0001 1 2 3 4 5 * * * * * * * * * * * * * * * * * * * * * * * * * * * * 6 7 BINGO ADVISORY COMMITTEE 8 MEETING 9 10 APRIL 24, 2003 11 12 * * * * * * * * * * * * * * * * * * * * * * * * * * * * 13 14 15 16 17 18 19 BE IT REMEMBERED that the BINGO ADVISORY 20 COMMITTEE meeting was held on the 24TH of APRIL, 2003, 21 from 10:00 a.m. to 2:33 p.m., before Suzanne T. Lane, 22 RPR, CSR in and for the State of Texas, reported by 23 machine shorthand, at the Offices of the Texas Lottery 24 Commission, 611 East 6th Street, Austin, Texas, 25 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. Larry Whittington - Dallas, Texas 6 Mr. Daniel Moore - Houston, Texas Ms. Marilyn Matthews - Odessa, Texas 7 Mr. Pete Pavlovsky - Rosenberg, Texas Mr. Mario Manio - Garland, Texas 8 Mr. Jack Dougherty - Austin, Texas 9 Charitable Bingo Operations Director: Mr. Billy Atkins 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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.......................................5 9 Item Number 4......................................21 10 Item Number 5......................................33 11 Item Number 6......................................76 12 Item Number 7.....................................108 13 Item Number 8.....................................113 14 Item Number 9.....................................116 15 Item Number 10....................................123 16 Item Number 11....................................123 17 Item Number 12....................................123 18 Item Number 13....................................133 19 Item Number 14....................................148 20 21 Reporter's Certificate............................162 22 23 24 25 0004 1 APRIL 24, 2003 2 3 CHAIR BRACKETT: Good morning. We'll go 4 ahead and call to order. We have a quorum present, and 5 it's 10:00 on April 24th. 6 Is there any discussion of the minutes 7 of the previous meeting, the February 27th meeting? 8 Did anyone have any questions as to those minutes, any 9 questions of the minutes? 10 All right, then. The minutes are 11 approved as they were recorded and printed and 12 distributed. 13 MR. ATKINS: Madam Chair, with your 14 approval, I'd just like to take a second and introduce 15 the Committee to the Lottery Commission's new executive 16 director. 17 MR. GREER: Thank you. 18 MR. ATKINS: Reagan Greer has been with 19 the Lottery Commission about two months. 20 MR. GREER: Two months. 21 MR. ATKINS: Going on two months. And 22 he and -- he and I have had the opportunity to work 23 together, and I appreciate his coming on board and all 24 of the good ideas he's brought with him. 25 And we appreciate your being here today. 0005 1 MR. GREER: Thank you. Absolutely. 2 CHAIR BRACKETT: Okay. And we also want 3 to welcome Chairman Clowe, the chairman of the Texas 4 Lottery Commission. Would either one of you like to 5 make any comments or... 6 MR. GREER: I just want to say hello and 7 obviously welcome to the Texas Lottery Commission. 8 It's been a great two months for me. I'm looking 9 forward to getting to know more about bingo. I'm 10 learning. Billy is bringing me up to speed on a weekly 11 basis, and I'm beginning to have a whole new 12 perspective about what bingo is all about in Texas. 13 I just want to commit to each of you 14 that I'm glad to be a part of the team, because that's 15 the way my management style will continue to be. And 16 if there's issues and things that you have, be sure to, 17 you know, let me know personally or go through Billy or 18 however your system works best. And thank you for 19 your, you know, persistence in keeping bingo on 20 people's mind and making it -- making it a positive 21 thing for the people of Texas. 22 CHAIR BRACKETT: Thank you. 23 MR. GREER: Mr. Chairman? 24 CHAIRMAN CLOWE: Nothing for me. 25 CHAIR BRACKETT: All right. We'll move 0006 1 on to Item No. 3 on the agenda, which is report, 2 possible discussion and/or action on recommendations by 3 the subcommittee relating to a survey of bingo players. 4 And Jack, it's all yours. 5 MR. DOUGHERTY: Good morning. My name 6 is Jack Dougherty, and I'm quite new to this august 7 body myself, but I have enjoyed trying to set up a 8 database for surveying all the bingo players in the 9 state. And the Commission -- I mean, the staff has 10 been very helpful, and I had good help from 11 Pete Pavlovsky, right there, with the Committee, and 12 we've worked up a good draft survey. 13 The survey will be in three parts. This 14 will be the first of three, primarily a demographic 15 survey, and there will be two more to follow. Staff 16 was represented by Norma -- Norma Quezada, at the table 17 there, and Dr. Liz Jambor and Veronica Drew. Those are 18 invaluable people. 19 All right. With their assistance, now 20 we developed this -- this draft instrument that is in 21 your -- in your agenda, and they wrote the guidelines 22 and they administered a letter of introduction to all 23 of the organizations that we'll be surveying. 24 It's my understanding there will be 130, 25 all said, to do the survey initially. There's probably 0007 1 over 600. I'm not really sure how many there are. I'm 2 guessing it's thousands. But anyway, 130 will be 3 targeted for this initial survey, and they will 4 comprise all of the information that we're going to get 5 off this first. I doubt if we'll survey any others 6 also. And so at this time, then, I would -- I ask the 7 Bingo Advisory Committee if they want to discuss or 8 adopt the recommendations of the subcommittee. 9 MS. QUEZADA: I'd like to add something. 10 My name is Norma Quezada, for the record. And as Jack 11 said, I am the staff representative of the bingo -- the 12 player survey subcommittee. And to my right-hand side 13 is Dr. Liz Jambor and Veronica Drew. Dr. Jambor, as 14 you know and -- you may not know, is the statistician 15 of the Texas Lottery Commission. 16 And she has extensive knowledge and 17 experience with surveys in compiling the information 18 and coming up with the results to -- of the research 19 that we gather from the data and compile it in coming 20 up with some logical explanation or reasons or -- or 21 methodology of why the player -- the Texas bingo 22 players like to play bingo. 23 Ms. Drew has done a great deal of 24 research on how surveys are conducted, who conducts the 25 surveys, the best formats for the surveys, and the best 0008 1 questions depending on what the survey wants to 2 capture. 3 Let me first say that both of these 4 ladies have done a very thorough job in both of these 5 areas, and their efforts, I believe, are visible to 6 you-all in the player survey package that you received. 7 The subcommittee decided that the most 8 effective way to approach this survey would be to 9 target the demographics of the bingo players as an 10 initial starting point. No other jurisdiction that we 11 know of has determined the demographic of bingo 12 players. 13 So this being said, this will be a new 14 and unexplored journey as we are excited about taking, 15 and one we will all take together to determine who our 16 Texas bingo players are. However, let me remind you 17 that this survey is just a test, a benchmark, and it 18 will be used as the ground work in determining who 19 plays and why they play bingo. 20 Their survey will also determine how, 21 who, and what we are -- we want to learn from bingo 22 players in future surveys. We have established our 23 target population to be approximately 130 halls, with 24 an estimated attendance of 1 percent of a million, 25 which is over 11,000 surveys that will be provided. 0009 1 And this will give us a good representation of the 2 demographics of bingo players throughout the state. 3 If you have any questions on the 4 statistics or how these numbers were compiled, 5 Dr. Liz Jambor will be more than happy to explain that 6 to you. Does anybody have any questions? 7 CHAIR BRACKETT: I have just one. In 8 determining the 130 halls, are you looking at different 9 economic bases through the state, like agriculture or 10 industrial or... 11 DR. JAMBOR: For the -- for the record, 12 my name is Liz Jambor. I'm with the Texas Lottery 13 Commission. 14 The way that we picked these halls was, 15 you've got classes from A to J. We had to condense 16 those down into three classes so that we can look at 17 the amount of money as a factor in each of the halls, 18 the amount of money that is generated by each of the 19 halls. We -- we also have five regions that we needed 20 to account for so that we didn't get too much 21 information from one region and not enough from the 22 other. 23 We also needed to look at the type of 24 hall, whether it's a VFW or church based or commercial 25 based. And so taking all of those factors into 0010 1 consideration and then using a random -- well, I didn't 2 use a random number generator. I went around and asked 3 people their favorite number and came up with the 4 average. So that was a random number. Went through 5 the list of halls and picked -- randomly picked halls 6 that fit those categories -- the classes, the regions, 7 and the types -- so that I do feel that based on this 8 11,000 halls, every type of hall in every type of -- 9 every part of the state is going to be represented. 10 MR. ATKINS: Let me clarify. You 11 referenced 11,000 halls? 12 MS. QUEZADA: No, sir. 13 DR. JAMBOR: Sorry, 11,000 surveys. 14 Sorry, Billy. I didn't want to send a panic through 15 the bingo community. 16 CHAIR BRACKETT: Are there any other 17 questions? 18 MS. MATTHEWS: I have one. Is there 19 some philosophy behind the ranking here on the second 20 page of reasons why people play, or is it just a 21 randomly listed -- I notice the first one is to support 22 worthy causes. I'm not sure too many bingo players 23 even know they're supporting worthy causes. 24 DR. JAMBOR: Well, there is no -- there 25 is no -- there is no reason why that one is the first 0011 1 one, and if no one -- no one chooses it and no one 2 ranks it, then we'll understand that -- that they -- 3 they are playing for other reasons. 4 But -- but there is a sense that there 5 may be a small group of people that do play to support 6 worthy causes. And because that's what charitable 7 bingo does, we needed to include that as a reason why 8 people play. But once -- once all of the data is 9 compiled, what we're going to be able to see is what 10 are the five most important reasons for playing bingo. 11 And if that doesn't make it, then you'll know, as bingo 12 providers, what -- what draws people in, and then be 13 able to use that information to hopefully bring more 14 people in. 15 MS. MATTHEWS: Thank you. 16 MS. TAYLOR: Are you going to provide a 17 list of the halls, the 130 halls that participated in 18 this survey? 19 DR. JAMBOR: We can, yes. We have those 20 exact halls. 21 CHAIR BRACKETT: It hasn't been 22 mentioned when this will start, a projected starting 23 date. 24 MS. QUEZADA: The schedule is in the 25 time line. 0012 1 CHAIR BRACKETT: If it's in the 2 notebook, that's fine. 3 MS. QUEZADA: The time line in the 4 notebook. 5 CHAIR BRACKETT: Okay. Any other 6 questions? 7 I want to thank you for a job well done. 8 MS. QUEZADA: Thank you. 9 DR. JAMBOR: Thank you. 10 CHAIR BRACKETT: Because I feel -- 11 and -- it's all the questions I would like answered. 12 MR. ATKINS: And we also, 13 Madam Chairman, would like to thank Jack -- 14 CHAIR BRACKETT: Oh, yes. 15 MR. ATKINS: -- for his leadership on 16 the subcommittee work. And he -- there was a lot of 17 work that went into getting -- getting all this 18 information together. 19 CHAIR BRACKETT: Yes. I think Jack 20 definitely made the ball roll. 21 MS. QUEZADA: And I'd like to echo 22 Billy's sentiments. They -- they brought in a lot of 23 good ideas and contributed to the bingo survey, the 24 letter and the guidelines. 25 MR. DOUGHERTY: And I might add, 0013 1 Madam Chairman, that the staff was the one that really 2 expounded on what I started, so their -- their ideas 3 were -- went far beyond what I had envisioned. 4 So congratulations to you. 5 MS. QUEZADA: Thank you. 6 CHAIR BRACKETT: Oh, I do have one 7 question, and maybe you addressed it and I wasn't 8 listening. You had a pretest on March 12th? 9 MS. QUEZADA: Yes, ma'am. 10 CHAIR BRACKETT: And how did that go? 11 MS. QUEZADA: Well, we -- actually, 12 we -- there was about six employees that took the test, 13 and it went rather well, actually. We got a lot of 14 input from their responses to the questions that we 15 needed to make some additional changes to the 16 questions, because some felt that -- for example, they 17 didn't care to give their age. 18 So, I mean, we -- we had, you know, just 19 age and a line by the survey, and some said, well, I'm 20 not giving you my age; you don't need to know that. 21 So we decided to change it and make it 22 into a range age, which would be more, I guess, user 23 friendly for the people that don't want to give out 24 their age. So we got a lot of good responses back from 25 that testing. 0014 1 MR. ATKINS: Did you talk about the 2 changes in the letter? 3 MS. QUEZADA: Oh, no, sir. There is a 4 change on the -- the letter that's going out to the 5 bingo halls and the conductors. Initially, we had said 6 that if there was any surveys or they needed additional 7 surveys, to contact us. However, because of -- this 8 was -- the letter was done prior to the population and 9 the -- the number of organizations that were going to 10 be tested, and some of the halls are only going to get 11 a limited number of surveys. Most of the halls will 12 only get a limited number of surveys, so we had to 13 change the letter to indicate that, that only specific 14 numbers will be submitted to their halls, and that 15 number should be returned to us. 16 And, you know, we understand that there 17 is going to be more participants -- more bingo players 18 or participants in their -- in their halls. However, 19 this is the only amount of surveys that we're going to 20 need for our testing and for this survey. And 21 basically, that was it. 22 And the change in the guidelines, on 23 No. 2, the administrative -- administration guidelines 24 for the survey, it has the first bullet. It's got 25 number of surveys, and it -- it changed that to 0015 1 say: This number represents your hall's representation 2 of the entire bingo population throughout the state. 3 CHAIR BRACKETT: Are you suggesting that 4 they have all the questionnaires answered at one 5 session, or they spread them out over several sessions? 6 MS. QUEZADA: It -- we're just giving -- 7 we're giving them a period, a two-week period for them 8 to capture the number of surveys that their hall is 9 going to be given. And they can do it at each session, 10 at every session. We're -- the only requirement is 11 that the same person does not fill out the survey twice 12 or more than -- more than once. 13 MS. TAYLOR: Is each hall going to 14 receive the same number of surveys? 15 MS. QUEZADA: No, ma'am. That's based 16 on the population and the statistics that Dr. Jambor 17 did. 18 MS. TAYLOR: So if you gave a hall a 19 hundred surveys and they only receive 20 of them back, 20 but they handed out all hundred, I mean, our -- I 21 notice it says contact the office. 22 Are they supposed to contact y'all to 23 get 80 additional surveys so that they end up with a 24 total of 100? 25 MS. QUEZADA: I'll let Liz answer that. 0016 1 DR. JAMBOR: We're going to send out "X" 2 number of surveys per hall, and every hall gets a 3 different number based on their category. For 4 instance, a hall that is in a well populated region 5 that is -- has a high attendance is going to have a lot 6 more surveys than the opposite spectrum. We're going 7 to send "X" number of surveys out. 8 If they -- the goal is -- and in the 9 instructions, it -- they're to have a little bit more 10 control than just handing them out. As they hand them 11 out, they need to take them back, whether they're 12 completed or not; and at the end of the two-week 13 period, send back all the surveys, completed or not. 14 We can then readjust the weights once 15 they come back, so if we've got a significant number 16 that are uncompleted, then we can adjust the weight so 17 that the end results reflect that and -- and aren't 18 masking survey return. So we will take into account 19 survey return. 20 The information here on wanting more 21 surveys, if -- if they complete their hundred in the 22 first week and they're so eager about this survey and 23 just are very -- very much wanting to be involved and 24 are wanting to fill out more, they're going to call 25 Veronica. And then we'll make the decision as to 0017 1 whether they -- they'll get more or whether to simply 2 thank them; we really appreciate their involvement and 3 their excitement about this process, but they have 4 completed their allotment, their representation of the 5 entire state survey. 6 MS. QUEZADA: And we're hoping, with the 7 help of the BAC members, Pete and Jack, that we -- that 8 they're going to be calling the halls and organizations 9 to encourage the bingo players to return the surveys 10 and fill them out, so... 11 MR. ATKINS: But I do think -- and I'm 12 sorry, Liz, I don't recall if this is part of what you 13 addressed or not -- if we do, for example, send out 14 11,000 surveys and we get back 500, you know, we know 15 this probably isn't a viable activity, so -- 16 DR. JAMBOR: That's true. It goes back 17 to what Norma was saying, that not only is this -- this 18 study a benchmark in gathering bingo player 19 information; it's also a benchmark in this whole 20 process. Since it's never been done, and it's never 21 been done this way, we're kind of not only testing the 22 population, but also testing the process. 23 We're kind of sitting with fingers 24 crossed, hoping that it works. It works in other 25 environments, and hopefully it will work in this 0018 1 environment too, and we won't have a bunch of empty 2 surveys. 3 So if we -- like Billy said, if we do 4 get back a low number, then we know we have to go back 5 to the drawing board as far as how do -- what's another 6 method we can use to gather this information. We still 7 want this information, it's very important information, 8 but we may have to figure out another method with which 9 to gather the information. 10 MS. TAYLOR: That's what I was looking 11 at. I don't know if it's just my hall, but I know in 12 my hall that there is a lot of customers that don't 13 read. They can't read. So I know that to hand them a 14 survey, I think they would be too proud to come back 15 and say, "I can't read this, so I can't fill it out." 16 I think they would take the survey, and 17 then it would just disappear. So that's why I was just 18 wondering whether you were going to do -- if you -- 19 they only need a number of 20 surveys out of the 20 hundred that you gave them. 21 MS. QUEZADA: Well -- and that -- that 22 may be a problem, but we were hoping that sometimes -- 23 since you do know your -- your hall, perhaps the caller 24 can go through the survey. You know, since you do know 25 the patrons in your hall, that most of them cannot 0019 1 read, perhaps the caller can go and read through the 2 survey and they can all fill it out together. I mean, 3 that -- that -- that's one initiative that the halls 4 can take. 5 MR. WHITTINGTON: Well, what if the 6 halls, once we get these surveys, we put them into play 7 and explain to the customers about the survey, how come 8 they just can't fill it out and return it to us and 9 we'll send it in -- 10 MS. QUEZADA: Right. 11 MR. WHITTINGTON: -- to -- to the 12 Lottery Commission. You know, the bingo hall itself 13 would actually send all the surveys back in. 14 MR. ATKINS: That's what we're asking 15 them to do. 16 MS. QUEZADA: Yeah, that's what we're 17 asking. 18 MR. WHITTINGTON: I'm saying after 19 telling them what to do, tell the customer to fill it 20 out and give it to us, and then we give it -- 21 MS. QUEZADA: Right. Well, you know, it 22 depends, again, on the hall. And either you can pick 23 up the surveys, or they can give it right back to you. 24 You can give it to them when the package is being sold 25 to them. 0020 1 MR. WHITTINGTON: Right. 2 MS. QUEZADA: You know, just the -- you 3 know your patrons, and you know what they're going to 4 respond to the best. 5 Any other questions? 6 MR. DOUGHERTY: We did discuss whether 7 or not to put out two -- put out two languages, 8 bilingual, but we didn't because we figured that they 9 could get enough help because most Spanish-American 10 people have to deal with English, and so they get help. 11 And we're certainly hoping that they can at least 12 have -- have their neighbor help with this. But we 13 didn't put out a bilingual report. 14 MS. QUEZADA: Okay. 15 CHAIR BRACKETT: Are you ready to make a 16 suggestion, a recommendation? 17 MR. DOUGHERTY: Well, I would certainly 18 to propose that the Bingo Commission approve the draft 19 form that we've presented to you and to maintain the 20 time line that we have set forth, and we will -- we 21 will follow that time line. And I make that motion. 22 MR. PAVLOVSKY: I will second that. 23 CHAIR BRACKETT: Okay. I'm sorry. I 24 didn't -- let me -- let me repeat and see if this is 25 the motion that you made; that you request the adoption 0021 1 of the Texas bingo survey and that the subcommittee 2 remain in effect until the completion of the project? 3 MR. DOUGHERTY: Yes, ma'am. That it 4 will stay in effect until -- until -- indefinitely as 5 we may go into the second or third phase. 6 MR. PAVLOVSKY: Yeah. 7 CHAIR BRACKETT: And we're also 8 approving the work plan as presented? 9 MR. DOUGHERTY: Yes, the time line. 10 CHAIR BRACKETT: The time line. All 11 right. The time line, rather than work plan. All 12 right. 13 Is that a clear motion for everyone? Do 14 you feel comfortable voting on that? Okay. All those 15 in favor, please say aye. 16 And there is no opposition, so the bingo 17 survey is adopted, and the plan for administrative. 18 And thank you very much. 19 MS. QUEZADA: Thank you. 20 CHAIR BRACKETT: Not only is it full of 21 good information, it has eye appeal. 22 MS. QUEZADA: Thank you. 23 CHAIR BRACKETT: We'll move on to 24 Item No. 4, which regards license fees, and Mario Manio 25 will present that. 0022 1 MR. MANIO: Thank you, Virginia. 