0001 1 2 3 * * * * * * * * * * * * * * * * * * * * * * * * * * * 4 5 BINGO ADVISORY COMMITTEE 6 MEETING 7 8 JUNE 19, 2003 9 10 * * * * * * * * * * * * * * * * * * * * * * * * * * * 11 12 13 14 15 16 17 18 19 BE IT REMEMBERED that the BINGO ADVISORY 20 COMMITTEE meeting was held on the 19th of JUNE 2003, 21 from 10:00 a.m. to 2:50 p.m., before David Bateman, 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 78701, 25 whereupon the following proceedings were had: 0002 1 APPEARANCES 2 3 Chairman: 4 Ms. Virginia Brackett - Lubbock, Texas 5 6 Committee Members: 7 Mr. Daniel Moore - Houston, Texas 8 Mr. Larry Whittington - Dallas, Texas 9 Ms. Marilyn Matthews - Odessa, Texas 10 Mr. Mario Manio - Garland, Texas 11 Mr. Pete Pavlovsky - Rosenberg, Texas 12 13 Charitable Bingo Operations Director: 14 Mr. Billy Atkins 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 Item Number 2................................... 4 7 Item Number 3................................... 4 Item Number 4................................... 5 8 Item Number 5................................... 50 Item Number 6................................... 58 9 Item Number 7................................... 58 Item Number 8................................... 58 10 Item Number 9................................... 109 Item Number 10.................................. 109 11 Item Number 11.................................. 113 Item Number 12.................................. 122 12 Item Number 13.................................. 128 Item Number 14.................................. 139 13 Item Number 15.................................. 148 Item Number 16.................................. 148 14 Item Number 17.................................. 160 Item Number 18.................................. 174 15 Item Number 19.................................. 175 Item Number 20.................................. 176 16 17 REPORTER'S CERTIFICATE.......................... 179 18 19 20 21 22 23 24 25 0004 1 June 19, 2003 2 Bingo Advisory Committee Meeting 3 AGENDA ITEM NO. 1 4 CHAIR BRACKETT: Good morning, everyone. 5 It's 10 o'clock and we have a quorum, so we will call 6 to order the Bingo Advisory Committee meeting on June 7 19th. 8 I think the first thing we want to do is 9 acknowledge and express our sincere sympathy to 10 Suzanne Taylor on the death of her son. 11 I received -- did someone say something? 12 AGENDA ITEM NO. 2 13 Okay. Are you ready to approve the 14 minutes of the April 24th meeting or make any 15 corrections? 16 AGENDA ITEM NO. 3 17 I don't hear any, so we will move on to 18 Agenda Item No. 3, which is consideration of and 19 possible discussion -- yes, the meeting -- the minutes 20 have been adopted or approved, accepted, whatever. 21 Item No. 3 is consideration of and 22 possible discussion and/or action on appointment of a 23 Bingo Advisory Committee vice-chair. We've been 24 without a vice-chair for some time. And Suzanne had 25 agreed to accept that position and we're very grateful 0005 1 for that that she will accept that position. 2 So Suzanne Taylor will be serving as 3 vice-chair of the Bingo Advisory Committee. 4 AGENDA ITEM NO. 4 5 Item No. 4 is report, possible 6 discussion and/or action on the 78th Legislature, 7 including the Appropriations Act and/or the 8 implementation of legislation, including appointment 9 of subcommittees. And Billy Atkins, that is your 10 agenda item. 11 MR. ATKINS: Thank you, Madam Chairman. 12 Members, you have quite a bit of information in your 13 notebook relating to this issue. And if I can real 14 quickly, I would just like to go over that 15 information. And then if I can, I'm going to try and 16 take it in reverse order. 17 You have a spreadsheet showing all of 18 the legislation that was filed this session relating 19 to bingo and its outcome in the legislature. You have 20 a copy of House Bill 29 -- 2519, an enrolled copy of 21 House Bill 2519. That is the legislation that made it 22 through the legislative process and at this time is on 23 the governor's desk awaiting action by him. 24 You have a section of House Bill 2292, 25 which contains some provisions relating to charitable 0006 1 bingo. Then you have a spreadsheet that's been 2 prepared by the staff that we're using as we work 3 through the implementation process that we've provided 4 to y'all for informational purposes. 5 And then the last two documents you 6 have, and that's where I would actually like to start 7 today, is you have copy of -- it's titled Senate Bill 8 1, 77th Regular Session General Appropriations Act. 9 And behind that is a piece of legislation that's 10 called House Bill 1, 78th Legislature Regular Session. 