. Do you want that person to be your unit 5 manager at a bingo hall? We don't, and I don't think 6 that anyone else would want that. 7 The bonding and licensing fees under 8 subparagraph (a)(5)(d), we understand that under 9 current law today every charity has to be ensured 10 that, for example, their prize fees are paid. Under 11 section 2001.514. But the problem that we don't know 12 today, for example, many mature halls have not had to 13 post bond because they've been prompt in payment of 14 their bond fees. No longer will that be the case. 15 In the case of River City, we pay about 16 $130,000 a year in prize fees to the state, and that's 17 a three and a half-million-dollar, roughly, hall and 18 there are a lot -- and I know Larry has got some halls 19 that are that big and -- and others. The bond on 20 something like that is going to be in the neighborhood 21 of ten to 50 percent of the premium. So someone is 22 going to either pay a CD, post a CD to obtain that 23 bond or a cash bond. All of a sudden you're talking 24 about serious dollars that would add to the cost and 25 may be so high as no one could participate in this 0086 1 unit accounting concept. 2 I -- and my comments are drafted on the 3 last version that Roy delivered. I understand that 4 there may be a new draft and if there is, at some 5 point, I would like to see it. The one that I'm 6 looking at is the one that Mr. Gabrillo -- Gabrillo 7 circulated on February 5, 2003. And if there's a 8 different version, then some of my comments are not 9 directly on target, so I would like to see that at 10 some point but... 11 MR. ATKINS: I don't -- no. 12 MR. FENOGLIO: No. 13 MR. ATKINS: That's the last version. 14 MR. FENOGLIO: That's the last one. 15 Okay. The bottom line is when you make it mandatory 16 that it has to be a unit manager, my clients are 17 opposed. They would like to have the flexibility to 18 do it either way, and -- and I'll just restate what 19 Mr. Bresnen said. Charities are already responsible. 20 If the unit manager concept comes into play, there 21 would be one person to interface with. And in the 22 case of the River City Bingo Hall, that's the same one 23 person anyhow. 24 My sense is a lot of halls that have 25 created ways to legally share revenues and expenses, 0087 1 it's still that one person. What the problem is if 2 you mandatory make it that that person has to be the 3 licensee, you are imposing new requirements on a -- on 4 a charity or group of charities, and there is a cost 5 involved, both directly in the license fee that 6 they're not paying today, and their bond fees that 7 they're not paying today and just in the regulatory 8 costs. 9 We still like the idea. We would like 10 to get it introduced and go forward, but we're not 11 there yet. I'll be happy to answer any questions. 12 MR. PAVLOVSKY: I have a comment or 13 question maybe for you. Awhile ago you asked about 14 if -- if an account manager or unit manager run off 15 with a bunch of money and run off to another city 16 somewhere. Obviously if someone stole some money, it 17 would behoove that organization to file a criminal 18 report. Under (5)(c), before anybody could be a unit 19 manager, they've got to have a criminal background 20 check run on them. That's going to cover some of 21 that. Am I on the same page with you? 22 MR. ATKINS: The criminal background 23 check would only pick something up, not if something 24 had been filed but if it had been a final conviction. 25 MR. PAVLOVSKY: If there would be a 0088 1 warrant out for them, it would have a potential to be 2 in there. 3 MR. ATKINS: But I don't know that just 4 that warrant would necessarily be a disqualifier. 5 There's a concept of innocent until proven guilty. 6 MR. PAVLOVSKY: I understand. But I -- 7 I wouldn't hire somebody that has a warrant out for 8 them. I don't think anybody in this room would. 9 MR. ATKINS: But they're not 10 necessarily going to know, Pete, if someone has a 11 warrant out against them. 12 MR. PAVLOVSKY: Oh, I would find out. 13 MR. ATKINS: Good for you. 14 MR. PAVLOVSKY: I know how the system 15 works. 16 MR. ATKINS: Good for you. 17 MR. FENOGLIO: And -- and if I may on 18 that, in -- Mr. Pavlovsky, he's -- Mr. Atkins is 19 correct that they couldn't deny the license as long as 20 their charge is pending, it's only if they've been 21 convicted, although the charity could require that 22 the -- the person for the unit who's going to be the 23 unit manager provide the same type of data to the 24 charity. And I agree with you. I don't know of any 25 charities if there's a warrant for felony theft 0089 1 outstanding that they would want to put that person 2 into responsibility. 3 The other issue in all the discussions 4 we've had -- and it may be, Billy, that I'm dense and 5 I know you weren't in all the meetings. You know, 6 sometimes I can be dense, but I never heard you 7 articulate the concern that you had about an employee 8 moving from being unit manager at hall A in Dallas, 9 there being accounting irregularities and that 10 employee goes to Corpus Christi and starts operating 11 as a unit manager in hall B. I never heard that as a 12 concern in -- in the earlier ones. I'm not saying we 13 can't address it, but I -- part of our working group, 14 I thought, was to flesh all of those issues out. And 15 I don't recall that ever being addressed in the 16 forceful terms that you did just now. 17 MR. ATKINS: And you're correct, 18 Steve. It wasn't because I don't think there was 19 discussion in the working group of Steve Bresnen's 20 concept of this joint and several liability. 21 MR. FENOGLIO: No, we talked about that 22 in the -- in the working group, the joint and several 23 liability issue. 24 MR. ATKINS: I don't -- then that's my 25 fault. I -- I don't require -- I don't recall that, 0090 1 but I'm pretty sure that we've been consistent with if 2 the need be wanting to get to that individual and in 3 whatever format that it took. And you -- you -- 4 through this discussion we may have hit on a possible 5 solution whereby if in your draft one of the 6 requirements for an organization when they designate 7 the person is that they have a background done on that 8 person. That may help aleve some of -- some of our 9 concerns on that issue. 10 If it's -- if that individual is not 11 licensed, if it's just someone that -- that the group 12 designates but all of the organizations are joint and 13 severally liable and they designate a contact, then 14 you may just look at, in your draft, having a 15 requirement that prior to designating that individual, 16 they have a background check done. And then, I mean, 17 you know, not to say they can't hire someone if 18 something comes up but, you know, at least that puts 19 them on a hook. If it turns out that there's a 20 warrant for their arrest for embezzlement somewhere 21 else and they designate that individual as their 22 point-of-contact person, then -- 23 MR. FENOGLIO: Just so you know, an 24 individual under current law today doesn't have the 25 authority to obtain criminal history record 0091 1 information. Only identified agencies can access the 2 DPS database, which also includes the FBI database. 3 and I don't know that DPS wants to give any charity 4 the authority to go out and start. But certainly we 5 can tag that back to the Lottery Commission and then a 6 requirement that -- that those charities that have 7 designated a unit manager be provided with that 8 information and address any confidentiality issues. 9 Because, technically, if y'all find information from 10 an -- an employee has a prohibited conviction, y'all 11 can't share that with the charity. You just tell the 12 charity that person didn't pass. They can pretty well 13 figure out why, but then if they've got the contacts 14 like Pete does, they'll -- they'll know -- they may 15 even know before you do. 16 I'm sorry. Mr. Whittington? 17 MR. WHITTINGTON: Well, that -- that's 18 why it's so important to address a unit manager as 19 someone who has been working with you for years and 20 that you trust, and I understand what you're saying. 21 That's not included, if they're an operator or if they 22 have anything to do with the organization. I think it 23 should be because those are the people that you trust 24 and that you know. And that's how to run your 25 business. I think they should be definitely included 0092 1 as being with the unit manager for the -- for the 2 bingo hall, if you trust those people. That's -- 3 that's the first place I would look for a unit 4 manager. 5 MR. FENOGLIO: And that's how we 6 approach it. I say we, the River City Bingo charities 7 have looked at it and the other organizations I 8 represent have had the same observation. We're going 9 to put someone there that we know and trust. And the 10 reality is they may wear two hats: their traditional 11 role as either the primary operator or, perhaps, hall 12 manager and alternate operator for one or more 13 organizations and the unit manager. The reality is 14 that many organizations are already doing it already. 15 But the last issue -- and -- and Roy 16 and I haven't had a chance to talk, and it's an issue 17 that came up later in our discussions and is -- this 18 may sound brave. We may reach agreement on all the 19 issues, but if the IRS throws us a curve out of left 20 field that says, well, now that everyone is a unit -- 21 engaged in unit accounting, you're no longer tax 22 exempt. I wouldn't want to be delivering that news to 23 the charities who've been doing this for six months or 24 a year. And I understand that Mr. Gabrillo had had 25 some discussions and it may be -- may require a 0093 1 private letter ruling, and we would just like to be 2 part of that and make sure that it gets done so that 3 going in we know that the -- it's not going to trigger 4 the loss of Virginia's charity as a tax exempt status, 5 which wouldn't make Virginia happy. 6 CHAIR BRACKETT: I wouldn't take the 7 chance on it until -- if you did have it, there's no 8 way I would take a chance on it. 9 MR. ATKINS: Steve, one other -- you 10 reminded me of one other thing that I wanted to 11 comment on, the issue of the unit manager also being 12 the operator. 13 MR. FENOGLIO: Yes. 14 MR. ATKINS: And just so you know where 15 we're coming from, I know that you're aware as a -- as 16 a businessman of a -- the most fundamental concept to 17 controls, et cetera, this separation of duties and 18 that's why that's the position we're coming from, you 19 know. You don't want people writing the checks who 20 deposit the checks who receive the checks, et cetera. 21 So that's what we're looking to. And if you will just 22 keep that in mind as you're working through your 23 concept of the operator, the unit manager, all being 24 the same person, et cetera, et cetera. 25 MR. FENOGLIO: Right. And -- and I 0094 1 would like to think that all halls already have that 2 in place. I mean, the unit manager is not going to 3 necessarily be the one that writes the checks. But 4 the unit manager is going to be the one that makes 5 sure everything gets done. And most halls have an 6 outside bookkeeper, and that's one of your first lines 7 of defense. And then the halls that I deal with, the 8 person that actually signs those checks, they're 9 presented with the invoice and a check on -- on the 10 document. And they have the ability to ask the 11 bookkeeper or someone other than themselves, okay, is 12 this an authorized expense, is it a legitimate 13 expense, and that sort of thing. And I don't 14 anticipate any of those things changing but if that's 15 the concern, it's not addressed in the unit accounting 16 proposal today. 17 CHAIR BRACKETT: Any other questions of 18 Steve? 19 MR. FENOGLIO: Thank you, ma'am. 20 CHAIR BRACKETT: No, thank you. 21 Did you do have a question for Steve? 22 Did you fill out a form? 23 MR. MICCIO: Yes, I did. 24 CHAIR BRACKETT: Yeah. Here it is. 25 MR. MICCIO: My name is Fred Miccio and 0095 1 I represent American Legion. And Roy, when he started 2 his conversation, brought up the fact that one of the 3 reasons they wanted to do this was because some of the 4 charities got good days and bad days, and they were 5 trying to equalize. Well, we are in the business for 6 knowing this for a long time, and how we're going to 7 overcome this is going to be -- I can speak for four 8 of the major bingo halls in Houston. 9 Some quoted distributions, if there's a 10 total distribution of a hall, let's say five charities 11 total, that's $60,000. We sit down and we figure out 12 how many sessions the charity -- each charity pay. 13 Your charity could have done 18,000. Mine got five. 14 We break it down by the session. Your charity writes 15 my charity a check. Your charity will balance it all 16 out. All of the distributions, everybody winds up 17 with an equal distribution. We no longer have to 18 change the licenses around because you're working 19 Mondays. I got Saturdays. I got the best days every 20 other week. We find the balance, and we try to 21 equalize. That takes care of the equalization 22 problem. 23 The most charities come together to 24 form four major halls in Houston. They all use one 25 bookkeeper for all the charities. My VFW post plays a 0096 1 dance down. We use one bookkeeper. I go in once a 2 week, one Saturday a week, and I sign whatever checks 3 that -- whatever bills they present me with, and I 4 sign the checks. With the one bookkeeper, she puts it 5 all together. 6 Thank you. At this point, I just can't 7 see bringing in the unit manager to have more control. 8 That's not the way we've been conducting business. 9 CHAIR BRACKETT: Thank you. 10 Don Bishop. 11 MR. BISHOP: My name is Don Bishop. 12 I'm here to represent Amvets Post 31 and commercial 13 lessor. I guess I need to speak up for some -- for 14 some of us that are in the business and know the 15 hands-on operation. I know three of you, four of you 16 folks, maybe five are involved in -- in bingo. We're 17 a hundred percent behind the unit accounting. It's 18 something we've needed for a long time. Like Danny 19 was asking and Mr. Miccio alluded to, we don't need 20 additional expenses. 21 Most of us still have a unit manager in 22 place in each hall. I don't know about the other 23 halls, but our unit manager is responsible for seeing 24 that the money when we are able to make some money 25 that it gets to the various charities' bank account. 0097 1 That's very critical for our unit managers. Our 2 unit -- our people that work at the bingo hall do not 3 have access to the charities' checkbooks, that's done 4 by the bookkeeping department. So in our case, we 5 probably could get the bookkeepers to be the unit 6 manager, which if it works out, we will do. So I 7 don't know if that would work for everybody. It would 8 for us. 9 The second thing that Steve Bresnen 10 brought up before he left was including the inventory 11 in this unit accounting. With your new rule and, I 12 guess, it's become rule on the perpetual inventory, 13 that is going to be a nightmare for us because we play 14 a jackpot game plan. We have 12 games in our set. We 15 play three early birds. We have two not in set 16 games. We sometimes play as many as eight or ten 17 night owls, all in the same session. And we don't 18 give away $2,500, by the way, or over, not even close 19 really. But we play a lot of games, and we process a 20 lot of paper. And if you come to one of our bingo 21 halls, you'll see we got cabinets with bingo paper 22 stacked everywhere and for us to do a perpetual 23 inventory on that, we're going to have to hire an 24 extra person. We don't need to hire an extra person. 25 If that could be consolidated into one set of paper 0098 1 that all the charities could share, that would greatly 2 help us with just time management within the bingo 3 hall. 4 So I would ask the advisory committee 5 to recommend to the staff that inventory be included 6 definitely in that unit accounting. And that's all I 7 have to say about that. Questions? 8 CHAIR BRACKETT: Thank you. 9 Roy, do you have any follow-up comments 10 you want to make? These are all the public people who 11 expressed a desire in speaking to this. 12 MR. HEINLEIN: I've got one up there, 13 Virginia. I've got one. 14 CHAIR BRACKETT: Okay. You did. I 15 just lost it underneath my stack of stuff. I'm sorry, 16 David. And you put number five. And thank you for 17 speak up. 18 MR. HEINLEIN: Thank you. David 19 Heinlein with Jetta Services. 20 We do the accounting for about 40 21 different charities and eight different bingo halls 22 and to answer one of the questions that was asked, 23 could a person do that in more than just one region? 24 And the answer is, yes, because with the age of fax 25 machines and Fed Ex's and UPS -- I've even moved my 0099 1 office from Houston there, and I've moved a little bit 2 closer to our home in Conroe because you don't have 3 to -- it doesn't matter where we're located anymore. 4 So we do books for charities that are in Victoria, 5 Brazoria County, Matagorda County, Harris County, and 6 Montgomery County. So we're located in and we have 7 halls that we do their books for in a number of 8 different locations. 9 And I thank Roy for doing -- for 10 sharing this with me, this work group. I'm a little 11 confused too about some terminology and maybe you can 12 help me. I have heard the word "subcommittee" and 13 "work group." I understood that I was working in a 14 work group, and I'm wondering if there was a member of 15 the BAC in our work group, would we then be a 16 subcommittee or would we still be a work group? 17 MR. ATKINS: Yeah. It's -- it's a good 18 question. It's kind of a fine line. The -- the 19 discussion that occurred at the December advisory 20 committee was -- was a work group which we took to be 21 separate from the advisory committee. So there 22 weren't -- there weren't any advisory committee 23 members that -- that were on that. We asked members 24 of the public or if -- if advisory committee members 25 knew of members of the public that wanted to just work 0100 1 with staff on this -- on this particular concept. So 2 that was a work group. Again, a subcommittee would be 3 something that's appointed by the Chair and has 4 committee members on it and it may or may not have 5 public members as part of that subgroup. 6 MR. HEINLEIN: Okay. That's kind of 7 what I thought. 8 MR. ATKINS: Yeah. 9 MR. HEINLEIN: I just thought, you 10 know, it's fair that way because I've -- I've heard 11 them used them back and forth, interchangeably. 12 MR. ATKINS: Right. 13 MR. HEINLEIN: So I'm thankful that I 14 was allowed to be a member of that work group on unit 15 accounting. It was a very productive work group, I 16 believe. I was unfortunately to not make the initial 17 meeting because of a death in the family, but Roy has 18 kept me up to date through e-mail. Boy, e-mail has 19 really paid off in this work group session because 20 we've been able to listen to the comments of each 21 other to Roy. That helps us then in our responses. So 22 it's been a very productive work group session. So I 23 certainly advise us to continue to do this kind of 24 thing as we look at different areas that will help 25 bingo. I believe the work group idea is a very good 0101 1 idea so something productive can come out of it. 2 In the last draft that we received of 3 February 5th, which is the one I'm now aware that is 4 the one that y'all are looking at, I e-mailed Roy an 5 e-mail thanking for him for including in that last 6 draft something that I recommended, which was to 7 address the problem that both Mr. Bresnen and 8 Mr. Fenoglio have mentioned and that is the problem 9 with the 501(c) status. 10 When we first started thinking about 11 this and -- and looking at the original draft, it 12 included calling this unit a sole entity. And I began 13 to think, well, what could that be. We started 14 thinking about, well, cloning this separate 15 organization or a limited liability company or 16 something like that, but then as we started thinking 17 about the -- what kind of a company could that be 18 would it -- could it be a 501(c) status itself. And 19 we determined that we could not. So, therefore, we 20 would be left with an entity that would not be a 21 501(c), and it would be difficult for them then to do 22 the work of a 501(c), for instance, buying the paper 23 that's only allowable by a 501(c) authorized 24 organization. 25 So I came up with the idea that maybe 0102 1 what we needed to do was use a trustee agreement. And 2 it solves several of these problems. If we, say, had 3 five charities in a hall and they decided that they 4 wanted to do unit accounting -- and I do endorse unit 5 accounting. It solves so many prior accounting 6 problems that we have. It's definitely worth 7 pursuing. We need to make every effort to -- even if 8 it's not, as Mr. Fenoglio said, perfect. We need to 9 get something down that has a potential to work and 10 make it as flexible as we can so that it meets all of 11 the needs of the industry. 12 And so in doing that, Roy has in this 13 draft used "unit" to mean a partnership, a joint 14 venture, a limited liability company, or a trustee 15 agreement. And I believe that the trustee agreement 16 is going to be the most viable choice. What that 17 would be would be, in the case of five charities, they 18 decide that one of those charities can act as the 19 trustee. That trustee then -- and there would be a 20 trustee agreement drawn up -- could then, as being a 21 501(c)(3) organization, open up a bank account for the 22 purpose of keeping -- keeping track of the funds of 23 this unit. They can buy paper because they're 24 authorized to do so. They can track all of the 25 financial information and file the reports. All of 0103 1 them could, of course, under this rule, file a 2 quarterly report. 