2 402.544 is -- was intended to be a new 3 section of the existing administrative code. The -- 4 our report and the text of the formulated document and 5 in the hand-out that was given to each member of the 6 Committee, and I believe there is also a hand-out that 7 was available to the public by the door. 8 The individuals who made a significant 9 contribution to the formulation of this document are, 10 to my right -- to my right-hand side, Pete Pavlovsky; 11 from the public is Stephen Fenoglio; and Bruce Miner, 12 the manager of the licensing -- licensing services of 13 the Lottery Commission, who was our main resource 14 person. And Bruce will be here with us today to act 15 also as a resource individual to address any questions 16 that might come up when we present the document for 17 deliberation. 18 402.545 is the existing sanction in the 19 administrative code. This is a new one, and the 20 question that might come up is why do we need a new 21 section on licensing. And the answer to the question 22 is because the existing rules do not have enough -- you 23 know, a lot of situations that arise in real life. 24 So the -- the provisions of 402.544 are 25 intended to address questions, disagreements, disputes 0023 1 that may arise between the licensees and the licensing 2 examiner. A case in point would be if there is a new 3 license application, how do we calculate the initial 4 amount of license fee that will be levied on the new 5 applicant. 6 In the absence of any historical data, 7 the licensing examiner will have to use some numbers 8 from somewhere to determine whether it's a Class B or 9 Class J or Class A license. And the -- in many cases, 10 there will be a disagreement or differences of opinion 11 between the licensing examiner and the license 12 applicant. The new rules are designed to minimize 13 the -- the number of disputes like that. 14 I -- I would like to call on the 15 manufacturers or the suppliers. There is a short -- 16 there is one paragraph in the new section pertaining to 17 bingo suppliers or manufacturers, and you will have a 18 chance to comment on that paragraph today or even after 19 today, when the -- when the new document is published 20 in the Texas Register. 21 We had -- we started a little bit on -- 22 on the language in one of the -- one of the paragraphs. 23 And I'm referring to Paragraph (B) in Subsection (a), 24 Original License Application. And this is a situation 25 where there is no historical data available, and we are 0024 1 faced with the challenge of calculating how much 2 license fee should be paid. 3 And let me read to you the language in 4 the Paragraph (B). The pertinent sentence is: If no 5 such organizations exist, the division may use gross 6 receipts amounts from organizations with the same 7 number of occasions conducting bingo at similarly 8 situated bingo premises. 9 And the pivotal phrase in here is the 10 "similarly situated bingo premises." And that is as 11 specific as we can get, because the challenge in here 12 is, if we pick a number from a neighboring bingo hall, 13 that number will almost always be different from what 14 the -- what the actual number will be. 15 So we -- I guess this is a situation 16 where we -- where we have to rely on the licensing 17 examiner to use his or her best judgment in calculating 18 the -- the amount of license fee. And with that 19 premise, I would like to present the document to be -- 20 for deliberation on the floor and subsequently for 21 adoption by the Committee, and, hopefully, for 22 publication in the Texas Register. 23 CHAIR BRACKETT: Mario, are you ready 24 for comment on it now? 25 MR. MANIO: (Nodding head.) 0025 1 MR. MINER: Hi. My name is Bruce Miner. 2 I'm with the Texas Lottery Commission's licensing 3 section. I'm available for any questions or comments. 4 CHAIR BRACKETT: There are no questions 5 on this? 6 MS. TAYLOR: I have one question. On 7 page -- it's on page 6. I don't know what number I'm 8 under, but -- it's number (6) on page 6: If an 9 application for a license is denied, the director may 10 refund the application fee less the cost incurred. 11 Does -- does that mean that "may" -- I 12 mean, does "may" really mean "may," or does that mean 13 you can just keep a license fee for somebody that 14 doesn't become licensed? I wonder about the "may" 15 word. I understand the reimbursing the cost for 16 whatever has been done, but... 17 MR. MINER: "May" was the less harsh 18 position. We just wanted to cover our expenses for the 19 cost of examining, going through the process, so... 20 MS. TAYLOR: But it seems like -- I 21 mean, it seems like the word should be you "shall" 22 reimburse whatever is left over from that if they are 23 denied a license, instead of "may," because it sounds 24 like, well, you can just keep it, and just say, "You 25 don't get a license, but we have the option of 0026 1 refunding or not refunding your money." 2 MR. MINER: Well, the other was we keep 3 it automatically. And then, you know, on -- depending 4 on how they -- you know, we can put in "shall." You 5 know, that was part of the discussion we had in the 6 previous meetings. And normally, we'd want it the 7 other way, and they had a "shall" in there, and we 8 moved it to a "may." But this one, I don't think, was 9 specifically addressed. 10 MR. ATKINS: Yeah. I mean, I don't 11 think it's -- I don't think it's a big difference to us 12 if it's "shall" or "may." I would think the only 13 question would be is, there conceivably could be a case 14 where the cost would be such that the -- there wouldn't 15 be anything to recover. 16 MS. TAYLOR: I mean, I can understand 17 that, but otherwise, it seems like they should 18 automatically know that they would get the balance of 19 their money back. 20 MR. ATKINS: I don't think it's an issue 21 for us. 22 MR. MINER: No. And it probably would 23 be more -- you know, enable us to be more consistent. 24 It would appear that we were -- you know, we could not 25 show favoritism if it was a "shall." 0027 1 MS. TAYLOR: That was my only question. 2 MR. ATKINS: Okay. I don't know if the 3 subcommittee has anything on this. 4 MS. MATTHEWS: Couldn't you say 5 something like "it shall be refunded to the extent that 6 it exceeds expenses"? Would there be a problem with 7 that? If I were a licensee reading this, I would 8 think, well, they might give it to me or they might 9 not, depending upon how they feel about it. 10 MR. PAVLOVSKY: Well, it -- excuse me. 11 It does say that they will refund the application fee 12 less the cost incurred. 13 MS. MATTHEWS: Where does it say that? 14 MR. PAVLOVSKY: Right here. 15 And I might add, too, it's not uncommon, 16 I don't think, in state government if -- when you apply 17 for something, it is a nonrefundable application fee. 18 I'm familiar with -- with that cost. 19 MR. ATKINS: That's true. 20 MR. PAVLOVSKY: So, you know, it -- 21 using the words "may" is -- that's really quite a bit 22 less harsh. You know, they -- they will get some of 23 their money back probably, you know, if it -- if it -- 24 if the cost doesn't -- doesn't use it all up, so... 25 MS. TAYLOR: So that's why -- why 0028 1 wouldn't "shall" -- I mean, if "shall" will work, I 2 think it -- "shall" ought to be in there. I know for a 3 lot of things -- the money that the application fee 4 costs is -- is a very small amount. But for a lot of 5 small charities, that application fee is a big amount. 6 And if they're denying, for whatever reason, it makes a 7 big difference to their account, you know, to lose 8 everything or -- so anyway, I just would like -- 9 they're -- they're nonprofits. I'd like them to get 10 whatever money is left, back. That's what I'm looking 11 for. 12 MR. ATKINS: Do you want to see if Mario 13 wants to -- 14 CHAIR BRACKETT: Yeah. 15 Mario, do you want to amend that 16 motion -- amend this so that it would read "shall" or 17 other language at (f)(6)? 18 MR. MANIO: Well, yes. My -- my 19 understanding of that section is that the Lottery 20 Commission intends to make a refund, but the -- the 21 cost incurred in processing the application would be 22 deducted from the refund. So I -- the "may" may not -- 23 may not be -- might not be agreed upon, whether it -- 24 the refund would be done or not. You know, I think 25 it's -- you know, the policy is you will make the 0029 1 refund. 2 MR. MINER: You make a good point. We 3 are going to make a refund. It just matters whether 4 the cost incurred either depletes it completely or a 5 portion of it. So a refund for somebody that went 6 through the whole legal process and went to hearings 7 and spent all the time fighting it and they were 8 denied, right now we just return the whole license fee. 9 But we would like to have the ability to retain it, or 10 maybe a larger license fee retained, because of the 11 time and money expended versus somebody that -- you 12 know, we're talking about denied. We're not talking 13 about somebody that applied and then withdrew. So 14 that's not an issue. 15 MR. MANIO: I believe the intention in 16 here, the "may" applies to the -- to the cost, not to 17 the refund. So it gives them an option to take -- to 18 deduct the cost incurred. 19 MS. TAYLOR: Not really, because "may" 20 is right in front of the word "refund." So they "may" 21 refund. They "may" refund the amount less the cost to 22 process the license. I'm just saying I think it should 23 say they "shall" refund any amount left after the cost 24 of processing the license. 25 MR. MANIO: What about if we say the 0030 1 director may deduct the cost incurred and refund the 2 balance -- 3 MS. TAYLOR: Well, if you change one 4 word, you're saying the same thing. Changing "may" to 5 "shall" actually accomplishes that same thing, does it 6 not? 7 MR. MINER: It appears so. You know, I 8 don't have a problem with that. 9 MS. TAYLOR: If there -- if there's a 10 balance left, then it would be refunded. If there 11 wasn't, it wouldn't. 12 MR. MINER: That would be up to Mario. 13 MS. MATTHEWS: In Paragraph (5), it says 14 that any balance left over after liabilities are paid 15 "shall" be refunded, which would be more -- 16 MR. MINER: Right. That's perfectly all 17 right with me. So, I mean, go ahead and -- 18 CHAIR BRACKETT: Does someone want to 19 move that this change in language is made before we 20 adopt -- or before we accept the recommendation, or do 21 we want to accept the -- include it in our motion, the 22 actual request to? You'll see -- 23 MS. TAYLOR: I'll make a motion to 24 change the word "may" to "shall." 25 CHAIR BRACKETT: In Item (f)(6)? 0031 1 MS. TAYLOR: Yes. 2 MS. MATTHEWS: What about (1), (2), 3 (3), (4)? What did you say? 4 CHAIR BRACKETT: I'm sorry, Marilyn. 5 MS. MATTHEWS: What about (1), (2), 6 (3), (4), also refers to "may" be refunded? 7 MR. MINER: So you're saying for 8 consistency is what this -- 9 CHAIR BRACKETT: Yeah. So for 10 consistency, it would be changed in all the references 11 there. 12 Are you clear on what action we're 13 taking? 14 MR. WHITTINGTON: Yes. 15 CHAIR BRACKETT: Okay. 16 Was there a second to your motion, 17 Mario? 18 MR. MINER: Let me better understand. 19 Now, the "mays" for (1), (2) and (3) and (4), I'm not 20 sure I see a... 21 MS. MATTHEWS: The top of the page, 22 second line: Amendment license fees may be 23 refunded ... that ceases to be licensed. 24 Each of those paragraphs say "may" be 25 refunded. 0032 1 MR. MINER: Okay. Well, I'm -- let me 2 read this closer. But we want the flexibility to be 3 able to refund them where -- let me see. 4 CHAIR BRACKETT: Well, maybe we're 5 getting too many actions on the floor at one time. 6 MR. MANIO: May I make a suggestion? 7 CHAIR BRACKETT: Okay. 8 MR. MANIO: Why don't we just submit the 9 document as it is, and it's still subject to the formal 10 comment period anyway, and we can make changes during 11 that period. And also, the difference between "may" 12 and "shall" is a very difficult thing for me to 13 understand because English is my second language, and 14 it's -- we are touching on legal things in here that -- 15 it's not very clear to me, so... 16 CHAIR BRACKETT: Okay. So do we want 17 to -- well, let's go ahead and vote on that motion, or 18 we can -- if -- it died from a lack of a second. Okay, 19 good. That motion died for lack of a second. 20 The action that is requested by the 21 subcommittee is that the license fee subcommittee 22 requests that the Bingo Advisory Committee recommend to 23 the Texas Lottery Commission that proposed new 24 Administrative Rule 402.544, License Fees, be published 25 in the Texas Register for formal comment. All in 0033 1 favor, please say aye. 2 There is no opposition to that, so that 3 carries. 4 Thank you for your work on this. 5 And Mario, thank you. This is a very 6 good document you gave to us. It's quite good. 7 Okay. That brings us to item No. 4 -- I 8 mean, Item No. 5 regarding card-minder devices. 9 And Danny Moore, you are in charge of 10 that. 11 MR. MOORE: All right. Good morning. 12 The subcommittee on Administrative Rule 402.555, 13 pertaining to the electronic card-minding devices. Our 14 subcommittee met four times since our last BAC meeting. 15 The Committee consisted of myself and Mario, from the 16 BAC; Roy Gabrillo; Homer Gonzalez; Phil Sanderson. 17 Billy sat in on one or two of the meetings also. From 18 the general public was Jamie McNally and Mark Newton. 19 And before I get started, I just want to 20 thank all of you for your time and effort. We put a 21 lot of time in on this rule, and I think we got some 22 good results out of our -- our work. The rule has 23 undergone major revisions by adding and deleting 24 sections in order to make it clear and concise for 25 licensees to understand. For example, a Definitions 0034 1 section has been added to define the terminology that 2 is common to electronic card-minding devices. 3 In this subcommittee, we actually had 4 subcommittees. What we did is we divided up into 5 groups to tackle this thing. We had the manufacturer 6 representatives, Mark and Jamie, work with Roy and 7 Homer and probably Phil. I wasn't in on some of those 8 meetings. I worked with Roy on the distributor side. 9 Mario worked on the conductors' requirements. 10 And those -- those meetings were done 11 outside our four other meetings. It was a lot of work, 12 folks, but I think we came up with a pretty nice rule 13 here at the end. And I really want to turn it over to 14 Roy and let him kind of go through some of the changes 15 that we did, and then maybe we can let the public 16 comment. 17 Roy? 18 MR. GABRILLO: Thank you, Danny. 19 MR. MOORE: You're welcome. 20 MR. GABRILLO: My name is Roy Gabrillo, 21 G-A-B-R-I-L-L-O, senior audit manager for Charitable 22 Bingo Division's operations division. 23 As Danny mentioned, we did make some 24 changes to the -- to the rule. And in fact, there were 25 changes from the last version that was presented to you 0035 1 at the February 27th meeting. And some of those 2 changes were, we went ahead and put the 66 card face 3 limit back into the rule. We had taken it out 4 originally. 5 Also, we put -- or took out the 6 restriction on the number of devices a player can use 7 where they -- we had limited it to one. We took that 8 out, so it's unlimited now. 9 And also, we took out the provision 10 dealing with the -- the face of a -- the price per face 11 for a card-minder can't be less than the paper face. 12 So some -- those are some of the 13 revisions that we did from the last version that was 14 presented to you in February. And if you've got any 15 questions, I'll be glad to answer them. 16 CHAIR BRACKETT: Does anyone have any 17 comments or questions at this point of Roy? 18 MS. MATTHEWS: I have one question under 19 little (f), Licensed Authorized Organization 20 Requirements, Paragraph (2): Each licensed authorized 21 organization shall conspicuously display during all 22 bingo occasions a sign indicating the number of 23 individuals attending a bingo occasion that may use 24 card-minding devices. 25 Is this going back to that 40 percent? 0036 1 MR. GABRILLO: Right. And that -- 2 because that number is -- is consistent throughout one 3 quarter because it's based on the -- on the average 4 of -- average attendance of the previous two quarters. 5 So whatever that number is, it will change only once a 6 quarter. 7 If it's not -- from the feedback that 8 I've gotten from the auditors when they go out and do 9 these assessment assistance inspections or even game 10 observations, there is still some misconception as to 11 what that number is. A lot of people think that it's 12 based on that night's attendance, and it's impossible 13 to tell how many people you're going to have that 14 night. 15 And so the auditors have tried to 16 explain to them that it's based on prior reports, two 17 quarters that -- so -- that have been filed with the 18 Commission. So like I say, that number won't change 19 every night. It will be based on -- it won't change 20 until -- at the end of every quarter, so it will be 21 consistent. 22 And then the other thing, some of the 23 comments that the auditors were hearing, too, was that 24 some people get upset -- players get upset when the 25 limit is reached and they can't buy devices, and so 0037 1 they -- they don't -- they're not aware of that -- what 2 that number is, so this is another way of making the -- 3 the patrons aware what that number is, as to how many 4 players can actually use the card-minding devices. 5 MS. MATTHEWS: You're saying it's based 6 on the previous two quarters? 7 MR. GABRILLO: Yes. That's -- and 8 that's in the -- that's in the Act. I think it's 9 Section 107 -- 10 MS. MATTHEWS: Okay. 11 MR. GABRILLO: -- that states that it's 12 based on two previously filed quarterly reports. 13 MR. ATKINS: There are several 14 provisions in the legislature that would eliminate that 15 requirement in the Act. But since this rule was under 16 consideration at this time, we want to go ahead and 17 address that now, and, you know, not have to assume 18 that something is going to happen if, during this 19 session, that's eliminated in the statute. It's a lot 20 easier to go in and eliminate one section of a -- of a 21 rule that's -- that's not applicable. 22 MS. MATTHEWS: Thank you. 23 CHAIR BRACKETT: No other questions or 24 comments from the Committee? 25 And Roy, are your two assistants there 0038 1 just to answer questions or to address something right 2 now? 3 MR. GABRILLO: No. If there's any other 4 questions, here's Phil. 5 MR. SANDERSON: Phil Sanderson, 6 assistant director of the Charitable Bingo Operations 7 Division. The only thing that I want to point out in 8 the draft that is in your notebook, there are some -- 9 some minor revisions that will need to be made that 10 are -- that are, I guess, clerical, so to speak. 11 Paragraph (a), Definitions, No. (1), 12 Card-Minding System. Then you've got (A) and (B) under 13 that, and then it starts back over with (1) again. 14 That will be No. (2). So from there to the end of 15 Section (a) will progress to where No. (11) is actually 16 going to be (12). 17 Then there are some places in the rule 18 where "fixed base" is hyphenated and some places it's 19 not. To be consistent, we'll hyphenate it throughout. 20 And then Paragraph (b) and (c), 21 capitalization of the "M" in card-minding. And I 22 believe on page 7 of 11 in (e)(2)(B), "the distributor 23 must list all devices," we're adding the word 24 "card-minding devices" in front of that. 25 Right above that in Paragraph (D), "the 0039 1 model, version and serial number or terminal numbers of 2 the card-minding device," we're making that plural, 3 "devices." 4 Paragraph (f), we're capitalizing 5 Licensed Authorized Organizations; the "A" and "O" will 6 be capitalized. 7 And on page 11 of 11, the Paragraph (4), 8 if you go down to about the fourth line that it starts 9 off with "minding system," we're going to insert the 10 same language that is in the first sentence of 11 paragraph (4), "that affects the security and/or 12 integrity of the bingo game or card-minding system." 13 It's just clarification in both parts as 14 to what the -- that the Commission detects a problem or 15 if the manufacturer or distributor organization detects 16 a problem. 17 And one other. On page 5 of 11, (D), 18 (E), and (G), we'll change "G" to "F." I just wanted 19 to make y'all aware of those changes. 20 MR. ATKINS: This is another one of 21 those rules, Madam Chair and Members, where a lot of 22 work has been put in by the subcommittee and also from 23 the -- the public members of the subcommittee provided 24 a lot of support. Jamie McNally, an attorney here in 25 Austin, and Mark Newton, a representative of one of the 0040 1 licensees, provided a lot of support. 2 Mr. McNally made his -- his word 3 processing capabilities at his office available to the 4 subcommittee in the drafting of the rule, and 5 Mr. Newton had a process whereby the discussions that 6 occurred over the conference call were able to be taped 7 so that they could later on be reviewed by the 8 subcommittee as they went through this process. So 9 again, their -- their participation and assistance 10 was -- was very beneficial. 11 CHAIR BRACKETT: Danny, in addition, I 12 want to be sure that everyone -- that all the people 13 that worked with you know how much we appreciate what 14 they did. 15 MR. MOORE: No, I can't -- I second 16 everything that Billy said. They -- those two 17 gentlemen really gave us a lot of input on this thing; 18 I can't tell you. We couldn't have done it without 19 them, I don't think, and the staff was incredible. 20 These guys really listened and had a lot of input. It 21 was -- it was a good experience for me to really work 22 with them. 23 And I thank you all very much. 24 MS. MATTHEWS: I'm glad you added these 25 definitions. It cleared up a lot of points in my mind. 0041 1 MR. WHITTINGTON: Roy, could I ask you a 2 question? On page 10 of 11, on No. (9): Each licensed 3 organization must record all bingo sales, including 4 sales of card-minding devices, et cetera, disposable 5 cards, on one point of sale. 6 Does this mean that the lump sum of that 7 sale -- like computers, like one lump sum, like every 8 day we deal with one lump sum instead of every sale? 9 MR. GABRILLO: Well, the card-minders 10 you have to ring up individually on the point of sale 11 anyway. Right? 12 MR. WHITTINGTON: If we ring them up 13 separately. But at the end of the day... 14 MR. GABRILLO: If you've got the 15 documentation for how you arrived at the figures for 16 paper and pull tabs, that would be -- you know, I think 17 that would be sufficient. But I think it -- it would 18 be more beneficial if you were able to just go ahead 19 and ring everything up; you know, like I say, set up -- 20 set up your keys on the system for your different prize 21 points for your paper and for your pull tabs, or you 22 could just ring everything up into one system, rather 23 than having two operating systems: a cash register and 24 then having a point of sale for the card-minders. 