11 And I would like to start on those two 12 pieces of information because they do have a pretty 13 significant effect on you and the Advisory Committee. 14 And so as I lay these out, I'd like to talk a little 15 bit about these documents, exactly what they are and 16 how they're organized. 17 First of all, if you'll look at the 18 bottom of just this first page, you'll see in the 19 center a Roman numeral followed by a dash followed by 20 a number. So on Senate Bill 1, the first is Roman 21 numeral VII-19. 22 The Appropriations Act is divided up 23 into what are called articles. And Articles 1 through 24 8 cover state agency budgets by a functional category. 25 For example, Article 3 covers agencies of public and 0007 1 higher education. Article 9 contains general 2 provisions and directions to state agencies. Article 3 10 contains appropriations for the legislature, 4 etcetera. 5 The Lottery Commission is one of six 6 agencies that is contained in Article 7, which covers 7 agencies of business and economic development. Some 8 of the other agencies in that section include the 9 Texas Aerospace Commission, Department of Economic 10 Development, the Department of Transportation, the 11 Workforce Commission and the Department of Housing and 12 Community Affairs. 13 So as we go through this document, I'll 14 be, you know, referring to page -- again, you know, 15 VII-19 of each one of the bills. And that will help 16 you follow along as we go through the process. 17 So the first thing I'd like to do in 18 Senate Bill 1 is draw your attention to page VII-23. 19 And this is the part of the Lottery Commission's bill 20 pattern that contains riders relating to this agency. 21 And a rider is a condition that's placed 22 on an appropriation. Often times riders express 23 detailed instructions for agency operations. And in 24 this case, we're looking at Rider 12 on page VII-23. 25 And that's the rider that provides for the 0008 1 reimbursement of Advisory Committee members. 2 Now if you go to the next document that 3 is titled House Bill 1, 78th legislature, the riders 4 are contained on pages VII-17 and VII-18. And if 5 you'll look through those riders, you will notice that 6 the rider for the recommend -- for the reimbursement 7 of the Advisory Committee members is not included. 8 Now as the Appropriations Act progressed 9 through the legislature this session, each house of 10 the legislature had included that rider in their 11 individual bill patterns. 12 However, when House Bill 1, which became 13 the final appropriation or the final vehicle for the 14 Appropriations Act went to conference committee, the 15 conference committee made across-the-board 16 recommendations that eliminated reimbursement riders 17 for all advisory committees. 18 So it wasn't anything unique to the 19 Lottery Commission. As they went through the bill 20 pattern for all kinds of agencies, they started to 21 eliminate those reimbursement provisions. 22 Now I have -- I'm providing this 23 information to you and I've talked about it with the 24 chairman, both Chairman Clowe and Chairman Brackett. 25 And there's no real way to sugarcoat it other than to 0009 1 say that effective September 1st of this year, members 2 aren't going to be eligible to be reimbursed for their 3 travel expenses related to service on the Advisory 4 Committee. 5 And I think it's important that we 6 provide this to you at this time so you can begin, you 7 know, thinking through the process. If service on the 8 Advisory Committee is too burdensome for members 9 without being eligible for that reimbursement, I think 10 that that's perfectly understandable. 11 Again, that's a decision that I think 12 each of you would need to make. And I would just, you 13 know, follow that up with: If, you know, during your 14 thought process and your determination, if you feel 15 like you're not going to be eligible, you know, to 16 serve, if you could just let us know and we can, you 17 know, if necessary begin the process of looking for 18 other members. 19 And that's really all I had specifically 20 on that issue. If any of you had any questions, I can 21 try and answer them. 22 Then one other item while we're still 23 talking about this that I'd like to bring to your 24 attention because it could be confusing is in the 25 actual appropriation for the division itself. And 0010 1 I'll tell you why. 2 If you go back again to Senate Bill 1 on 3 page VII-21, you'll see a line that says Total, Goal 4 B: Enforcement of Bingo Laws. And you'll see an 5 appropriation of about 2.7 million dollars for each 6 year, for each fiscal year. And that's the money 7 that's appropriated to the state for all of the 8 division's regulatory activities. 