3 But, now, what about payroll taxes? If 4 they are a unit reporting as a separate entity, you've 5 got a problem. Now, the Internal Revenue Code has a 6 type of an agreement that you can enter into for 7 payroll purposes, see, common pay master systems. And 8 that would work in these other kinds of companies 9 except the State of Texas does not participate with 10 the Texas Workforce Commission. It's -- they do not 11 have the same reciprocal agreement with the IRS, and 12 there are some states that do. 13 So when I looked at the problem, I 14 said, well, you know, I don't know if we can get an 15 agreement from TWC to be able to file the separate 16 report for the whole unit, and then follow up with the 17 IRS. The IRS would -- would allow it. 18 Then it occurred to me, we might use 19 the private letter rule with the IRS, and if we did a 20 trustee agreement and that is a 501(c)(3), (4), 21 whatever, organization. It is, in effect, then hiring 22 the employees on behalf of the whole group because it 23 has an agreement to do so. It is then the employer 24 who pays all the payroll, pays all the payroll taxes, 25 and the TWC, and there would be no conflict with that. 0104 1 But we might be able to use this common 2 pay master system then to piggyback a separate private 3 letter to the IRS to be sure that these charities are 4 not in any conflict that would be restrictive to their 5 501(c) status. Because as Virginia said, I certainly 6 would not want to endanger that status with the IRS 7 and lose that. So I do believe that requires us to 8 look at a private agreement letter. That cost -- 9 there will be a cost to that. There is a fee schedule 10 in the Internal Revenue Code for that, and it starts 11 about $240 as a minimum. It could go as high as 12 $6,000 for a private letter. 13 Larry? 14 MR. WHITTINGTON: I don't see why you 15 can't have unit accounting at the end of year where 16 they're like their own separate entity and to file 17 their own taxes. That's what they're filing now. 18 MR. HEINLEIN: You don't have to do 19 that. 20 MR. WHITTINGTON: I mean, it would 21 be -- just be unit up until the last part and then you 22 have to separate and do your own deal. 23 MR. HEINLEIN: Okay. What we're trying 24 to do is to reach a decision. It's the difficult part 25 is -- is the payroll. And we've got to be able to be 0105 1 sure that, you know, we've got an organization that 2 has the authority to hire all these employees, and if 3 they're one of the charities of that group, they will 4 because they are a 501(c). They are nonprofit tax 5 exempt organization. 6 So that's why I like that particular 7 agreement because it has less problems. You may be 8 able to avoid these problems in some of the other 9 entities that they've listed here, but they are more 10 difficult. I think the trustee agreement would be the 11 easier agreement to use because then we could do all 12 the payroll taxes and -- to the Internal Revenue 13 Service and to the State of Texas without any problem 14 at all. 15 Then, of course, they will still be 16 responsible because they are part of a -- an 17 agreement. And the Internal Revenue Service would 18 have to certainly look at each of those organizations 19 as having been a part of that activity for that year. 20 So it's not going to negate their responsibility for 21 filing a 990 individually. They still have to do that 22 because they are part of that group. 23 And this is where we probably need more 24 room. I do think that this can be viewed by the 25 Service as a group of combined parties, the purposes 0106 1 of which is intended to use accounting to accomplish, 2 and then as far as to have one set of books to keep 3 all of the activity of the bingo at that hall and one 4 bingo bank account. Pay all the bills out of that. 5 Pay all the payroll taxes outside of that. Then 6 because -- if that group then just tries to file their 7 own 990 and the other didn't, I don't think the 8 service would go for that. 9 MR. WHITTINGTON: No. I'm talking 10 about filing their own at the end of the year. 11 MR. HEINLEIN: I think they would have 12 to conclude that you were a partnership in the group. 13 So you would then be in default. So I believe that 14 then -- then the way that we would structure it that 15 each of those charities would be given their portion 16 of the share, whatever that percentage is that has 17 been agreed upon in the trustee agreement, if it's an 18 equal share. That's how I would envision it being 19 because there are five partners, and they all share in 20 five equal parts. 21 And so we would take the year-end books 22 and divide it by five and your gross receipts would be 23 one fifth of the total number, and that would be the 24 gross receipt that's going to determine whether or not 25 you have to file a 990. As you know, if your receipts 0107 1 are in excess of 25,000 in the last three years, 2 you're obligated to file a 990. And if you're in 3 bingo, you're obligated to file a 990. Even if you're 4 only playing one session a week, you're going to have 5 to file a 990. And if you're also engaged in instant 6 bingo, you're going to have to file a 990 too because 7 it's unrelated business income tax. 8 So each of the members of that group 9 are going to have to pay their portion of their share 10 of that, and they'll still have to file a 990 and a 11 919, and that would be divided up by the whole unit's 12 activity for their proportional share. 13 Now, I stated to Roy a couple of times 14 I'm confused about the paragraph (f). It says the 15 licensed authorized organizations comprising the unit 16 shall keep and maintain conduct of the bingo games 17 separate and apart from the other games of the unit. 18 And I simply do not understand that. I mean it's 19 suggesting to me that I've got to keep a set of books 20 for the unit, and I've got to keep a separate set of 21 books for each of the charities. 22 MR. ATKINS: It doesn't have anything 23 to do with the books. It has to do with the operation 24 of the game. 25 MR. HEINLEIN: Okay. 0108 1 MR. ATKINS: I don't know -- I don't 2 know if you heard what Phil said earlier. The 3 operation of the game and the activities of the unit 4 accounting are two separate things. 5 MR. HEINLEIN: Yeah. I remember that. 6 MR. ATKINS: And that's what that 7 says. Or let me put it this way. That's what that's 8 supposed to say. 9 MR. HEINLEIN: Well, in -- it's saying 10 that conduct of the bingo games is separate and 11 apart -- 12 MR. ATKINS: The conduct of the games, 13 not the unit accounting. It is the conduct of the 14 game, the drawing of that ball. 15 MR. HEINLEIN: Okay. I'm going to have 16 to let some of this kind of sit. I told Roy one of my 17 things, I said, you know, it's taken me two weeks to 18 respond because I'm a slow thinker. I got to think 19 everything out. Because my first inclination was 20 we're going to have to file a limited liability 21 company in this thing. So it's a real easy deal, but 22 you've got to think of all these things that it 23 effects. So I'm still saying it's worth pursuing. We 24 need to keep after it. We need to uncover the 25 problems that we may have with it and find solutions 0109 1 for them. 2 So when he sent this February 5th 3 draft, we got this new term "unit manager." In the 4 previous drafts, it only had its own use to identify 5 the individual that would be designated by a majority 6 vote of the members of the unit, as a person who's 7 responsible for the activity of the unit. And 8 until -- Phil said one day awhile ago, I still 9 didn't -- I didn't have any concept of that being 10 separate from the actual bingo activity. I had been 11 viewing the unit manager as that person who is 12 actually conducting the bingo activity at the hall. 13 Now, you've thrown me a new piece of information. 14 And, in fact, now, while I'm hearing 15 this overview, what you said and what -- what Phil has 16 said, I probably myself have been the one that has 17 been the unit manager for these different halls that I 18 now do their books for because I'm very involved with 19 their financial activity. But then if you tag on to 20 that inventory being my responsibility, that's not an 21 area that I'm involved in. Because I'm not there at 22 the hall and I'm not counting the paper and I can only 23 be responsible for something that I'm there to do. 24 I'm hands-on. If I'm going to be responsible for 25 something, I'm going to know what their doing. 0110 1 I mean one of my greatest concerns 2 after having a charity that had a problem, because I 3 was new in this industry, is the rule that you must 4 deposit funds by this next business day. In some 5 cases, I've had some charities that have had some 6 circumstances where they weren't near the bank. It 7 only took two days for the BAC to say, well, that's 8 close enough. Well, it isn't. And I have found 9 there's a very, very good reason for that. 10 And one of the main things my staff 11 tells -- I told them what they have to do is -- the 12 greatest document that we get at the end of each month 13 is the bank statement. And we must -- they must look 14 at the bank statement and look at all the dates of 15 those deposits and be certain that that money that 16 they said was for that occasion went to the bank in 17 the exact amount that they have told us or what it was 18 supposed to be. I mean, that's the greatest tracking 19 system. 20 As Fenoglio and -- and Bresnen said, 21 you know, we -- we need this second party to be -- 22 like the draft says that we need this credibility. We 23 need this checks and balances. Well, that's what I do 24 for mine -- provide charities a check and balance. 25 We have an operator that's at the 0111 1 hall. He's counting the money the other night, and he 2 says that there's supposed to be $1550. Well, I'm 3 going to check to be sure that the next day that $1550 4 went to the bank. And I'm going to be reporting it if 5 it didn't happen. And in a lot of cases, it went to 6 the wrong bank. You know, they picked up the wrong 7 deposit slip, and that's how we get a violation that I 8 just so much hate. But I can't do anything about it 9 because they picked up the wrong deposit. 10 And the worst thing they can do is pick 11 up the wrong tax coupon book. And when they put -- 12 put the money in the bank for a wrong charity on the 13 tax coupon book, I've got real problems. Sometimes it 14 takes me a year to get that straightened out. 15 But it's an important job to have, some 16 outside accounting taking care of the books and 17 looking at these details of the money. But it will be 18 a little bit difficult to impose this requirement of 19 looking at the inventory and things like that. It 20 needs to be done. I mean, that inventory is certainly 21 a very critical item, and we do solve some very 22 critical problems with the unit accounting. You solve 23 the problem of the different charities having to have 24 their own paper. 25 And, boy, has that come into focus with 0112 1 the event-tabs that we're doing now. As we have 2 suspected, the event tabs and -- and the new pull-tabs 3 that we have on the market today that we're able to 4 sell, they're selling like hotcakes. 5 And where we have challenged some of 6 our halls that they should set a goal of depositing a 7 thousand dollars off of just pull-tabs per session. 8 They laughed at me and said, "Oh, there ain't no way 9 we can do that." Well, we've been at it for less than 10 a couple of months on an aggressive basis, and we have 11 a couple of halls already very much close to a 12 thousand dollars per session. That means that if 13 they're doing 12 sessions a week. They're depositing 14 $12,000 to the bank a week from just pull-tab sales. 15 Okay. So that's a lot of products that they're having 16 to sell, but that's a lot of inventory. And that will 17 help us to be able to account for that in just one 18 single unit. 19 Three areas that the unit manager would 20 be required is that he would have to be licensed. I 21 mean that's going to be true, but what would be the 22 cost of that license. Because there is going to be a 23 cost that is going to be passed on to the charities. 24 So it shouldn't be several thousand dollars. It 25 sounds like to me that it would cost me a nominal fee 0113 1 of a hundred dollars, just to defray the cost of 2 setting up monthly accounting. 3 But the license owner would have to 4 be -- post a bond according to the 201 -- 2001.514, 5 that could be three times the amount of the quarterly 6 tax. Well, we're seeing quarterly taxes right now for 7 a particular bingo hall of that size to be $40,000. 8 You're looking at 120,000-dollar possible bond. And 9 you might have to have $60,000 cash to do that. So 10 you could just wipe out the availability to even be 11 involved in that kind of requirement. 12 But certainly if there's a -- a 13 violation problem, if they've had a history, if 14 they've failed to have her pay, then the bond should 15 be required. But if there's no violation and that 16 hall has a history of paying their winners fees, then 17 it would seem that we ought not to have to require 18 that bond or at least nothing like that, but maybe 19 creating a nominal bond of something like $5,000. 20 I know I'm taking too long, so I'll ask 21 if there's any questions. Because I can talk about 22 unit accounting for a long time because it's an area 23 that I am involved in. I mean, it's so much a part of 24 what we do as a firm, and it's an important issue that 25 we hope that you can get solved because it would 0114 1 really streamline the bingo operation. I mean, it's 2 very, very much in need of activity. 3 If I can answer any questions. 4 MS. TAYLOR: I have one. When you use 5 the private letter rule -- 6 MR. HEINLEIN: Yeah. 7 MS. TAYLOR: -- one of your 8 organizations uses their tax ID number for the 9 employee information? 10 MR. HEINLEIN: Yes. On the -- on 11 the -- for the trustee agreement, we use the tax ID 12 number. 13 MS. TAYLOR: Okay. So if the whole 14 thing breaks up, ultimately, it's going to come back 15 on that one charity? 16 MR. HEINLEIN: Yeah. 17 MS. TAYLOR: And you would have the 18 responsibility? 19 MR. HEINLEIN: Yeah. And certainly you 20 would want to select the charity that had the best tax 21 rate, but if -- if they haven't -- say, I've been 22 involved in the same hall for a number of years or 23 so. It's going to be about the same, very low, four. 24 2.7 is the default for your first one, but after 25 you've been in for three years, it keeps going down. 0115 1 Because we don't usually have claims like that. 2 MR. DOUGHERTY: Madam Chair, I have 3 a -- a conflict between something that David said and 4 what Steve Bresnen said, and maybe you can clarify 5 it. I think Steve said that Janis Woods would not be 6 eligible to be a unit manager and -- and you said that 7 any accountant could be. So could you clarify why 8 Janis Woods would not be -- 9 MR. HEINLEIN: Because she was a member 10 of their -- those organizations at the hall where 11 she's a manager. I am not a member of any of those 12 organizations. 13 MR. DOUGHERTY: She is presently a 14 member? 15 MR. HEINLEIN: Yes. 16 MR. DOUGHERTY: Oh, okay. I did -- I 17 was not aware of that. 18 MR. HEINLEIN: I am not a member of any 19 of the organizations that we do the books for. I am 20 independent and outside of the halls that we do 21 business for. Okay? So we do accomplish that long 22 arm, you know, third party, away from -- a distance 23 from the hall. 24 MR. DOUGHERTY: In River City she works 25 at the hall. 0116 1 MR. HEINLEIN: She works at the hall, 2 and there is certainly a lot to be said for one person 3 being the one that -- we -- we write the checks, and 4 we attach them to the envelopes. But when we send 5 them to the hall to the charity individual, not even 6 the charity owner, not even the hall manager but the 7 charities individually. And they post checks and they 8 sign them and look at them and define whether or not 9 that's the correct number. I mean, they have the 10 opportunity to do that, to look at that, even all the 11 payroll checks. They can look and see if somebody has 12 inadvertently got a raise that they didn't know 13 about. They could find out. 14 Thank you. 15 MR. ATKINS: Just for clarification 16 that was Steve Fenoglio that used the -- that talked 17 about Janis Woods. 18 CHAIR BRACKETT: Okay. We need to give 19 the court reporter a break. We've gone a lot over an 20 hour. 21 MR. ATKINS: Can I -- can I real 22 quickly just -- I have a couple of comments. 23 CHAIR BRACKETT: Okay. Real quick. 24 MR. ATKINS: For the court reporter, 25 David, would you spell your last name because I 0117 1 never -- 2 MR. HEINLEIN: I'll give her a card. 3 I'll give her a card. 4 MR. ATKINS: Okay. 5 THE COURT REPORTER: I know it from 6 last time. 7 MR. ATKINS: All right. Have -- I was 8 just going to suggest that -- as you heard us talk 9 about, Roy has been in contact with the IRS. I think 10 it might be interesting if you do something similar 11 apart from him. 12 MR. HEINLEIN: Okay. 13 MR. ATKINS: And see if the information 14 is similar that we get. Maybe y'all could talk about 15 exactly what you're asking so if you have similar 16 questions, you can see what the responses are. I -- 17 MR. HEINLEIN: It's definitely an 18 important point. 19 MR. ATKINS: Sure. I appreciate your 20 comments about the work groups. 21 MR. HEINLEIN: Yes. 22 MR. ATKINS: And how they've been. I 23 know they've been very beneficial for us, I think in 24 two areas. It's given staff the opportunity to 25 explain where we're coming from and why and vice 0118 1 versa. And it has also given us the opportunity for 2 everyone to understand exactly what you've said. 3 These are not simple issues. 4 And, you know, we get lots of folks up 5 here that say, well, just add a word here or a comment 6 or whatever and everything is hunky-dory, and we find 7 ourselves down the road in a big mess. And this 8 requires a lot of work and I know you've done a lot of 9 work, and I appreciate that. I think we still have a 10 lot of work to do. 11 But one last thing, I want to end with 12 admonishing you. You said the rule that funds be 13 deposited the next day. 14 MR. HEINLEIN: Yes. 15 MR. ATKINS: It is a statutory 16 requirement. 17 MR. HEINLEIN: Yes, I know. Right. 18 MR. ATKINS: It is not a rule. 19 MR. HEINLEIN: I -- I'm sorry. 20 MR. ATKINS: And I've held -- I've held 21 other people to that standard, so I had to do it to 22 you. I know that's why you hate me because those 23 funds have to be deposited the next day. 24 MR. HEINLEIN: I love that statute, 25 Billy. 0119 1 MR. ATKINS: It is a statute. And for 2 the record, we're -- we're laughing and smiling about 3 the statute problem. 4 MR. HEINLEIN: It's a good statute. I 5 like it. 6 MR. ATKINS: Thank you, David. 7 CHAIR BRACKETT: Okay. Let's adjourn. 8 I mean, recess. I'm sorry. I'm getting a little 9 ahead of myself. 10 MR. PAVLOVSKY: Did -- did you want -- 11 did you want a second for that? 12 CHAIR BRACKETT: I know we'd probably 13 get several on that one. Yes. Yes. And we'll 14 reconvene in an hour, which would be 2:50 -- I mean 15 1:50. 1:50. 16 (Recess.) 17 CHAIR BRACKETT: Okay. Let's call the 18 meeting back to order. All right. We'll call back to 19 order. If anyone wants to do a witness affirmation 20 form, they can put it right here, please. 21 And we're on Item Number 6, 22 consideration and/or possible discussion or action on 23 the new rule relating to license fees. This is rule 24 544. 25 MR. ATKINS: And I was going to -- 0120 1 CHAIR BRACKETT: Okay. First, I would 2 like to say that I feel like we need to limit our 3 discussion to ten minutes a person. 4 MR. HEINLEIN: Are you talking about me 5 again? 6 CHAIR BRACKETT: Okay. Thank you. Go 7 ahead, Billy. 8 MR. ATKINS: Members, this is a 9 proposed new rule and partly coming from, if you will 10 recall, the December meeting. I believe it was the 11 December meeting when the general licensing provision 12 rule was up for second reading. Comment was made by a 13 member of the public, I believe it was sharing items 14 that she had about some comment. She had some 15 questions regarding license fees. And I don't 16 remember specifically what the issues were and we told 17 her that we were working on a separate rule specific 18 to license fees. That is this rule. And I would like 19 to lay the rule out briefly in that Bruce Miner is the 20 licensing manager and is available to try and answer 21 any questions you may have. 22 This rule relates to license fees 23 submitted by any license applicant for any type, 24 including original licenses to conduct bingo or to 25 lease bingo premises. It deals with renewal license 0121 1 fees, amendment license fees, as well as refunds of 2 license fees. 3 It also has language in there that 4 would deal with organizations that may have 5 outstanding liabilities to the state prior to them 6 getting a refund. Any of that money would be applied 7 to those liabilities before they would be refunded to 8 the organization. And it sets out the procedures that 9 the organizations would need to follow in order to 10 request a refund. 11 And let me before Bruce comes up, 12 mention a couple of things. One of the things that is 13 not in this draft but we are still discussing, and we 14 anticipate including in the rule for discussion, would 15 be a requirement that the agency would withhold from 16 any refund the actual cost of processing an 17 application, whether or not it was issued, because 18 there are still costs associated to the agency for 19 processing an application even though it ultimately 20 may not be issued. 21 Another thing that I want to point out 22 kind of along the lines of the discussion that we had 23 earlier during the orientation, and everything, is 24 that I would like for you-all to keep in mind that 25 this is a first reading. The rule in front of you 0122 1 again has on it "Draft for Discussion Purposes." 2 That's what we're here to do. And it would be -- it 3 would be very appropriate, for example, at the 4 conclusion of this discussion if one or more members 5 of the advisory committee wanted to take this up under 6 consideration in a subcommittee and review it 7 further. That would be very appropriate at this time. 8 Again, what we would want to avoid is 9 any situation where this rule has been put forward for 10 discussion for comment and not hear from anybody until 11 we come back for a second reading and we're ready to 12 move forward for -- to the Commission for the formal 13 comment period and have folks saying, "Oh, wait a 14 minute, I'm ready to comment on it now." We need to 15 start doing that up front. That's what we're here to 16 do. 17 That's what I have to lay out. And 18 like I said, Bruce is here and if you have any 19 specific questions about it, he can address those for 20 you. 21 MR. MINER: Madam Chair, BAC members, 22 my name is Bruce Miner, and I'm the licensing section 23 manager for the Charitable Bingo Division. 