25 But, I mean, for this purpose, you know, 0042 1 that will -- that will suffice if you're ringing up a 2 lump sum. As long as you've got the documentation to 3 back up those -- those sales figures, that will work. 4 MR. MOORE: Okay. Because when you've 5 got a hundred people going up to the cashier and ring 6 up every point on paper, and the computers and all the 7 other -- you know, we're out of time, because it takes 8 a lot of time to do that. 9 MR. GABRILLO: Okay. 10 MR. WHITTINGTON: And the other 11 question, under (C): "The serial number of each 12 card-minding device sold" should be put on what? I 13 mean, what is that saying? The serial number of each 14 card-minding device -- on the same page in section -- 15 under (C). 16 MR. GABRILLO: Well, and I think it 17 already does that already, if I'm not mistaken, Homer, 18 when they -- when you sell a unit. 19 MR. GONZALEZ: Homer Gonzalez, auditor 20 with Charitable Bingo. Back in -- if you look back 21 into the rules -- or manufacturer requirements, that's 22 one of the things that the invoice has to have on it, 23 on the receipt. That's printed up on the machine. It 24 has to have to have that information on it now, as it 25 is. So we're asking for something that the 0043 1 manufacturers aren't being required to do. 2 MR. MOORE: Isn't -- Homer, isn't that 3 on the -- when the equipment is actually initially 4 installed into the location? 5 MR. GONZALEZ: Oh, I'm sorry. 6 MR. MOORE: These are the records that 7 you want them to keep for four years. Because this 8 is -- this is (8)(D) he's talking about. 9 MR. GONZALEZ: Yeah, I'm sorry. 10 MR. WHITTINGTON: Yeah. I'm talking 11 about (8). 12 MR. GONZALEZ: 8, page -- 13 MR. MOORE: Page 10. These are 14 recordkeeping requests. 15 MR. GABRILLO: Yeah. That's already 16 in -- in other words, they don't have to input that. 17 In other words, they don't -- once they -- once -- 18 that's what I'm asking. Do they -- once -- once 19 they -- 20 (Mr. Gabrillo and Mr. Gonzalez 21 conferring.) 22 MR. GABRILLO: So it's not something 23 that's extra? 24 MR. GONZALEZ: No, it's not anything 25 that's extra. Let me double-check. 0044 1 MR. MOORE: We -- we talked about this. 2 This is -- we tried to make it all the same for 3 everybody, that they had to keep these requirements. 4 The requirements are for recordkeeping and audit 5 purposes, you know. This isn't an ongoing thing. 6 We're not going to be printing serial numbers on every 7 receipt that goes to every bingo player in every bingo 8 hall. That's an impossibility. 9 MR. WHITTINGTON: Yeah. 10 MR. SANDERSON: Paragraph (8) is the 11 requirement that they "maintain for four years, reports 12 for each occasion that provides the following." And 13 the devices -- the way the manufacturers program the 14 devices and requirements under manufacturing, this 15 information is stored on the database. And there is a 16 report that prints out that you have access to, that 17 will tell you exactly which serial numbers were used, 18 which bingo faces were used or loaded onto the 19 card-minding devices. So (A) through (G) is a 20 requirement that that information must be available for 21 four years, and the system keeps it on the database. 22 MR. WHITTINGTON: For the manufacturer 23 and distributer. Okay. 24 MR. SANDERSON: Yes. 25 MR. WHITTINGTON: Because my cashier was 0045 1 asking, do we have to keep up with all these numbers 2 every time I ring up the computer. And I said no, it's 3 not clear to me, so we're going to make sure. 4 MR. SANDERSON: When the system logs the 5 faces, it keeps track of what numbers are on there. 6 MR. WHITTINGTON: That's -- right. 7 MR. DOUGHERTY: I have a question. Back 8 in February, there was a lot of discussion about the 9 limit of one card-minding device per player, and that 10 was removed. And where -- where do you reference the 11 "unlimited"? Under -- I can't find any reference to 12 that. That just ignored our -- 13 MR. GABRILLO: Well, right. Because in 14 the -- like I said, in the last -- and there never was 15 a limit. Right now, there's -- with the current rule, 16 there is no limit on the number of devices that a 17 player can use. 18 MR. DOUGHERTY: But it doesn't actually 19 say that in here, though. 20 MR. GABRILLO: Right. It doesn't 21 actually say it. 22 MR. DOUGHERTY: Okay. 23 MR. GABRILLO: So when we -- on the rule 24 we that presented back in February, we did have it as 25 specifically stating under the restrictions, part of 0046 1 the -- of the rule, it was in there that, you know, 2 each player can only use one device. And so after 3 discussing it in the meetings, we decided that it would 4 be best to go ahead and take that out and just -- and 5 also restore the 66 face card limit. 6 MR. DOUGHERTY: Okay. Well, I just 7 couldn't find the reference point, and I was wondering 8 just what page that was on so I could check to see that 9 it was taken out. 10 MR. GABRILLO: Right. It doesn't 11 specifically say in the -- I can tell you, in the 12 current rule, it doesn't -- it doesn't specifically say 13 that it's unlimited. It's just -- I guess it's 14 understood. 15 MR. DOUGHERTY: Okay. That's all. 16 CHAIR BRACKETT: Okay. No further 17 questions from the Committee. We have several people 18 in the -- who are attending today who would like to 19 make some comments. So if you three gentlemen would 20 stay handy to -- there will probably be some comments 21 you'll need to address. 22 Sharon Ives, (f)(2) and (f)(3). 23 MS. IVES: Good morning. Yes, it's 24 still morning. My name is Sharon Ives, and that's 25 I-V-E-S. And I'm with Fort Worth Bookkeeping, and my 0047 1 office handles 44 bingo organizations' bingo 2 bookkeeping. I'm not sure at this time if I can 3 comment on No. 4. I'd signed up to comment on that 4 one, and y'all took your vote and then you went on to 5 Item No. 5. 6 But since I was called up to comment on 7 Item No. 5, the card-minding device rule, I believe I'm 8 on record in past meetings commenting on -- it would be 9 page 7 of 11, (f)(2) and (3), stating that a sign shall 10 be displayed during all bingo occasions, the number of 11 individuals attending a bingo occasion that may use a 12 card-minding device. 13 I don't know about you, but some of 14 these organizations have very long names. I'm sure you 15 want it posted the way it's on their bingo license. In 16 addition to the number of players allowed to play the 17 card-minding devices, you're going to have a big poster 18 board up there. In my opinion, it's one more thing to 19 hang on the walls. I don't know if y'all have looked 20 at your walls lately, but there's a lot of posters, 21 signs, the 1-800 number, all of that already up there. 22 On No. (3), I don't know if part of this 23 was deleted from the previous draft. It seems to me 24 like on the screen of the fixed units, you could have 25 the 1-800 number. I don't know if I'm overlooking that 0048 1 or if that was the part that was taken out. This says 2 "prominently displayed on each card-minding device." 3 I'm still on page 7 of 11, (f)(3), the last sentence. 4 MR. SANDERSON: There is a manufacturing 5 requirement that allows for it to be on the screen of 6 the fixed base. 7 THE REPORTER: What was your name again, 8 sir? 9 MR. SANDERSON: Sorry. Phil Sanderson. 10 MS. IVES: So does that mean on the 11 hand-held units, you still have to put the little 12 stickers that the customers sit there and keep peeling 13 off? 14 MR. SANDERSON: As far as I'm aware, I 15 don't know if any manufacturers have developed a 16 hand-held that allows it to be on the screen. Yes, and 17 the reason that it's there, the rule -- or the section 18 about the 800 number is actually in three places. One, 19 the manufacturer is required to provide it on a fixed 20 base unit as an option and provide the stickers to the 21 distributor, and the distributor is required to provide 22 the stickers to the organization, and it's the 23 organization's responsibility to make sure the stickers 24 stay on the hand-helds. 25 MS. IVES: That also goes with the 0049 1 two-sign requirement in each location, the -- what is 2 it, an 8-and-a-half by 11 Gamblers Anonymous 1-800 3 numbers? Correct? 4 MR. SANDERSON: Yes. That's required by 5 statute, I believe. 6 MS. IVES: Just out of curiosity, how 7 many more times are we going to have to keep posting 8 the 1-800 numbers? 9 MR. ATKINS: Probably as many times as 10 the statute says you're going to have to. But let me 11 ask you some questions, Sharon. 12 MS. IVES: Sure. 13 MR. ATKINS: What's all the signage 14 that's required? There's the -- the compulsive 15 gambling sign, the operator on duty sign, the license. 16 There would be, under this rule, the number of people 17 who could play. What else? 18 MS. IVES: Plus we have the anniversary 19 posters in some of the halls. 20 MR. ATKINS: Oh, no. No. What's 21 required to be posted? 22 MS. IVES: Oh. As far as I know, I 23 guess you hit all the key points. 24 MR. ATKINS: So those four things. 25 There's three things now. This would be four. 0050 1 MS. IVES: (Nodding head.) 2 MR. ATKINS: And those are overwhelming? 3 MS. IVES: I'm a firm believer that 4 customers are coming in there to play bingo. We've 5 already got the required signs posted. First of all, 6 it's hard to keep up with the hand-held units on 7 keeping the stickers on there. You have to check those 8 after each session. You know, after the first session, 9 when they come up to get the devices reloaded for the 10 second session, you're constantly -- I see Suzanne 11 nodding her head -- checking those stickers, which is a 12 good idea for the fixed units, having that somewhere on 13 the actual display. I mean, I -- I see where you're 14 coming from, Billy -- 15 MR. ATKINS: Well, but I -- I guess I'm 16 not understanding your response. How are those four 17 signs overwhelming? 18 MS. IVES: How many halls do you -- 19 MR. ATKINS: Because -- because -- 20 because I guess I don't -- if -- if I am misstating 21 your statement, let me know. 22 MS. IVES: Well... 23 MR. ATKINS: And I think you also made 24 reference to a poster board; you would have to have a 25 poster board to have this -- include this information. 0051 1 And I don't recall -- 2 MS. IVES: Okay. 3 MR. ATKINS: -- any reference to a 4 poster board. 5 MS. IVES: Well, it says the letters on 6 the sign shall be no less than 1 inch tall and include 7 the name of the licensed authorized organization. 8 My comment just a little bit ago is some 9 of these organizations have a very long name on the 10 license. As a matter of fact, on some of them, I guess 11 the computers down here kind of cut it off on the tail 12 end. That's a lot. You would have to put it on a 13 board, would you not, to fit everything on there? 14 MR. ATKINS: Why don't -- why don't we 15 look at it. Why don't we look at it -- 16 MS. IVES: Okay. 17 MR. ATKINS: -- and see if we can't, 18 with a PC on an 11-and-a-half by an 8-inch of paper, 19 work something out so that it can -- 20 MS. IVES: Billy, I've even tried it on 21 PowerPoint, putting the operators' names one inch, 22 8-and-a-half by 11, landscaped, just to fit. And even 23 then, some of the last names have to be hyphenated. 24 But they're an inch. 25 Moving on, I believe those were it on 0052 1 this one. I guess I'll come back during the public 2 comment period to comment on Item No. 4, if that's all 3 right, a little bit later. Thank you. 4 CHAIR BRACKETT: All right. 5 James McNally. 6 MR. McNALLY: Good morning, committee 7 members. My name is Jamie McNally, with the law firm 8 of Clark, Thomas & Winters here in town, representing 9 GameTech, International, manufacturer of card-minding 10 devices. 11 As Danny and Billy said, this -- this is 12 a product of a lot of work by a lot of people. 13 GameTech's group does appreciate the opportunity to be 14 part of that process. I think the staff members worked 15 extremely hard on this rule, and it -- it very much is 16 a product of compromise. There was spirited discussion 17 for quite a number of meetings, and we would urge that 18 you present the latest version of the rule with the 19 changes that Phil discussed to the Commission for their 20 consideration at that next meeting. 21 And again, thank you very much for the 22 opportunity to be part of the process. I think it was 23 a good process, and I -- and I think it worked. Thank 24 you. 25 CHAIR BRACKETT: Thank you. 0053 1 Mark Newton. 2 MR. NEWTON: My name is Mark Newton. 3 I'm with -- representing BK Entertainment, the 4 manufacturer. I'd just like to add to Phil's list of 5 typographical corrections. On Item (e), "D" and the 6 "R" in "requirement" should be capitalized. That's 7 just an example of the back and forth we went through 8 with this rule. We were always keeping an eye over 9 each other's shoulder and making sure that we were all 10 doing what we wanted to do. And there was some -- 11 there was some spirited discussion. 12 And what I'd like to say is that this -- 13 this rule, I think, is the best possible rule we could 14 come up with. It may not be perfect for everyone in 15 every circumstance, but I think that it's about the 16 only one we're going to be able to get consensus on. 17 And I echo Jamie's sentiments that we pass this on up, 18 and hopefully it will get through the period of public 19 comment without too many revisions and we can go 20 forward. 21 I'd like to thank the subcommittee 22 members. It was a very interesting process, and I hope 23 it's one that's encouraged by the Bingo Advisory 24 Committee to carry forward to the other subcommittees. 25 I think it's a step in the right direction for 0054 1 improving the environment of bingo in Texas. Thank you 2 very much. 3 CHAIR BRACKETT: Thank you. 4 All right. Danny, your committee is 5 requesting that the Bingo Advisory Committee recommend 6 to the Texas Lottery Commission that they propose the 7 Administrative Rule 402.555, Electronic Card-Minding 8 Devices, be published in the Texas Registry for formal 9 comment. 10 MR. MOORE: Is that your motion? 11 CHAIR BRACKETT: I'm -- I'm asking you. 12 MR. MOORE: That's my motion. 13 MR. BISHOP: Excuse me. 14 CHAIR BRACKETT: Do I have a witness 15 affirmation form from you? 16 MR. BISHOP: Yes, ma'am. I'm sorry. 17 CHAIR BRACKETT: Come up and make your 18 comment. 19 MR. BISHOP: I am Don Bishop, from 20 Dallas, Texas, AMVETS Post 31 and Improved Order of 21 Redmen's and commercial lessor. Other than that, I 22 have nothing to do with bingo. I also want to ask a 23 couple of questions, actually, for clarification on 24 page 7 of 11, Item (4)(f)(2), if I'm identifying that 25 properly. It's again about the posting of the signs 0055 1 and keeping track of the -- the number of devices 2 available. 3 First, I want to say we do have a lot of 4 other signs up there, Billy. And in support of 5 something Sharon said, we've got all our city and 6 county signs; health, city permits. You also have all 7 your schooling permits for each employee. And you take 8 all those signs and you multiply them by five to seven 9 in a commercial hall with five to seven bingo licenses, 10 so we do have quite a -- quite an array of signs there. 11 But that's just -- 12 MR. ATKINS: What are you -- 13 MR. BISHOP: -- a side comment. 14 MR. ATKINS: I'm sorry, Don. What's the 15 schooling permit? 16 MS. IVES: Operator training permit. 17 MR. BISHOP: Your training program 18 permits also have to be displayed, and they are about 19 this big. 20 MR. ATKINS: Those have to -- those 21 don't have to be displayed. 22 MR. BISHOP: Well, it's our 23 understanding they do. 24 MR. ATKINS: I don't know why you'd 25 understand that. 0056 1 MR. BISHOP: Well, because I'm retarded. 2 CHAIR BRACKETT: In some of the 3 trainings, they do state that. 4 MR. BISHOP: Well, then I may be 5 mistaken about those having to be displayed. I mean -- 6 MR. ATKINS: Well, we don't have -- 7 MR. BISHOP: -- we -- we do have them 8 displayed, so... 9 MR. ATKINS: Well, they need to be 10 available, but they don't need to be displayed. 11 MR. BISHOP: I don't want to take up 12 time with that. I've got -- Roy, could I -- could I 13 ask you to stay here a minute, because I think you may 14 have the answers to my next questions. 15 My understanding of the 40 percent rule 16 is that it's an average of two prior quarters, but the 17 law does not specify which two prior quarters. I think 18 it's just assumed that it -- it means the two immediate 19 quarters. But my question is, it's -- it's a 20 40 percent average of all those times, so any one 21 occasion -- suppose we go through the end of the month 22 and we -- we've sold 20 percent of our attendance in 23 computers, so then we can along to the first of the 24 month. Are we not allowed to sell 60 percent? Because 25 it talks about an average. How do you determine that 0057 1 average? 2 MR. GABRILLO: Roy Gabrillo, senior 3 audit manager. 4 It's based on your two previous -- 5 previously filed quarterly reports. So if you -- if 6 the two -- for two quarters -- your average attendance 7 for two quarters was a hundred, say, a hundred people 8 per -- per occasion, 40 percent of that would be 40. 9 So for a full quarter, you could only 10 sell to 40 people, okay? Every night. That's your 11 limit. Every occasion, you can only sell to 40 -- you 12 can only sell the card-minding devices to 40 people. 13 Once you get that 40, that number of 40, you can't sell 14 any more card-minding devices. And it doesn't matter 15 how many devices each are -- I mean, how many are sold. 16 MR. BISHOP: But doesn't that -- doing 17 that for that quarter in that quarter, doesn't that set 18 a precedent for the ensuing quarters that come along 19 because you're going to have to use those figures for 20 those quarters? 21 MR. GABRILLO: It just depends on 22 your -- it just depends on the attendance in the 23 current quarter. So if your -- if your attendance 24 happens to go up the following quarter, the number of 25 devices -- the number of persons you can sell to may go 0058 1 up. It may not go up quite a bit unless you have a 2 big -- a big surge in attendance from one quarter to 3 the next, so that if your attendance is fairly 4 constant, there's not going to be much deviation 5 between the average, that 40 percent average. 6 MR. BISHOP: Our attendances are not 7 fairly constant. Our attendances are not fairly 8 constant. They jump all over the place. 9 MR. GABRILLO: Right. And that's why 10 it's an average. That's why it's an average. 11 MR. BISHOP: Okay. I -- I guess that 12 will have to do for us for now. 13 On -- on the matter, Billy, of the name 14 of the charity being on the number of computer signs, 15 we've already got the operator identified there, and 16 the charity, and we've got the licenses that list their 17 playing time. Is that not redundant? Couldn't we just 18 have one sign saying so many computers can be sold 19 during that occasion -- 20 MR. ATKINS: I'm thinking we have 21 probably -- 22 MR. BISHOP: -- with a flip number? You 23 know, we're going to have to have a number card or a 24 grease board or something. As a matter of fact, can we 25 use a grease board? Because, Billy, some of our game 0059 1 plans fluctuate. And we play early birds. People are 2 coming, we're trying to sell the computers, we're 3 trying to get ready for the set games to start, and you 4 might have seven people come in right at the last 5 second that -- that would let -- allow you to sell four 6 more computers -- or whatever the math is on that, 7 three more computers. Do you see what I'm saying? 8 It's a matter of logistics for us. 9 MR. ATKINS: I understood you up to a 10 point. I don't know how more people coming is going to 11 allow you to sell more card-minders. But to get to 12 your question, you can use a grease board, you can use 13 a marker board. 14 MR. BISHOP: Well, I haven't -- 15 MR. ATKINS: You can use -- 16 MR. BISHOP: Well, I thought -- 17 MR. ATKINS: Let me -- let me answer 18 your question. Okay? But I think the question about 19 the signage is something that we can reexamine as to 20 the information that needs to be on there. Ideally, it 21 would be something that wouldn't be any more than -- 22 like I was talking about with Sharon -- something you 23 could spin off, you know, a computer. 24 MR. BISHOP: Okay. 25 So if I understand this right, Roy, if 0060 1 we all of a sudden have a boom night and we have -- 2 instead of a hundred players, theoretically, and we 3 have 200 players, but we're back over here with a 4 40-computer limit from our two previous quarters, are 5 you telling me we can't sell 80 computers that night 6 with a crowd of -- 7 MR. GABRILLO: Correct. That number -- 8 that number 40, that's what you have to use for the 9 whole quarter every night. 10 MR. BISHOP: Okay. 11 MR. ATKINS: Based on your previous 12 attendance. 13 MR. GABRILLO: Previous attendance. 14 Right. 15 MR. ATKINS: Not your current 16 attendance. 17 MR. GABRILLO: Right. 18 MR. ATKINS: Your previous attendance. 19 MR. BISHOP: Is that the way y'all are 20 interpreting the law? Is that what I understand? 21 MR. GABRILLO: No. That's what the law 22 says. 23 MR. ATKINS: That's what the law says. 24 MR. BISHOP: Y'all are going to waste me 25 on that subject -- 0061 1 MR. ATKINS: Well, how do you -- 2 MR. BISHOP: -- on interpretation. 3 MR. ATKINS: How -- how do you interpret 4 the previous quarter? I'm just reading it. I'm just 5 reading it on the face. And the previous quarter, to 6 me, doesn't say tonight. 7 MR. BISHOP: Well, it also doesn't say 8 the immediate two previous quarters. It just says two 9 previous quarters. 10 MR. ATKINS: And I think that's 11 addressed in the rule. 12 MR. MOORE: But the key here is average. 13 And Don, I don't want to -- I'm not going to argue with 14 you, but if you have 200 one night and a hundred 15 another night, the average there is 150 people, so you 16 should be able to sell 60 computers. 17 Right? 18 MR. ATKINS: (Nodding head.) 19 MR. MOORE: I mean, that's -- you're 20 going to add all these numbers. Throw in a number, you 21 divide it by the number of occasions, and that's going 22 to be the number. It's not going to be 40. If you 23 averaged 200 one night and a hundred the next night, 24 that's 300 people in two nights. That's 150 people 25 average. So the number is going to be 60. It's not 0062 1 going to be 40. It's not going to be the low end of 2 the number. Is that clear? 3 MR. BISHOP: As a matter of curiosity, I 4 wanted -- the public need to be made aware of that. 5 MR. ATKINS: The reason is, is because 6 we've had -- as -- and I think it was Phil that said in 7 his presentation, we've had I don't know how many 8 organizations come to us and say this is what we've 9 done. Because otherwise, they -- for some reason, 10 there is some magic to a sign and -- you know, that 11 they can point to and say this is what that number is, 12 instead of just saying we can't sell any more. And 13 we've had a number of organizations that have not just 14 suggested that, but have implemented that, and it 15 indicated to us that it works. 