9 Now again, if you flip over to Senate 10 Bill -- I'm sorry -- House Bill 1 and if you look at 11 page VII-16, again you have the same -- the same line 12 that says Total, Goal B: Enforce Bingo Laws. And it 13 says approximately 12.3 million for each of the fiscal 14 years. 15 And I'd like to explain to you the 16 difference in those two amounts. What the legislature 17 did this session is they costed out everything to the 18 bill. And they included in the agency's bill pattern 19 the money that the division actually allocates out to 20 local jurisdictions. So that is accounted for now in 21 the bill pattern. 22 You know, in the past we -- we just made 23 those allocations. Now it's actually being accounted 24 for in the bill. And if you look over to page VII-18, 25 Rider 12, they indicate what those allocation amounts 0011 1 are for each fiscal year: 9.8 for the first fiscal 2 year 2004 and then about 9.7 for 2005. 3 So apart from -- so if you deduct that 4 amount for the 12.4, 12.3 million, that remaining 5 balance would be what would be the appropriation for 6 the operation of the division. 7 And again, I just wanted to point that 8 out to you because it is different. It could be a 9 little confusing in case any of you had any questions, 10 if any of you received any questions. 11 Then if there are no questions about 12 that, I can move on to House Bill 2519 and House Bill 13 2292. You have, again, copies of both of those in 14 your book, as well as the spreadsheet that I mentioned 15 earlier that the staff is using in terms of 16 implementation. 17 Now I've -- I do want all of you to keep 18 in mind the staff in the division, you know, 19 essentially the day after the session ended began a 20 process more or less of organizing or preparing for 21 the implementation of these provisions starting with 22 the development of that spreadsheet and, you know, 23 trying to identify specific actions that we may need 24 to take, as well as other divisions within the agency 25 that may be affected. 0012 1 Now so far as of the last time I checked 2 this morning, the only directly -- the only bingo 3 legislation that directly affects us that's been 4 signed so far is House Bill 2292. And essentially 5 what that provision does is it deletes the requirement 6 that the compulsive gambling sign be posted in bingo 7 halls. 8 Now it does still require that the 9 compulsive gambling sign be on card-minding devices 10 and pull-tab dispensers. House Bill 2292 deletes the 11 requirement that it be posted in bingo halls. 12 Now again, to the best of my knowledge 13 2519 hasn't been signed yet. And the governor has 14 until Sunday, June 22nd to take action on bills. And 15 he can either, of course, sign the bill, veto the bill 16 or he can let it become law without his signature. 17 But we will know definitively on Monday that we can 18 start this implementation process more aggressively. 19 Now apart from those comments, you know, 20 about the fact that, you know, until it's signed we 21 won't know definitively one way or another, we did 22 want to bring this forward because we do think it's 23 appropriate for the Advisory Committee at this time to 24 begin discussion on both of these bills. 25 And particularly, if you look at the 0013 1 spreadsheet that the staff has developed, you know, we 2 do anticipate that with the rule or that with the bill 3 there will need to be rule development, etcetera. 4 We have staff here if you have any 5 additional specific questions that can try and address 6 some of it, but I think it was our intent to more or 7 less leave it just up to the Advisory Committee as to 8 how one, y'all think you could be most effective in 9 this process and to what level the Advisory Committee 10 wants to be involved. 11 The Advisory Committee may want to 12 appoint one subcommittee. It may want to appoint 13 several subcommittees. Again, I think that's a -- 14 more or less a decision for y'all to make. 15 I guess the last thing that I would 16 share with you is: Of course, after the bill is 17 actually signed, we will begin as part of our 18 implementation process our regular notification 19 activities to licensees. 