24 And I can receive any questions or 25 comments. 0123 1 MR. MANIO: I have a question. 2 MR. MINER: Yes, sir. 3 MR. MANIO: Subparagraph (b) on the 4 first page, an applicant shall submit an annual 5 license fee amount that is in excess. I have some 6 problems trying to understand what you mean by "in 7 excess." How much and over what amount? 8 MR. MINER: Okay. Our intent is that 9 when you apply for a license fee, it's an estimate and 10 we may be thinking you're estimating low based on the 11 other activity in the hall. And some people might try 12 to keep it under the current amount that might require 13 a bond. We're just saying be realistic as for the 14 prize fees -- sorry -- the license fees that are due 15 the state. So we try to minimize the risk to the 16 state. Does that answer your question? 17 MR. MANIO: Partially. Does this mean 18 that you're going to take them to the next level based 19 on what was estimated or what the next two levels 20 are? 21 MR. MINER: Well, let me ask them to 22 make sure that we understand. Because they have two 23 bad nights, we can't compare them with someone who has 24 two good nights. So we ask that it be a realistic 25 estimate of the license fee. Because what we would 0124 1 not like to see is -- is you estimate low because, you 2 know, we do a recalculation of renewal time, so 3 potentially, you know, $4900, $2400 due from last 4 period, 2500 due from this period. So the state 5 should have received 4900, but maybe you don't renew. 6 You go out of business, so, therefore, the state has 7 lost its opportunity for that 2400-dollar license fee. 8 MR. ATKINS: The -- 9 MR. MANIO: Go ahead. 10 MR. ATKINS: Well, I was just going to 11 try and -- and to follow up with that. You know, for 12 example, Mario, we can have a large commercial hall 13 with six organizations in it, all playing three times 14 a week, and their license fee is $2500. We have 15 another organization submit an application to play in 16 there, and they submit an estimated license fee of a 17 $100. You know, if we're going to have -- what -- 18 what this section is intended to say is that we're 19 going to go, wait a minute, that -- that doesn't look 20 right. 21 So Bruce is saying, you know, explain 22 to us how these other six organizations can have this 23 amount while you have, you know, the smaller amount. 24 There could be, like Bruce says, a reason for that, 25 you know. And I'm using the -- the -- you know, the 0125 1 biggest example there is. There -- there may be a 2 reason for it. What this language is intended to lay 3 out is we're going to look at it. And if it's out of 4 line with the others, we're going to be looking for 5 justification. If there's not justification then 6 we're going to require that comparable license fee. 7 MR. MANIO: Okay. So, well, I'm just 8 concerned about timing in here. When is the 9 assessment made? At the time of the application or 10 after -- after you have made the review or -- 11 MR. MINER: This is an original 12 license. 13 MR. MANIO: Right. Original license. 14 MR. MINER: It's during the process, so 15 it should be one of the first things we look at. We 16 review the whole application, identify to you those 17 areas that need, you know, clarification or -- or 18 documentation, and we would hope that at that time we 19 make you aware that those amounts seem low as compared 20 to the rest of that hall. So you would say, yes, it 21 is. We'll pay you extra. No, it isn't and explain 22 why not. 23 CHAIR BRACKETT: Are there any other 24 questions? 25 Okay. We have a couple of people that 0126 1 said they would like to comment on this. One is 2 David. 3 MR. HEINLEIN: I'm going to pass on 4 this one. 5 CHAIR BRACKETT: Okay. David is going 6 to pass. 7 Steve Fenoglio. Stephen, you have ten 8 minutes. 9 MR. FENOGLIO: Thank you, Madam Chair. 10 And I'm sorry. I was out in the lobby. You're 11 talking about Rule 55 -- 544 license fees? 12 CHAIR BRACKETT: Correct. 13 MR. FENOGLIO: The -- the first concern 14 that my clients have is under subparagraph (a)(1), 15 subparagraph (b) where you talk in terms of the 16 estimated gross receipts used to calculation -- used 17 to calculate the license fee are not reasonable when 18 compared to gross receipts of other organizations with 19 the same number of locations conducting bingo. 20 Some halls are larger volume halls, and 21 if your only comparison is the same -- the charity 22 with the same number of occasions in another bingo 23 hall, that in me my view will not necessarily be 24 realistic of what the license -- what the gross 25 receipts should be used to calculate because they are 0127 1 large -- and when I say large halls, I mean large 2 revenue halls and small revenue halls, sometimes in 3 the same market. And, yet, it -- it's a small revenue 4 hall, and you're going to compare this charity with 5 three sessions in a large revenue hall, then the 6 license fee all of a sudden is an -- would not 7 necessarily be proportionately representative. 8 And I think I understand, Mr. Atkins, 9 the intent of that, but there ought to be something 10 other than just, well, if you've got three sessions 11 and the charity over here in a huge revenue hall had 12 the same three, you ought to use something other than 13 just the sessions themselves. I understand the intent 14 is to avoid a charity submarine or lowballing the 15 revenue license fees. 16 Eventually that will correct itself if 17 the charity stays in business when they come around to 18 renew, but if they go out of business, which I gather 19 is one of the concerns the staff has. And you're 20 shaking your head, yes, Mr. Atkins. We salute that. 21 We don't want someone playing games and lowballing 22 what the state is due. They go out of business and 23 then there's no one left to pay because indirectly the 24 good charities, the good guys have to pay, either 25 directly or indirectly. 0128 1 But the way it's drafted, you can have 2 the unintended consequence and put a low revenue 3 charity hall out of business because they now have to 4 go up to that higher number. And I think the same 5 comment is true on subparagraph (2)(b) for the 6 commercial lessor. 7 MR. ATKINS: Okay. Let's -- let's talk 8 about that because on (2)(b) they do compare gross 9 rental income. 10 MR. FENOGLIO: And it says similarly 11 situated bingo premises in the same city if possible. 12 I don't know what you mean by similarly situated. 13 Again, if you're -- if by similarly situated, you 14 mean, well, we'll compare a mature bingo hall that 15 conducts bingo 14 sessions a week to another 16 14-session a week bingo hall, but one bingo hall has 17 twice the revenue of the other one, in one sense 18 they're similarly situated because they both conduct 19 14 sessions per week regularly. But at the same time, 20 they're not similarly situated because -- and that may 21 be what y'all had intended is that you would look at 22 not what's similarly situated, what you look at really 23 is hall A -- let's say the gross revenues are a 24 million and a half for all five charities -- and hall 25 B is River City Bingo at three and a half million. 0129 1 Will you -- those aren't -- I mean, 2 they're similarly situated because they're both 3 commercially run in the sense that they're running 4 full time. But hall A is a small hall -- or smaller 5 hall -- and hall B is not. Or if you had a VFW-style 6 post where they may conduct 14 times a week, but 7 they're not trying to run it for anything other than 8 for the benefit of their members. They're not trying 9 to get general public members in. 10 What do you mean by similarly 11 situated? That's what I'm trying to address. 12 MR. ATKINS: Right. And I think -- I 13 think you're accurate in -- in describing our intent 14 as trying to ensure that in as many variables as 15 possible that one hall is equal to the other hall. 16 I'm not -- I don't think we want to get into actual 17 wordsmithing now, but I would hope as a result of 18 this, you might submit suggested language. 19 MR. FENOGLIO: And I'd be -- 20 MR. ATKINS: And have a conversation 21 with that. 22 MR. FENOGLIO: And I'd be happy to, but 23 this is the only opportunity I've had yet today to 24 understand, well, where are you headed or what -- 25 what -- 0130 1 MR. ATKINS: Right. 2 MR. FENOGLIO: -- do you want to 3 capture? 4 MR. ATKINS: Right. Right. And that's 5 part of the process we're going through now, is based 6 on that conversation, if you can come up with 7 suggestions that you think clarify -- further clarify 8 what we're talking about then we're happy to consider 9 that for this rule. 10 MR. FENOGLIO: Okay. Second issue is 11 under subparagraph (b)(1), and it's repeated 12 throughout, including (b)(3). There's a work sheet 13 for calculating the license fee and bond amount. Is 14 that something that's in existence today that you can 15 share with the industry? And if so, we would like to 16 see that because when -- when you reference some 17 document, I always want to go look at the document, 18 and if there are any -- so I can understand. 19 MR. ATKINS: That is a commonly 20 available document, and it's on our web site and 21 attached to most of our applications, at least the 22 originals. 23 MR. FENOGLIO: Okay. 24 MR. ATKINS: Yeah. 25 MR. FENOGLIO: And that would be, for 0131 1 example, for a conductor, you would go to the 2 conductor's application and then all the -- 3 MR. ATKINS: Right. And all the 4 schedules. 5 MR. FENOGLIO: -- schedules. Okay. 6 Then I can get that. 7 In subparagraph (e)(1) an overpayment 8 of an annual license fee is a credit and shall be 9 applied to a license renewal fee for the next license 10 period. If they've overpaid it, it's not the state's 11 money, it's their money. And I would think -- I would 12 want -- I would want you to consider giving them the 13 option of asking for that money. If it's the 14 overpayment, and let's -- let's say it's $2000, 15 they -- they missed it by a large -- no. It's their 16 money. It's not the state's money, and it shouldn't 17 be mandatory that it shall be applied but perhaps may 18 be applied. Because the charity might need that extra 19 money for whatever reason. And -- and again the 20 notion is it's the charity's money. It's not -- 21 because it's an overpayment, it's not the state's 22 money. Ultimately, I think that's what the law is. 23 It is -- I mean, you've got it or the state has it. 24 But you're holding it, in effect, in trust for the 25 licensee, and those -- the rule says it shall be 0132 1 applied. Well, if the charity needs it, why can't 2 they come get it. Anyway... 3 MR. ATKINS: And let's -- we don't have 4 to do it now, but I think that we will need further 5 discussion on that. 6 MR. FENOGLIO: Okay. Under 7 subparagraph (f)(5), under refund of payments, and 8 it's the second sentence, any balance after 9 liabilities are paid shall be refunded to the 10 organization, providing no outstanding liabilities for 11 the state exists. And the second sentence, a refund 12 will not be -- the -- the following sentence, a refund 13 will not be issued until all liabilities to the state 14 have been paid. 15 I am assuming you're only concerned 16 about the Lottery Commission-related liabilities? For 17 example, you could read that broadly to be 18 unemployment taxes, as well as all liabilities to the 19 state, and if that were the case then no one would 20 ever get a refund or it would be very difficult to get 21 the overpayment for a refund because of the potential 22 out there that there's some liability to the state 23 that exists, unrelated to bingo. It's related to 24 something else. 25 If they, for example, in some 0133 1 charities, as you know, do have bars. Well, there's a 2 liability to the state for certain charges or fees 3 that are paid to the state related to the sale of 4 alcohol. The same is true of you. Reading that 5 broadly, they'd never get their refund paid because 6 there's a potential for a liability to the state. 7 MR. ATKINS: And my assumption is that 8 our intent was specific to those liabilities incurred 9 under the Bingo Enabling Act. And so, again, we would 10 be receptive to suggestive language. 11 MR. FENOGLIO: Okay. And with that in 12 mind, those are the only comments that my clients 13 asked me to make to this rule. 14 If you don't have any questions, I will 15 sit down and shut up. And I think I was within the 16 ten minutes, Madam Chair. 17 CHAIR BRACKETT: You did perfect. 18 MR. FENOGLIO: Thank you. 19 CHAIR BRACKETT: You had a second left. 20 David, you said you would pass. All 21 right. Those are the only people who said they wanted 22 to comment on this. 23 MR. ATKINS: Okay. Then I don't know 24 if you had -- one of the things that the committee can 25 do is discuss whether or not there are members that 0134 1 would like to serve on a subcommittee to discuss this 2 further. 3 CHAIR BRACKETT: Are there members who 4 would like to serve on the subcommittee? Would you, 5 Mario? 6 MR. MANIO: Sure. Yeah. 7 MR. ATKINS: And -- and I'm -- I'm not 8 trying to pressure. I mean, nobody has to. I -- I 9 would just, you know, repeat what I -- I said earlier, 10 and I think Steve, you know, heard that and -- and 11 will get the language on those sections that we talked 12 about. On the other sections, we can have further -- 13 further comment on, and there may not need to be a 14 subcommittee. 15 CHAIR BRACKETT: Well -- 16 MR. WHITTINGTON: I think Steve covered 17 it pretty well. 18 CHAIR BRACKETT: Well, do what you feel 19 comfortable with. Mario is a good thinker, and he's 20 articulate so... 21 MR. ATKINS: We can -- we can probably 22 do this. Is there another member that would -- 23 MR. PAVLOVSKY: I will work with him on 24 it. 25 MR. ATKINS: Great. 0135 1 CHAIR BRACKETT: Pete, will work with 2 him on it too. 3 MR. ATKINS: And on the -- who -- will 4 Mario chair? 5 CHAIR BRACKETT: I think that's the 6 procedure. The first name called is the chair. 7 MR. ATKINS: Okay. And -- 8 CHAIR BRACKETT: Which can be a shock 9 sometimes. 10 MR. ATKINS: And Bruce will represent 11 the staff. And we'll follow up with Mario on getting 12 together. And I think this is probably something that 13 can probably be done over the telephone. Great. 14 CHAIR BRACKETT: All right. Let's move 15 on to Item Number 7, consideration and possible 16 discussion and/or action on a new rule relating to 17 allowable charitable distributions and expenses. 18 That's number 568. 19 MR. ATKINS: Madam Chairman, this rule 20 comes from, in part, again, the Sunset staff 21 recommendations that the agency was asked to further 22 clarify for a rule authorizing charitable 23 distributions and expenses. 24 This is also one of the rules that -- 25 this has already been discussed in the informal work 0136 1 groups that we talked about earlier. This is the 2 draft, as imperfect as it is, that has come forward so 3 far from those in -- from that work group. 4 Again, this is here for first reading. 5 It is here for discussion. And again this would be 6 one of those that we would look to -- that we really 7 think a subcommittee would be beneficial on to -- to 8 work on further. And with that, I will ask 9 Mr. Gabrillo to talk briefly about the history of the 10 work group that has been working on this and take you 11 quickly through the draft rule. 12 MR. GABRILLO: Roy Gabrillo, Senior 13 Audit Manager, Charitable Bingo Division. First of 14 all, the copy of the rule that's in your notebook is 15 the -- is not the one -- was not the correct. It was 16 sent out by mistake, and I believe Worlanda e-mailed 17 you a -- a current copy. So I apologize to you for 18 any confusion about that. But this is -- this is the 19 one that was e-mailed to you and is the most current 20 rule we've been working on. 21 As Billy mentioned, the work group has 22 undertaken this. Also trying to get clarification as 23 to what are -- or should be considered charitable 24 expenses or charitable distributions or charitable 25 purposes. This is -- the problems we've made so far, 0137 1 we've had discussions and one of the things that has 2 been brought up was the types of documentation that 3 are required to substantiate any charitable 4 distributions. 5 Many times our auditors, when they're 6 doing audits and compliance reviews, when they see -- 7 when they're reviewing charitable distributions, all 8 they have is a check saying -- made out to the 9 individual or to some entity but with no documentation 10 as to what that purpose is. And a lot of times the 11 auditor has no -- has -- has no other alternative than 12 to disallow it because of the fact that there is no 13 documentation for that payment. So that's one of the 14 things that we're trying to cover in this -- in this 15 rule is to supply or provide a list of what can be -- 16 what will substantiate a charitable distribution and 17 also what -- clarify what is a charitable 18 distribution. 19 So that being said, if you have any 20 questions. 21 MS. TAYLOR: I have one question. What 22 if you are giving this to -- what if your charity has 23 an account set up that they usually deposit the bingo 24 funds and call it their special bingo account. It's a 25 general account, but they keep their bingo funds 0138 1 separate from their general account records. In that 2 instance, would they be required to provide the 3 general account records if all the bingo funds are 4 disbursed into one area? Would they just be required 5 to provide that documentation? 6 MR. GABRILLO: Well, and -- where is 7 that subsection? 8 MS. TAYLOR: Well (c) makes mention of 9 that. 10 MR. GABRILLO: Yeah, (c). If -- in 11 other words, if it's just -- if this goes -- just by 12 writing the check from the bingo account to that 13 specific fund or to the general operating fund, 14 they -- 15 MS. TAYLOR: But if they don't put it 16 in the general operating fund -- 17 MR. GABRILLO: Well -- 18 MS. TAYLOR: -- is a checklist still 19 required? 20 MR. GABRILLO: Yes. Because we would 21 have to -- you would have to -- we would have to 22 substantiate or you would have to substantiate how 23 that money was -- was spent. 24 Again, just by writing the check and 25 then putting it on your quarterly report as a 0139 1 charitable distribution in and of itself is not the 2 actual -- in other words, it doesn't end there. 3 MS. TAYLOR: Right. No. But no. But 4 my -- what I'm trying to say is if they didn't -- if 5 they never put it into their general checking account. 6 MR. GABRILLO: Okay. 7 MS. TAYLOR: If they have a separate 8 fund set up just for bingo proceeds, then would they 9 only be required to provide the documentation from 10 that one -- 11 MR. GABRILLO: From that account, yes. 12 MS. TAYLOR: -- account. 13 MR. GABRILLO: Right. In other words, 14 all we have to -- we have to look at any account that 15 receives bingo funds. 16 MS. TAYLOR: Okay. But only the 17 account that receives the funds. 18 MR. GABRILLO: Right. Exactly. 19 MR. WHITTINGTON: Okay. 20 CHAIR BRACKETT: So briefly what you're 21 talking about is make sure that you're making a 22 donation to a charity. 23 MR. GABRILLO: Well, it -- it -- a 24 charitable -- is being used for a charitable purpose 25 as described in Section 2001.454 of the Act, where 0140 1 it -- it states the different criteria of what 2 constitutes a charitable distribution. 3 CHAIR BRACKETT: Are there any other 4 questions? 5 MR. GABRILLO: Thank you. 6 CHAIR BRACKETT: Don't leave, though, 7 because we might -- 8 MR. GABRILLO: Oh. Okay. 9 CHAIR BRACKETT: -- have some people 10 that want to comment too. 11 David, did you want to -- to speak up 12 on that from the side? 13 MR. HEINLEIN: Yeah, I do. But I want 14 Phil to go. He had some comments that I wanted to 15 hear. 16 CHAIR BRACKETT: Okay. Who? 17 MR. HEINLEIN: Phil. 18 CHAIR BRACKETT: Phil. Okay. 19 Okay. Is Fenoglio -- Fenoglio -- do 20 you want to go while we're waiting on him? 21 MR. FENOGLIO: Madam Chairman, for the 22 record, my name is Stephen Fenoglio. 23 CHAIR BRACKETT: Fenoglio. I'm sorry. 24 MR. FENOGLIO: I have visited with 25 staff about some of these changes, and it is 0141 1 substantially different than the last version we 2 saw -- saw in our work group. If y'all don't know, 3 Billy was kind enough and his staff was kind enough, 4 and I think we've had a total of four work group 5 sessions, either three or four on the charitable 6 distribution rule. This last version is substantially 7 different. 8 I don't want to bore y'all with the 9 details that I -- that I've looked at and had a lot of 10 questions. I would rather -- I understand there 11 may -- there's something -- some discussion, Madam 12 Chair, of appointing a subcommittee to look at this 13 issue. We would support that and air those issues out 14 in the subcommittee and if that's the will of the 15 committee, well, then I can certainly avoid taking 16 up -- it would be at least 30 minutes of time, Madam 17 Chairman, to get my comments. I don't want to do 18 that. I'd rather do it in the subcommittee process, 19 if that's the will. Although, I will be happy to go 20 into the details of the questions that serve my 21 clients. 22 CHAIR BRACKETT: Okay. I guess you're 23 volunteering to serve on the committee. 24 MR. FENOGLIO: Yes, Madam Chairman, if 25 that's the course. 0142 1 CHAIR BRACKETT: Okay. 2 MR. FENOGLIO: We -- I already served 3 on the work group -- 4 CHAIR BRACKETT: Okay. 5 MR. FENOGLIO: -- and I would be happy 6 to continue. 7 CHAIR BRACKETT: That was the work 8 group, right? 9 MR. ATKINS: That -- that's what we 10 had. 11 MR. FENOGLIO: May I go now, Madam 12 Chairman? 