16 MR. BISHOP: Okay. So let me try to 17 boil this down again to the practical 18 session-to-session operation. 19 We've got -- we're in a situation where 20 we have two different charities playing on the same day 21 because of the three times a week. They -- say they 22 play two -- there are two sessions back to back on one 23 day, and then they split the next day. And some places 24 sell their computers for both sessions ahead of time to 25 save time and all. So they're going to be able to sell 0063 1 some computers from one session, but not for the other, 2 or vice versa. 3 And you're going to have -- if I 4 understand now what you're saying, for that whole 5 quarter, you're going to have a constant maximum number 6 of computers that each charity can sell for that whole 7 quarter. Is that what I'm understanding? 8 MR. GABRILLO: Not computers, though. 9 MR. BISHOP: Card-minders? 10 MR. GABRILLO: It's not the number of 11 computers that you're -- that we're -- that we're 12 counting. It's the number of persons using those 13 computers that you've -- that you're selling to. 14 MR. BISHOP: I know. But that's 15 established -- if I understand, Roy -- by the number of 16 the attendance for the previous two quarters. And 17 you're stuck, each individual charity, for -- their 18 attendance is stuck with that number of card-minder 19 sales for the next quarter, so their sign is never 20 going to change for that quarter. Is that -- 21 MR. GABRILLO: That's -- and that's -- 22 MR. BISHOP: -- what I'm understanding? 23 MR. ATKINS: Don, let me -- let me 24 clarify something first. Are you still commenting on 25 the rule, or do you have questions about the statute 0064 1 itself and the implementation? 2 MR. BISHOP: I'm asking about the 3 auditing of it, Billy. 4 MR. ATKINS: About the auditing of what? 5 MR. BISHOP: The -- from the audit 6 department. When they come and audit us and look at 7 our computer sales, what the heck are they -- what -- 8 what are they holding us to? What -- what number? And 9 I'm getting clarification on it. I got -- 10 MR. ATKINS: As it relates -- 11 MR. BISHOP: -- clarification from Roy. 12 MR. ATKINS: As it relates to the rule? 13 MR. BISHOP: As it relates to posting -- 14 I'm talking about how -- I'm talking about our sign, 15 posting the number of computers that this charity can 16 sell during this occasion. 17 MR. ATKINS: Okay. 18 MR. BISHOP: Is that a constant figure 19 that we're going to use for that entire quarter, based 20 on the attendance of the previous two quarters? Say 21 it's 40 computers; that charity sign is going to say 22 for a whole quarter that this -- this charity can sell 23 a maximum of 40 computers. And is that sign going to 24 be constant -- 25 MR. ATKINS: You need to -- you need to 0065 1 bear with me, Don. I don't think your question is 2 about the sign. I think your question is about how you 3 come up with the number that's on the sign. 4 MR. BISHOP: You're making a distinction 5 there? 6 MR. ATKINS: Yeah. This -- 7 MR. BISHOP: And Suzanne is -- and I'm 8 saying -- I'm saying card-minders; I should say people, 9 attendants. 10 MR. ATKINS: And here's what I'm asking 11 you: Are you talking about the sign being posted, you 12 know, apart from the number, the information that's on 13 the sign, et cetera? Or are you talking about how you 14 arrive at that number that goes on the sign? 15 MR. BISHOP: Actually, I would say both, 16 Billy. 17 MR. ATKINS: Okay. 18 MR. BISHOP: What the heck are we going 19 to put on the sign, and is it going to be the same 20 number for the entire quarter? 21 MR. ATKINS: And I think it's a valid 22 question, and I don't know if it's addressed in here. 23 MR. BISHOP: Okay. 24 MR. MOORE: Roy, I don't think we 25 actually put a time frame on how long that number stays 0066 1 on a board. It -- it doesn't say for a quarter 2 anywhere, I don't believe. 3 MR. GABRILLO: Okay. But it's -- again, 4 it's based on two previously -- the two previously 5 filed quarters. 6 MR. MOORE: Okay. 7 MR. GABRILLO: Okay? So it's not going 8 to change until the next quarter ends and they have 9 their attendance for that current quarter. So 10 that's -- they would use that quarter that just ended 11 and the one before. That's -- so it's going to -- 12 that's when it would change -- 13 MR. MOORE: Okay. 14 MR. GABRILLO: -- if it changes at all. 15 MR. WHITTINGTON: Roy, let me ask you a 16 question. I understand -- I'm trying to understand 17 what Don is saying. Number one is, bingo is down. I'm 18 losing money for two quarters. All of a sudden, I've 19 got a great night, I can make money, and I'm supposed 20 to stop selling computers at that point? 21 MR. GABRILLO: Based on -- based on the 22 statute and the number that -- that's calculated as 23 their average attendance and the 40 percent, you have 24 to stop at that number. 25 MR. WHITTINGTON: Then that would be 0067 1 almost defeating the purpose for the charities. In 2 other words, I'm still losing again. So that's why we 3 need to get rid of the 40 percent. 4 MR. GABRILLO: Exactly. I mean, 5 that's -- and that's why there's -- that's why there's 6 a bill out there to do that. 7 MR. MOORE: Well, that -- that number 8 isn't calculated. It's not going to be the end -- 9 December 31st, this number isn't calculated. These 10 people don't do these reports. They don't believe 11 in -- most of them might do it on the 15th. So there's 12 going to be some slack time in there. I don't -- I 13 don't know. 14 MR. GABRILLO: Yeah, unless -- unless 15 they do their own -- you know, the organizations do 16 their own reports or if they -- you know, when they 17 give it to the bookkeeper to do all the calculations 18 for the sales and attendance, if the -- if the 19 bookkeeper -- once the -- once that information is 20 obtained, relay it back to the operator and give the 21 new number -- you know, it can done. It can be done 22 before the 15th. It's just a matter of 23 communicating -- 24 MR. MOORE: Sure. 25 MR. WHITTINGTON: Is there any type of 0068 1 revisions that we can go about? Because right now, two 2 of my main halls in Dallas are facing a smoking ban, 3 and that would be my worst halls. This has been going 4 on for two months almost. So I'm going to have to take 5 that attendance that -- that's been so good, and now 6 it's my worst attendance ever, and average it out over 7 the next two quarters to come up with a number. 8 Because it's almost impossible because we're losing 9 money, right and left. 10 MR. GABRILLO: And that's the way you're 11 going to have -- have to do the calculations. You have 12 to use the -- this quarter that just ended in -- on 13 March 31st, and the -- and the report for the -- or the 14 figures from the quarter ending December 31st of last 15 year, and average them out and then multiply by 16 40 percent. 17 And that's why I was -- earlier, I had 18 mentioned to -- to Don that it's going to -- it could 19 go -- it could fluctuate if you have a resurgence in 20 attendance or if you have a drop in attendance. It can 21 either go up or down. But for the most part, it might 22 stay constant because of the fact that the attendance 23 is -- if it's constant throughout a reporting period, 24 it won't change that much. But in your case, what 25 you're talking about -- 0069 1 MR. WHITTINGTON: It's -- it's bad. 2 MR. GABRILLO: -- it's going to -- it 3 will definitely hurt you because if your attendance is 4 down quite a bit for this quarter, your number -- 5 MR. WHITTINGTON: 40 percent. 6 MR. GABRILLO: -- the number -- that 7 40 percent number will drop. I don't know how much it 8 will drop, but it will drop. 9 MR. WHITTINGTON: A lot. Because like I 10 said, that's where we make money. We're making money 11 from computers mostly. And a lot of the players are 12 not playing in Dallas city; they're playing in Dallas 13 suburbs, which is killing us, okay? We are -- we're 14 losing every night. So I'm having to go by that 15 figure, and this has been going on for almost two 16 months now. And we are barely even, making enough to 17 make the payoffs. 18 MR. ATKINS: Can I make a suggestion 19 here? 20 CHAIR BRACKETT: Yes. 21 MR. ATKINS: I think that Don raises a 22 good point. Part of what this language was meant to 23 address is the common complaints that we work from 24 organizations regarding that language. I think there 25 is probably that language in the Act limiting the use 0070 1 of card-minding devices. And I think there is probably 2 additional language that could be fleshed out relating 3 to that, to clarify that for inclusion in the rule. 4 And one thing that the Committee could 5 do is move forward on this rule with an instruction to 6 the subcommittee to address that issue to submit during 7 the formal process and talk about those quarters, the 8 calculation of the number, et cetera, to provide 9 guidance to the organizations. 10 CHAIR BRACKETT: Danny, how does that 11 sound to you? 12 MR. MOORE: No, that's fine. I think we 13 could do that in one meeting probably, or a couple. 14 MS. TAYLOR: I'd like to make one 15 comment. Personally, my hall doesn't have a problem 16 with the 40 percent rule. Unfortunately, we don't have 17 that many players that play electronics because they 18 are the big spenders. But for many, many halls that 19 I've gone to, the 40 percent rule is one thing that I 20 know is what makes the Lottery Commission not realize 21 really how bad bingo attendance is. Because I haven't 22 been to a hall that doesn't inflate their attendance 23 numbers to allow them to have additional electronics on 24 the following quarter, because -- it's just the truth. 25 If you were actually aware of their account of the 0071 1 attendance every night for -- for -- I think that you 2 would find that a lot of the halls that use a lot of 3 electronics inflate their numbers for that reason. 4 MR. BISHOP: I am categorically denying 5 that. 6 (Laughter.) 7 MR. ATKINS: I was going to say, you 8 would -- 9 MS. TAYLOR: I haven't been to your 10 hall, Don, but, I mean, I am -- I'm serious. It's 11 amazing. Because I ask them to go out and count these 12 people. "No, we figure it on how many electronics 13 we're using so that we can continue to use what we need 14 just to make it work." 15 So I'm -- seriously, the Lottery 16 Commission does not have a clue on how bad bingo really 17 is because you really don't know what the true 18 attendance is. 19 MR. ATKINS: Suzanne, I would just 20 say -- let me follow up on what Don said. You don't 21 have a clue what we know. 22 (Laughter.) 23 MS. TAYLOR: Maybe not. Maybe not. 24 MR. ATKINS: And if you knew what we 25 knew, you might go running away screaming, pulling your 0072 1 hair out. 2 MR. BISHOP: Billy, maybe you don't know 3 what we know about what you know. 4 MR. ATKINS: You should know what I know 5 what you think you know, but you don't know what you 6 don't. 7 MR. BISHOP: That -- that's pretty good. 8 But in getting out of your way here, I do want to point 9 out, like, the day school lets out, our bingo 10 attendance, anyone in the business knows it drops off 11 20 to 30 percent, normally. And when you go through 12 that summer period, then for the next two quarters, 13 you're carrying those attendance figures on your next 14 two quarters. So hopefully, this legislation we have 15 coming will get rid of this silly 40 percent thing, and 16 we can get on with the matter of bingo business. 17 Thanks a lot for your time. 18 CHAIR BRACKETT: I need some points of 19 information. You referred to that there is pending 20 legislation or a rule or something regarding the 21 40 percent. 22 MR. ATKINS: Yeah. There are -- there 23 are at least two to three pieces of legislation I'm 24 aware of that would repeal that provision on the end. 25 CHAIR BRACKETT: All right. So what do 0073 1 we need to do with this right now on this proposed rule 2 here, this 555? 3 MR. ATKINS: Well, what -- what I had 4 suggested is moving ahead with what's in the notebook, 5 while at the same time directing Danny's subcommittee 6 to address this issue that we just discussed with Don. 7 CHAIR BRACKETT: All right. 8 And Danny, you and the subcommittee are 9 agreeable to that? 10 MR. MOORE: Yes, ma'am. 11 CHAIR BRACKETT: All right. So let's do 12 the -- the purpose of moving on is so that we can get 13 things started on this, and then we can add the change. 14 Correct? 15 MR. MOORE: Yes. 16 CHAIR BRACKETT: All right. So Danny, 17 what is your motion? 18 MR. MOORE: The subcommittee requests 19 that the BAC recommend to the Texas Lottery Commission 20 that the -- that proposed new Administrative 21 Rule 402.555, Electronic Card-Minding Devices, be 22 published in the Texas Register for formal comment. 23 MR. ATKINS: And -- and the work of the 24 subcommittee -- 25 MR. MOORE: And the subcommittee will 0074 1 work on the -- 2 MR. ATKINS: Clarifying language. 3 MR. MOORE: -- clarifying language. 4 MR. ATKINS: Relating to the calculation 5 of the number of devices the players -- 6 MR. MOORE: The players can use. 7 MR. ATKINS: Yeah. Number of persons. 8 MR. WHITTINGTON: I'll second. 9 CHAIR BRACKETT: All right. And Larry 10 seconds that vote -- that motion. All those favor of 11 that, the motion as read the last time, please say aye. 12 Is there any opposition? 13 (None opposed.) 14 Okay. Then that will be published in 15 the Texas Register for formal comment. 16 MS. MATTHEWS: I have one more question. 17 If the 40 percent rule is deleted by the legislature, 18 will this have passed before that or after that? 19 MR. ATKINS: You know, it's just -- it's 20 really hard to tell right now, Marilyn. I mean, they 21 could almost happen at the same time. And it's 22 conceivable -- first of all, if it did pass, the 23 statute overrides the rule. So if it passed, then that 24 language in the rule would be meaningless. 25 Diane, shake your head yes if that's 0075 1 correct. 2 MS. MORRIS: Well, it was a great 3 question. And you have no control over the whole other 4 side of the process. 5 MR. ATKINS: Come up -- 6 MS. MORRIS: Sorry. 7 MR. ATKINS: -- to the front, please, 8 and identify yourself. 9 MS. MORRIS: I'm Diane Morris, and I'm 10 assistant general counsel of the Texas Lottery 11 Commission. 12 I'm not really here to render legal 13 advice whatsoever to the Bingo Advisory Committee on 14 this issue of law. My comment was, it was a very good 15 question; that is, what happens if law moves forward 16 and gets adopted versus a rule moving forward. And my 17 response to you was, that is a very good question 18 because there is so much on the other side, as far as 19 the legislation is concerned, that would be out of your 20 control, including some kind of effective date or 21 timing. 22 So I think, as Billy has said, you just 23 proceed and try to accomplish what you can and 24 recognize that there will be much out of your control. 25 MR. ATKINS: Well, again, keep it in 0076 1 mind that I'm not an attorney either, but it seems like 2 an attorney told me at one time that law supersedes 3 rule. And so if it were to turn out that even if they 4 occur at the same time or if this were adopted before 5 the other took effect, I think it's relatively easy for 6 us just to propose the deletions of those provisions. 7 CHAIR BRACKETT: Is that -- is that a 8 good answer for you, Marilyn? 9 MS. MATTHEWS: Yes. 10 CHAIR BRACKETT: Thank you. 11 Excuse me, are you needing a break? 12 THE REPORTER: No, I'm fine. 13 CHAIR BRACKETT: All right. Then that 14 brings us up to Item No. 6. Larry Whittington, you are 15 in charge here. The possible discussion -- report, 16 possible discussion and/or action on recommendation by 17 the subcommittee on proposed amendments to 18 16 TAC No. 568. 19 MR. WHITTINGTON: First of all, I'd like 20 to thank the subcommittee who helped out on this job. 21 David Heinlein, he's a public member; myself and 22 Suzanne Taylor from the BAC; and of course, 23 Roy Gabrillo; and of course, Phil Sanderson. 24 We talked about this, and we tried to 25 simplify this rule as much as possible so the Bingo 0077 1 Advisory Committee, the agency as well as the public, 2 will understand that -- what it takes -- how to use 3 different proceeds from the charitable purposes. So 4 right now, I want to turn this over to Roy because he 5 understands everything, and he's got it all written 6 down. And we agreed on a lot of this, and I'm going to 7 let him explain about everything. If the public has 8 got any questions, please direct them to Roy and -- and 9 Phil. 10 MR. ATKINS: Or some of the subcommittee 11 members. 12 MR. WHITTINGTON: Or Suzanne or myself. 13 MR. GABRILLO: Thank you, Larry. And 14 again, I want to thank Larry and Suzanne for the -- all 15 their time and energy they put behind this rule and 16 also to the public members of the subcommittee. 17 And our attempt was to make this rule 18 clearer to everyone, where it will benefit not only the 19 Lottery Commission as the regulator, but also the 20 licensees to make clearer to them as to what 21 constitutes a charitable distribution and -- and what 22 records -- and that's normally the problem that the 23 auditors confront when they're conducting their audits, 24 is that there is usually a lack of documentation as to 25 what -- for -- for a charitable distribution. 0078 1 So I think what we've got here, we 2 spelled out -- and it doesn't cover everything, but I 3 think it covers most everything that will be required 4 to substantiate or document a charitable distribution. 5 Also, we've added language in here as 6 far as the use of a post or a lodge -- post, home, or a 7 lodge when it's used for a charitable purpose. For 8 example, any facility -- lending a facility for -- to 9 another nonprofit or charitable organization for a 10 meeting or some kind of function, that they can defray 11 the cost of using that building by using a portion of 12 charitable proceeds from -- for charitable purposes. 13 So if there is any other -- if you've 14 got any questions, I'll be glad to answer them. 15 CHAIR BRACKETT: Does anyone on the 16 Committee have any questions at this point? 17 Okay. Do you have any further comments? 18 We have several people in the audience -- 19 MR. GABRILLO: No. 20 CHAIR BRACKETT: -- who would like to 21 comment, public comment. 22 Bruce Weatherford. 23 MR. WEATHERFORD: Good morning. My name 24 is Bruce Weatherford. I represent Therapeutic Riding 25 of Texas in DeSoto. And looking at this draft that we 0079 1 see here, it makes mention that we're a 501(c)(3). And 2 it says even though you're a 501(c)(3), it does not 3 exempt the organization from providing all of this data 4 and information. 5 We're a small organization. We have no 6 paid staff on board. Everything is done by volunteers. 7 But if this rule goes through to account for the 8 disbursements from our bingo account that comes into 9 our funds, I would have to hire a full-time bookkeeper 10 to track all of that activity. 11 And if we do that, that takes away from 12 the purpose of our organization, because whatever we 13 pay a bookkeeper, we will lose that funding to assist 14 our purpose and give our riders, our participants in 15 the program, a chance to participate. Because we don't 16 turn them away if they don't have money. But if we 17 take that money and use it for other purposes other 18 than the intent of our program, then we are failing 19 what our mission is to our participants. 20 CHAIR BRACKETT: Pardon me. Are you 21 referring to (d), the allowable charitable 22 distributions, where it says that you -- that -- the 23 records that have to be presented, a general ledger, 24 dated pamphlets, et cetera? 25 MR. WEATHERFORD: Yes, ma'am. And, you 0080 1 know, I just don't understand why we are having to give 2 a specific breakdown to the Lottery Commission or 3 whoever is asking for this information, when we are 4 also governed by the IRS and the fact that we're a 5 501(c)(3). 6 MR. ATKINS: And -- I'm sorry, sir, I 7 didn't -- I didn't get your name. 8 MR. WEATHERFORD: Bruce Weatherford. 9 MR. ATKINS: Mr. Weatherford, thank you. 10 And I guess you're aware that you would have to supply 11 proof that's similar to what we're asking for if the 12 IRS should ask about that. 13 MR. WEATHERFORD: Why should I duplicate 14 that? 15 MR. ATKINS: Well, you don't have to 16 duplicate it. It's just -- 17 MR. WEATHERFORD: I do, because I've got 18 to send it to two different places. 19 MR. ATKINS: You don't have to send it 20 anywhere. You have to have it available if it's 21 requested. 22 MR. WEATHERFORD: That's right. But why 23 do we have to make it necessary as a part that we 24 submit what our expenditures -- expenditures and 25 everything for license renewal and stuff like that? I 0081 1 understand that this is tied to -- you have to submit 2 your expenditures and things on license renewal. 3 MR. ATKINS: You have to submit -- 4 MR. WEATHERFORD: Well, I think that 5 there's a reference here. 6 MR. ATKINS: Phil, Norma? Could 7 someone -- Roy, could someone come up and help 8 Mr. Weatherford and myself because... 9 MR. SANDERSON: Phil Sanderson, 10 assistant director of the Charitable Bingo Operations 11 Division. The information in (d), Paragraph (d), is 12 saying that this is the documentation needed to 13 substantiate the distributions that you've reported to 14 us on the quarterly report. It's not asking for 15 anything in addition to what the IRS currently requires 16 in a 501(c)(3) organization to maintain. 17 And it doesn't say -- there is no 18 requirement that this be submitted to the Commission. 19 It has to be available for review by the Commission. 20 MR. WEATHERFORD: Well, if we already 21 have it, why are we -- why are we even making it a rule 22 and regulation written down if it's available? And you 23 know it's available if it's a 501(c)(3), because if the 24 IRS comes back and asks us any questions, we have to 25 have that for them. So why put it in and -- and waste 0082 1 your time in putting it into a rule and regulation? 2 MR. ATKINS: I don't -- I don't think 3 it's a waste of our time. I think it's to let you know 4 what we require. Because we're -- we're not the IRS, 5 and I know that this is either -- you know, it's either 6 intentionally confusing for a lot of folks or, you 7 know, they just don't want to try and understand it or 8 whatever. 