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