13 CHAIR BRACKETT: Yes, you may. 14 MR. MICCIO: For the record, my name is 15 Fred Miccio, and basically I'm representing the VFW 16 and the American Legion. The American Legion and the 17 VFW are recognized charities, as we all know. And I 18 find that I have a little problem with this. One, to 19 check the books to the legion, checking the books to 20 the VFW. 21 The Bingo Enabling Act specifically 22 states that any building that inhabits bingo players 23 is considered a charity, that it can be distributed to 24 it. Knowing that, when we automatically take our 25 bingo money and turn it over to the general fund that 0143 1 should be the end of it right there. I don't believe 2 there's any need for investigation on that. 3 CHAIR BRACKETT: Okay. We'll make note 4 of that for committee purposes or for work group 5 purposes. No. It's the committee. I'm sorry. 6 MR. ATKINS: Subcommittee. 7 CHAIR BRACKETT: Subcommittee. 8 MR. MICCIO: Thank you. 9 CHAIR BRACKETT: Thank you. Was there 10 anyone else who wanted to make comment on this, this 11 Number 7 on the agenda? 12 Thank you. 13 MR. ARNOLD: Phil Arnold from Houston, 14 Texas. I represent several charities from there. A 15 number of them. Virginia Institute, number one. 16 I appreciate being part of the group 17 that looked at some of these issues. I was able to 18 express myself and my thoughts in person and hear the 19 comments of other people that were part of the group. 20 And at first I was pretty critical of the idea of 21 regulating some of these things in more detail, but 22 after I was part of the group and I heard some of the 23 experiences that had been encountered by the bingo 24 division and comments by a few of the other charity 25 people, I began to see there is -- there is a need. 0144 1 I wasn't fully aware of the wide 2 spectrum of different types of charitable groups that 3 were involved. So I foresee a need for some things to 4 be clarified and a -- and a need for there -- there to 5 be a more, I guess, specific way bingo money is used 6 for charitable purposes that needs to be documented 7 in -- in some ways that I was not really aware of. So 8 I guess I'm saying I learned something by 9 participating in the group. 10 I think some of these things are -- can 11 be a little labor intensive here and a little bit too 12 detail-oriented perhaps. But looking at the list of 13 one through 14, that does give quite a range of ways 14 that documentation can be made. I'm looking at page 15 two of four of this particular thing that we were 16 given today. That does list the things from meetings, 17 canceled checks, flyers, advertising, that's quite 18 reasonable. 19 Section (e) on page two has a few -- 20 statements there that -- that confuses me a bit and 21 I've had it explained to me by e-mail, which is very 22 helpful. But I still think we need some clarification 23 and perhaps what Steve is saying, as we have further 24 time to look at it, will clarify these things. One 25 would be (e)(3). This is page two of (e)(3). I think 0145 1 actually the letter is (i)(3). Let me verify that. 2 No. This is (e). Okay, (e) on page two and three. 3 Just a comment there about expenses for administrative 4 support including but not limited to paper, desk, 5 chairs, for making a charitable distribution for the 6 purposes of any of the causes, deeds, or activity 7 listed in the Section 2001.454. These are not to be 8 considered charitable expenses. So I think that needs 9 to be still clarified better because one gets the 10 impression here that some things that are crucial to 11 carrying out a charitable purpose need not be 12 permitted. 13 I've had that explained to me that that 14 is not the case in groups that are clearly defined as 15 charitable under 501(c)(3). And in those cases those 16 groups would be able to use paper, desks, chairs for 17 making a charitable distribution for the purpose of 18 any cause. But other certain types of groups may not 19 be. 20 So I'm still a bit confused about 21 that. Perhaps that can be clarified as this is 22 finalized because there are sometimes obviously the 23 thing that we had talked about before that if a 24 women's shelter needs to have the hedges trimmed so 25 that surveillance of that area for the safety of the 0146 1 women inside could be done, then the trimming of those 2 hedges is crucial to the definition of a charitable 3 purpose, so would the security cameras, those types of 4 things, and as well as envelopes and stamps and those 5 types of things that enable a group to carry out its 6 function. 7 So I just say that. I think that's 8 already been clarified by e-mail to me and in person, 9 but I wanted to bring it up in a public forum to show 10 how important it is. In order for a charity to carry 11 out its purposes, there are some things that are 12 directly related to that charitable purpose. At first 13 blush, you might not consider that to be charitable, 14 but actually you do have to have some things like that 15 to carry it out. A food truck that takes food to the 16 hungry has got to pay for its license plates and for 17 its stickers and for its gasoline and for its oil, 18 that type of thing. 19 That's really what I wanted to say. 20 Glad to be part of it. 21 CHAIR BRACKETT: Thank you. 22 MR. ARNOLD: Thank you. 23 CHAIR BRACKETT: Thank you, and thank 24 you for your work on that. 25 David, did you -- 0147 1 MR. HEINLEIN: I'm David Heinlein. I'm 2 with Jetta Services. 3 CHAIR BRACKETT: Okay. Would you like 4 me to remind you. 5 MR. HEINLEIN: Ten minutes. I'm not 6 going to take that long. 7 This is a completely different draft of 8 what I've been looking at. So one of my comments was 9 I -- I thought about earlier is I saw when I came in 10 this morning all the different documents out there. 11 Is there something -- is there some way to get these 12 available before the Bingo Advisory Committee meeting 13 or are they only available at that moment on the 14 table? I mean, I could have just looked on the 15 internet and hadn't found it. I -- and I just don't 16 know how to do that. 17 MR. ATKINS: Well, ideally, as we 18 develop this process, these drafts will be on the web 19 site and -- and available. We're not there yet. I 20 don't know. I don't know why everybody is saying this 21 is a completely different draft than the last thing 22 they saw. 23 MR. HEINLEIN: It is different. 24 MR. ATKINS: I might have to have Roy 25 address that later on. 0148 1 Let me go to the question of people 2 getting this before the meeting, and I'm going to 3 sound really callous. And -- and I'm -- I'm sorry for 4 sounding that way. But this is their meeting, and 5 we're going to make sure that they get the information 6 beforehand. So that -- 7 MR. HEINLEIN: Okay. So they -- they 8 have it. 9 MR. ATKINS: So that -- yeah. So that 10 they can comment on it, and it's not that -- 11 particularly with a document like this where we're 12 actively seeking comment on, it's not that we don't 13 want to get that comment on it. But, you know, who 14 all do we send it to? We're setting ourselves up for 15 a situation. You know, if we -- if we send it to you, 16 and we forget to send it to Sharon back there, then 17 all of a sudden, you know, we're trying to cut her out 18 of something, et cetera. So that's part of that. It 19 is that difficulty. Again, when we get to that 20 perfect world, as -- as we work through the 21 subcommittees and these work groups, hopefully each 22 draft as it's developed will be out there on the web 23 site for everybody to see and comment on. 24 MR. HEINLEIN: Okay. Some -- some of 25 the things that we talked about in the work group, 0149 1 they're -- they're showing up on here now. 2 MR. ATKINS: Right. And -- and the 3 only thing that -- that I know as far as this being a 4 different draft is I do know that after the work 5 groups there were additional written comments that 6 were submitted by the members of the work group 7 individually. They -- they weren't done in the group, 8 but they were done individually. So that may -- and 9 those were incorporated and that may be what this 10 is -- people are shaking their heads. That's why this 11 appears so different because we got individual 12 comments from the work group members that were 13 incorporated into this. 14 MR. HEINLEIN: Often times like in 15 paragraph (c) on the first page. The charitable bingo 16 division does not consider a check written from the 17 bingo account into the licensed organization's general 18 account an automatic charitable distribution unless 19 the licensed organization is a 501(c)(3). And we have 20 some charitable organizations conducting bingo that 21 are not 501(c)(3), not many. I think you've given us 22 a number that 95 percent of the bingo conductors are 23 501(c)(3). 24 But on page three under general 25 provisions, we also have the terminology, most 0150 1 organizations 501(c)(4), (5), (6), (7) -- it lists all 2 those other ones -- may qualify for a portion of the 3 operating expenses to be allowable. And I suppose 4 that that is to amplify, that being left off of 5 paragraph (c). 6 And my question would -- would be on 7 that area. One of the common issues is 501(c)(3) for 8 the reason that that occurs in 95 percent of them or 9 do we cover that because the statute says something 10 about only monies being delivered to the 501(c)(3). 11 And I was just looking through the statute to see if 12 my recollection was serving me right because I believe 13 that there is in the use of proceeds -- and I couldn't 14 find it just now -- the language that says you can 15 only distribute to a 501(c)(3). 16 Is that right, Roy? 17 MR. GABRILLO: Well -- Roy Gabrillo, 18 Senior Audit Manager. 19 To answer your question, a 501(c)(3) 20 from the IRS is considered a charitable or is 21 classified as a charitable organization. The other 22 classifications are such as nonprofit tax exempt 23 organizations. So they're not actual charitable 24 organizations. Now, they do perform charitable 25 deeds. So that's why only a portion of their expenses 0151 1 would be allowed. Part -- part of those expenses 2 could be paid with money from -- from bingo. So 3 that's why those are in -- 4 MR. HEINLEIN: So that's why we 5 separated it under two -- 6 MR. GABRILLO: Right. Two different 7 categories. 8 MR. HEINLEIN: Under some you can do 9 certain expenses and on the other one, it can do all 10 of the expenses. 11 MR. GABRILLO: Right. But that's not 12 to say that everything that a 501(c)(3) does is going 13 to be allowable. We'll still need to make sure that -- 14 that the money is being used for a charitable purpose 15 and it's not going to the benefit of one individual. 16 MR. HEINLEIN: Right. 17 MR. GABRILLO: Even though they're a 18 501(c)(3), oh, I'm a 501(c)(3), I can do whatever I 19 want. 20 MR. HEINLEIN: We say that on the 21 agreement. 22 MR. GABRILLO: Right. 23 MR. HEINLEIN: Okay. Well, I think 24 that would be all I have to comment on. 25 MR. PAVLOVSKY: Virginia, I would just 0152 1 like to add I'm not going to apologize for being 2 callous to David, but we have an opening over here. 3 MR. HEINLEIN: Oh, I'm going to slip 4 out before I hear anything. 5 MR. PAVLOVSKY: Come on and join us. 6 MR. WHITTINGTON: It is my 7 understanding, Billy, there's going to be a 8 subcommittee on this topic too, right? On discussing 9 this, what we've been talking about. 10 MR. ATKINS: I definitely recommend a 11 subcommittee -- 12 MR. WHITTINGTON: Yeah. 13 MR. ATKINS: -- on this one. 14 CHAIR BRACKETT: Okay. Phil Arnold, 15 did you want to speak? Oh. You've done so. Okay. 16 Oh, Steve. Steve Bresnen, that's who. 17 He's gone? 18 MR. BRESNEN: I think -- I understand 19 there's going to be a subcommittee and why don't in 20 the interest of time, why don't I bow out for the 21 moment. 22 CHAIR BRACKETT: Okay. But you will 23 let the subcommittee people know? 24 MR. BRESNEN: Yes, ma'am, and I'll be 25 happy to participate on or with the subcommittee. 0153 1 CHAIR BRACKETT: Okay. 2 MR. BRESNEN: Do I get any points for 3 that? 4 MR. ATKINS: I think the Chair is 5 starting to like this concept of subcommittees. 6 CHAIR BRACKETT: But they can go on for 7 aeons, though. That's the only problem. 8 Are there any other comments on this? 9 All right. Then we'll move on to the 10 next one. 11 All right. Let me ask you, Committee, 12 do you desire that we appoint a subcommittee at this 13 point in time to -- to work on this five -- 568? 14 Yeah? Who in this group would like to -- to work on 15 that. Would you, Suzanne? 16 MS. TAYLOR: Yeah. Larry and I will. 17 CHAIR BRACKETT: Okay. 18 MS. TAYLOR: Larry's name was said 19 first. 20 MR. ATKINS: I guess, are you going to 21 name the chair of the subcommittee. 22 CHAIR BRACKETT: If his name is first, 23 then that's what Sir Robert says. 24 MR. ATKINS: Again, I think three is a 25 good number for a subcommittee and since you have a 0154 1 majority of members, I don't know if you would like to 2 ask Mr. Fenoglio, Mr. Heinlein, anyone to serve as a 3 public member on that subcommittee. 4 CHAIR BRACKETT: Mr. Heinlein, would 5 you be willing to work with this group? 6 MR. HEINLEIN: Sure. 7 CHAIR BRACKETT: Okay. 8 MR. ATKINS: It's a subcommittee. 9 CHAIR BRACKETT: It's a subcommittee. 10 MR. HEINLEIN: What's it for? 11 CHAIR BRACKETT: We'll let you know 12 later. 13 MR. HEINLEIN: Oh. Okay. 14 CHAIR BRACKETT: It's for charitable -- 15 charitable distribution. 16 MR. HEINLEIN: Oh. Okay. 17 CHAIR BRACKETT: Charitable -- 18 MR. HEINLEIN: Use. 19 CHAIR BRACKETT: Use or distribution. 20 Distribution and use of expenses. 21 All right. We're to Item Number 8, 22 which is the card-minding devices. 23 You're already there, Roy. I was 24 looking for you over here. 25 MR. MOORE: Virginia, can I make a 0155 1 comment before Roy starts? 2 CHAIR BRACKETT: Can you turn on your 3 microphone? 4 MR. ATKINS: Can I lay -- can I lay it 5 out before -- 6 MR. MOORE: Sure. 7 MR. ATKINS: Okay. This 402.555, 8 Members, was first heard by you at the August 2002 9 meeting. It's been on several agendas since then. 10 The staff has received several comments during this 11 informal period. I know from at least two 12 different -- I believe two different manufacturers of 13 card-minding devices. I have -- I've also received 14 some comments from advisory committee members 15 regarding this rule. 16 I have been torn about this rule. As I 17 said, this is an example of a rule that -- that's been 18 out there for quite a while. And it -- it needs to 19 move forward. I understand that there is a desire 20 among some people in the industry that it not go to 21 the Commission yet, that there be more work sessions 22 held on it, given the fact that there is at least one 23 advisory committee member I know of that had comments 24 on it who wasn't able to be here today. 25 I guess my -- my final comment is I 0156 1 guess I'm okay with it not going to the Commission 2 yet. But I want to state very emphatically that this 3 is a prime example of what we're seeking to avoid; 4 that is, a rule hanging out there for months on end, 5 available for this informal comment period, et 6 cetera. And then all of a sudden when we get ready to 7 move forward on it, there being, you know, additional 8 comments that need to be made or additional 9 consideration that needs to take place. 10 Again, since -- since, you know, I 11 guess, since this is kind of a new process for us, 12 I'm -- I'm okay for this going under a little further 13 discussion, but, you know, just so everybody knows 14 that time period is quickly coming to an end. And 15 we're -- we're going to have to move on this rule. 16 And I say that in conjunction with this rule and again 17 as a reminder to the other subcommittees that we just 18 appointed, not just for the advisory committee but for 19 any members of the public who may want to comment on 20 it, now is the time, not, you know, the day before 21 it's scheduled to be acted upon. And Mr. Gabrillo is 22 available to discuss those, lay out the rule, and 23 discuss maybe some of those changes that have been 24 submitted so far. 25 CHAIR BRACKETT: First, let me ask 0157 1 you. What type of time line did you have in mind and 2 when would you like to be -- for this group to be back 3 with a final report to me. 4 MR. ATKINS: At no later than the -- 5 than the next advisory committee meeting. 6 CHAIR BRACKETT: So what would be -- 7 how many months? Do you want that two months from now 8 or three months or to what -- you know, to get it 9 going. 10 MR. ATKINS: Are you talking about 11 scheduling the next meeting? 12 CHAIR BRACKETT: So that they'll have 13 a -- so that they have a time in line -- I mean in 14 mind. 15 MR. ATKINS: Well -- 16 CHAIR BRACKETT: Well, do you want -- 17 do you want that on our minds before we move on, and 18 then when we set the meeting -- 19 MR. ATKINS: I would rather you have 20 that on your mind when you get to setting the next 21 meeting, you know, with the understanding that again 22 this rule has been out there since last August. So 23 even if the next meeting is a month from now, that's, 24 you know, probably 25 more days than they'll need to 25 make whatever comments that need to be made on this. 0158 1 CHAIR BRACKETT: All right. Go ahead. 2 MR. GABRILLO: Roy Gabrillo, Senior 3 Audit Manager, Charitable Bingo Division. The changes 4 in this rule were brought about mainly because 5 there's -- it's -- there's a lot of change going on in 6 the technology of card-minding devices and also to 7 clarify some things. 8 For one thing we've added a definition 9 section to this rule to spell out the difference 10 between a card-minding device and the -- and the 11 system. The device -- because again it -- it can be 12 confusing as to when you're talking about a 13 card-minding device. Are you talking about the unit 14 itself, or are you talking about the entire system? 15 So that's -- there's some clarification there that 16 we've added to that. 17 There's some clarification as far as 18 any peripheral games that can be -- that can be part 19 of any card-minding system. Player tracking can be 20 used now as opposed to it has not been able to be used 21 before. Also we had made some changes to the approval 22 process as to what has to be submitted and also our 23 part of the testing system as to when we will notify 24 the -- the manufacturers of when we will start testing 25 on it and give it -- and also put in writing as to 0159 1 what an estimated completion date would be for that -- 2 for the testing of that system. 3 Some of the languages that we -- one -- 4 let me see if I can find exactly which one was -- was 5 needed. There's language in there that talks about 6 the advance in technology. It used to require that an 7 EPROM -- here it is in -- it's on page five, 8 subsection three where it talks about an EPROM. Most 9 card-minding device systems don't even use that 10 anymore. They use what's called a flash RAM chip. So 11 that language has become obsolete. So that's 12 something that has been deleted. 13 And a lot of -- a lot of -- I'm not 14 going to say a lot. The language that -- that's in 15 here -- some of the language that's in here we had -- 16 as Steve had mentioned, we had gotten comments from 17 the industry as to what they would like to see in this 18 rule, and we did incorporate some of that language 19 into this -- into this rule. 20 Something else that was -- that we 21 revised is -- is on page nine, subsection (e), 22 conductor requirements, where we talked about the 40 23 percent section of the Act where we -- the 24 card-minders are limited to 40 percent of the players 25 in attendance -- in attendance of the hall. We're 0160 1 going to require them to post the number -- what that 2 number is. Right now currently they don't have to 3 post any -- any information as to what that number is 4 or as to how many people can use card-minders. 5 We're going to require that that be 6 posted with -- and, of course, that's going to change 7 just about every quarter. I was -- yeah. The other 8 thing, too, was the prior rule that required that each 9 individual organization that used a card-minding 10 device or system in their hall, each individual 11 organization had to maintain a log regarding the 12 information regarding the card-minding system. That's 13 been changed where only one record has to be kept but 14 with all the names of all the charities in that 15 particular -- in that particular hall that are using 16 this. So that's one way of eliminating a lot of 17 duplication of paperwork. 18 But if you have any questions regarding 19 this rule? 20 MR. ATKINS: There were two things that 21 I wanted to mention. One of which I know Larry 22 brought to my attention, I know is still an issue of 23 consideration is (e)(5), dealing with the price of the 24 card faces, the electronic card faces. That's -- 25 that's one of the reasons I'm becoming more amenable 0161 1 to keeping this open for discussion. As much as some 2 folks don't want to hear it. I still get lots of 3 comments from conductors about the price of 4 card-minding devices and what they're being charged. 5 And so to make sure that they have the broadest 6 opportunity whatsoever to comment on that, that's part 7 of the reason for keeping it open. 8 And also on (h)(2)(b), the elimination 9 of the 66 card face requirement, I think its a big 10 change for this state, and I don't know if we received 11 any comment on that or not. But it's something that I 12 think merits a lot of conversation again from the -- 13 from the industry. 14 MR. PAVLOVSKY: By the way, did y'all 15 receive a lot of comments since August on this? I 16 think that was the last date of the last hearing. 17 MR. GABRILLO: We did receive comments 18 from several manufacturers regarding the rule. And 19 like I said, we did incorporate some of that language 20 into the -- into this rule. 21 MR. PAVLOVSKY: Okay. Only for 22 manufacturers. 23 MR. GABRILLO: Right. But it hasn't -- 24 but it hasn't gotten out to the public yet. 25 MR. PAVLOVSKY: Yeah. 0162 1 MR. GABRILLO: And there is no work 2 group on this like -- like the other, like the unit 3 accounting and charitable distributions rules. 4 MR. MOORE: Roy, did anybody request 5 that the card limit be taken off in any of these 6 written comments. 7 MR. GABRILLO: I'm trying to think if 8 that -- that may have been a suggestion that came in. 9 MR. MOORE: Okay. And then in 10 subsection (e)(7), it says that we're going to -- the 11 conductor would have -- shall prohibit the use of more 12 than one electronic card-minding device per player. 