9 But we -- we're not the IRS, and we have 10 our own requirements. And what we're trying to do, 11 Mr. Weatherford, is just tell you what it is we want to 12 see so that we don't come in here and ask you where is 13 your general ledger, and you go, well, I didn't know I 14 wasn't supposed -- I was supposed to have that. 15 MR. WEATHERFORD: Well, I appreciate the 16 thoughtfulness of looking out to make sure that we do 17 proper bookkeeping, but we have our books audited 18 annually, and if that information is required, it would 19 be available. But I still think that we shouldn't have 20 to see it in black and white. 21 MR. ATKINS: Well -- 22 MR. WEATHERFORD: I'm against it. 23 MR. ATKINS: Okay. Is there -- is there 24 anything other than not just having it that you would 25 suggest? 0083 1 MR. WEATHERFORD: Well, if we're a 2 501(c)(3) organization, our books are required to be 3 audited so that we can submit it to the IRS for 4 verification. And that is the way we maintain our 5 501(c)(3). They look at our expenditures, and if they 6 see that there's something in there that does not meet 7 their rules and requirements and -- and everything, 8 they come back to us and question us about that. 9 MR. ATKINS: Okay. Then what about the 10 organizations that aren't the 501(c)(3)? 11 MR. WEATHERFORD: I'm only interested in 12 the 501(c)(3) section. 13 MR. ATKINS: Well -- 14 MR. WEATHERFORD: Okay? 15 MR. ATKINS: -- I appreciate that, but 16 we have to be interested in -- in everyone. 17 MR. WEATHERFORD: Yes. But each exempt 18 organization through the IRS, I think, get their books 19 audited or have to be audited, and they have to submit 20 forms and paperwork each year to the IRS to maintain 21 that exemption. It doesn't make any difference whether 22 it's a 501(c)(3) or any of the other 501s. Each one is 23 audited and submitted to the IRS for -- on -- on their 24 specific forms. 25 MR. ATKINS: You have an audit performed 0084 1 by a CPA? 2 MR. WEATHERFORD: Yes, we do. 3 MS. TAYLOR: Mr. Weatherford, if I could 4 explain to you some of the thoughts of the Committee on 5 this, one of the things that was very confusing when 6 this rule came forward before, months and months and 7 months ago, and we asked that it be put away until we 8 could work on it and work in a positive manner, what we 9 were trying explain to a lot of organizations or what 10 we were trying to accomplish with the -- this rule was 11 to let people know this is what the Lottery Commission 12 is going to be looking for. 13 You know, if you're audited, this is 14 what they want to see. So, I mean -- and it is 15 something you should have. And you keep good records, 16 and that's great, so it wouldn't be a problem for you. 17 You would just show them the same things you would show 18 the IRS. 19 But there's a lot of organizations that 20 are small that don't use a CPA, and we're trying to 21 give them some guidelines of what they need to be 22 keeping; what records do they need to keep in their 23 filing cabinets just in case they're audited. 24 We weren't trying to impose anything on 25 you. We were just trying to give some advice to some 0085 1 of the smaller charities that don't have CPAs of what 2 they're going to be looking for and things that would 3 pass the muster with the Lottery Commission. You know, 4 not like, "This is your requirement," but "Here's 5 things that will help you. Keep these four things, and 6 you'll be fine if you get audited." 7 MR. WEATHERFORD: Well, we're a small 8 organization too, but that is one expenditure that we 9 feel is necessary to keep us out of trouble. And if we 10 can keep ourselves out of -- out of trouble with the 11 IRS, we should have no problems with the Lottery 12 Commission? 13 MS. TAYLOR: You're absolutely right. 14 Absolutely right. 15 MR. WHITTINGTON: Exactly. 16 MS. TAYLOR: So for you, this -- this 17 isn't going to be a problem. It's not going to -- you 18 never have to think about it again. 19 MR. WEATHERFORD: Well, but I had 20 thought I had seen somewhere that we would have to 21 submit this data to -- 22 MS. TAYLOR: No. No, we did not put 23 that in there. 24 MR. WEATHERFORD: -- the Lottery 25 Commission on license renewal, where an exact 0086 1 accounting of the funding would have to come -- that 2 is -- that's not anywhere in this? 3 MR. WHITTINGTON: (Shaking head.) 4 MR. WEATHERFORD: I thought I had seen 5 it, but -- I'm sorry. I apologize. 6 MR. ATKINS: Well, you -- you don't have 7 be that sorry. You know, keep in mind that this is a 8 work in progress. And so, you know, this has been 9 floating around for quite some time, and it could have 10 been that somebody suggested that, and it just didn't 11 make it into this. I don't know. I don't recall that, 12 but it's -- it's possible that could have happened. 13 MR. WEATHERFORD: Well, this was a 14 little late getting out there this morning, and I 15 didn't have time to really digest all of the pages on 16 it before I got up here because I was interested in 17 listening to what else was going on. 18 But the -- the point being is that, you 19 know, we keep our records. We satisfy the IRS, and by 20 doing so, if we satisfy the IRS, we're going to submit 21 any questions that some auditor from the bingo section 22 or lottery section that comes by and looks at our books 23 or wants to look at our books. And it doesn't make a 24 difference whether it's the books are kept over at 25 Fort Worth Bookkeeping for the bingo accounting and 0087 1 everything; when that money is transferred into our 2 general account, we keep track of all of those 3 expenditures, and we can give an item-for-item cost 4 breakdown. 5 MR. ATKINS: Well, and you -- and you 6 raise a good point, and I think Suzanne referenced it 7 and Larry referenced it about -- and this goes back to 8 the "if it's good enough for the IRS, why isn't it good 9 enough for you." It's not that it's not good enough, 10 but this assumption by some folks that, you know, the 11 IRS is, you know, sitting around and has a really close 12 eye on every charitable organization -- 13 Do you recall how many EO officers they 14 had for the four-state region at our last meeting? 15 MR. SANDERSON: I believe there were 16 six. 17 MR. ATKINS: Yeah. We meet fairly often 18 with the Internal Revenue Service, and there are four 19 exempt organization officers that cover a four-state 20 area that includes -- I want to say around a 21 hundred thousand charitable and nonprofit 22 organizations. So that's six people reviewing a 23 hundred thousand groups, and they've told us they don't 24 do it. 25 MR. WEATHERFORD: Well, I just -- I just 0088 1 got a letter from the IRS office in -- in Ogen, Utah, 2 questioning about an amended social security tax form 3 that had been submitted, and they had misinterpreted 4 this. Now, I'm receiving correspondence from Ogden, 5 Utah. So somebody out there is looking at what records 6 we submit. 7 MR. ATKINS: Well, is -- is that -- oh, 8 I'm not denying that there is not someone looking at 9 all the records. Was this in relation to -- to your 10 990? 11 MR. WEATHERFORD: It was in relation to 12 the amount that -- they said we had sent in an amended 13 tax form quarterly report for -- for taxes that had 14 been paid. And what had happened, somebody had had 15 some problems that they -- they thought that there was 16 an amended one, and I had to take the time to research 17 it and verify it and send them a little letter back, 18 you know, saying, hey, what you have in your hands is 19 the original; there is no amended filings. 20 But, you know, I had to invest my time 21 to research this. But the thing is, the fact that the 22 statement -- you know, maybe there's not that many 23 people out there that's going to be looking from the 24 IRS. Are you going to field more people to go out and 25 check people -- 0089 1 MR. ATKINS: We have field -- 2 MR. WEATHERFORD: -- than the IRS does? 3 MR. ATKINS: Yeah, we do. We have -- we 4 have more auditors dealing with charitable and 5 nonprofit organizations in Texas than the IRS does. 6 But again, we're just -- and it goes back to what 7 Suzanne was saying earlier. When we're -- 8 MR. WEATHERFORD: We're a small 9 organization. 10 MR. ATKINS: -- out there, we're just 11 looking at our organizations. 12 I appreciate that you're a small 13 organization. I do. And I appreciate -- 14 MR. WEATHERFORD: No, that was a pun. 15 Yes. 16 MR. ATKINS: And I appreciate everything 17 you do. But again -- and, you know, maybe we can -- 18 maybe this would address a lot of the questions folks 19 are going to come on. We're trying to tell you what 20 we're going to be wanting. And, you know, 21 unfortunately we have small organizations that we have 22 to deal with, and we have very, very large ones that we 23 have to deal with, and we're just trying to let 24 everybody know. 25 MR. WEATHERFORD: Well, if somebody 0090 1 doesn't speak up for the little small ones, then we 2 won't be heard from. And I wanted clarification. I 3 wanted an understanding of why and what was going to be 4 done with this. And the only way I know to do it is 5 get up here and beat on the table a little bit. 6 MR. ATKINS: Well, do -- do you think 7 you got some clarification? 8 MR. WEATHERFORD: Well, I think -- I 9 think I understand it better -- 10 MR. ATKINS: Okay. 11 MR. WEATHERFORD: -- and we'll just have 12 to wait and see what the total fallout is and find out 13 how many times we get audited. 14 MR. ATKINS: Well, if you've got any 15 other questions, ask any of these folks on the 16 subcommittee. 17 MR. WEATHERFORD: Anybody else have 18 anything? 19 Thank you. 20 CHAIR BRACKETT: Thank you, 21 Mr. Weatherford. 22 Sharon Ives. 23 MS. IVES: I could wait seven minutes 24 and say good afternoon. My name is Sharon Ives. 25 Actually, I guess what I need is a 0091 1 little clarification on this. Let me give you a 2 hypothetical example. Currently, as a bookkeeper, we 3 write checks from the bingo account and mail them to 4 the organization. They deposit that into their general 5 fund. Currently, we are considering that a charitable 6 distribution. 7 According to this, if I read that 8 correct, that's no longer the case; only if that 9 organization is a (c)(3). If it's not a (c)(3), take, 10 for instance, a fire department; I cannot mail them a 11 check every quarter, and that will not be considered a 12 charity distribution because they haven't spent the 13 money. 14 Say they're saving it for fire 15 equipment, a new fire -- or not a new fire truck, but a 16 refurbished fire truck, for $50,000. I mean, how is 17 that going to work out? Can they still do that? Can I 18 still send the checks from the bingo account to the 19 general fund account if they are not a (c)(3)? 20 MR. WHITTINGTON: Hey, Roy, don't 21 these -- don't these state somewhere about fire -- fire 22 departments, et cetera? 23 MR. GABRILLO: Roy Gabrillo, senior 24 audit manager. 25 Even right now, currently, even when 0092 1 the -- when the check is written to the general fund, 2 even though it's reported on the report as a charitable 3 distribution, when we audit that amount, if it's -- you 4 know, the entire amount may not be allowed. It's based 5 on -- based on what it was used for or -- or the lack 6 of documentation. 7 So it -- on paper, it will still be 8 considered a charitable distribution when -- when you 9 write the check to the organization's general fund. 10 But when we come and do the audit, again, it still has 11 to be -- it still has to be established that that was 12 used for a charitable purpose. 13 And also the documentation -- that's why 14 it says even though this -- I know the section you're 15 referring to does not -- the Charitable Bingo 16 Operations Division does not consider a check written 17 from the bingo account into a licensed authorized 18 organization's general account an automatic charitable 19 distribution unless the organization is a 501(c)(3). 20 On paper, it is, because that's what you're -- that's 21 how you're showing it on the report. 22 But again, when we come out and do the 23 audit or a class review, there could be circumstances 24 where the -- the entire amount or part of that amount 25 is not going to be allowed as a charitable 0093 1 distribution. 2 MS. QUEZADA: Also, I think that the 3 rule also indicates that the charitable -- the 4 charitable organization can give you a memo or a letter 5 stating what the charitable purpose is going to be or 6 what they need the money for. And that's good enough 7 for you to consider it as a charitable distribution. 8 However, if we go and we audit them, and that money was 9 used -- was supposed to be for the purpose used on that 10 memo, then we need documentation for that to back that 11 memo up. 12 MS. IVES: Okay. I think I may or shall 13 be following you. So basically, it can still remain 14 the way it is today. If the fire department mails me a 15 memo or a letter stating that, yes, you continue 16 mailing me the money to whatever fire department 17 general fund, I just hold that letter; I continue 18 mailing them their checks every quarter, but it's still 19 left up to the auditors during the audit if they allow 20 that or disallow that. Is that the way I'm 21 understanding this? 22 MS. QUEZADA: Yes. But hopefully, they 23 will give you some reason or maybe a general 24 description of what they're going to use the charitable 25 funds for; you know, for the upkeep of the building, 0094 1 for a new fire truck, et cetera. 2 MS. IVES: I want to know what happened 3 to the Reduction of Paperwork Act of 1984. Sorry. 4 Okay. I just want to make sure that this is still not 5 going to cripple the way that the organizations 6 currently receive their money and spend their money. 7 So I guess, if I'm understanding this correctly, things 8 can still remain the same, except for if they are not a 9 501(c)(3), then I need to make sure have was additional 10 documentation. Correct? 11 MR. GABRILLO: That's correct. 12 MS. IVES: But it's still up to the 13 auditors at the time of the audit whether they allow 14 that as an authorized charitable distribution? 15 MS. QUEZADA: Well, that's what this 16 rule is. It's trying to make that more clear to you as 17 to what it is we're going to be looking for so you can 18 determine and say, yes, well, it is going to be a 19 charitable distribution. 20 And again, we encourage the 21 organizations: If you're not sure it is, then give us 22 a call and we can discuss it. 23 MS. IVES: Any questions? 24 Thank you. 25 CHAIR BRACKETT: All right. 0095 1 Don Bishop, do you have comments on 2 this? 3 MR. BISHOP: No. Thank you. 4 MR. ATKINS: Thank you. 5 CHAIR BRACKETT: All right, Larry, what 6 is -- what is your pleasure on this? What are you 7 asking us to do? 8 MS. TAYLOR: I just have one -- one 9 comment on this, that I've had the same problem before. 10 On page 1, (c), it's -- it's in the first sentence. It 11 says: Records from the licensee's general operating 12 accounts must be made available. 13 And it just seems that it shouldn't -- 14 instead of necessarily -- what if they didn't put it 15 into their general account? What if they put it into a 16 special fund account? I think it should just say "the 17 account into which the funds were deposited must be 18 made available," because it might not be the general 19 account. 20 If I was a charity, I wouldn't put it 21 in my general account. It would be much easier to 22 keep those funds separately to make sure that a 23 hundred percent of those funds were used the way they 24 needed to be used, and there would be no question about 25 it. 0096 1 So I just think instead of the general 2 account, it should say "account into which the funds 3 were deposited." 4 MR. GABRILLO: That's fine. We could -- 5 we could change -- we could change that language to, 6 you know, broaden it a little bit more. 7 CHAIR BRACKETT: Okay. So that would 8 be -- okay. That -- you would broaden that before it's 9 published in the Register. Correct? 10 MR. GABRILLO: Yeah. We'll -- I guess 11 we'll have to get together on that. The Committee will 12 get together, just like the card-minding rule, and -- 13 and hash out the language on this one. 14 MS. TAYLOR: And, I mean, like -- like I 15 was telling one of the previous people speaking, we 16 weren't trying to narrow; what we were trying to do was 17 define and let people know what the Lottery is going to 18 be looking for so that it would be easier to maintain 19 the records that they're going to be asking for. If 20 you know what they want, it's a lot easier to have the 21 information available instead of the Lottery coming in 22 and asking for things that you don't have. So we were 23 just trying to explain the items that would count as -- 24 as proof of the recordkeeping that would be required. 25 CHAIR BRACKETT: Roy, just stay right 0097 1 there. This is -- an amazing event has occurred. It's 2 almost noon, and Stephen Fenoglio would now like to 3 speak. And this is his first time up today. 4 Have you been -- were you ill this 5 morning? 6 MR. FENOGLIO: Well, I had a -- almost 7 three-hour conference call that began at 8:00, and -- 8 and I didn't do most of the talking, Madam Chair. 9 That's why I was not here. 10 For the record, my name is 11 Stephen Fenoglio. 12 MR. ATKINS: I thought -- I thought you 13 were going to say that's why I was only three hours. 14 MR. FENOGLIO: For the record, I've got 15 an e-mail that I'd like to circulate, and it has to do 16 with the ongoing and continuing discussion I've had 17 with Norma and Roy and Phil and others on this rule. 18 And we have made, I believe, dramatic 19 progress from where we started -- and Larry, when we 20 took over, so to speak, and when the subcommittee was 21 formed. And I appreciate all of that work. 22 Where -- we're -- and in response to a 23 question or a comment one of the gentlemen made about 24 "we don't want to have to keep any more records than we 25 have to," and all, I think we all understand that. But 0098 1 we need to know what the rules of the road are, and the 2 staff have been helpful in helping that. 3 And the discussion process, Billy, the 4 informal process, has been very good, I believe, from 5 my perspective, in the 950 charitable organizations and 6 business organizations that I represent. 7 What I've handed out is an April 9, 2003 8 e-mail that the staff sent me that -- in response to an 9 e-mail that I sent to Roy, where, again, how are we 10 going to apply some of this language? 11 And I, Billy, like you, have been 12 focused a lot more on other issues at the legislature 13 than this, for the last couple of weeks. I haven't 14 figured out how to roll in those comments about how, 15 for example, the questions is -- can you give me 16 examples of the types of expenditures that would be the 17 test in the draft rule subparagraph -- or 18 Subsection (b)(2), where bingo proceeds are being used 19 by different types of organizations. 20 And then one of the other continuing 21 themes is whether convention seminar expenses are 22 approved or -- or whether bingo proceeds that are used 23 for convention seminars expenses are an allowable 24 expense under the charitable distribution test. 25 And you can see the staff's response 0099 1 that -- perhaps yes and perhaps no. And -- and that's 2 a fair comment. It -- it is, because you cannot answer 3 with a blanket statement that -- because if, you know, 4 I used, for the Arc of the Capital Area, bingo proceeds 5 to send one of the employees on a seminar in Oklahoma 6 City -- hardly a tourist destination of the universe, 7 much less the greater 48 states -- to discuss 8 underwater welding -- and the Arc has to do with 9 programs for people and their families with 10 disabilities. Underwater welding wouldn't have 11 anything to do with that mission. 12 But on the other hand, if they went to 13 Oklahoma City to -- for a conference that had to do 14 with developing areas of treatment for people with 15 mental disabilities, then I think those type of 16 expenses from bingo would be appropriate. And I think 17 you can see the analysis that the staff has briefly 18 given. 19 And -- and I think that sometimes that's 20 as good as the -- an agency can give you. What I have 21 still wrestled with -- and again, it's been my fault, 22 not the staff's -- how do we roll in some of these 23 answers to the rule. 24 And I don't know that we need to, Billy 25 and Members of the Committee, but two years from now, 0100 1 after the newness of this issue has worn off, or three 2 years from now, when an agency or a charity has an 3 expenditure that's being questioned, you need 4 something, I think, that gives a little meat to the 5 bone of this rule so that we don't have to go back and 6 Roy and I don't have to square off in a hearing over 7 those issues. 8 And I haven't come up with a solution 9 yet. I will, Billy, before we get to the end of the 10 road on this. And I don't know what we need to roll 11 into it. I talked with staff about a rule history, a 12 legislative history, if you will. And part of that 13 would be in the rule-making comment period if the 14 Commission decides to publish the rule for comment. 15 But I guess I just want to say that there has been a 16 lot of thought put into this, and I don't want to see 17 the -- that effort wasted. 18 There's one other comment, Billy, and 19 it's something that I heard after the decision was made 20 to bring this to the Committee. What about -- and 21 someone alluded to it earlier -- a volunteer fire 22 department that is accruing bingo proceeds toward the 23 purchase of a fire truck. And as you probably know, 24 fire trucks typically cost a lot of money, $50,000. 25 Under the language that's here, it's 0101 1 suggested that perhaps that savings or that accrual of 2 those -- let's say it's a thousand a month in bingo 3 proceeds to purchase that -- would not be considered a 4 charitable distribution. They distribute it from their 5 bingo account to their general fund, they've got a 6 board resolution or some sort of designation by the 7 founders and organizers of the volunteer fire 8 department, and that's what they're putting that money 9 aside for. I don't think anyone here would say that 10 they couldn't do that. 11 And volunteer fire departments typically 12 are conservative. They're not going to buy much on 13 credit; they're going to pay cash for it. You know, 14 how do -- the rule, I believe, needs to be flexible 15 enough -- flexible enough to recognize that that's 16 okay, that that, in effect -- they're putting that 17 money into their savings account -- is the charitable 18 distribution, contingent upon it actually being paid. 19 And I don't know if the staff have 20 thought through that particular hypothetical, but I've 21 been asked that about four times: How does the rule 22 handle that? And I -- with that, Madam Chair, I'll be 23 happy to quit and go home, figuratively, or if there's 24 any thoughts from staff or Billy about that. 25 CHAIR BRACKETT: Norma has some thoughts 0102 1 there. 