13 That wasn't in the original draft that we saw in 14 August and that just showed up in the draft as of 15 Friday. And I was curious if anybody had requested 16 that. 17 MR. GABRILLO: I think that -- that 18 came from -- 19 MR. GONZALEZ: I -- I don't know if I 20 know that one or not. 21 MR. ATKINS: Homer, you need to come up 22 and identify yourself. 23 MR. GONZALEZ: Homer Gonzalez. I'm an 24 auditor with the Texas Lottery Commission. And 25 that -- concerning that rule about the limit, that -- 0163 1 that one I did not come -- it did not come from 2 anybody that sent any letters that I'm aware of. 3 MR. ATKINS: What would be the 4 reasoning for it? 5 MR. GONZALEZ: Well, they were just 6 trying to limit how many machines were going out at a 7 time because I think one thing that we're looking at 8 is that we don't have a card limit where they want to 9 limit how many -- how many units people play. So if 10 they don't have a card limit then the -- they're 11 subject -- 12 PUBLIC MEMBER: We can't hear back 13 here. 14 MR. GONZALEZ: Yeah. Because they were 15 going to -- looking at the reducing or getting rid of 16 the card limit that they were talking about. 17 CHAIR BRACKETT: They can't hear. Can 18 you hear now? They still can't hear. 19 MR. GONZALEZ: They wanted to limit the 20 use -- units that they sold to players to just one 21 unit. 22 MR. MOORE: Okay. I don't -- 23 personally, just from talking to people over the last 24 few days, I don't -- I don't find that in the 25 marketplace. And -- and that being said, I would be 0164 1 happy to volunteer to be part of a subcommittee on 2 this rule if it's going to go on to this next meeting 3 so... I just -- just from conversations I've had on 4 this rule, I -- I don't get that sentiment in the 5 marketplace right now that they want to -- there's too 6 many -- from Corpus to Dallas, there's too many 7 different variables why people sell multiple units to 8 players. And it's anywhere from half-pay structured 9 halls where they're trying to get as many half-pay 10 units on the floor to lower their payouts. That is 11 money to the charity. 12 I mean, that's just one instance. But 13 I'd be happy to work with you guys on this. I really 14 think it needs to be looked at some more. 15 MS. TAYLOR: I think that's a big 16 problem too is that we have an awful lot of players 17 that want to play two different units. They want to 18 play fixed and a handheld because if they -- you know, 19 it's the lucky thing. This one might not be lucky for 20 them tonight, and this one might be lucky. They never 21 looked at that -- that, well, they can put a certain 22 amount of cards into this unity. They want two 23 different units the same as they'll go and buy a pack 24 of cards from you and then come over and buy a pack of 25 cards from me because it's the luck thing. And I mean 0165 1 that's what bingo is all about. 2 I think this is something that could 3 potentially harm the charities and that could wipe out 4 a lot of customers. In fact, most of the electronic 5 customers like to play more than one unit. 6 MR. ATKINS: The -- what makes more 7 sense to me for that language is the -- you know, 8 we -- we very often get complaints that organizations 9 are exceeding their 40 percent requirement. And so 10 we'll go out and we'll conduct investigations. And 11 actually what happens is someone is going into the 12 hall buying multiple units and then giving it to their 13 friend to play, and -- and that's what's occurring. 14 It's not that the organization is necessarily 15 intentionally violating that 40 percent requirement, 16 and it would just seem to me that that would be a 17 possible way to address that. I mean, again, I -- I 18 don't know where the language comes from. 19 MR. MOORE: Well, then -- then they're 20 going to do that with bingo paper too. I mean, it's 21 the same philosophy. 22 MR. ATKINS: I don't think it is the 23 same philosophy, Danny, because I don't think there's 24 any requirement in the Bingo Enabling Act that only a 25 certain percent of players in a hall can play bingo 0166 1 paper. 2 MR. MOORE: Okay. But as far as 3 splitting paper, they could split paper. If you're 4 talking about somebody buying three units and giving 5 one to a friend, if they buy three nine ones for -- 6 they could give a set to somebody if there's receipts 7 involved in something like that. But as far as 40 8 percent of the rule, I agree. 9 MR. ATKINS: Well, and -- and you may 10 hit on -- on something else there. 11 MR. MOORE: Yeah. 12 MR. ATKINS: It may be that you don't 13 include language -- as long as we still have the 40 14 percent requirement in the statute, it may be that you 15 don't look to limiting the number of devices that an 16 individual has, but you look to requiring an 17 individual to have a receipt for the device before 18 they can play. 19 MR. MOORE: I see. 20 MR. ATKINS: And that will stop the -- 21 that. 22 MR. MOORE: Right. 23 MR. WHITTINGTON: Well, you know, we 24 have introduced technology to bingo players, and we 25 always try to attract new players. The most we can do 0167 1 is for young players. This is a computer age. And in 2 my halls, if we didn't have a multitude of electronics 3 being played, we wouldn't make the payouts. I mean, 4 people are up on computers. They are going to play 5 computers. That's technology. That's just like 6 taking Quick books from a bookkeeper or taking a 7 laptop from -- from Billy, saying you got to write 8 with your hand -- a hand -- it's got to be 9 handwritten. That's -- that's -- that's basically 10 what we're talking about. 11 You know, electronics is in. And how 12 can I not say you can only play one unit when -- when 13 people want to play two and bring the money in for the 14 charities. I cannot tell them not too. And then all 15 of a sudden we can't make the payouts because we limit 16 those players who are used to playing two or three 17 units are down to one. So all of a sudden I can't 18 make the 2500-dollar payouts, especially in the major 19 halls. Okay. 20 I can see the little -- little halls 21 that don't have computers and all that. But when you 22 come to a major hall like our five halls, okay, they 23 pay out $5,000 a day. We have to take in $5,000 and 24 we got to get about 250 people on board just to take 25 it into paper, never mind computers. And we can't get 0168 1 that now in today's market. We're going to get 2 behind. It's sometimes needed. If they don't buy 3 three computers, we can't make our payouts. And we 4 advertise the max -- max payout every day. 5 And that's the only way we make it in 6 our halls. Those people come in. Please, we -- we 7 encourage them. Buy -- buy two. Buy three, so we can 8 make our payout and have some money for our charities. 9 CHAIR BRACKETT: Okay. Are there 10 comments from the public? Several of you signed up 11 and... 12 MR. ATKINS: Phil. 13 CHAIR BRACKETT: Is this in breach of 14 some security thing? 15 MR. SANDERSON: Not yet. Not yet it's 16 not. 17 CHAIR BRACKETT: Not yet? 18 MR. SANDERSON: Phil Sanderson, 19 Assistant Director of Charitable Bingo. 20 That language was added when the card 21 face limit was taken out because if the card -- if 22 the -- one reason the individual is buying or using 23 three card-minders is to play 198 faces. And if they 24 can buy 198 faces on one unit, why would they want to 25 buy two units or three units. 0169 1 I'm just saying that's -- that was the 2 logic behind that so... 3 MR. MOORE: Okay. 4 MR. SANDERSON: I mean, that's why 5 that -- 6 MR. MOORE: It makes sense. It -- it 7 makes sense to a point. 8 MR. SANDERSON: And -- and on top of 9 that, it could reduce the cost to the charities by the 10 manufacturers and distributors not having to have 300 11 units in a hall when they only need 100 units. 12 MR. MOORE: I don't disagree on some of 13 that, but at the end of the day -- at the end of the 14 session or when they're done selling, you have 40 15 computers still sitting at a rack. A lot of these 16 places will go out and sell those computers. They'll 17 load that one special game in there for five bucks, 18 whatever it is, it's their 7.50 a game. And they'll 19 get rid of those computers because they may have been 20 on an inventory price or something like that, but it's 21 a way to create more revenue for the hall. And if a 22 player has already got a computer sitting in front 23 them, they're not going to be able to sell that 24 computer. 25 And I mean it's just -- this is just 0170 1 one instance that I know goes on. And that happens in 2 several halls. What do they do -- what do they do 3 with those computers? 4 MR. SANDERSON: There's probably -- and 5 that goes back to the -- the reason that they have 300 6 units, as an example in the hall is because people are 7 using two and three and four units at a time. So if 8 they know that they're only going to have a hundred 9 people that they can sell card-minders to, then they 10 only keep a 100 units on stock, and they don't have -- 11 they don't have to worry about paying that extra per 12 use fee or -- or the unit fees for the ones that are 13 just sitting there. 14 MR. WHITTINGTON: Why does it have to 15 be limited to a hundred people? How can you have 150 16 units and -- and only can sell 150 units to the 17 people, not just one person but somebody want to buy 18 three, if they run out, they run out. 19 MR. SANDERSON: That's -- and that was 20 one of the options that we looked at with the 40 21 percent was it doesn't mean the 40 percent of actual 22 individuals playing there or only 40 percent of the 23 card-minders can be used. If I can clarify what I 24 just said. That -- that -- and the -- you know, the 25 statute only requires 40 percent of those in 0171 1 attendance can utilize a card-minding device and one 2 of the early interpretations of that was that it was 3 based on the number of units. We were limiting the 4 units to 40 percent of the attendants, which would 5 cover what you were saying, that you only have a X 6 number of units. And if somebody wants to buy three, 7 they buy three. 8 And then -- but you -- you've got to 9 realize from our standpoint, then we're getting into 10 people calling in and complaining because, "I can't 11 get there until 7:00 o'clock, and they already have 12 all the units sold out at 6:00," or "Somebody is 13 saving it for their friend," or "They're reserving 14 card-minders." There's, you know, a lot of complaints 15 that we end up having to investigate or security has 16 to investigate that are on one of the -- the like 17 frivolous type, you know, just -- they're just upset 18 because they didn't get the chance to use an 19 electronic device. 20 So if you limit the number of devices, 21 you have one set of circumstances that creates the 22 problem. 23 MR. MOORE: Okay. 24 MR. SANDERSON: If you limit the number 25 of people, then you have another set of 0172 1 circumstances. 2 MR. MOORE: Phil, I saw the letter from 3 NAFTIM, Mary Magnus, had sent in and she said that in 4 reference to that 66-card limit, that they didn't want 5 it taken off. And she's representing the paper 6 manufacturers. 7 I think it's a perception thing. I 8 don't know of many states that don't have a card 9 limit, and I think that if a player can load up 10 whatever amount of cards they want, let's just say 11 they have unlimited resources, I think the perception 12 for the other players that are playing paper is this 13 player is hitting. They have no idea how many cards 14 are in that unit. Right now we have it regulated at a 15 number. They know if they've got that unit in front 16 of them, there's 66 cards in it, they can feel 17 comfortable. And I think perception is important. I 18 think you'll run off more paper players if you take 19 the limit off. 20 MR. ATKINS: Let me address that, 21 Danny. 22 MR. MOORE: Okay. 23 MR. ATKINS: When card-minders were 24 first authorized and this rule was first developed and 25 the staff proposed a 66 card-face limit, you would 0173 1 have thought that we had burned the Bible on -- at the 2 front door of the Vatican. 3 MR. MOORE: Yeah. 4 MR. ATKINS: And we did that for 5 exactly the reasons that you just expressed. And it's 6 now several years later, and these devices have been 7 out there. And we're revisiting this rule, and all 8 we're saying is that's one element that we want this 9 discussion to occur on. Maybe when everything is said 10 and done, the 66-card face limit stays, and maybe it's 11 lowered. Maybe it's raised. Maybe it's done away 12 with completely. But this is exactly the kind of 13 discussion that has to take place. 14 MR. MOORE: Sure. 15 MR. ATKINS: I think you're right. I 16 think most other jurisdictions have some kind of -- of 17 limit. And I think most other organizations that are 18 outside the arena of, say, state or provincial 19 regulation, Indian games, casinos, other bases even 20 have some kind of card limit. You know, it's -- it 21 may be higher than the 66. But I think you're right 22 that most of them do. But we think it's time for this 23 discussion to take place. 24 MR. MOORE: Yeah. I don't have a 25 problem with that. I would like to be part of it. 0174 1 MR. ATKINS: Okay. Well, you spoke up 2 first. 3 MR. MOORE: I'd like to be the chair of 4 the committee. 5 CHAIR BRACKETT: Yeah. You're already 6 signed up. 7 MR. MANIO: Virginia? 8 CHAIR BRACKETT: Yes. 9 MR. MANIO: I have a couple of 10 questions either for Phil or for Roy. 11 Page five, the first paragraph, 12 "Manufacturers of card-minding device systems must 13 manufacture," and all of a sudden there's a -- a word 14 inserted in here. "Accounting -- internal accounting 15 system is cable of recording the sale of all pull-tabs 16 and disposable bingo cards." And it -- it occurred in 17 two places. On -- on page seven at the bottom, it 18 shows up again, disposable card and pull-tab sales 19 information. So why -- why was this pull-tab inserted 20 in -- in the card-minding systems? 21 MR. SANDERSON: The -- the system 22 itself is -- part of the system is the point-of-sale 23 device, the cash register. And as far as I know now, 24 most of them include disposable pull-tabs in their 25 systems. All it does is it enables you to use one 0175 1 point-of-sale device to track all your sales for that 2 bingo occasion, instead of having a cash register or 3 something like that to ring up pull-tabs and -- and 4 paper. 5 MR. MANIO: Well, I may be missing 6 something in here, but I have never seen pull-tabs 7 sold to a cash register. 8 MR. SANDERSON: But they have to ring 9 them up on a cash register. 10 CHAIR BRACKETT: They ring them up at 11 the end of the night. 12 MR. MANIO: Oh, I see. Oh. Okay. So 13 that's the reason why this was inserted in here. You 14 are requiring the -- the system to keep up with the 15 pull-tab sales. 16 MR. SANDERSON: Just the sales, yes. 17 MR. WHITTINGTON: Well, you know, our 18 point-of-sales guy has the paper that -- 19 CHAIR BRACKETT: Larry. 20 MR. MANIO: Okay. And, now, let me -- 21 let me go to the second issue, the pricing issue. And 22 it's on page -- page ten, one of the conductor 23 requirements. Item number five, the conductor shall 24 set the price of electronic card faces sold to the 25 bingo players so that the electronic card faces are 0176 1 not less than the price of the equivalent number of 2 paper card faces. 3 Help me clarify my thinking. What 4 thinking was used here, you know, in this provision of 5 the -- what -- what are we trying to accomplish? 6 MR. SANDERSON: If I'm not mistaken, I 7 believe that was in the first draft, the first rule 8 that was adopted for card-minders and then it came 9 out. And in looking at the rule in its totality, if 10 one of the -- one of the concerns was if we didn't 11 limit the card number -- card faces -- if we allowed 12 an unlimited amount of card faces, then somebody could 13 play 500 faces for $20, where a paper player couldn't 14 play that many faces for $20. 15 So if -- the concern was that everybody 16 was somewhat on an equal playing field that if you're 17 selling paper -- a paper pack for X cents per face and 18 they could buy 60 faces and play them, then the 19 card-minder, a person playing the card-minding device, 20 would have a chance to play more faces if they wanted 21 to, but they couldn't get them discounted, so to 22 speak. They would have to pay the same price per face 23 for those faces. And I -- there again, it all goes 24 together with the, you know, one unit, you know, 25 unlimited faces and the price is equal. So it's 0177 1 all -- I think all three of those are, more or less, 2 packaged together to an extent. 3 MR. MANIO: This has been an issue the 4 last -- well, in the last three committee meetings, 5 this -- this -- this has already come up. And I 6 believe that there was some comments made about this 7 issue on -- on pricing. And I'm sure that it will 8 come up again sometime today. And I believe the main 9 issue here is why not let the bingo halls create, 10 make, or formulate their own pricing strategy, whether 11 it's paper or computers. Leave it to the market 12 process. 13 MR. SANDERSON: And that's fine, but 14 there are some other states that have this same 15 requirement. So I mean it's not something that's just 16 unique to Texas. 17 MR. ATKINS: And you need to keep in 18 mind, Mario, that there are other members of the 19 industry that take a position exactly opposite to 20 yours, and that's why -- 21 MR. MANIO: I understand. 22 MR. ATKINS: -- and that's why it's 23 being discussed. And I understand your position. You 24 know, I'm just asking you to understand there are 25 people on the other side of that fence -- 0178 1 MR. MANIO: I -- I do understand. 2 MR. ATKINS: -- who do want -- 3 MR. MANIO: I do understand that. 4 That's why I ask you for the clarification first and 5 what is the purpose for this rule in here. 6 MR. ATKINS: Right. 7 MR. MANIO: Now, moving further along, 8 some bingo halls can be affected adversely if we 9 recommend the pricing of electronic devices. Some 10 bingo halls might benefit. I don't have the 11 statistics. You do. You can probably run a -- you 12 know, some sort of a study based on the quarterly 13 reports. How many bingo halls will -- will start 14 losing money if we -- we enforce this rule in here? 15 And how many bingo halls are going to make money or -- 16 or charities? I don't know and those are just 17 questions I'm throwing in here because -- 18 MR. ATKINS: I don't know any -- I 19 don't think that we would have the information from 20 the quarterly reports necessary to run that. 21 MR. MANIO: Well, what we would need is 22 how many card-minding devices were sold per session, 23 what is the revenue from those, and then from that you 24 can work backwards. And what is the -- the paper 25 sales revenue, then you can figure out -- 0179 1 MR. SANDERSON: But the quarterly 2 doesn't track the number of devices that are used. So 3 I mean I don't -- we don't have that information and 4 we don't have the pricing structure because the 5 charity -- the organizations aren't required to report 6 price structures to us. 7 CHAIR BRACKETT: But don't the daily 8 reports require that? 9 MR. SANDERSON: Well, the daily reports 10 would, yes. 11 CHAIR BRACKETT: So if -- so a charity 12 could look at the daily report and furnish you that 13 independently. 14 MR. SANDERSON: But we're not -- we're 15 not establishing the pricing structure for the 16 organization. All we're saying is that if they 17 utilize card-minding devices, that when they sell a 18 card-minding device that it's loaded with the faces 19 for that session that's equal to the same price as you 20 would charge somebody that pays for paper. 21 MR. WHITTINGTON: Well, can I speak 22 now? 23 MR. MANIO: Go ahead, Larry. 24 MR. WHITTINGTON: I think we've been 25 dealing with 66 spaces for so long and Texas knows 66 0180 1 spaces, how come you just can't table this and just 2 leave it at 66 spaces and just do a -- like we do it 3 with the 40 percent, it was 40 percent. And just go 4 on and just table it completely. I mean, that's what 5 I -- I think we really should just leave it like it 6 is, status quo. It's the 66 cost and people know 7 that. Okay? 8 Somebody wants to come in and buy 9 computers, they're coming in and -- and spend money 10 for the charity. That's the only way we can make it. 11 I'm telling you. I mean -- and I'm not just speaking 12 for me personally. I'm -- I'm speaking to seven or 13 eight conductors I've -- I've talked to in Dallas. 14 They feel the same way. That's the only way they can 15 make their payouts. 16 MR. MANIO: It's still completely -- 17 MR. WHITTINGTON: When I look at my 18 daily and it's got 2200 dollars' worth of computer 19 sales, I know that we can make the payout. And -- 20 and, of course, in -- in return make the charities a 21 little money. 22 CHAIR BRACKETT: So that's what you 23 want to recommend to the -- to the work group? 24 MR. WHITTINGTON: Yes. 25 MR. ATKINS: Subcommittee, Virginia. 0181 1 CHAIR BRACKETT: Subcommittee. I need 2 somebody out there with cue cards. 3 MS. TAYLOR: My turn? 4 CHAIR BRACKETT: One more comment. 5 MS. TAYLOR: Okay. Page six, what I 6 was looking at is (e)(5), the toll free number being 7 placed on each of the receipts. I don't understand 8 why -- if it's already printed on the card-minders, 9 why do we need to have all of that information printed 10 on individual receipts? 11 And, also, the last sentence of number 12 five, where the licensed authorized organizations are 13 responsible for placement of labels. I would love 14 that to say the distributor is responsible for the 15 placement of the labels. Instead of putting that onto 16 the charities, let the distributors put the labels on 17 the individual units. They get paid enough money for 18 them. No offense, Danny. 19 MR. SANDERSON: I think the 20 distributors are required to provide the labels for 21 the organization. 22 MS. TAYLOR: Yeah, but they could place 23 them too. 24 MR. SANDERSON: Well, so that means 25 when we walk into your hall. 0182 1 MS. TAYLOR: That's going to be a tough 2 one. 3 MR. SANDERSON: And -- that's right. 4 And so we're going to go to -- to Daniel and cite him 5 for your machines not having the 1-800 number on it. 6 MS. TAYLOR: He needs to be over there 7 making sure they're -- they're on there and clean. 8 MR. ATKINS: You're going to have Danny 9 in your hall every occasion that you play bingo. 10 MS. TAYLOR: I would love to have him. 11 MR. ATKINS: And I'm sure he would love 12 to be there. 13 MS. TAYLOR: And I had another 14 question, page seven, number ten. It's kind of what 15 Mario was talking about but not exactly. Where it 16 says the system prints a receipt for each and every 17 sale that includes, at a minimum, the following 18 information: the pull-tab sales information. 19 I didn't understand reeling it in at 20 the end, but that language makes it sound like for 21 each and every sale. I mean, there's a lot of sales 22 on pull-tabs. So that language right there seems -- 23 where (g), the last -- we're on (g) going with number 24 ten, "the each and every sale." It seems like it just 25 needs to say, the -- the sales for the evening or the 0183 1 sales for the occasion or something instead of "each 2 and every sale." 3 (E) on page number nine, (e)(2), the 4 conductors conspicuously displaying the time 5 indicating the number of individuals that can use 6 electronics. I don't see why that needs to be there. 7 If -- I -- anyway, I have a problem with that one. 8 Number four -- 9 MR. ATKINS: Do you want to, Suzanne, 10 just talk about your problems or -- 11 MS. TAYLOR: Well, no. 12 MR. ATKINS: -- do you want to talk 13 about why the language is there -- 14 MS. TAYLOR: No. What I was hoping -- 15 MR. ATKINS: -- what we're trying to -- 16 MS. TAYLOR: -- what I was hoping was, 17 to make this a little bit quicker, that -- that maybe 18 these are items that I would like to discuss as a 19 subcommittee whenever they meet, instead of taking a 20 lot of time to go over it all here. 21 MR. ATKINS: Okay. 22 MS. TAYLOR: Things that -- that I, 23 looking at them, think would like not to take all the 24 time now doing it but discuss whenever this point 25 comes up. If they would let me know, I would love 0184 1 to -- 2 MR. ATKINS: Okay. 3 MS. TAYLOR: -- explain my problems or, 4 you know, my concerns with this group. 5 MR. ATKINS: Yeah. I appreciate that. 6 Let me just add this one caveat then since sometimes, 7 you know, some folks may try and, you know, address 8 some questions as though it was done for no reason, et 9 cetera or whatever, I'd just say that it was 10 considered and there was a reason for that language 11 put in there, that it was there to address some 12 specific issue. But we can hash those out further in 13 the subcommittee. 14 MS. TAYLOR: And that's -- that's my 15 understanding. 16 MR. ATKINS: Yes. 17 MS. TAYLOR: Y'all are going to talk a 18 lot about this -- 19 MR. ATKINS: Okay. 20 MS. TAYLOR: -- and I just want to make 21 sure that these are items that during your discussion 22 you talk about since we're not actually doing anything 23 further on this today. 24 MR. ATKINS: Good. 25 MS. TAYLOR: (e) -- let's see this is 0185 1 page nine, (e)(4), that first sentence about that 2 where it shall inform the bingo players that the bingo 3 players cannot be required. It -- it just seems like 4 that if you're going to -- I understand -- anyway, 5 that particular one where it sounds like you've got to 6 stand up on the caller stand and say, we're not using 7 this information for anything. You don't have to give 8 it us. You know, just the -- the language seems like 9 it could use some improvement there. I understand 10 where you're going. It's just kind of weird language, 11 I think. 12 CHAIR BRACKETT: Let me ask everyone 13 here in this room to please submit all your comments 14 to these work groups and subcommittees and also to the 15 people who are working on the -- in these work groups 16 and subcommittees. Please get the minutes off the 17 internet. 18 MR. ATKINS: The web site. 19 CHAIR BRACKETT: That what? 20 MR. ATKINS: The web site. 21 CHAIR BRACKETT: The web site. And 22 study them before you get together as a group. And 23 they're there obviously. These minutes can be 24 exceedingly valuable to you and save you a lot of 25 kicking things around that have already been kicked to 0186 1 death. And then use the bingo division employees as a 2 wonderful resource as to what was the thinking behind 3 this. 4 Any other comments or anything in 5 particular? 6 MS. TAYLOR: That was it. 7 CHAIR BRACKETT: Okay. Thank you. 8 MR. SANDERSON: Thank you. 9 CHAIR BRACKETT: All right. We're 10 still on Item Number 8. And I think we're ready for 11 public comment at this point. 12 MR. MICCIO: Fred Miccio, for the 13 record. When card-minding first came to -- 14 CHAIR BRACKETT: Excuse me just a 15 minute. Did you get his name? 16 THE COURT REPORTER: Yes. 17 CHAIR BRACKETT: Okay. 18 MR. MICCIO: When the card-minding 19 legislature came up, I attended the meetings and I 20 remember Billy was in the background too. We had a 21 lot of pull on that. There was electronic people 22 there. We had the paper distributors there. And they 23 kept saying what they wanted, what they didn't want. 24 And nobody would tell the legislature exactly what 25 they wanted. 0187 1 And, finally, when nobody could explain 2 what was going on, I went up and I spoke and I said to 3 them, people don't want electronics because they're 4 going to lose their paper business. The electronic 5 people don't want it if they can't have all of the 6 business. And they asked me what I would recommend 7 and I recommended the 40 percent, and it became law. 8 I don't think it was anyone's choice, but I 9 recommended the 40 percent. And the 40 percent was 10 for 40 percent of the people not 40 percent of the 11 card-minders at the time. 12 But what I'm here to discuss now is 13 item number seven. 14 CHAIR BRACKETT: Okay. We've 15 already -- we've already passed on seven. We're on 16 Item Number 8, the card-minding consideration and 17 possible discussion on that. 18 MR. MICCIO: Well, I -- 19 CHAIR BRACKETT: We can't go back on 20 that. 21 MR. MICCIO: -- well, I'm on 22 card-minding. What I wanted to comment on was 23 (e)(7). 24 CHAIR BRACKETT: You mean seven? Well, 25 it's Item Number 8 on the agenda. 0188 1 MR. MICCIO: I thought I was on eight 2 on the agenda, but it's seven on the rule. 3 CHAIR BRACKETT: Okay. I'm sorry. 4 MR. MICCIO: Oh, no problem. 5 I was a little doubtful about 6 card-minders when they first came out. But like a lot 7 of other things I didn't want before, and I went out 8 with this card-minding thing and I even said at the 9 time when we recommended the 40 percent, if we're 10 going to do it, let's not make the same mistake we 11 made with pull-tabs. If we've got something good, 12 let's go ahead and use it. That's why I recommended 13 the 40 percent. 14 Well, only recently I've been really 15 learning how to make a tool out of these card-minders. 16 We have got into the position now where bingo is down 17 and the crowds are small. What we're doing, we are 18 flooding the hall with half-price computers. And what 19 is happening at the end of the night, we are picking 20 up anywhere from four to eight hundred dollars that we 21 would not have made had we not have had half-priced 22 computers in there. 23 My charity is the kind that the sports 24 association plays over in Houston. We had a crowd of 25 ninety something -- 92 people, but we paid out $2500. 0189 1 We closed the day with $1200. So it was good. Why? 2 Every bingo that went that day was a half-price 3 winner. Every bingo in that session was a half-price 4 winner. We kept that money out. That saved the day 5 for us. 6 Now, back here, same section. Let 7 me -- the next one is the card-minding device that 8 holds up to a maximum of 60 cards, which is basically 9 the same thing as limiting it to -- to one 10 card-minder. I think we ought to leave it the way it 11 is right now. We've learned how to use it. Let's 12 leave it the way it is. Thank you. 13 CHAIR BRACKETT: All right. Thank you, 14 Fred. And I'm sorry I got mixed up on the numbers 15 here. 16 Steve, I think you wanted to speak, 17 didn't you? 18 MR. FENOGLIO: For the record, my name 19 is Stephen Fenoglio. I'm an attorney in Austin. And 20 I would like to restate what I said the last time I 21 was up here because it -- everyone liked that, I 22 think. I'll be happy to work on the subcommittee with 23 you. 24 The -- there have been material changes 25 from the last version. I'm prepared to go through 0190 1 those comments, but in the interest of time, I think 2 it's appropriate to go through the subcommittee. 3 Although, if you want me to address my comments, I'll 4 be happy to. 5 May I go, Madam Chair? 6 CHAIR BRACKETT: Yes, you may. You 7 have permission to leave. 8 MR. FENOGLIO: Let my people go free. 9 Thank you, Madam Chairman. 10 CHAIR BRACKETT: Thank you. We 11 appreciate you. Even though, I might not show it by 12 calling you the wrong name, I do appreciate you. 13 Okay. Have you signed? 14 MR. MCNALLY: Yes, I have. 15 Good afternoon, Committee Members. My 16 name is Jamie McNally. I'm an attorney with the law 17 firm of Clark Thomas here in town. I'm here today 18 representing Game Tech International, manufacturer of 19 bingo card-minding devices. 20 Game Tech really appreciates the 21 opportunity that they have had to comment early on 22 these rules before they have been referred to the 23 Commission. And Billy mentioned earlier about an 24 informal comment period, and that is a great idea. We 25 appreciate the ability to comment during the comment 0191 1 period. In fact, we filed comments on this rule. We 2 filed, I think, two sets of comments on -- on this 3 proposed rule. So we look forward to working with the 4 staff to finalize this rule. 5 But I'm here today to support the idea 6 of a subcommittee to provide -- to continue to work 7 on -- on this rule. Game Tech is continuing to review 8 the draft rule it received on Friday. The -- the 9 language it received on Friday was significantly 10 different than the earlier draft. I think some of you 11 have already talked about some of those -- those 12 differences. 13 In addition to those, for the first 14 time the rule distinguishes between card-minding 15 devices and card-minding systems. The rule also for 16 the first time institutes new security measures that 17 need to be applied both to card-minding devices and 18 card-minding systems and in terms of devices that have 19 to be required, both through fixed-base units and 20 handheld units. That -- that's a very complicated 21 undertaking. And we support the work of the Bingo 22 Advisory Committee -- subcommittee to continue to work 23 on that. And -- and I would be happy to work with or 24 on the committee as you endeavor to finalize the 25 rule. And we'd appreciate that very much. 0192 1 And I would be happy to answer any 2 questions you folks have. 3 CHAIR BRACKETT: Any questions? 4 Thank you. We appreciate your offer of 5 assistance. 6 MR. MCNALLY: Thank you. I appreciate 7 that. 8 CHAIR BRACKETT: Mark Newton. 9 MR. NEWTON: Good afternoon. My name 10 is Mark Newton. I'm with BK Entertainment. I was a 11 little bit concerned when I first came down to Austin 12 and hopped on a plane yesterday from Winnipeg because 13 I heard this rule was going to be heard today and 14 potentially going to the Commission tomorrow. 15 I felt the rule-making process that the 16 Lottery Commission, Billy and the staff, have gone 17 through, we have been kept in the loop of what's 18 happening but not to the same degree that we are 19 hearing today. When we heard that there was an 20 informal comment period to contribute information, we 21 provided that, but it was in the form of written 22 communication with opinions on -- on different facets 23 of what's going on in these rules. There was never a 24 sit-down opportunity where you sit across the table 25 and discuss the impact of what the rules are and hear 0193 1 the pros and cons thing. And some of the things that 2 were unsettling in these rules was I really question 3 the economic model that was put together to -- for the 4 basis of these rules. 5 When you start talking about fair 6 pricing and limiting the number of devices and 7 changing the card limits, you're changing fundamentals 8 that have dictated the shape of the economic 9 marketplace that we have now and to arbitrarily or 10 even with one-sided thought decide on how to change 11 those without having a strong economic model to 12 support them causes a lot of concern. 13 BK Entertainment is not just an 14 electronics manufacturer. We sell paper. We sell 15 pull-tabs, and we sell ink. So we're not concerned 16 just with electronics. We're concerned about the 17 bingo industry as whole. What we try to do in a 18 number of markets, including working with the Ontario 19 government and their market, working with Michigan and 20 drafting the rules there, working with Nebraska and 21 Missouri, is we're trying to create an environment 22 that the regulators and the manufacturers or the 23 organizations in the private sector can come together 24 in and form rules that are good for the industry, that 25 are good for the individual players. 0194 1 Billy is going to have his concerns 2 with regulation and control and auditing and 3 tracking. Our charities are going to be worried about 4 their costs and the bottom line. The manufacturers 5 trying to sell their product. Distributors are trying 6 to be the go-between. Everyone has a -- has an 7 important function that they need to bring to the 8 table in order to -- to come up with meaningful and 9 productive rules. 10 My hat goes off to the -- the work that 11 the Lottery Commission has done here with the draft 12 rules. Some of the changes that Jamie was talking 13 about are -- differentiating between the site system 14 and device. Those are big changes that affected every 15 single page of the rules. There's a lot of work 16 that's been done and a lot of progress done, but I 17 don't want to see things derailed because of a, you 18 know, maybe a lack of understanding of procedures or 19 whatever. I think that there's a lot of people in 20 this room today who have -- or that feel passionately 21 about getting corrective rules put down. 22 I would like to offer the support of my 23 company and myself in time and material resources and 24 whatever is needed to help draft these rules. And 25 then I could go through page by page, item by item, 0195 1 but I'll decline that in the interest of time and 2 would appreciate the opportunity to serve on a work 3 group or a subcommittee. 4 Thank you very much. 5 CHAIR BRACKETT: Thank you. 6 Did you hear that? 7 MR. MOORE: Yeah. 8 CHAIR BRACKETT: Do you have a 9 question? 10 MR. MOORE: No, I don't. 11 CHAIR BRACKETT: Thank you. Okay. 12 Ed Branom. It's 2:20 something and 13 this is your first time to speak today. 3:20 14 something. I'm sorry. 15 MR. BRANOM: I haven't spoken to you in 16 a couple of months. I've been having withdrawals. 17 I'll be very brief. I wanted to comment about a -- as 18 much as anybody else -- I just want to give you a 19 perspective of my -- of my particular position. 20 When the card-minders first came out, 21 we attempted to -- we didn't attempt to -- we sold 22 cards and the paper at the same price but because of 23 competition in the marketplace, so when the 24 card-minders was cheaper, we were forced to sell them 25 at a cheaper price to compete. What happened as a 0196 1 result of that was we drove away all our paper 2 players. So now we come along with a limit to use of 3 machines to one per person and raise the price of the 4 computers themselves and we figured we would drive 5 away the few customers we had left because they can't 6 afford to buy the card-minders. It's almost like it's 7 designed to fix the gate when the cows are already out 8 and gone. 9 If we had this procedure to start with -- well, 10 that's hindsight. It's pretty difficult not to be for 11 generally a -- for a pretty good concept in here that 12 we could hold the things. It's almost too late to 13 change it -- probably not too late to change it, but 14 the cause and effect would be pretty -- pretty 15 devastating for a lot of people. I think it's fair, 16 but it's just a little too late. 17 I tell you what we did try to do, just 18 so you understand. We realized that when the paper 19 players began to leave, that we had a major problem. 20 So we discontinued to use the card-minders for a 21 period of about six months. We instantly lost the 22 card-minder people and our paper players never did 23 come back. We thought they would come back in the 24 door because we had catered to their wishes, but they 25 had already found another bingo place to play, and 0197 1 they were comfortable there apparently and we didn't 2 get them back. Then we switched back to the 3 card-minder system -- to the card-minder machines and 4 we didn't get the card-minder people -- players -- 5 players back. But that's all we have. If we drive 6 those away, we don't have anything else. 7 And I can tell you there are just 8 jillions of bingo halls out there that aren't as busy 9 as they usually are. There's been such a huge 10 decline, and the attendance has dropped. And a big 11 part of it has to do with the card-minder strategy, 12 that they are the only players that are left. And I 13 know you folks have heard this hundreds of millions of 14 times, "I don't go where the machines are played 15 because I don't have a chance to win." 16 We have two bingo halls, one in Plano 17 where we play card-minders and one in Denison where we 18 do not. Our average activity in Plano is about 150 19 people a night. Our average attendance in Denison is 20 pushing 300. 21 CHAIR BRACKETT: In Denison it's what? 22 MR. BRANOM: Pushing 300. They're 23 pretty good sized halls, and that's just a 24 difference -- there's a -- there's a -- in Sherman, 25 which is the companion city of Sherman and Denison, 0198 1 there's a bingo hall there that has the card-minders, 2 and when we decided that we weren't going to have -- 3 they -- they never had that when a bought this bingo 4 hall three years ago. We never had card-minders, but 5 we really pushed the issue, the old-fashioned bingo 6 and card-minders, and our attendance went up 7 enormously within a couple of months. 8 You know, I just wanted to give you 9 that little bit of information coming from the 10 trenches. Thank you very much. 11 CHAIR BRACKETT: Kenneth Griffith. 12 MR. GRIFFITH: Kenneth Griffith. I'm a 13 distributor with Good Time Bingo in Texas. 14 Just a couple of comments and I want to 15 echo Mark's sentiments. What we really looked at on 16 some of these rules is the economics of it, as far as 17 the hall is concerned. I think everyone here is 18 concerned with the profitability of their hall and 19 their hall being viable in the future. In order to do 20 that, I think it's up to all of us that we come up 21 with rules and regulations and things to do in our 22 hall, the way we play our hall. 23 When we come in and we go back to 24 trying to sell something that -- sell electronics the 25 same as paper which was done before and didn't work 0199 1 before, I think -- I think it would be going a step 2 backwards. And I also agree with Mario saying that 3 the -- this is a decision that should be left up to 4 the -- to the hall itself on how they sell their 5 papers and electronics. And if Mr. Branom doesn't 6 want electronics in his Denison hall and he's doing 7 very well, I think that's great. And if you don't 8 want them in your hall, then you can make it like 9 that. But I think the economics side is we do have 10 electronics. 11 Now, I will disagree with one thing 12 Mr. Branom said. Our initial entry into the 13 electronic market produced -- we sold more paper into 14 the same halls that we introduced more electronics to 15 than we did before we had electronics. But I think 16 that as a group -- that you as a group, to be relevant 17 and to look across the state of what everybody needs 18 and what they want -- and I know that's what you're 19 going to do -- I think you look at all these issues 20 that affect you. 21 I think that one of the other issues I 22 would like to touch on is the more than one electronic 23 card-minding device per player. Once again, we 24 sell -- the idea in the bingo hall is to sell, whether 25 it's paper, pull-tabs, or electronics. And sell as 0200 1 much as paper as you can sell, sell as much pull-tabs 2 as you can sell, and sell as much electronics that you 3 can sell. I don't think the limit of one -- even if 4 it's tied to elimination, I don't agree with 5 eliminating the 66 faces. I think they should stay. 6 The idea that someone would come along 7 and buy two or three hundred faces and only play one 8 machine and it would be a less cost, I think what 9 you're doing is setting it up to be the integrity of 10 the games, and you're setting it up -- do you stop it 11 at 196 or 256 or 1,000. There should be a limit. I 12 would say that when it was started, Mr. Atkins, there 13 was some people that believed in the 66. I was one of 14 them early on in the game that I felt like it was good 15 because it had worked. 16 The limitation of those in other states 17 have worked very well. So it's those three issues. 18 There are quite a few other issues that I will take up 19 with you and provide comment on to your committee, 20 slash, work group. 21 CHAIR BRACKETT: Thank you. 22 MR. GRIFFITH: Thank you very much. 23 CHAIR BRACKETT: David Heinlein. 24 MR. HEINLEIN: He's going to pass. 25 CHAIR BRACKETT: Phil Arnold. 0201 1 MR. ARNOLD: Thank you again. Phil 2 Arnold from Houston, Texas representing Houston 3 Charities. 4 Page ten. I'll be brief. To say a 5 negative comment, which I'm going to do about page 6 ten, will not serve to really do justice since a 7 tremendous amount of work went into the whole thing 8 here. I can see a lot of technical information, a lot 9 of good things are in here. And -- but I think 10 there's only really two things that really cause a 11 problem, cause a problem for who or for what, cause a 12 problem for charity revenues. 13 Page ten, number seven, the conductors 14 shall prohibit the use of more than one electronic 15 card-minding device per bingo occasion. Here's our 16 situation, and it's reproduced in a number of halls. 