2 MS. QUEZADA: Again, like I said 3 earlier, that if you had that in a memo, if you were a 4 fire department and you wanted to purchase a truck, put 5 it in the memo and send it to -- put -- keep it in your 6 documentation from the bingo account saying, you know, 7 this is for the purchase of a truck, and it's going to 8 cost us an estimated so much money, and the money is 9 going to be in the savings account, and, you know, the 10 estimated time to purchase the truck is three or four 11 months or a year or whatever it would take. 12 I mean, you still have that backup, and 13 you could have the meetings, you know, as well, saying 14 that we're going to -- we're going to save up for 15 the -- for the fire truck that we need. And that's 16 enough documentation for us as well, plus, you know, 17 whenever you buy the truck. 18 MR. FENOGLIO: Thank you. 19 MS. QUEZADA: You're welcome. 20 CHAIR BRACKETT: Mr. Watterson, were you 21 wanting to speak to this issue? 22 MR. WATTERSON: Yes. 23 CHAIR BRACKETT: Okay. 24 MR. WATTERSON: My name is 25 Ken Watterson. I'm with the Marine Corp League out of 0103 1 Dallas. I'd just like to express my opinion on it. 2 It seems like to me that we've got all 3 these regulations on how to spend it. We all are 4 charities, 501(c) something. Just like we ought to 5 determine that's how we spend our money, why do we have 6 to have a different set of rules? Just like our 7 501(c)(3), the government should be the -- or 4 or 8 19 -- should be -- determines how we spend our money. 9 Why do we have to have these other rules that gets us 10 in trouble? 11 CHAIR BRACKETT: Roy, do you want to 12 address that? 13 MR. GABRILLO: Roy Gabrillo, senior 14 audit manager. 15 The purpose of bingo in Texas is for -- 16 to be used for charitable purposes in the state. So 17 if -- that's the reason we're having these rules, is 18 to -- for one thing, this particular rule is to clarify 19 what constitutes a charitable use in Texas. Other than 20 that, I don't know what else to say to you, because IRS 21 rules, again, they're entirely different from what we 22 have. 23 And in fact, I've asked that in the past 24 of IRS agents as to -- you know, if they have -- they 25 have their purposes or their rules. I asked one in 0104 1 particular if their statutes override any kind of state 2 statutes, and they said no. It just depends on, you 3 know, each -- each state has their own rules and 4 regulations, and that's what needs to be followed. 5 When it comes to them, you have to follow their rules. 6 All we're trying to do here, again, is 7 just to clarify the issue as to what constitutes a 8 charitable -- a charitable purpose. Certainly not an 9 individual's -- paying an individual's credit card or 10 paying for an individual -- an individual's truck 11 payment from bingo funds. That is not a charitable 12 purpose. So that's why we're having these -- these 13 rules set out to clarify that. 14 MR. WATTERSON: Well, I agree with you, 15 but I don't believe you'll see this also approved in 16 any 501(c)(3) playing bingo with paying credit cards 17 out. The fact of it is, they've got to establish a 18 system and qualifications. We change ours year to year 19 or every three years, whatever. This here is a -- a 20 stated platform that we can go by. Everybody -- 21 everybody has a difference in their -- in 22 qualifications. It depends on their -- what their "C" 23 is. 24 MR. GABRILLO: Right. And again, the 25 only -- the only recognized true charitable 0105 1 organization is a 501(c)(3). All the other 501(c) 2 certifications are just tax exempt nonprofit 3 organizations. And that being said, that doesn't mean 4 that they -- that they don't do charitable works. And 5 that's what our purpose is, to verify and, again, 6 through this rule, clarify what constitutes a 7 charitable purpose, what documentation has to be -- has 8 to be maintained to substantiate that -- that 9 expenditure. 10 MR. WATTERSON: That's all I have. I 11 just think we're, you know, having too many sets of 12 rules here. I think one set can be for everybody to go 13 by and be -- and it should be the government. They've 14 got the most accurate set that we go by. 15 CHAIR BRACKETT: Okay. Thank you. 16 MR. WHITTINGTON: Well, you know, again, 17 we knew we would have questions about this rule. But 18 that is -- that is always going to be a rule -- and I 19 promise you that -- with the Texas Lottery Commission 20 about proceeds. So we try our best to simplify it as 21 much as possible to make it workable for everybody. 22 And I really feel that if you've got a 23 certain purpose of distribution, you really should -- 24 should they check with y'all first and make sure it's 25 okay on certain things, Roy, and send some type of 0106 1 documentation in so that we can get your okay if it's 2 okay to use for a particular thing? 3 MR. GABRILLO: We frequently do get 4 calls from licensees requesting information as to 5 whether -- you know, a disbursement that they are 6 planning to -- to do in the future, if it's -- if it 7 would be allowable, who would get an allowable 8 distribution. So we do get -- every once in a while, 9 we do get questions from licensees. And you're right; 10 if they -- if they do have -- if it's questionable -- 11 and Norma mentioned it also -- if -- if they have a 12 question in their own mind, yeah, contact the Bingo 13 Division, and we'll try to give you an answer. 14 MR. WHITTINGTON: Because I wouldn't 15 want anybody keeping documentation of something for 16 months, and all of a sudden, after three or four 17 months, send it in to y'all and it's not a charitable 18 distribution. It -- it really would look bad on them. 19 I feel that in advance, before they do anything, I 20 think it should be -- if it's questionable, they should 21 check with y'all first. 22 MR. GABRILLO: You're right. Exactly. 23 MR. ATKINS: And let me -- let me 24 clarify that, Larry, because you raise a good effort. 25 You know, when people call, we attempt to suggest to 0107 1 them what other organizations have done in that 2 situation because, as you know, we're not authorized to 3 issue advisory opinions. So all we can do is provide 4 examples of what other groups have done. 5 And just to finally, I think, comment on 6 something that's so important about the work that your 7 subcommittee does, is that this is a directive of the 8 Sunset Commission that this be done. So the Advisory 9 Committee, in that sense, is ahead of the curve by 10 working on this now. 11 MR. WHITTINGTON: Well, I recommend that 12 the BAC recommend to the Texas Lottery Commission that 13 the proposed new Administrative Rule 402.568, 14 Distribution of Proceeds for Charitable Purposes, for 15 publication in the Texas Register for formal comment. 16 CHAIR BRACKETT: All right. 17 Mario seconded that rule. All those in 18 favor, please say aye. 19 Okay. Any opposed? 20 (None opposed.) 21 And I misworded that. I said Mario 22 "seconded that rule." I should have said "seconded 23 that motion." 24 It is 12:15. It's probably a good time 25 for us to take a lunch break at this point. Are all of 0108 1 you agreeable to that? 2 We'll reconvene at 1:15. 3 (Lunch recess.) 4 CHAIR BRACKETT: All right. The Bingo 5 Advisory Committee will call back to order. It's 1:25, 6 and we are to Item No. 10. No, we're not. We're to 7 Item 9, I'm sorry. Okay. I'm trying to just skip over 8 a lot of things and just forget some things. I'm 9 sorry, I've been concentrating on the bottom portion of 10 the agenda, that being the website item, Item No. 7. 11 And Billy Atkins is going to speak to that one. 12 MR. ATKINS: Madam Chair, Members, I'll 13 lay this out. One of the items that was adopted on the 14 work plan for the Bingo Advisory Committee was a review 15 or study, if you will, of the agency's website; 16 specifically, the Bingo Division's website, the 17 information that's on there, that could be on there, 18 the usability of the website, et cetera. 19 Their -- the agency has recently changed 20 vendors who maintain our website, so we think now this 21 issue is ripe for consideration, and we would ask that 22 the Advisory Committee appoint a subcommittee to work 23 with staff on reviewing the website and making any 24 recommendations for the agency to consider as we move 25 forward for possible changes to our website. 0109 1 The staff representatives on this issue 2 would be Terry Shankle, who is the accounting services 3 manager, and Rick Frysinger, who does a lot of the work 4 maintaining our current website. They have already 5 compiled a great deal of information for our 6 subcommittee, once it is formed, to start reviewing, 7 relating to not just other websites of organizations 8 that regulate charitable bingo in other jurisdictions, 9 but they have also reviewed other state agency websites 10 and, I think, other -- even business websites for 11 suggestions that we think may be eligible for 12 consideration and recommendation by the subcommittee. 13 Did I leave anything out, Terry? 14 MS. SHANKLE: No. Well covered. 15 CHAIR BRACKETT: Do you have comments 16 you want to make or to speak to this, or are you -- are 17 you here for Item No. 7 or another one? 18 MS. SHANKLE: Well, Items 7, 8, 9, I 19 believe, at this time. 20 CHAIR BRACKETT: All right. Do you have 21 anything you need to say right now on Item 7? 22 MS. SHANKLE: No, ma'am. Thank you. 23 CHAIR BRACKETT: All right. I think 24 someone expressed interest to me in working on 25 Item No. 7 in the subcommittee on the website. 0110 1 MR. WHITTINGTON: Just Suzanne. 2 CHAIR BRACKETT: Yes. Suzanne did. 3 Then Suzanne will be -- she's out of the room right 4 now -- she will be the chairman of the website 5 subcommittee. 6 (Ms. Taylor entered the room.) 7 CHAIR BRACKETT: And do you want to ask 8 people to work with you later, or do you have anybody 9 in mind right now, if you want to -- and of course, we 10 encourage you to use non-BAC members too. 11 MR. ATKINS: We have found, I think, 12 with the last go-around, that three was a good size; 13 two Advisory Committee members and a public member, if 14 we can -- if we can get it. 15 MS. TAYLOR: Was there anybody else on 16 the Committee that expressed an interest in this 17 particular -- 18 MR. MANIO: I'd be interested. 19 CHAIR BRACKETT: Okay. So Suzanne and 20 Mario, and then you'll get your public member. 21 MS. TAYLOR: (Nodding head.) 22 CHAIR BRACKETT: Thank you. Would you 23 like to hear any information on this now, or -- 24 MS. TAYLOR: Yeah. I think it would be 25 real interesting. I think other people would too. And 0111 1 then maybe somebody that's here would like to be that 2 public person. 3 MR. ATKINS: I don't -- I don't know 4 right now what else we could add, other than -- 5 CHAIR BRACKETT: Other than what you 6 have already said. 7 MR. ATKINS: -- what I've already said. 8 Yeah. 9 CHAIR BRACKETT: Okay. 10 MR. ATKINS: We're -- we're wanting to 11 review the website and -- if possible and improve its 12 usability and content. There are -- I mean, I guess I 13 can go a little farther. There are -- there are a 14 number of items that we've been considering, anyway. 15 They include something like having a 16 searchable database for members of the public who want 17 to locate a bingo hall that they can go play in. We 18 would like to have a capability of -- for example, to 19 broadcast these meetings over the Internet. We've 20 talked about, of course, using the website and the 21 Internet more in the -- in the actual conduct of 22 business; that is, allow organizations to submit and 23 pay for their quarterly reports electronically, even 24 support or even submit and pay for applications 25 electronically. 0112 1 I'm -- I'm trying to think of what -- 2 some of the other things that we thought of. But we've 3 pretty much opened it up as wide as we can. 4 CHAIR BRACKETT: Okay. So there are no 5 limits to the imagination. 6 MR. ATKINS: No. There are no limits to 7 the imagination. The only limits are going to be to 8 the pocketbook. But we would -- if nothing else, we 9 would like to start, you know, generating this 10 conversation. And, you know, again, there could be 11 ideas out there that we haven't thought of that even if 12 we can't, I guess, implement them, we can put them on 13 our wish list for, you know, at least a future date. 14 CHAIR BRACKETT: Okay. Is there anyone 15 in the public here who would be interested in working 16 with Suzanne and Mario on this website question? 17 If you think about it and change your 18 mind, give them a call. Their numbers -- their -- you 19 can contact them. Their numbers are listed as members 20 of the Committee. 21 MR. ATKINS: And as with other 22 subcommittees, this will be posted on the website with 23 contact information should the public want to -- to 24 submit information to any of the staff or committee 25 members. 0113 1 CHAIR BRACKETT: Okay. All right. 2 Thank you. 3 And thank you for volunteering to do 4 that. 5 I'd like to recognize that 6 Commissioner Cox has joined us. He's going to spend 7 the afternoon with us. I think all of you probably 8 know him. Thank you for being here. 9 COMMISSIONER COX: Glad to be here. 10 CHAIR BRACKETT: Item No. 8, 11 consideration and possible discussion or action, 12 including appointment of a subcommittee to review and 13 comment on the bingo bulletin, including its content, 14 specifically regarding additional information that 15 would benefit licensees. 16 And do we have a presentation on that, 17 or is this just needing to be a committee appointment? 18 MR. ATKINS: Again, it's the same as 19 Item 7. This also was one of the items identified on 20 the Advisory Committee's work plan. And again, the 21 staff representatives will be Terry Shankle, as well as 22 Donna Rose, who could not be here this afternoon. 23 Donna is kind of the de facto editor of the bingo 24 bulletin, and she works on gathering the information 25 and working with our marketing department, et cetera, 0114 1 on -- on putting all of that information and getting it 2 to the licensees. 3 Again, like with the website 4 subcommittee, they have already started gathering some 5 information. Specifically what we have is every -- not 6 just every bingo bulletin from the Lottery Commission, 7 but as Chuck will recall, Chuck Bertani will recall, 8 the comptroller's office used to send out a 9 publication. And we have gathered the copies of those 10 that we can for the Committee to review, as well as 11 other jurisdictions, again, that regulate bingo, and 12 publications that they may put together. 13 Again, that's for the Committee to 14 review and consider as they begin this process. Again, 15 I don't know if there -- if there is anything more that 16 we have to add to that. But what we are specifically 17 soliciting is, if there is information or -- that we're 18 not currently including in the bulletin that 19 organizations might like to see and might be useful. 20 CHAIR BRACKETT: Okay. 21 Mario, are you still interested in 22 working on this? 23 MR. MANIO: (Nodding head.) 24 CHAIR BRACKETT: We -- I had -- we had 25 sent out a general letter to all the members asking 0115 1 them if they'd be thinking about which committee they 2 would like to serve on, and Mario agreed to work on 3 that one. 4 MR. MOORE: I'll join them. 5 CHAIR BRACKETT: Okay. And Danny, we 6 can only have two. That's where you want to be, Danny? 7 MR. MOORE: Yeah. 8 CHAIR BRACKETT: And then if anyone -- 9 again, on any of these, if anyone in the public is 10 interested in doing that, you can speak now or approach 11 either one of these people later. Most of these 12 subcommittees and study groups, you have been meeting 13 by telephone conference. Right? 14 MR. ATKINS: Uh-huh. 15 CHAIR BRACKETT: So it's not going to 16 involve travel, if anyone is worried about that. 17 Normally, it would not involve travel. I'm not going 18 to make an ironclad statement about anything. It 19 certainly could change. 20 MS. TAYLOR: It could. 21 CHAIR BRACKETT: But that does mean, 22 too, you do a lot of individual work on your own before 23 you get together as a group. 24 All right. If there's no further 25 comment on that, I'll move to Item No. 9, which is 0116 1 consideration of and possible discussion or action, 2 including appointment of a subcommittee, on a new rule 3 relating to transfer of funds. And this is procedural. 4 Would you like to comment on this, 5 Terry Shankle? Okay. There she is. 6 MS. SHANKLE: I'll give you some 7 background information. Section 2001.451 of the Bingo 8 Enabling Act states: A licensed authorized 9 organization may lend money from its general fund to 10 its bingo bank account if the organization requests and 11 receives the prior approval of the Commission. Except 12 as provided by this section, no other funds may be 13 deposited in the bingo account. 14 This information was -- was -- the 15 information regarding transfer of funds was previously 16 contained in Bingo Regulation and Tax Rule 55.547, 17 Books and Records. However, this rule was not adopted 18 by the Texas Lottery Commission when we transferred 19 from the TABC. The information regarding the transfer 20 of funds should be contained in a rule so that 21 organizations know what is expected, what information 22 will be required to be submitted, the payback schedule, 23 and how to report the information on a quarterly 24 report. 25 And I'm just asking that this be the 0117 1 first reading on this rule and not necessarily have a 2 subcommittee appointed. 3 MR. ATKINS: Again, that's our 4 recommendation. If the Committee feels there needs to 5 be a subcommittee, that's fine. But again, this rule 6 would lay out for the two readings or comment, should 7 there be any. 8 CHAIR BRACKETT: Okay. I -- apparently, 9 I wasn't listening or something. I've missed the point 10 here. You're just giving us this information and -- 11 that current information regarding the transfer of 12 funds to be contained in a rule? 13 MS. SHANKLE: That is correct. 14 CHAIR BRACKETT: Okay. 15 MS. SHANKLE: Because there's -- other 16 than the Enabling Act and -- it doesn't tell an 17 organization what is required or what is expected or 18 how we are to handle the loan approval process. So I'm 19 asking you if I can -- we can put it in the rule so 20 that everyone knows what to do. 21 CHAIR BRACKETT: All right. So you have 22 already done this work, and you want to know if it can 23 be put into a form that can be adopted? 24 MS. SHANKLE: Yes, ma'am. And it would 25 go to second reading next. 0118 1 CHAIR BRACKETT: Okay. 2 MR. PAVLOVSKY: This is only for a new 3 application. Is that correct? 4 MS. SHANKLE: No, sir, that's not 5 correct. You can -- it's for either the original or if 6 an existing one needs extra money to buy bingo supplies 7 or equipment. 8 MR. PAVLOVSKY: (Reading) Or a 9 license -- may request a loan -- okay. Or start-up 10 money as necessary. 11 And that covers the rest of the bases? 12 MS. SHANKLE: Yes, sir. 13 MR. PAVLOVSKY: Okay. 14 MR. WHITTINGTON: What if it's not a 15 loan to -- what if it's not a loan; it's just money 16 given? 17 MS. SHANKLE: Well, it's -- it's -- you 18 cannot deposit it into your bingo bank account, because 19 only funds derived from bingo can be in there -- 20 MR. ATKINS: Or approved loans. 21 MS. SHANKLE: -- unless we approve it. 22 MR. WHITTINGTON: Well, that was just a 23 question I'm sure they would want me to ask. Okay. 24 MR. MOORE: So right now, a charity can 25 loan money from the general to the bingo account? 0119 1 MS. SHANKLE: That is correct, as long 2 as they go through us. They have to fill out a 3 Schedule F showing what all of their expenses are and 4 their anticipated payback. 5 MR. MOORE: That's in place right now, 6 but it's not in writing? Is that -- it's -- it's 7 described in the Act? Is that -- Phil? 8 MR. SANDERSON: Phil Sanderson, 9 assistant director of Charitable Bingo Operations 10 Division. 11 In answer to Larry's question, the word 12 "loan," in the context of this rule and probably in the 13 Act itself, it's not a loan like you go to the bank and 14 get a loan. All it is is an organization cannot lend 15 money from the general account to the bingo account 16 without approval. That's the only way that funds can 17 be put in there. 18 So all it is is authorizing the 19 organization to transfer funds from the general account 20 or operating account into a bingo account so that, one, 21 they can -- say they want to buy a new -- one of those 22 $12,000 bingo blowers and they don't have 12,000 in the 23 bingo account; they can say we want to put 12,000 in 24 there, and we'll pay back a thousand a month until it's 25 paid off -- 0120 1 MR. WHITTINGTON: Okay. 2 MR. SANDERSON: -- or, you know, we'll 3 pay back the general account a thousand. And it's just 4 an accountability of the funds and how it's transferred 5 between the accounts. 6 And Danny, your question was that -- it 7 is correct that -- the Act stipulates that the approval 8 has to be there to transfer the funds. The process 9 that we currently have in place is what is outlined in 10 this rule, and it goes along with the other rules that 11 we've put out and are planning on putting out that just 12 put everyone on notice that this is our process, this 13 is what's required. 14 If you do request money to be moved from 15 the general account to the bingo account, then at that 16 point in time, you get approval and you tell us how 17 you're going to put it back into the general account, 18 because it's not a distribution and it's not an expense 19 when you make that money transfer back into the general 20 account. 21 MS. TAYLOR: It's not an automatic 22 approval, either, is it? 23 MR. SANDERSON: No, ma'am, it's not. 24 MR. MOORE: Is there going to be a form? 25 MR. SANDERSON: There is a form. There 0121 1 is -- I believe it's called a Schedule F that -- right 2 now, it goes out with an original application 3 automatically if somebody is applying for an original 4 license, and we send out the schedule with it. If one 5 of Larry's groups decided to call in and, you know, "We 6 need to move some money into our bingo account," we 7 would send -- you know, fax him. And I believe it's 8 even available on the website, where they can print it 9 out, they fill out the information on it and send it 10 in. 11 MR. MOORE: Okay. 12 CHAIR BRACKETT: Are there any further 13 questions or any comments you'd like to -- any 14 information you'd like to get from them? 15 Okay. Thank you. 16 Sharon Ives, did you want to make a 17 comment on this? 18 MS. IVES: Sharon Ives, Fort Worth 19 Bookkeeping. 