17 We have about 60 players out of about an average of 18 260, let's say about 60 of them buy about 90 to 100 19 computers. 60 people, 100 computers. If I prohibit 20 -- according to this rule, if I prohibit them to buy 21 more than one, I'll have about 60 people buying one. 22 So I'll lose about 40 sales. Let's say I'll lose 30 23 sales at, say, $15 per computer. 30 times 15 is $450 24 per session. And if you add on a few things, like the 25 speed that can be added to the computer, so you're 0202 1 really going to average a little bit more than 15. 2 That's -- that's $900 a day and if you add those 3 extras in, it's going to be $1,000 a day that we will 4 lose with number seven in here. 5 And I'll be glad to handle any 6 objections to this -- this statement that I'm making. 7 Bring it on. I'm ready to discuss that. It's going 8 to be $1,000 -- 9 MR. ATKINS: I'd like -- 10 MR. ARNOLD: -- a day. 11 MR. ATKINS: I would like to discuss 12 it, Phil. So -- so what you're telling this group is 13 that the money from the card -- the card-minding 14 devices has nothing to do with the number of faces. 15 It's the device itself. 16 MR. ARNOLD: Yes. Let me explain 17 that. If we -- 18 MR. ATKINS: Yes. Do -- do explain it. 19 MR. ARNOLD: Yes. 20 MR. ATKINS: Because I want you to 21 recall what Phil was saying that -- 22 MR. ARNOLD: Yeah. 23 MR. ATKINS: -- the reason that that 24 came about was because, you know, theoretically an 25 individual would be able to play an unlimited number 0203 1 on -- on a device. 2 MR. ARNOLD: Right. 3 MR. ATKINS: And, you know, the reason 4 they were buying more devices now was so that they 5 could get more card faces. And so through the 6 scenario and the rule as it is now, that would be a 7 nonissue. But what you're telling this committee is 8 that the card faces are irrelevant. It's -- it's the 9 device themselves. 10 MR. ARNOLD: I would put it this way. 11 That I think what you're saying is if we could 12 increase it to 100, then we would be able to charge a 13 higher price for it. 14 MR. ATKINS: But if -- 15 MR. ARNOLD: Is that what you mean, 16 related to that? 17 MR. ATKINS: If you could increase what 18 to 100? 19 MR. ARNOLD: If we increase the number 20 of faces to 100, we could, therefore, charge more for 21 it and that would make up the lost revenue of the 40 22 I'm missing? Is that what you're asking me, if that's 23 true? 24 MR. ATKINS: Well, no. What -- what 25 I'm asking you is that you said that you had a hundred 0204 1 devices and 60 people who played electronics. 2 MR. ARNOLD: That's about right, yeah. 3 MR. ATKINS: So what I think I hear you 4 saying is that you have -- of those 60, some of them 5 play more than one. 6 MR. ARNOLD: That's right, yes. 7 MR. ATKINS: Okay. So what if instead 8 of having an inventory of a hundred devices, if you 9 know you have 60 people, why wouldn't you reduce your 10 inventory of devices? 11 MR. ARNOLD: For two reasons. One is 12 we pay -- excuse me for snapping that -- we pay for 13 our devices, it depends upon the use. So if I don't 14 use all 100, I don't have to pay for the ones that I 15 don't sell that night. So there's no harm in having 16 500 because I'm only paying for the ones I use, the 17 ones I sell that night. So I'm not losing any money 18 in that way. But the -- the real point to be made 19 here is that if I have 60 units, and I don't have a 20 hundred in there like I would like to do now, if I 21 only sold 60, I would be losing 40 sales times $15, 22 which is approximately, what, $500 a session, I would 23 be losing. Unless I raised the price of the computer 24 and then sold 60 at a higher rate, then I would be 25 able to make up the difference except for another 0205 1 problem I'm going to bring up, why that won't work 2 either. 3 MR. ATKINS: But if you sell more faces 4 than the 66 on the devices, by trade, isn't the price 5 going to go up anyway. 6 MR. ARNOLD: Oh, I see what you're -- 7 see, that's what I meant by -- by if I raise the price 8 of the computer; that is, if I -- if I add more faces 9 and, therefore, charge more for -- for the package is 10 what was -- two things. First, the players are used 11 to paying X amount for their computer. So if I add 12 more faces to it, I would be, of course, trying to 13 charge them more money. They're going to look at me 14 right then, "Oh, you're charging us more money. 15 You're adding a few more faces, so you get more money 16 from us. You're going to ask for more money and let 17 me buy only one of them. I usually get three, and now 18 I can only buy one." 19 But that I can almost survive except 20 for the next step that happens. My competitor a mile 21 or two away or another competitor four miles away, 22 what he'll do is he'll wait. He'll wait to see how 23 high I raise the price to those 40 computers, for 24 those extra faces and then he won't raise his price or 25 he'll raise his a dollar while I raise mine three. 0206 1 Now, my customers come in and say, "I've got to pay 2 more for the computer. I can only get one computer. 3 I don't want to pay more for the computer. I don't 4 like the way you're treating me." They go down the 5 street to the competitor who -- who has not raised his 6 price. Now, I lose 20 people to my competitors. So, 7 now, not only do I not sell the 40 I was selling, I 8 lost 500 for that session. I've also now lost ten, 15 9 players to my competitor for a loss of -- of paper 10 they would have bought had they stayed. 11 I think this -- if we look at it, I 12 know we can look at it in subcommittee. And I can -- 13 we can go back and forth with these things, but from 14 my experience in all honesty, I really believe that -- 15 that if we did this, we would lose $1,000 a day, 16 $360,000 a year. Now, we just inserted a pacemaker, a 17 pacemaker into the bingo halls with event paper and it 18 saved our lives. Let's not take this very fragile 19 patient and shake it too hard with too many extreme 20 changes right here. 21 Keep it at 66. Don't let it go to a 22 hundred. Let us go ahead and -- let's go ahead and 23 sell more than one to a customer. And I've -- I've 24 got my sales force trained to do that for many years, 25 pushing them to sell more and -- and keep this patient 0207 1 alive and take up some of these issues at the 2 subcommittee. Thank you. 3 MR. MOORE: Hey, Phil. 4 MR. ARNOLD: Hey. 5 MR. MOORE: Wouldn't you say that -- 6 and I know just the use of market with -- that we're 7 going to talk about here. But I've sensed that 8 there's been stability in that pricing on these 9 computers over the last year. That actually I would 10 think that maybe it's gone up. It hasn't come down I 11 don't think. And I -- I do agree with you that if you 12 add more cards there's going to be -- everybody is 13 going to be looking for that competitive edge again, 14 and, you know, and I -- I know you cover it maybe with 15 this pricing with paper and electronics. But it -- it 16 is kind of a dangerous thing to go into. 17 MR. ARNOLD: Well, if we have less 18 computers in the hall -- I mean, if we only let people 19 buy one, there are going to be more complaints, more 20 phone ringing up here too saying they can't get but 21 more than one computer. And we sold them out all 22 because, "They only had 60. They only had 70 23 computers. They used to have 120. Now, they've only 24 got 70." They're going to be calling up here saying, 25 "Now, I've got to get there at 4:00 o'clock to get a 0208 1 computer." That's going to be a worse problem for the 2 Lottery Commission, Bingo Division. 3 And it is true that the fact that the 4 prices have settled down. We've been able to raise 5 our prices slightly on computers the last year. And 6 in our particular case, as I said, most people play 7 paper in our hall. Our computers did not drive them 8 away. So we've been able to handle that. 9 But also on point number five, I'll 10 conclude with. Mr. Miccio, I believe is his name, 11 he -- he did make the point some halls play what's 12 called a half pay option, where you can get your 13 computer but you pay a little less for that computer, 14 but if you win on it, you only win half of the money. 15 It's called half-pay computers. So some halls sell 16 full-pay computers and also half-pay computers for a 17 little less money. 18 Sometimes they price those half-pay 19 computers for less than the paper, maybe 50 cents 20 less, a dollar less, because they're only winning half 21 the money. The reason they want to do that is because 22 the charity that way gives away half the money. The 23 player is happy because they paid less and earned some 24 money. And the charity is happy because they didn't 25 have to give away the full amount at these lean times. 0209 1 So if we did number five and it 2 prohibits the -- the halls being able to sell that 3 half-pay computer for a little less money than paper, 4 which gets people to buy them. If we do -- and 5 sometimes they'll buy two or three of those. If they 6 can no longer buy two or three of those and also we 7 can't sell it for less than the paper, a dollar, let's 8 say, then we won't have the half-pays hitting. So 9 each day we'll be giving away more money than we 10 wanted to. So not only will we lose -- lose the 500 11 that I mentioned just a moment ago, but if we have one 12 half-pay computer hit per session, that saves you 13 about 250 more dollars. Now, we've lost $750 per 14 session or $1500 a day, about half a million dollars a 15 year. Thank you. 16 MR. ATKINS: And I would ask Phil that 17 we follow up outside this meeting. I'm not saying 18 your math is wrong. I'm saying -- 19 MR. ARNOLD: Right. 20 MR. ATKINS: -- that there may be other 21 things you need to consider. 22 MR. ARNOLD: And -- and I'll be happy 23 to do that and if there's anyway you can increase the 24 income by doing this, then I'm all for it. But as I 25 figure what I've gone through the last year and a half 0210 1 just to encourage the staff to up sell -- to sell that 2 popcorn and that coke when you get your movie tickets, 3 you know, that type of training that goes on to get 4 your staff to sell that extra computer and the thought 5 now that I -- that now we're just going to let them 6 buy one and I'm going to have to raise the price of 7 that and my competitor is going to be sitting around 8 waiting to see just how high is he going to go to get 9 my people over there, that pacemaker is barely running 10 right now. 11 CHAIR BRACKETT: I need for the record 12 to reflect that at 3:40 Suzanne Taylor left. 13 That is all of the -- 14 MR. BISHOP: Whoa. 15 CHAIR BRACKETT: Don, I thought -- 16 okay. I'm sorry. I'm looking at the wrong spot. 17 You're right here. I'm sorry. You said you wanted to 18 speak on all of the issues. But right now -- 19 MR. BISHOP: This one in particular. 20 CHAIR BRACKETT: -- okay. We're going 21 to speak on this one issue -- not issue but... 22 MR. BISHOP: My name is Don, and I'm an 23 alcoholic. That ten minutes got me. We only had five 24 minutes in AA. 25 CHAIR BRACKETT: You may choose between 0211 1 five and ten, but don't tell us the whole story, 2 please. 3 MR. BISHOP: I don't know. I'm -- I'm 4 hearing a big silence here. If you can hear a silence 5 and -- and I wonder why there aren't more people 6 testifying and more people here that are in favor of 7 the main topic of conversation which seems to be page 8 nine, the conductor requirements, all the way, one 9 through eight, in addition to the 66 cards. It seems 10 to be the focal point here, and I was wondering why 11 there aren't more people speaking up in favor of. 12 Everything I've heard has been against them. We're 13 certainly against them, in the time thing we're -- 14 we're trying to get through here. 15 We had quite an ice storm up in Dallas 16 as y'all may or may not know. I'm sure you had some 17 in other places too, but we had about 17 to 20 of our 18 charity people lined up to come down to make comment. 19 So it could have been a lot worse for you Virginia, 20 but I don't want to speak for them. But I will tell 21 you that they're a like mind of most of the comments 22 that you've heard, and I would just like to get that 23 on the record, please. 24 MR. ATKINS: Can I ask you something, 25 Don? Do you know -- 0212 1 MR. BISHOP: Sure. You're going to 2 anyway. 3 MR. ATKINS: Do you not want me to? 4 Why would they not comment today? 5 MR. BISHOP: Why? 6 MR. ATKINS: Yeah. Well, did they 7 comment earlier? 8 MR. BISHOP: Well, there's so much 9 here, you know, and some of them commented earlier, 10 and some of them didn't. But when are we going to 11 comment? We are going to come down when we can. 12 MR. ATKINS: Well, that -- yeah. 13 MR. BISHOP: And I know, Billy. 14 MR. ATKINS: I'm -- I'm trying to 15 figure out the same thing. 16 MR. BISHOP: Let me try to -- let me 17 try to expand just briefly on that. We're not all 18 available all the time to come to all of these 19 meetings. Most of us have jobs just like you guys 20 do. Your job just happens to be doing this. This 21 isn't our job and to try to get these volunteers, in 22 particular, from these charities, who mostly have 23 other jobs. They have to take off work. We've got to 24 get the expenses paid that -- for people to come down 25 here. So it's -- it's a big deal for us to get down 0213 1 here. So I -- I know you know that. 2 MR. ATKINS: Sure. Sure. 3 MR. BISHOP: I don't know how else to 4 answer your question. 5 MR. ATKINS: Well, you know, there are 6 other ways to comment. 7 MR. BISHOP: We can -- we come when we 8 can. 9 MR. ATKINS: Right. And you can write 10 a letter. 11 MR. BISHOP: Yeah. 12 MR. ATKINS: Or send an e-mail. Okay. 13 CHAIR BRACKETT: When you write a 14 letter or send an e-mail it goes to -- to you, Billy, 15 and then you put it with us or how is that handled? 16 MR. ATKINS: If you -- if you go make 17 it during the formal comment period, it will go to 18 the -- to the general counsel. 19 CHAIR BRACKETT: Okay. 20 MR. ATKINS: But, you know, when we're 21 in this process, we'll -- we'll have someone identify 22 them. 23 CHAIR BRACKETT: All right. Sharon, do 24 you want to go ahead and speak? This is Item Number 25 8. 0214 1 MS. IVES: Good afternoon. My name is 2 Sharon Ives -- and that's I-v-e-s -- with Fort Worth 3 bookkeeping, and I'm here today to comment on 4 402.555. I am on page six of 14, number five. 5 Keep in mind, I just briefed this this 6 morning -- or this afternoon. And I was happy to see 7 that the 1-800 number could be displayed on the screen 8 of the card-minding device. You don't know how many 9 times that's the number one audit violation on the 10 little labels being peeled off by the customers. 11 The distributor can supply the labels 12 as much as they want, and the conductor can put the 13 labels on the machine as much as they want, but you 14 cannot sit there and stop the customers from peeling 15 the labels. I was also happy to see that. But I was 16 also happy to see that it did not have to be one inch 17 in. It would have taken up the whole screen. So 18 that's a good thing. 19 On page seven, number ten, I have read 20 that several times, and I don't know if I quite 21 understand it. The way that I interpret it is every 22 time you sell a card-minding device or you void a sell 23 of a card-minding device, a receipt has to be printed 24 and on that receipt A through G -- the information on 25 A through G has to be on that receipt. Is that 0215 1 correct? Is that the way that you interpret it? 2 MR. ATKINS: Yes. 3 MS. IVES: So if I'm a customer and I'm 4 buying a card-minding device, on my receipt it's going 5 to tell me how many disposable cards were sold in 6 pull-tab sales on that receipt? 7 MR. GABRILLO: Roy Gabrillo. Senior 8 Audit Manager of the Charitable Bingo Division. Yeah 9 that's -- that language will probably have to be 10 deleted because that's just -- that's probably 11 something that the -- the player does not need to 12 know. So we'll probably go ahead and take that out of 13 the -- of this section. 14 MS. IVES: Okay. Roy, do you want to 15 stand back up here so we can get some more of this 16 deleted. Okay. That answered my question. Thank 17 you. 18 On page nine, (e) conductor 19 requirements -- excuse me -- number two, my thought 20 on -- on that paragraph is right now there's too many 21 other things being posted all over the walls already. 22 To have the conductor post in letters on a sign, not 23 more than one inch the number of electronics that can 24 be sold or leased for that session. I thought we were 25 supposed to be eliminating paperwork, not making more 0216 1 paperwork or more items up at the cashier's cage or 2 more posters hanging on the walls. So that's just my 3 opinion on that issue. 4 Page ten, number seven, I guess you can 5 read this two different ways. The conductor "shall" 6 prohibit -- thank goodness it doesn't say the 7 conductor "must" prohibit. So I don't know if that's 8 the right verbiage, per se, for this paragraph. As 9 you-all or everyone here is more than aware, bingo has 10 been on the decline for years now. It's not getting 11 any better. If a customer is coming up to the 12 cashier's booth and they want to spend their money, 13 why don't we just take their money? If they want two 14 machines, give them two machines. If they want three 15 machines and you have three machines, why not give 16 them the three machines and take their money. To me 17 that's helping the charity and satisfying the 18 customer. Because if you're waiting in line to buy a 19 machine and you're getting up there and, you know, 20 "I'm sorry, but you can only have one machine," I can 21 just hear all the phone calls coming down to Austin on 22 that issue. 23 And on page 13, number seven, here we 24 go with the "may" and the "must" and the "shall" 25 again. Each conductor must record all bingo sales. 0217 1 Does this paragraph eliminate the cash register? Does 2 anybody know? 3 CHAIR BRACKETT: Roy will speak to 4 that. 5 MR. GABRILLO: Roy Gabrillo. Senior 6 Audit Manager. Yes. That's -- in other words, if 7 they -- if you've got a card-minding system in your 8 hall, it -- it makes more sense to go ahead and record 9 everything on the point-of-sale system of the -- of 10 the device -- of the card-minding system rather than 11 having a cash register cage for the paper and the 12 pull-tabs and then the POS reports for the 13 card-minding devices. You mind as well go ahead and 14 put everything on -- on one system. 15 MS. IVES: That answered my question. 16 And I believe that is it. Thank you. 17 CHAIR BRACKETT: Thank you. 18 MR. BRESNEN: Madam Chair, if I was to 19 amend my form, can I say one more thing about this 20 rule? 21 CHAIR BRACKETT: Yes. 22 MR. BRESNEN: Thanks. Steve Bresnen on 23 behalf of the Bingo Interest Group. 24 I -- I concur with the kinds of things 25 that Sharon Ives and Don Bishop and Ed Branom said 0218 1 about this rule. And we -- I just want to point out 2 we have commented about this rule before. And we had 3 a lot of people here. I can't remember who commented 4 specifically about what, but I know do know that -- 5 that I've been here before about this price of the 6 card faces, the same whether they are paper or 7 electronic. I don't remember the 66 card-face limit 8 going away in the past or the one per -- one per 9 player. It will be in there in the past. 10 MR. ATKINS: Okay. 11 MR. BRESNEN: Okay. So that -- I think 12 that explains why they're not here. I mean, why -- 13 why we're just now commenting on those things because 14 it just came out. Anyway, we're -- we're working with 15 the work group. 16 And I want to say one other thing. I 17 thing we've gotten a much higher quality explanation 18 from you, Billy, and from Phil and Roy today about why 19 certain things are in the rule, what you're thinking 20 is and kind of discussion about these things. And I 21 mean that's the quality of explanation that makes 22 these meetings much more productive and -- and 23 worthwhile. And I appreciate it. 24 MR. ATKINS: Thank you. 25 MR. BRESNEN: Thank you. 0219 1 CHAIR BRACKETT: All right. We're to 2 the public comment. 3 MR. ATKINS: Madam Chair? 4 CHAIR BRACKETT: Yes. 5 MR. ATKINS: You have a chair for a 6 subcommittee. I don't know if there's another member 7 that wants to serve on that subcommittee. 8 CHAIR BRACKETT: Now, you're talking 9 about the -- 10 MR. ATKINS: On the card-minding 11 device. 12 CHAIR BRACKETT: -- on the card-minding 13 devices. 14 MR. ATKINS: Yes, ma'am. 15 CHAIR BRACKETT: I thought it was Dan 16 and Suzanne. 17 MR. ATKINS: I had Suzanne on the 18 charitable distribution rule. 19 CHAIR BRACKETT: Is that correct? 20 MR. ATKINS: And I would just say there 21 are -- 22 CHAIR BRACKETT: And -- and what are 23 you waiting on? 24 MR. ATKINS: Larry is chair also of the 25 charitable distribution. 0220 1 CHAIR BRACKETT: Okay. I'm sorry. I 2 had it mixed up then. Larry and Suzanne are 3 charitable distribution. 4 MR. MOORE: Right. 5 CHAIR BRACKETT: And then, Danny, is 6 there anyone that would like -- Mario would you 7 like -- 8 MR. MANIO: Yeah. 9 CHAIR BRACKETT: -- to work with Danny? 10 Okay. I have Mario and Danny. 11 MR. ATKINS: Okay. Is there -- for 12 purposes of three, I don't know if Mr. Newton 13 volunteered. 14 MR. MOORE: I think Larry wants to be 15 involved, and he's got five halls. So it makes sense 16 that he could help on this. We can have three people, 17 right? 18 MR. ATKINS: You're -- you're starting 19 to get a big group. 20 MR. MOORE: Yeah. I know. 21 MR. ATKINS: But let's try it. 22 MR. MOORE: Okay. And then as far 23 as -- I would -- I would recommend Mark from Bingo 24 King. I mean, I can e-mail him on this. 25 CHAIR BRACKETT: Okay. Now, how big -- 0221 1 how big do you want your group? 2 MR. ATKINS: That's four. 3 MR. MOORE: I know it's getting big, 4 but I mean -- 5 MR. ATKINS: Why don't you -- 6 MR. MOORE: Can -- am I allowed to do 7 that or not? 8 MR. ATKINS: Why don't we -- do you 9 want to try that? 10 MR. MOORE: I think it's good right 11 there. 12 MR. ATKINS: And -- 13 MR. MOORE: I think Jamie, too. James 14 McNally. 