20 And yes, I'd like to -- as a matter of 21 fact, I just came up with two questions while I was 22 sitting there, one of them being what about after an 23 audit, when moneys have to be transferred from the 24 general fund back into the bingo account? Would you 25 have to fill out the Schedule F? 0122 1 And also, the second question, there is 2 no time line on here. If I'm applying for a loan to 3 loan money from my general fund to my bingo account, I 4 think there should be a time line on how -- you know, 5 how many days the Commission would have to process that 6 request. 7 That's it. 8 CHAIR BRACKETT: A time line on the 9 Commission? 10 MS. IVES: Yes. 11 CHAIR BRACKETT: Okay. And then your 12 other question was regarding payback time -- 13 MS. IVES: Uh-huh. 14 CHAIR BRACKETT: -- if it was a loan? 15 MS. IVES: After an audit. 16 CHAIR BRACKETT: After an audit. 17 MS. IVES: Right. After an audit, say 18 you have to transfer funds from the bingo -- I mean, 19 from the general fund account back to the bingo 20 account. Would you therefore have to fill out the 21 Schedule F and get approval, or would that approval be, 22 per se, from the auditor? 23 MR. GABRILLO: Roy Gabrillo, senior 24 audit manager. 25 No, it wouldn't be a -- you wouldn't 0123 1 have to fill out the form for that. It's just -- you 2 have to transfer that money back into the bingo account 3 with -- you know, with the understanding that those 4 funds that come into that bingo account can't be from 5 bingo. So in other words, if you're moving money to 6 your general account from bingo, that same money can't 7 be put back. It has to be from another source. 8 MS. IVES: So that just remains with a 9 time line, then, on the Commission to process the loan 10 request on the transfer of funds. Thank you. 11 CHAIR BRACKETT: All right. If there 12 are no further comments on that, we'll move on to 13 Item No. 10, 11, and 12 -- let's look at all of these 14 at the same time -- which involve the consideration and 15 possible discussion or action, including appointment of 16 a subcommittee regarding a general audit and tax 17 reviews and location verification. 18 And Roy, do you want to speak to that? 19 MR. GABRILLO: Yes. And as it's noted 20 in your -- in the memo that's in your notebook, that 21 these rules were presented to the BAC back in 22 August of 2001, and we did put them out for 23 publication, we did receive public comment, and then we 24 withdrew the rules in April of 2002. 25 And we'd like to revisit this -- revisit 0124 1 these rules and have them back out there again, with an 2 understanding that these rules are just what we do now. 3 This is -- this is -- what these rules -- the contents 4 of these rules is what the audit section does now. And 5 so that's the reason for publishing these rules. 6 And also, the action requested is that 7 we appoint -- that you would appoint one subcommittee 8 to study all three -- all three of these rules and to 9 get -- for one thing, get input from -- from the -- the 10 Committee to see if there is some things that can be 11 changed or added to this -- to these rules. 12 MS. MATTHEWS: Why were they withdrawn? 13 MR. ATKINS: There was -- there was a 14 lot of comment generally about the -- questioning the 15 need, et cetera, for them. Since that time, again, 16 we've gone through a Sunset Review, and this is one of 17 their specific recommendations. So it's one of those 18 "whether we like it or not," we're -- these are some of 19 those that we have to develop. 20 It was -- also, Marilyn, before we had 21 begun this process of rules being considered informally 22 before they go to the Texas Register, they were, you 23 know, generally brought before -- at that time, they 24 were -- let me make sure I'm saying this right, that 25 this is in that same time period. That was back when 0125 1 rules were brought before the Advisory Committee once 2 and then automatically went to the Commission. 3 So that public comment hearing that was 4 held after the rules had been published was really the 5 only time that they had been commented on. And so now 6 we have this process, where they're out for two 7 readings for the Advisory Committee, plus we have the 8 opportunity to work informally with the subcommittee 9 and receive comment on them before they go before the 10 Commission for publication in the Texas Register. 11 MR. GABRILLO: Right. And I was 12 involved with two of the subcommittees -- on two 13 subcommittees dealing with the rules. And the process 14 that we -- that we went through in -- in drafting those 15 rules I think was very helpful, not just to staff, but 16 I think also to the members of the subcommittees. 17 Because again, they had an -- a better understanding of 18 what -- where the auditors were coming from when, you 19 know, they're doing their audits or reviews and what 20 things they encounter. 21 And at the same time, we're 22 understanding -- we got the understanding of your -- 23 the licensees, what things you encounter. So I think 24 by appointing the subcommittee to study these rules, it 25 would be beneficial to both -- again, both the agency 0126 1 and to the -- and to the industry. 2 CHAIR BRACKETT: And Roy, would that 3 information be available for the people who would be 4 working on this subcommittee? 5 MR. GABRILLO: As far as -- 6 CHAIR BRACKETT: The starting point or 7 any of the -- you said that this had gone out to the 8 public before? 9 MR. GABRILLO: Well, like -- well, yeah, 10 when we -- when we had these out there for public 11 comment, yeah, that's true. 12 MR. ATKINS: There are -- there are 13 transcripts, yeah. 14 MR. GABRILLO: Yeah, there are 15 transcripts. From the public hearings, you mean? 16 CHAIR BRACKETT: Yeah. 17 MR. GABRILLO: Yeah. In fact, 18 they're -- they are posted on our website, those 19 transcripts. 20 CHAIR BRACKETT: They're already on the 21 website? 22 MR. GABRILLO: Yes. 23 CHAIR BRACKETT: Okay. So that would be 24 an aid to the community. 25 Any other comments before we ask for a 0127 1 committee? 2 MR. GABRILLO: Well, I can answer any 3 questions if anybody has any. 4 CHAIR BRACKETT: Okay. 5 Marilyn, you said that you would like to 6 work on the subcommittee for the general audit. And so 7 are you willing to include the tax reviews and the 8 location verification as a part of that agenda? 9 MS. MATTHEWS: That would be fine. 10 CHAIR BRACKETT: Okay. Marilyn will be 11 chair of that group. 12 Okay. Before we go any farther, Sharon, 13 do you have comments? I have your sheet here on this. 14 MS. IVES: I would just like to 15 volunteer to be on the subcommittee. 16 CHAIR BRACKETT: Well, good. I'm glad 17 you volunteered, because you were going to be asked to 18 volunteer. It's good to have a volunteer that 19 volunteers without being asked. Thank you. 20 And Marilyn, do you want to appoint your 21 third -- another person or... 22 MS. MATTHEWS: I can. Is there anybody 23 on the Committee that's interested? 24 MR. WHITTINGTON: I'll do it with you, 25 Marilyn. 0128 1 MS. MATTHEWS: Okay. 2 CHAIR BRACKETT: Okay. So Marilyn and 3 Larry from the Committee, and Sharon from the public. 4 MR. ATKINS: Roy Gabrillo and his 5 designee will be the staff. 6 CHAIR BRACKETT: Well, that's -- 7 MR. ATKINS: Okay. 8 CHAIR BRACKETT: I understood the 9 whole -- your whole department is available. Correct? 10 MR. GABRILLO: I guess in a way. 11 MR. ATKINS: As needed. 12 MR. GABRILLO: As needed. Thank you, 13 Billy. 14 MR. WHITTINGTON: And Marilyn, Roy is a 15 good person to work with. 16 CHAIR BRACKETT: Thank you so much. 17 MR. GABRILLO: Thank you. 18 CHAIR BRACKETT: All right. Thank you. 19 So that brings us down to item No. 13. 20 Is that correct? 21 MR. ATKINS: Is there another -- 22 CHAIR BRACKETT: Yeah. Is there -- 23 Sharon was the only one who had indicated that she 24 might to want to speak. Was there anyone else who 25 would like to speak on this? 0129 1 MS. IVES: I can still comment on it. 2 CHAIR BRACKETT: Okay. Go ahead. 3 MS. IVES: Do you mind? 4 CHAIR BRACKETT: No. It would be nice 5 to have it in the minutes. 6 MS. IVES: Just commenting on the 7 402.590 general audit. Correct? 8 CHAIR BRACKETT: Correct. 9 MR. ATKINS: For numbers for -- 10, 11, 10 and 12. 11 MS. IVES: Yeah. This is No. 10 on the 12 agenda. 13 CHAIR BRACKETT: Right. But it doesn't 14 have a number. 15 MS. IVES: Well, ours does. 16 CHAIR BRACKETT: Oh, the end of the -- 17 I'm sorry. Okay. 18 MS. IVES: Sharon Ives, Fort Worth 19 Bookkeeping. 20 I've got some issues with this. First 21 of all, you're asking the organization people that have 22 full-time jobs and that are volunteers on these 23 organizations to complete these forms. And this is on 24 Paragraph (b), Notification, fifth line. And it 25 reads: The forms may include but are not limited to a 0130 1 questionnaire, physical inventory, and instructions. 2 The forms must be completed prior to the entrance 3 conference, and the information must be provided in a 4 manner prescribed by the Commission. 5 If I'm not mistaken, these are the same 6 forms that are still mailed out to the State upon 7 notification of audit. The questionnaire is a -- I'm 8 not sure how many pages, but there's pages, which is 9 more than one. It's either five or seven pages -- five 10 to seven pages asking them to list bingo hall, the 11 address, the phone number, who owns the snack bar, who 12 sells the dobbers and glue. I mean, some of these 13 things in -- I just have a problem with it. 14 The other form that has also surfaced in 15 the notification of audit, I don't know if there is a 16 schedule number on it or whatever, but it's longways, 17 and they're wanting the organizations to go back during 18 whichever audit period -- which normally is a year -- 19 wanting you to fill out, item by item, on what they 20 have done with their money, how they spent it, when 21 they spent it, who it went to, the day, check number, 22 how many people it helped, and so on and so on. 23 I'm sorry I don't have a copy of that 24 with me; I've got that back at the office. But I just 25 have a problem with asking a volunteer to go back 0131 1 through their general fund records to obtain this 2 information. I mean, you're providing the information 3 to the auditor. Why couldn't the auditor fill it out? 4 Those are my comments. 5 CHAIR BRACKETT: That's on No. 590? 6 MS. IVES: Yes, ma'am. 7 CHAIR BRACKETT: Okay. And you want to 8 comment on 95 and 91? 9 MS. IVES: I'm sorry, those are back at 10 my chair. 11 Am I the only one that signed up on -- 12 CHAIR BRACKETT: Uh-huh. 13 MS. IVES: Give me a minute. Thank you. 14 MR. BERTANI: There's supposed to be 15 public comment, isn't it? 16 CHAIR BRACKETT: Not -- not yet. Not 17 yet. 18 MR. ATKINS: We're not at public comment 19 yet, Chuck. Calm down. Calm down. 20 MS. IVES: Madam Chair, I want to wait 21 on these last two, since I signed up on the 22 subcommittee, which I understand is covering all three 23 of these issues. Correct? 24 CHAIR BRACKETT: Right. 25 MS. IVES: So I'll -- I'll table my 0132 1 responses until the next reading. 2 CHAIR BRACKETT: Okay. Well, don't 3 forget your ideas. And Marilyn will be happy to work 4 with you. 5 MS. IVES: I'll make sure she gets my 6 number before I leave. 7 CHAIR BRACKETT: And Larry. 8 MS. IVES: Okay. Thank you. 9 CHAIR BRACKETT: Thank you. 10 Are there any other comments from 11 anybody on the Committee on that? 12 All right. Then that brings us to -- 13 MR. ATKINS: I've been -- real quick, 14 before you go on, I've been asked -- on Items 7 and 8, 15 we still need public members, and I've just been asked 16 that we set some type of time line to either get a 17 public member or for the subcommittee, as is, to move 18 forward. 19 You know, we don't want that to be 20 allowed to -- to be left hanging. So maybe we could 21 charge the Committee members with, you know, trying to 22 identify someone who may be interested in serving and 23 get that information to us by May 2nd, which I think is 24 next Friday. 25 CHAIR BRACKETT: Okay. Is that 0133 1 agreeable to the people that have agreed to chair? 2 MR. MANIO: Yes. Thank you. 3 CHAIR BRACKETT: All right. I really 4 didn't feel like that was hanging; I felt like that was 5 the pleasure of the chairman. But it's good to have a 6 time line on it. 7 All right. Are we ready to move on to 8 Item No. 13? 9 All right. This is public comment. 10 MR. BERTANI: Public comment? 11 CHAIR BRACKETT: Public comment. 12 MR. BERTANI: For those of you who don't 13 know me, I'm Chuck Bertani. I've been in the business 14 since 1970, before it was legal. I was on the ground 15 floor of helping to establish bingo in the State of 16 Texas in 1980 and 1981 that dealt with the 17 constitutional amendment. 18 I tell you this not because I want you 19 to think that I either know something or don't know 20 something. I'm telling you this because I want you to 21 understand I have been around the game. I served -- I 22 served six years on the Bingo Advisory Committee and 23 probably would still be there if I had acquiesced to 24 all of the things that Billy wanted. I didn't do that. 25 I'll tell you like I told all of my 0134 1 colleagues: Each of your jobs is to represent charity 2 bingo; it's not to acquiesce to the management of the 3 Bingo Division. If you keep that in mind, we might be 4 able to stop some of these rules that are being put 5 into effect. It amazes me that bingo has been around 6 for 21 years and we're still making rules. Either 7 somebody doesn't know what the hell they're doing or 8 somebody wants to do something that they shouldn't be 9 doing, one of the two. 10 Today charitable bingo is in the middle 11 of the lake drowning. We're asking for a life 12 preserver to save us, and the Bingo Division is 13 throwing us a damn anchor. We can't survive with that. 14 We can't swim. And I don't know what you guys and gals 15 can do about it, but you can help us some ways by 16 preventing these rules. 17 Let's talk about just how ridiculous 18 some of this stuff is. We've got seven pages on how to 19 calculate license fees. Well, we've already got a 20 provision in there that says if you make so much money, 21 you pay this amount of money for a license fee. If you 22 stop and think about what the purpose is for this other 23 stuff, it can only be to generate more money. It can't 24 be for anything else. 25 It can't be to reduce it, because if you 0135 1 reduce your intake, you go into another bracket that's 2 lower. The only purpose of it can be that -- as an 3 example, of a thousand dollars you make, you have to 4 pay 500 for license fees; if you make 1500, you're 5 going to have to pay $525 or 550. So the only purpose 6 is to take more money out of our pocket. And they 7 can't tell you any different, because there is no need 8 for it. We've got seven pages of it to tell us what 9 we've got to pay. That is absolutely ridiculous. 10 But let me tell you something else. 11 We've got another rule that we've got to post on a 12 board about how many computers you can get. For one 13 session, we post Texas Paralyzed Veterans can sell 14 60 computers. UAV can sell 30. That's not confusing? 15 It's insane. But Billy says some of the other 16 charities are trying it, so we need to make a rule 17 because they'd like it. 18 Well, let me tell you something. On 19 Wednesdays, I give away Cokes and free hot dogs, and I 20 like it. Let's make a damn rule to give away free 21 Cokes and hot dogs. What's the difference? 22 What's the bingo bulletin for? Why not 23 put it in the bingo bulletin that we visited some of 24 the halls, and they think it's a good idea that you 25 post why you can't sell more computers. I think it's a 0136 1 terribly bad idea. I think it discourages the public. 2 I think it's absolutely ridiculous. 3 Let's talk about the 40 percent. We've 4 got a rule that's going to be dealing with that, and I 5 heard the comment -- of course, I know there is a law 6 there that would do away with the 40 percent. Now, 7 Billy is going to ask you to pass a rule that's 8 contrary to doing away with the 40 percent, which is 9 fixing to come in and go away in the next month. Why 10 in the world would you want to pass a rule that you're 11 going to have to rescind two months from now? That 12 don't make sense. The prudent thing would be not to 13 pass the rule until we see what happens in the 14 legislature. 15 But really, the prudent thing would be 16 is to quit making these rules; to start doing something 17 to help charitable bingo. We are floundering all over 18 the state. I happen to be one of them that's doing 19 quite well, but that doesn't do me any good because 20 there's a lot of my colleagues and lot of good 21 charities that I happen to be a bona fide member of 22 that are not doing so well. 23 And we're sitting in here making rule 24 after rule after rule that makes it more difficult, 25 more time consuming, for the people in charitable 0137 1 bingo. I remember, Billy, you told me we were going to 2 streamline this thing, we were going to get rid of the 3 paperwork, we were going to do things that make it 4 easier. 5 Well, today don't seem to do that. 6 Today seems to me that it's another burdensome 7 conglomerate of rules that's being introduced and 8 asking you guys and gals to approve. And I certainly 9 hope that you use your individual thinking and not try 10 to -- I like Billy, don't get me wrong; I'm not down on 11 Billy -- but not acquiesce to what Billy and them want, 12 because they're making rules to justify their jobs to 13 show that they have things to do, and this is why 14 they're doing it. 15 I have -- I have a feeling that there is 16 a want to do away with charitable bingo, and you'd 17 probably ask me, well, why would I say that? People 18 that's in charitable bingo would lose their job. 19 But I don't think so. I think that 20 those in the hierarchy have already got a deal to go to 21 the Lottery Commission. I think the Lottery Commission 22 doesn't like the idea of charitable bingo because it 23 takes a few funds from them. And all you've got to do 24 is start looking at the way that we're being 25 micromanaged. And that's exactly what it is: We'll 0138 1 let you transfer -- that's a rule -- we'll let you 2 transfer if we want to, but you're going to fill out a 3 bunch of forms to do it. 4 Why should we have to do that with our 5 own money? We'll tell you how to spend your money when 6 we get ready to tell you how to spend your money. 7 We've talked about these forms, and 8 we've talked about the forms on the IRS, things that 9 we've already got. And Billy says this is the way to 10 let you know what they want, by rule. How come we 11 can't let people know what they want by letters? Is 12 that some big deal? 13 We started -- Lloyd Chris -- I've been 14 trying to think of his name, bless him -- 15 Representative Lloyd Chris was the daddy of bingo. We 16 started with laws and rules that thick (indicating). I 17 was there helping writing them. Three pages in 1981. 18 Look at it now. It's almost big as a library. That's 19 ridiculous to run bingo. They can tell you all this 20 crap they want to about what they need. What they're 21 telling you is, we need all of this so that any time we 22 want to, we can put the clamps on you like a pair of 23 vice grips, clamp down on you, make it difficult, make 24 you acquiesce, make you be a part of the team until we 25 put you out of business. Ladies and gentlemen, we're 0139 1 not far. And I've been saying -- 2 How long have I been off the Committee, 3 Suzanne? 4 MS. TAYLOR: Six years. 5 MR. BERTANI: So for 12 years, I've been 6 saying the way to make bingo operations profitable is 7 advertisement. There is not a business in the world 8 that will not tell you that the life and blood supply 9 line to them is advertisement. I've been trying to get 10 Billy to set up an advertisement program for 12 years, 11 and I still think it can be done by a certain 12 percentage from everybody involved -- manufacturers, 13 distributors, charities, commercial lessors -- a 14 certain percentage, set up a pool and go statewide just 15 like the Lottery does. But no, they don't want to do 16 that because we might do well. Now, we do advertise in 17 my hall, and I see the difference. 18 I want to tell you something else that 19 you need to understand, because some people get carried 20 away about what things are good and not good. And I'm 21 not telling you I know everything about bingo, but I'm 22 going to tell you this much: When a guy came here to 23 sell us electronics, he told us what a great thing they 24 were and how many new young people they were bringing 25 in. And I said all it was going to do is split the 0140 1 money from the charities; that you're going to get 2 people to spend more money, but the more money they 3 spend, you're going to send a little bit over to the 4 guy that had the electronics. 5 That has proven true. There ain't no 6 new young people coming into bingo to play electronics. 7 It's still us old folks that's got a few extra dollars 8 that's buying electronics and the paper too. But now 9 we're splitting off a little bit of the electronics, 10 where we would have kept 100 percent. 11 They talk about prizes. I heard Phil 12 get up one day and tell the senate that this $250 prize 13 might make a difference of 20 people coming in when 14 it's raining. They won't come for a $750 prize, but 15 they'll come for a $250 door prize. That makes a lot 16 of sense, doesn't it? Well, we've got the door prizes, 17 and you know what it's done? It's taken some money out 18 of the commercial lessor into somebody else's pocket. 19 It ain't increased -- it has not increased anybody's 20 attendance whatsoever. Has not. 21 The new pull tabs they talk about. I've 22 heard this for 12 years. We have got to change the 23 pull tabs, we need to get a different color, we need to 24 put the clowns and the bells and clocks and everything 25 else on them. Well, they did that. Why don't you look 0141 1 and see how much pull tabs have increased. Not a bit. 2 Nothing. 3 They talk about, now, progressive bingo. 4 We've got everybody excited about progressive bingo. 5 Well, let me tell you what it's going to do. If I've 6 got a big pot today and you've got a little pot today, 7 your people are coming to mine. I'm going to have 8 500 people and you're going to have 50. That's all 9 it's going to do. It's going to let one hall take from 10 the other. It's a bad deal. 11 You talk about satellite bingo. Another 12 way for somebody that's got a satellite bingo operation 13 to get into the money of the charities. We'll put this 14 in, let them make so much, and we'll take so much. It 15 ain't going to increase anything. 16 The only thing, ladies and gentlemen, 17 that will increase bingo participation is 18 advertisement. You could put $10,000 of game in there, 19 and if you don't tell somebody about it, it ain't going 20 to bring anybody in. Why can't we understand that? 21 You can advertise in the Bingo Bugle all you want to, 22 or all these other things, these little old things that 23 go on a bingo wall. All it's going to do is tell his 24 hall what I'm doing, and my hall what you're doing. 25 We have got to have a comprehensive 0142 1 advertisement program, and we need to get it going 2 quick. And I would urge you people on the Committee to 3 make that a priority to get things done. And you're 4 going to hear it told to you: We need a change in the 5 law. 6 Well, why in the hell ain't we changed 7 the law in 12 years, Billy? Why have we not made an 8 offer to the -- to the senators, and that could change 9 the law? I asked that we have the charities be able to 10 share the first and second sessions together to reduce 11 the bookwork, to reduce the paperwork. I asked that 12 nine years ago. I was told there had to be a change in 13 the law. Well, Billy, why ain't we changed the law? 14 That ought to have been something so easy to get 15 through, anybody could have done it. It's because they 16 don't want to do it. 17 That's because it makes it easier on us. 18 That's because it reduces the work on us. That's 19 because it reduces the cost to the charities, where we 20 don't have to pay two people to do all the work. 21 And I'm not here to berate anybody. I'm 22 not here to try to insult anybody. I'm not here to say 23 my ideas are the best ideas. But let me tell you 24 something, ladies and gentlemen. We've tried everyone 25 else's ideas. We've tried electronic, we've tried door 0143 1 prizes, we've tried pull tabs, we've tried -- we've 2 tried to try progressive bingo, and I'd urge you to 3 don't -- don't let that -- it ain't going to go 4 anywhere. The governor is going to veto it. I know 5 that for a fact. He vetoed it last time. 6 But we need to get on with the 7 advertisement. I hope that you take what I said to 8 heart. I hope that you'll understand that your job is 9 to represent charities, not the Bingo Division. Look 10 out for us, the charities and the commercial lessors. 11 That's your job. 12 We appreciate what you're doing, and 13 thank you for the courtesy to allow me to talk. God 14 bless all of you. Have a nice day. 15 CHAIR BRACKETT: Chuck, I'd just like a 16 little clarification. You're suggesting that what we 17 do is to investigate state -- that bingo be advertised 18 statewide by adding a fee, an annual license fee, 19 adding -- increasing the annual license fees, and that 20 increase be dedicated to -- 21 MR. BERTANI: No, I didn't say license 22 fees. What I would have to do, Virginia, that we -- 23 CHAIR BRACKETT: Oh, you said an 24 allotment from the license, yeah. 25 MR. BERTANI: I would say a certain 0144 1 percentage -- 2 CHAIR BRACKETT: Okay. 3 MR. BERTANI: -- from all of the 4 participants in bingo. And I don't know what that 5 would be because I don't know what a statewide cost 6 would be to advertise. What my proposal would be is 7 that we take Houston/Harris County for a while, we come 8 into Dallas/Fort Worth County for a while, we go to 9 San Antonio and Harris, like that for a while, and chop 10 it up. 11 But not go totally statewide, because 12 the cost might be too great; but section it off, hit 13 them for a while, hit this one for a while, hit this 14 one for a while, for them people to understand there is 15 a bingo game. You'd be surprised how many people don't 16 know that we play bingo and that we play it for the 17 kind of money that we play, the big pot. 18 MR. WHITTINGTON: Well -- well, we have 19 talked about advertising because it is needed, much 20 needed. That was my first statement when I came here a 21 year ago. I talked about advertising. 22 Pull tabs, I want to correct you on 23 that. The new pull tabs we have gotten in have really 24 helped a lot in the last four or five months. The 25 bingo is down. And you're right, we do need 0145 1 advertising all over the state, and anytime we could 2 come up with something to have a reasonable amount of 3 money that we can budget for advertising for bingo, it 4 would be greatly appreciated, and I'm sure we're going 5 to work on that very soon about some -- as well as for 6 the website and everything else that -- that shows some 7 point of advertising: the website, the hotline, 8 everything else that goes along with advertising. 9 So yes, it is very much needed, and I 10 appreciate you bringing that up. We have talked about 11 it, and we're going to work on it. 12 MR. BERTANI: Well, good. And -- and 13 let me just say something about -- about pull tabs. 14 When I was speaking of pull tabs, I'm talking about 15 statewide. They very well could have done well and 16 might do well for a while or might do well all the 17 time, and I hope they do. 18 But I'm speaking of statewide; in 19 particular, what they have done to boost it. They 20 haven't brought in anybody new. What they have done is 21 got some more money out of the people. And let me tell 22 you what happens when they get more money out of the 23 people. It's what the electronics did to us. I used 24 to have 400 to 500 people a session or all day. Since 25 the electronics coming in, I'm down to 300, 250, 300. 0146 1 Why? I'll tell you why. They spend more money than 2 they should, so they want to play two or three days a 3 week instead of the five and six days a week they were 4 playing. It doesn't take a mathematician to figure out 5 what's happening. I mean, when we was getting $20 6 apiece for 500 people, today we're getting $26 to $28 7 apiece from 250 to 300 people. You can -- you can see 8 the correlation to it. 9 Any other questions? I thank you very 10 much. 11 CHAIR BRACKETT: Well, we thank you. 12 MR. BERTANI: I wish the best to all of 13 you. 14 CHAIR BRACKETT: Okay. Dolores, do you 15 have some comments? 16 MS. OELFKE: This is my first time to 17 speak on the mike. My name is Dolores Oelfke. I 18 wanted to -- to comment about advertising. I happen to 19 know a very, very good advertising company. He is a 20 wonderful man. He's -- he's my husband. It's Oelfke 21 Advertising Services in Fort Worth. We lived in 22 Houston. You spoke of Houston. He did advertising -- 23 he used to work for Sears. 24 He was transferred to Dallas with the 25 advertising office in Dallas. We lived in 0147 1 Fort Worth -- we lived in Dallas. Then he moved from 2 Cox's, R.E. Cox's Department Store when it was Cox's, 3 and then he went into business. His friends talked him 4 into going into business for himself because he knew 5 all phases of advertising. He knew the newspaper, the 6 catalogs, the -- the TV, and whatever. 7 So he went into business for himself, 8 and he's been very successful at it. And we got into 9 bingo. Well, I got -- he still has his advertising 10 agency, but his wife got into bingo by a friend. We 11 have a concession stand at two bingo halls. We each -- 12 he has some -- what do you call them? Okay. But we 13 have different nonprofit organizations that we 14 represent that have been very successful, and so we're 15 involved in various bingo halls. 16 So -- and he usually does what his wife 17 asks, ha, ha, ha. But if you need anybody to help with 18 advertising, I would suggest that you contact him. He 19 would be more than glad to help you with it. That's my 20 comments. 21 CHAIR BRACKETT: Thank you. 22 MS. OELFKE: And I'm a nervous wreck. 23 MR. BISHOP: So am I, for some reason. 24 CHAIR BRACKETT: I don't have anyone 25 else who has asked to -- for time to make public 0148 1 comment on that. 2 Mr. Cox, is there anything that was said 3 that you would like to address or -- 4 COMMISSIONER COX: No, but I'd be 5 pleased to answer questions if anybody wants to ask me. 6 CHAIR BRACKETT: Okay. Would anybody 7 like to address any questions to Commissioner Cox? 8 This is a wonderful opportunity. 9 I think you can probably feel that 10 everything that was stated was probably a question 11 regarding what it is that we can do. 12 Well, now, that's no fair asking a 13 secret question over there. Will -- 14 COMMISSIONER COX: He saw a book I 15 recommended to him. 16 CHAIR BRACKETT: Oh, okay. Well, there 17 being no further comment, we'll move on to the 18 Item No. 14, which is consideration of and possible 19 action on future Bingo Advisory Committee meeting dates 20 and items to be considered for future meetings. And of 21 course, we've covered several items that will be 22 considered, and then the agenda is open for further 23 items until -- how much time before the meeting? 24 MR. ATKINS: At least -- at least 25 two weeks before the meeting. We're trying to get the 0149 1 information out to the members at least a week 2 beforehand. So again, the sooner we can get it, the 3 easier it is for us to compile it and send it out. 4 There were -- there are three things 5 that I would like to go ahead and put the Committee 6 members on notice of for the next meeting. One -- and 7 it should have been on this meeting, and it's my fault 8 it wasn't -- is the selection of a vice chair. So we 9 will have that on the next agenda. 10 And then also at their Commission 11 meeting yesterday -- the Commission meeting was 12 yesterday -- the Commissioners -- there were two items 13 that the Commissioners asked that the Advisory 14 Committee investigate, and one deals with Internet 15 bingo. And if there are any members, either on the 16 Committee or in the state, that are aware of Internet 17 bingo -- or I guess in a broader sense, Internet 18 gaming -- having an impact on charitable bingo, if they 19 wanted to see if there was information that they could 20 receive on that. 21 And the other dealt with cities and 22 local jurisdictions imposing smoking ordinances. I 23 know Lubbock imposed one. Dallas imposed one recently. 24 I know there are several other jurisdictions in Texas, 25 as well as jurisdictions in the United States and 0150 1 Canada. We're aware of lots of other areas that are 2 imposing smoking ordinances, and the Commissioners 3 wanted to see if they could get a better sense from the 4 Advisory Committee on the impact that's having on 5 organizations. 6 So what we will be doing is, I guess, 7 crafting those agenda items, gathering the research 8 information that -- that we have. And I guess that we 9 will come back and add -- you know, if there is other 10 information that members can get to us on those items. 11 But I do think that the Commission would like to get 12 further detailed information from the BAC on those 13 items. 14 CHAIR BRACKETT: Okay. 15 MR. WHITTINGTON: With another -- how -- 16 how do we address that? Do we -- because I've got a 17 couple of months of data, negative data. 18 MR. ATKINS: Great. If you can just 19 compile that and send it to us, we'll put it with the 20 other information that we'll put together on that -- on 21 that item. 22 MR. BISHOP: I do have a question of 23 either you and/or Commissioner -- 24 CHAIR BRACKETT: Would you come to the 25 microphone, please. 0151 1 MR. ATKINS: Don, do you want to come up 2 to the front? 3 MR. BISHOP: Oh, you need to do that? I 4 thought this was informal. 5 MR. ATKINS: No. 6 CHAIR BRACKETT: No. 7 MR. BISHOP: It's so formal in Austin. 8 MR. ATKINS: Isn't it terrible? 9 MR. BISHOP: I'm Don Bishop, Dallas, 10 Texas. 11 My question is about getting something 12 on the agenda for the Commissioners meeting that is not 13 either put on there or recommended by the staff. How 14 does that process work? How do we... 15 MR. ATKINS: I would think that you 16 would need to contact the chair of the Commission -- 17 MR. BISHOP: Okay. 18 MR. ATKINS: -- Tom Clowe. 19 MR. BISHOP: Okay. And then just 20 request him to get it on their agenda? 21 MR. ATKINS: Uh-huh. 22 MR. BISHOP: Great. Thanks. Thanks to 23 all of you guys for being here and taking your time. 24 CHAIR BRACKETT: Any further comments on 25 the future agenda at this point, Larry? 0152 1 MR. WHITTINGTON: I want to discuss an 2 item, if we can, that we don't get this progressive 3 thing -- anything going, that we need to come up with 4 some type of a minimum or maximum payout per game. 5 Right now, that's capped out at 5,000, and that's what 6 we give out in six games, so we don't have room for any 7 games or anything else without cutting the pie. So we 8 could just discuss some type of minimum amount and 9 maximum amount we can go up to on a -- on a commercial 10 hall which pays out the maximum amount of payout. That 11 will give us more insight of getting moneys into other 12 games that we can do for many games, et cetera. 13 MR. ATKINS: How -- what -- you're 14 losing me. 15 MR. WHITTINGTON: Okay. Right now, the 16 payout is $5,000. We give the max out -- 17 MR. ATKINS: Well, right now, the payout 18 is $2500 per game. 19 MR. WHITTINGTON: Per sesson. Per 20 session, yeah. I'm talking -- but we get -- we have 21 two sessions a day, which makes $5,000. 22 MR. ATKINS: Okay. 23 MR. WHITTINGTON: We have tried to give 24 a computer away before, but it was against the rules 25 because we had to include that $35 computer as part of 0153 1 our payouts. And because -- 2 MR. ATKINS: It's not against the rules; 3 it's against the statute. 4 MR. WHITTINGTON: Against the statute. 5 Okay. 6 MR. ATKINS: Okay? 7 MR. WHITTINGTON: And that's why I'm 8 trying to introduce, if we can -- if we could talk 9 about maybe making the $2500 a little more per session. 10 MR. ATKINS: Through statute? 11 MR. WHITTINGTON: Yeah. 12 MR. ATKINS: Well, here's what I would 13 recommend. As you'll recall, there was a work plan 14 that the Commission and the Advisory Committee agreed 15 on. 16 MR. WHITTINGTON: Uh-huh. 17 MR. ATKINS: So if you can find 18 somewhere in that work plan that that would fall under, 19 then we could address that item. 20 MR. WHITTINGTON: Okay. I've talked 21 about this before, but, you know -- okay. 22 CHAIR BRACKETT: So -- so it would be 23 part of the legislation that would be -- go with the 24 progressive bingo but increase the jackpot? Is that 25 what you're thinking or -- 0154 1 MR. ATKINS: Well, the progressive 2 bingo. 3 MR. WHITTINGTON: Yeah, it would. 4 Progressive -- that's if the progressive don't get 5 passed. 6 CHAIR BRACKETT: Okay. But you're 7 talking about the satellite? 8 MR. WHITTINGTON: No, I'm not talking 9 about that. I'm just talking, period -- 10 CHAIR BRACKETT: It's increasing -- 11 MR. WHITTINGTON: Yes. 12 CHAIR BRACKETT: Okay. Okay. I'm with 13 you now. I understand. 14 MR. WHITTINGTON: As it is, we can't 15 give anything else per session or play an extra game on 16 anything, because if we was to hand anything out, it 17 would be different. We have that limitation coming 18 from what we don't give out up to 2500, but as of right 19 now, we don't because we give the whole 2500 out per 20 session in bingo games. 21 CHAIR BRACKETT: Billy, can you give us 22 an update on the -- what's going on, legislative-wise, 23 what's happening with things regarding bingo, and 24 especially the things suggested by the Sunset Review, 25 any legislation on that? 0155 1 MS. MORRIS: I don't know where that's 2 on the agenda, and I would stop, I guess -- I hate to 3 be rude to interrupt you, but -- I'm sorry Billy, to 4 even -- I know you wanted to probably be responsive. 5 But he's limited. 6 CHAIR BRACKETT: All right. And we 7 don't have anybody with the public to comment on that, 8 so it can't be public comment? Or can you make 9 comments on it? 10 MS. MORRIS: No, ma'am, I'm not -- 11 CHAIR BRACKETT: Okay. 12 MS. MORRIS: No, ma'am. Public comment 13 does not really allow a -- 14 CHAIR BRACKETT: Well, I knew that you 15 couldn't under public comment, but I thought maybe you 16 could some way else, so -- all right. 17 MS. MORRIS: But it certainly would 18 seem, and I guess under your topic -- your next agenda 19 item, it may be that you want to put a topic there 20 right now to remember that, that there is an update on 21 legislative session and activities -- 22 CHAIR BRACKETT: Okay. 23 MR. MOORE: We may not meet before that. 24 I do have a -- I may bring in somebody in reference to 25 satellite bingo. I think everybody needs to be 0156 1 educated a little more in that area, so I may have 2 another company come down and talk to y'all if that's 3 all right. 4 MR. ATKINS: Well, it's all right. 5 Again, I'd refer you back to your work plan. 6 MR. MOORE: Okay. 7 MR. ATKINS: And the Commissioners have 8 asked for the Advisory Committee to conduct a much more 9 thorough examination of other types of bingo; 10 satellite, whatever. So if -- if that's something that 11 the Committee is ready to move forward on, we're fine 12 with that, but we'd like to organize it a little better 13 and spend a lot more time than have one person come in 14 and maybe make one presentation. 15 MR. MOORE: Sure. That makes sense. 16 MR. ATKINS: Yeah. 17 CHAIR BRACKETT: Okay. Can that be an 18 agenda item for the next meeting? 19 MR. ATKINS: Yeah. 20 MR. MOORE: That would be a good idea. 21 CHAIR BRACKETT: Who will arrange that? 22 MR. ATKINS: Well, I don't know if we'll 23 be able to do it all by the next meeting. It may be at 24 the next meeting that we will be able to, at that 25 meeting, form that subcommittee, and -- and we can 0157 1 probably, by then, have identified a lot more groups. 2 Then the subcommittee can put something together, and 3 we could -- you know, I could even envision that being 4 one advisory committee to itself. 5 CHAIR BRACKETT: Uh-huh. Does that 6 sound like a plan -- 7 MR. MOORE: Yeah, that's fine. I 8 think -- I just think everybody needs to be educated on 9 this, and there's -- there's so many models out there, 10 but they're all a little different. And, I mean, even 11 all these different jurisdictions, we need to take a 12 look at them and see what we think fits if -- if we 13 ever get to that point where we create legislation that 14 passes here. 15 MR. ATKINS: Uh-huh. 16 CHAIR BRACKETT: But it's premature to 17 ask someone to work on that now, to create a work group 18 to work on that? 19 MR. ATKINS: Yeah. You don't have that 20 posted. 21 CHAIR BRACKETT: Okay. It can't come 22 under consideration for future meetings for the agenda 23 item? 24 MR. ATKINS: Sure. It's just -- it's 25 something that you're going to do at a future meeting, 0158 1 but not have -- take action on it now. 2 CHAIR BRACKETT: Right. And that's what 3 I'm saying. Could I ask someone to come and give us a 4 report on that at our next meeting? 5 MR. ATKINS: We can schedule it as an 6 agenda item for the next meeting. 7 CHAIR BRACKETT: Okay. 8 MR. MOORE: Okay. 9 CHAIR BRACKETT: So Danny, would you be 10 in charge of that agenda item for -- for our next 11 meeting? 12 MR. MOORE: Well, I mean, I'm not going 13 to do any background work right now. I'm going to wait 14 until I get a subcommittee together at the next meeting 15 to move forward from there. 16 MS. MORRIS: That's a fine line. 17 That's -- that's -- 18 MR. MOORE: Well, the session is going 19 to be over. I don't see a great urgency. I think we 20 should just take our baby steps right now, get a 21 committee together at the next meeting, and move on. 22 Okay? There's -- there really isn't any urgency to -- 23 MR. ATKINS: Right. 24 MR. MOORE: -- do it now. 25 CHAIR BRACKETT: All right. Are there 0159 1 any other suggestions for the next meeting? 2 All right. What -- what's a good 3 meeting time? First, I want to discuss a time of the 4 meeting. It's been suggested that we try to meet 5 at 9:30. Is that a possibility with people coming in? 6 I mean, how great of a handicap is that? 7 MS. TAYLOR: Big. Huge. 8 MR. MOORE: Big. 10:00. 9 CHAIR BRACKETT: Yeah. I know that we 10 used to try to meet earlier, and it did not work out. 11 And I really think 10:00 seems late, and 10:00 is 12 inconvenient for a lot of schedules, but it does seem 13 to work better. So let's continue with the -- if it's 14 the general consensus, let's continue with the 10:00 15 time. 16 Okay. When do we need to meet again? 17 Do we need to meet in -- in June, July? 18 MR. ATKINS: (Nodding head.) 19 MR. WHITTINGTON: June. 20 CHAIR BRACKETT: What did you say? 21 June? 22 MR. WHITTINGTON: The end of June, yeah. 23 CHAIR BRACKETT: Do you have any 24 particular day in mind? 25 MR. WHITTINGTON: Thursday is fine. 0160 1 CHAIR BRACKETT: The 19th or 26th? Does 2 the Lottery Commission have a meeting set? 3 MR. ATKINS: I don't think they have one 4 set. It's possible that I will be out of the office 5 the week of the 23rd. 6 CHAIR BRACKETT: Okay. So that would be 7 putting Thursday, the 26th -- is Thursday, the 19th, a 8 good time? That's the third Thursday. 9 MR. MANIO: Yes. 10 MR. WHITTINGTON: Yes. 11 CHAIR BRACKETT: That's good? All 12 right. Then we're setting our next meeting for 13 June 19th here in Austin at -- 14 MR. BISHOP: Virginia, would I be out of 15 line to ask a question? Is the legislative session 16 over by that time? 17 CHAIR BRACKETT: Uh-huh. Is that all 18 you needed to know? 19 MR. BISHOP: Yeah. I was just going to 20 suggest, make sure that the next meeting (inaudible). 21 THE REPORTER: I couldn't understand 22 you. I'm sorry, what did you say? 23 MR. BISHOP: I just -- I just wanted to 24 make sure that the next meeting would be after we knew 25 what the legislators had done, so a lot of this that we 0161 1 still have to deal with is going to be hopefully 2 covered by then. Thank you. 3 CHAIR BRACKETT: I don't believe there 4 is any more business to be covered right now, so if no 5 one objects, we'll adjourn the meeting. And thank you 6 for coming, all of you. And also thank everyone in the 7 audience who came. 8 (Proceedings adjourned.) 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 0162 1 REPORTER'S CERTIFICATE 2 3 STATE OF TEXAS ) 4 COUNTY OF TRAVIS ) 5 6 I, SUZANNE T. LANE, Certified Shorthand 7 Reporter for the State of Texas, do hereby certify that 8 the above-captioned matter came on for hearing before 9 the BINGO ADVISORY COMMITTEE as hereinafter set out; 10 that I did, in shorthand, report said proceedings, and 11 that the above and foregoing typewritten pages contain 12 a full, true, and correct computer-aided transcription 13 of my shorthand notes taken on said occasion. 14 15 Witness my hand on this the day 16 of , 2003. 17 18 19 20 Suzanne T. Lane, CSR, RPR Texas CSR No. 6992 21 Expiration Date: 12/31/03 WRIGHT WATSON STEN-TEL 22 1609 Shoal Creek Boulevard Suite 202 23 Austin, Texas 78701 Phone (512) 474-4363 24 Fax (512) 474-8802 25 JOB NO. 030424STL