15 CHAIR BRACKETT: I think you named him 16 awhile ago. 17 MR. MOORE: Yeah. 18 CHAIR BRACKETT: Okay. 19 MR. MOORE: Well, that should suffice, 20 I think. That's... 21 MR. ATKINS: I wouldn't recommend going 22 to five -- 23 MR. MOORE: Okay. 24 MR. ATKINS: -- on a subcommittee. 25 MR. MOORE: Well, then we should 0222 1 eliminate one of the BAC members, I think. 2 Larry, you got the other one. Let's 3 just make it Mario and myself and those two. 4 MR. ATKINS: Okay. 5 MR. MOORE: Okay. Do you know who 6 we're going to be working with on the staff side? 7 MR. ATKINS: The -- on the staff side 8 will be Roy Gabrillo and Homer Gonzalez. 9 MR. MOORE: Okay. 10 MR. ATKINS: And, if I could, before 11 you go to public comment, Madam Chair, we have the 12 subcommittees for each item that's been discussed, the 13 staff designee and also provide some quick contact 14 information. 15 CHAIR BRACKETT: Yes, I can. 16 MR. ATKINS: -- for those individuals. 17 CHAIR BRACKETT: That's fine. Expedite 18 things. 19 MR. ATKINS: And this is also for the 20 benefit of the members of the public that are here or 21 may view this in the transcript of the hearing. If 22 there's anyone that would like to present information 23 to these subcommittees, they should at least contact 24 the staff person that I'm going to give you the 25 information for. 0223 1 On rule for 402.544, which was the 2 license fee rule, the subcommittee was Mario, chair, 3 with Pete as the other member. We did not discuss 4 specifically a public member. Mr. Fenoglio was, I 5 think, the only one who had comments on that rule and 6 he may volunteer. Again, I think this is probably 7 going to be the most straightforward he may volunteer 8 to be involved. He's shaking his head yes. The staff 9 contact on this subcommittee will be Bruce Miner, who 10 is the licensing supervisor. For everyone's benefit, 11 Bruce's e-mail address is 12 bruce.m-i-n-e-r@lottery.state.tx.us. And Bruce will 13 be contacting Mario starting tomorrow on getting this 14 group together and getting the changes to this rule 15 ironed out. So I encourage anyone that wants to 16 submit comment to that subcommittee, to contact Bruce. 17 The subcommittee on the use of proceeds 18 rule 402.568, the chair is Larry with Suzanne as the 19 member and David Heinlein as the public member. The 20 staff designee will be Roy Gabrillo, and he may 21 designate another staff member to work with him. 22 Again Roy will be contacting Larry starting tomorrow. 23 Roy's e-mail address is roy.gabrillo, G-a-b-r-i-l-l-o, 24 @lottery.state.tx.us. 25 And, finally, on 402.555, the 0224 1 subcommittee is Danny as chair, Mario, and public 2 members Jamie McNally and Mark Newton. The staff 3 contacts will be Roy Gabrillo and Homer Gonzalez. And 4 you already have Roy's contact e-mail address. I gave 5 that out. Again, if there are members of the public 6 that want to submit information or be informed if 7 the -- if those groups are going to be actually 8 meeting or just conducting their business over the 9 telephone, et cetera. 10 CHAIR BRACKETT: And we need to 11 consider a time line on this too, but we'll do that 12 when we get into the period about a meeting date. 13 Did you have something, Danny? 14 CHAIR BRACKETT: Do we have any further 15 public comment? 16 MR. NEWTON: Once again for the record, 17 Mark Newton for Bingo King Entertainment. Once again 18 I want to comment on -- and I think that I've seen it 19 performing on ice here as sort of an evolution of the 20 Bingo Advisory Committee here to start going into 21 subcommittees and work groups and -- and what have 22 you, and I think that that's a great step forward. 23 And I applaud you guys on your good efforts in the 24 direction you're taking. 25 One thing I would like to comment on 0225 1 is -- is the time line issue for the card-minding 2 device rule. I -- I know there's a number of 3 different parties in the industry who would like to be 4 able to assemble comment. They are currently 5 reviewing the latest draft that went out last Friday. 6 And so I think within a couple of months it could be 7 done. I think Billy was mentioning two or three 8 months until the next Bingo Advisory Committee. 9 Is that correct? 10 MR. ATKINS: No not necessarily. If 11 they haven't gotten to that yet, they may see a need 12 for a meeting next month. But I'm troubled by the 13 idea that this rule needs to be reviewed for another 14 two or three months. 15 MR. NEWTON: Well, we may see it and 16 have a difference of opinion on that, I guess. The 17 one -- the one thing I can comment on -- on the time 18 line issue is that we were informed last fall of the 19 informal comment period and only received in mid 20 January a letter requesting comment. We were given 21 one month to provide the comment, and I worked 22 probably 60 hours on the comments that I provided. 23 And in less than a five-day period, the comments from 24 all manufacturers were assembled into the draft that 25 was presented last Friday. And I just sort of thought 0226 1 that those time lines seemed kind of skewed, that it 2 seemed like everything was rolling downhill and slowly 3 picking up speed and rolling faster and faster towards 4 the end, where I think that it's almost the cart 5 before the horse, where you really have to have the 6 discussion and -- like I heard comments today getting 7 an explanation for the idea behind certain ideas, you 8 know, why are you doing this. That two-way dialogue 9 has never occurred. 10 The draft rules say "for discussion" 11 and my interpretation of a discussion is we sit here 12 and talk and we discuss. You don't just right a 13 letter and send it off. But I think the two-way flow 14 of communication is important for the process. 15 MR. ATKINS: And -- and those. 16 MR. NEWTON: I will -- I will strive as 17 much as I can, Billy, to be able to get things done as 18 quickly as possible. We can -- but I don't want to -- 19 I don't want to end up. It's -- it's like today. I 20 can go through that draft rule, and I'd have comments 21 on just about every section in it. Does that mean 22 that they're going to be ignored in the -- in the 23 committee because I didn't mention them? I -- I hope 24 not, but for the sake of time and by the same regard I 25 don't want for the sake of expediency, go to the point 0227 1 where we get the cart before the horse, where we make 2 a rule that we're going to have to live with for a 3 number of years that's going to impact the marketplace 4 without giving it due consideration and thought. 5 There's a lot of intelligence in this 6 room. There's a lot of people with a lot of bingo 7 experience, a lot of years of -- of knowing the 8 marketplace. Are we just going to, you know, brush by 9 all of this collected knowledge and -- and not draw on 10 it. I think that you have to have the ability for 11 people to voice their opinions and -- and to be able 12 to come to a consensus. 13 I agree with Billy that this has 14 dragged on for too long. I would have loved to have 15 this committee formed six months ago. 16 MR. ATKINS: And I appreciate your 17 comments, Mark, but, you know, let me -- let me tell 18 you what troubles me about your -- your statement. 19 You heard about the informal comment period last fall, 20 then you got a letter from us with a -- with the time 21 line and then you commented. 22 MR. NEWTON: No. That's not true. 23 MR. ATKINS: Well, that's -- 24 MR. NEWTON: I have sent e-mails and 25 I've sent numerous copies and requests for draft 0228 1 copies of all of the rules. And I've sent 2 documentation back and I can provide all of that for 3 you. And that was all through the informal comment 4 period. The process of the comments and how they can 5 be interpreted and who was doing what with them was 6 never truly explained. I did not realize that the 7 informal comment period was a time when I should come 8 knocking on your door and sitting down at the table 9 and discussing things. The informal comment, I 10 thought, was to help people provide the draft rule for 11 this board -- this committee, I mean. 12 MR. ATKINS: And that's the reason I 13 eased up on -- on moving forward at this time. Now, 14 you know. 15 MR. NEWTON: And I'm here. 16 MR. ATKINS: Once you -- once you see 17 that something is up for informal comment, you know, 18 to jump on it and be all over it until the deal is 19 done. 20 MR. NEWTON: It's an educational issue 21 for myself. 22 MR. ATKINS: We're all learning as we 23 go along. 24 MR. NEWTON: I will do whatever I can 25 to expedite this whole process, though. 0229 1 MR. ATKINS: Thank you. 2 CHAIR BRACKETT: Thank you. 3 I'm assuming there's no further public 4 comment. 5 MS. MORRIS: I have -- I have a 6 follow-up. 7 CHAIR BRACKETT: All right. 8 MS. MORRIS: I want to make sure -- and 9 I'm -- I'm going back to pretty much Agenda Item 3 and 10 4 about subcommittees and the process. And I just 11 want to make sure that we all -- you're all on the 12 same page under the Open Meetings Act, that the 13 administrative rule requires y'all to comply with -- 14 that you understand that the business of the 15 subcommittees are not making final decisions. You are 16 not abdicating that to them. There may be lengthy 17 detailed debates in this subcommittee. It could last 18 for days, but the subcommittees have no power. 19 They're not going to do something and then suddenly 20 changes are made because the subcommittees said it had 21 to be that way. That what is given to the 22 subcommittee must come back to this body. You're not 23 acting on your own and so this body is not saying, 24 well, we have now figured out a way to truly save 25 time. We'll give everything to a subcommittee, and it 0230 1 doesn't have to come back here. And I think, hence, 2 the tension of Mr. Atkins. He wants to get down the 3 road. 4 CHAIR BRACKETT: Yeah. All of y'all 5 who will be working on this subcommittee, you 6 understand that. 7 COMMITTEE MEMBERS: Yeah. 8 MS. MORRIS: So it may be, in the 9 future, subcommittees have the luxury of two or three 10 months. But right now -- 11 CHAIR BRACKETT: Right now. 12 MS. MORRIS: -- I think you're hearing, 13 let's get down the road as soon as possible. 14 MR. ATKINS: Well, no. Now, wait 15 Diane. I -- I only raised that issue on this one 16 rule. 17 MS. MORRIS: Okay. That's -- and I'm 18 just wanting to make sure, though, that it's not about 19 you, it's about how much the subcommittees are 20 starting to becoming to get an impression that they 21 are making changes, that they're developing, and 22 things are going to occur because of them. And that 23 is not -- I have missed the message if that's what you 24 have gotten by the end of today. 25 MR. ATKINS: They are going to be 0231 1 developing recommendations to bring to the entire 2 committee. 3 MS. MORRIS: Yes, sir. Yes, sir. 4 CHAIR BRACKETT: All right. Let's look 5 at March. Is there a good meeting time in March? 6 MR. ATKINS: I'm waiting on my -- on my 7 calendar. I can't tell you without it. But while 8 we're waiting, let me make take this opportunity to be 9 the bearer of bad news. The committee has worked and 10 gotten language in the rule to allow for one meeting a 11 year to take place out of Austin. Since that time, as 12 I'm sure a lot of you know -- thank you -- the state 13 has come into pretty severe financial crisis. And the 14 state agencies have been asked to curtail their 15 budgets in every way they can. 16 Now, one of the ways that we've done 17 that in the Bingo Division is we have cut pretty 18 dramatically our travel budget is, for instance, 19 affected our operator training program. We're 20 limiting severely the locations that we offer that 21 training program, and we've run some figures on what 22 it would cost to hold the advisory committee meeting 23 outside of Austin. And we just think we're 24 hard-pressed to justify that, at least for the 25 remainder of this fiscal year. And we've -- we've 0232 1 shared that with the commissioners, and they're in 2 concurrence. So I don't think that we can be 3 recommending one of those meetings outside of Austin 4 at this time. 5 MR. WHITTINGTON: Basically, they're 6 all going to be here. 7 MR. ATKINS: Yes, sir. 8 CHAIR BRACKETT: Okay. Well, I thank 9 you for making that. I thought I was going to have to 10 break the bad news. 11 MR. ATKINS: No. No. 12 CHAIR BRACKETT: Good. You're the 13 bearer of bad news so that means you're responsible 14 for it. 15 In talking about March, I'm totally 16 unavailable that last week in March. I hate to say 17 this, but you don't live by bingo money alone. We're 18 having a major fund raiser at my emergency shelter 19 that last week, and I will have to be very available 20 for that. 21 MR. WHITTINGTON: First week in April. 22 CHAIR BRACKETT: Well, we're into -- 23 then we run into a lot of spring break. I'm don't 24 know if that affects -- well, I'm too old for it to 25 affect me. 0233 1 MR. ATKINS: I'm still too young for 2 it. 3 CHAIR BRACKETT: Yeah. So... 4 MR. MOORE: You think. 5 MR. ATKINS: I'm glad somebody got 6 that. 7 CHAIR BRACKETT: Well, that -- like the 8 4th of April. Is that a good time. The 4th is a 9 Friday. 10 MR. PAVLOVSKY: No. 11 MR. MOORE: Let's do it in the middle 12 of the month anyway. 13 MR. WHITTINGTON: How about the 11th? 14 MR. MOORE: I just think it would be 15 fair about Friday. 16 CHAIR BRACKETT: The 11th? All right. 17 Is the 11th okay with everybody? 18 MR. PAVLOVSKY: What's wrong with 19 Thursdays as opposed to Fridays? 20 CHAIR BRACKETT: Nothing except I 21 can't. I have a board meeting that day, but y'all can 22 do it without me. I would tell you it's also my 23 birthday, but I don't want to think about that. 24 MR. ATKINS: Well, we promise not to 25 sing happy birthday. 0234 1 CHAIR BRACKETT: Well, good. 2 MR. FENOGLIO: Madam Chair, are you 3 talking about April or March? 4 CHAIR BRACKETT: We're talking about 5 April now. We've kind of skipped around it. Okay. 6 Would you prefer April 17th or April 3rd or... 7 MR. MANIO: 17th. 8 CHAIR BRACKETT: 17th. The 3rd -- I'm 9 sorry. The 3rd is a Thursday. 10 MR. WHITTINGTON: 17th. Thursday is 11 better. 12 CHAIR BRACKETT: Now, what? 13 MR. WHITTINGTON: Thursday is better 14 for me. 15 CHAIR BRACKETT: Okay. Now, that's 16 Easter weekend. 17 MR. PAVLOVSKY: Yeah. That's not a 18 good one. 19 MR. WHITTINGTON: Oh, no. 20 CHAIR BRACKETT: That's my only 21 Thursday. Okay, y'all. Hurry up and -- 22 MR. WHITTINGTON: What about the 15th, 23 the Tuesday? 24 CHAIR BRACKETT: 15th, the Tuesday. Is 25 Tuesday okay with everyone? 0235 1 MR. ATKINS: Actually, that -- that 2 will be -- 3 MR. PAVLOVSKY: That's right. 4 MR. WHITTINGTON: Oh, man. 5 MR. ATKINS: That would be another 6 issue. 7 MR. PAVLOVSKY: As a matter of fact, 8 that's my wedding anniversary. 9 MR. WHITTINGTON: 15th. April 15th. 10 MR. PAVLOVSKY: Yeah. 11 MR. WHITTINGTON: Yeah. 12 MR. MOORE: Make it the 16th then. 13 MR. WHITTINGTON: Yeah. 14 CHAIR BRACKETT: You're getting into 15 that Easter stuff. I don't know if that's -- that's 16 Passover. Yeah. Well, is the 25th too late to do 17 it? That's the last Friday or the 23rd or 24th. 18 MR. MOORE: 24th. 19 MR. PAVLOVSKY: 14th. What's wrong 20 with the 14th or the 15th? Does anybody have a 21 problem with that? 22 MR. WHITTINGTON: 15th is tax day. 23 MR. ATKINS: Yeah. And I'm thinking 24 that -- that may be another issue for Marilyn. 25 MR. MOORE: Yeah. Let's -- let's do 0236 1 that after the tax day, the 24th. 2 MR. PAVLOVSKY: Okay. 3 MR. MOORE: The 24th. 4 CHAIR BRACKETT: I'm for the 24th. 5 MR. WHITTINGTON: What's the 24th? 6 That's a Thursday? 7 CHAIR BRACKETT: That's a Thursday. 8 MR. PAVLOVSKY: What -- what date did 9 you say, Larry? 10 MR. WHITTINGTON: 24th. 11 CHAIR BRACKETT: 24th. Thursday the 12 24th of April. 13 MR. ATKINS: 10:00 a.m. 14 MR. PAVLOVSKY: Yes. 15 CHAIR BRACKETT: Yeah. 10:00 a.m. 16 Okay. Okay. Does everybody have that down now? 17 MR. ATKINS: Okay. One last thing I -- 18 I don't know if anybody wants to go back and revisit 19 that work plan. If -- it was -- I'll tell you it 20 was -- it was kind of my assumption that the committee 21 would either adopt or otherwise agree to the items on 22 that work plan and -- 23 CHAIR BRACKETT: Okay. 24 MR. ATKINS: -- make assignments, et 25 cetera, recommendations, whatever, and I can -- 0237 1 CHAIR BRACKETT: Okay. I'm -- I'm 2 sorry that I didn't -- I just kind of assumed I was 3 thinking that was adopted by general consensus, but we 4 certainly did not make any consignments. And I can't 5 find where I put it. 6 MR. ATKINS: It's in the notebook. 7 CHAIR BRACKETT: Yeah. It's in the 8 notebook. 9 Do I hear a motion to adopt this work 10 plan as presented to us, the draft right there and the 11 time lines with it. 12 MR. ATKINS: Well, there aren't 13 necessarily time lines with -- 14 CHAIR BRACKETT: Okay. I was trying to 15 run this up here. Okay. Is this general consensus 16 that we're adopting this work plan? 17 COMMITTEE MEMBERS: Yes. 18 CHAIR BRACKETT: All right. Then the 19 work plan is adopted. We've given so many assignments 20 out today on things that we need to have by our next 21 meeting. I would prefer to do this in April. Do we 22 have anything coming up that will derail it? 23 MR. ATKINS: Can we do one at least 24 right now? 25 CHAIR BRACKETT: Sure. 0238 1 MR. MOORE: Yeah. 2 CHAIR BRACKETT: Proposed rule. Is 3 that the one you want to do? 4 MR. ATKINS: Well, again, you know, I 5 think -- I think those are more or less done. I was 6 going to suggest Item 6 the -- the survey of players. 7 CHAIR BRACKETT: The survey of players, 8 yeah, definitely. 9 MR. ATKINS: And I was thinking maybe 10 Jack would be willing to chair that and maybe if there 11 would be another member who would be interested in 12 working with them on that. 13 MR. DOUGHERTY: I would be glad to work 14 with anybody. 15 CHAIR BRACKETT: Do you -- well, do you 16 expect it at any time now? 17 MR. PAVLOVSKY: My question about his 18 is how -- how are you going to implement a survey 19 around the state? 20 CHAIR BRACKETT: That's what -- that's 21 what the work group will decide. 22 MR. PAVLOVSKY: Well, my perception of 23 that is every member of this committee should be on 24 this and, you know, each one of us do it in our 25 respective areas. 0239 1 CHAIR BRACKETT: Well, you can discuss 2 that. 3 MR. ATKINS: Yeah. Let's -- let's talk 4 about that. We actually have some other suggestions 5 that we're going to make to the subcommittee. We will 6 address that. 7 MR. PAVLOVSKY: Obviously, I'm not 8 going to go down to Harlingen -- 9 MR. ATKINS: Sure. 10 MR. PAVLOVSKY: And pass out -- 11 MR. MOORE: That's not what we're 12 talking about. 13 MR. PAVLOVSKY: You know -- 14 MR. MOORE: We're talking about -- 15 MR. PAVLOVSKY: Well, I wanted to 16 clarify that. I wanted to clarify that. 17 MR. ATKINS: Jack is not going to 18 Harlingen. I'm sorry, Pete is not. 19 MR. PAVLOVSKY: You got that right. 20 MR. ATKINS: Okay. But will you serve 21 on this -- on the subcommittee. 22 MR. PAVLOVSKY: No. 23 MR. ATKINS: Okay. 24 MR. PAVLOVSKY: Yes, sir. 25 MR. ATKINS: Okay. I just want to know 0240 1 what I got. 2 MR. PAVLOVSKY: I just want to know 3 where I got to go and do what. 4 CHAIR BRACKETT: Well, I'll take care 5 of Lubbock. 6 MR. PAVLOVSKY: Thank you. 7 MR. ATKINS: The staff comment -- the 8 staff. 9 MR. PAVLOVSKY: Take care of Amarillo 10 while you're up there. 11 CHAIR BRACKETT: All right. 12 MR. DOUGHERTY: Did I hear you say that 13 every member of the committee is on the subcommittee? 14 MR. ATKINS: No. No. The subcommittee 15 is -- Members -- Members, don't -- don't leave yet. 16 The subcommittee consists of you and 17 me, and you'll be working with -- Norma or Terry -- 18 with Norma. She will be contacting you about getting 19 together and discussing what we've already done and 20 suggestions that you can bring back to the full 21 committee for their consideration. 22 MR. PAVLOVSKY: Okay. 23 MR. ATKINS: You know, the reason I'm 24 suggesting to move forward on this is because the 25 biggest bulk of this has already been done. That was 0241 1 the only suggestion I had. 2 MR. WHITTINGTON: Is this the survey or 3 form that he gave he us? 4 MR. ATKINS: I'm sorry? 5 MR. WHITTINGTON: The survey or 6 something that you gave us, a draft of a -- 7 MR. ATKINS: That is the draft that 8 Jack had done. We have done some -- some other work 9 on that since. 10 CHAIR BRACKETT: Okay. And you'll 11 bring that back on the 24th. 12 MR. DOUGHERTY: Yes. The 24th, yes, 13 or -- or before. 14 MR. MOORE: I'll be writing. 15 CHAIR BRACKETT: Yeah. This is 16 something that -- you can certainly get it to us by 17 mail or by e-mail, however. 18 MR. ATKINS: Well, but if you -- let's 19 stop. 20 CHAIR BRACKETT: Well, we can study it. 21 MR. ATKINS: We can -- we can give it 22 to you. That's right, but there can't be any 23 deliberation or anything like that. 24 MR. DOUGHERTY: Right. 25 CHAIR BRACKETT: Well, yes. 0242 1 MR. PAVLOVSKY: Can we adjourn? 2 CHAIR BRACKETT: Well, yes. I'm -- 3 that's fine. We can adjourn at this point? 4 MR. ATKINS: Yes. 5 CHAIR BRACKETT: All right. Thank you 6 for being here today and for all of your work. It's 7 not an easy thing. This is the hardest work to do, 8 isn't it? I think, a lot harder than working bingo. 9 MR. MANIO: There is something more 10 painful than that. 11 CHAIR BRACKETT: Thank you. Thank you, 12 and I'll see you on April 24th. 13 (Adjourned at 4:21 p.m.) 14 15 16 17 18 19 20 21 22 23 24 25 WRIGHT WATSON STEN-TEL 0243 1 REPORTER'S CERTIFICATION 2 3 STATE OF TEXAS ) 4 COUNTY OF TRAVIS ) 5 6 I, SHELLEY N. JONES, Certified 7 Shorthand Reporter in and for the State of Texas, do 8 hereby certify that the above-captioned matter came on 9 for hearing before the BINGO ADVISORY COMMITTEE as 10 hereinafter set out, that I did, in shorthand, report 11 said proceedings, and that the above and foregoing 12 typewritten pages contain a full, true, and correct 13 computer-aided transcription of my shorthand notes 14 taken on said occasion. 15 16 Witness my hand on this 12th day of 17 March, 2003. 18 19 20 ________________________________ Shelley N. Jones, RPR, CSR #8058 21 Expiration Date: 12/31/04 1609 Shoal Creek Boulevard, 22 Suite 202 Austin, Texas 78701 23 (512) 474-4363 24 25 JOB NO. 030227SNJ WRIGHT WATSON STEN-TEL 0244 1 ERRATA SHEET 2 PAGE LINE CHANGE REASON 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25