20 You know, we generally do a special 21 edition of the Bingo Bulletin. We'll have Web site 22 updates. We'll incorporate changes into the operator 23 training program. I think one of the things that you 24 can be the most -- the most effective and the most 25 helpful to us right now is if you do get any calls or 0014 1 any questions or anything, is if you can explain to 2 people that it's not effective yet, to not be making 3 changes yet. 4 You know, we will -- we will duly notify 5 everybody when some of these provisions, you know, are 6 authorized. For example, people shouldn't be going 7 out -- I don't think it had an immediate effective 8 date, but I don't think people should be going out and 9 taking down their compulsive gambling signs, you know, 10 just as an example. 11 And again, I'd be happy to answer any 12 questions about anything that you got in your 13 notebook. Then apart from that, Madam Chair, I think 14 we would just look to the Advisory Committee for their 15 desires. 16 CHAIR BRACKETT: Okay. And what you're 17 suggesting is that we have one subcommittee or two 18 subcommittees, whatever we prefer? 19 MR. ATKINS: Whatever. 20 CHAIR BRACKETT: Or is that -- or is 21 that a request from you that we have two? 22 MR. ATKINS: That was -- you know, that 23 was just a suggestion. Again, I think that we have 24 some experience under our belt. And, you know, I 25 think all of the members have served on subcommittees 0015 1 and know how they work. 2 You have in the spreadsheet, you know, 3 the impact we anticipate. I think we would look to 4 the Advisory Committee for, you know, how they think 5 they could be most effective. 6 CHAIR BRACKETT: Okay. Larry? 7 MR. WHITTINGTON: I think if we 8 discussed -- once the bill do get signed or passed, we 9 should definitely have a subcommittee on the bill. 10 And I think it should be a little larger than three or 11 four people, maybe six or seven people, three or four 12 people from the general public and one with the 13 Lottery Commission, as well as Bingo Advisory 14 Committee, and discuss it and then come up with 15 everything that need to be talked about concerning 16 this bill. 17 MR. ATKINS: Well, let me -- let me make 18 one -- I would go ahead and recommend that whatever 19 the desire of the Advisory Committee is they go ahead 20 and do that today, not -- not wait and see what 21 happens. But you know, if the final recommendation is 22 to appoint a subcommittee that's a little larger, then 23 go ahead and make that recommendation today that we 24 can -- so that we can move forward. 25 MR. WHITTINGTON: Okay. 0016 1 MR. MOORE: Well, if I could speak, I've 2 already worked on 402.555. So has Mario. I mean, it 3 just to me would make sense that maybe we're involved 4 because that's meant to be revisited because we made 5 amendments to that rule already. The 40 percent 6 repeal would be a part of that new law if it happens. 7 So weren't there some other people like 8 involved in unit accounting on the committee? I can't 9 remember who was in on that. 10 MR. ATKINS: Suzanne. 11 MR. MOORE: And I just think that maybe 12 picking up the ball where you started and would help 13 some of these move along quicker instead of bringing 14 new people on to the committee. 15 MR. WHITTINGTON: Well, cooperating all 16 these people together, I think that would be good. 17 MR. ATKINS: Well, and that's fine. The 18 only thing the committee would need to keep in mind is 19 if you start to get to the size of a quorum, then you 20 have posting requirements, etcetera. 21 MR. MOORE: Right. 22 CHAIR BRACKETT: Okay. What are the 23 suggestions from other people? Mario, how do you feel 24 about it? 25 MR. MANIO: My initial reaction is 2519 0017 1 is a huge bill. But there is really one big major 2 change as far as bingo is concerned, and that's the 3 unit accounting. The other things like the 4 education -- 5 CHAIR BRACKETT: Then what I was really 6 wanting to know is: How do you feel about continuing 7 in a subcommittee to deal with these things and the 8 implementation? 9 MR. MANIO: That's -- that's what I was 10 leading into. 11 CHAIR BRACKETT: I'm sorry. 12 MR. MANIO: Instead of, you know, 13 appointing one subcommittee for the whole bill, maybe 14 we can focus on unit accounting, one subcommittee for 15 unit accounting. The others are probably, you know, 16 can be taken care of without the subcommittee. 17 MR. WHITTINGTON: I think everything 18 needs to be -- needs talked about and people got 19 different ideas. Like I know Steve, the most -- both 20 Steves are involved. It's a lot of people involved in 21 different things concerning this bill. And I didn't 22 mean to go out of proportion when I said -- I think 23 the most amount we can have is five people? 24 MR. ATKINS: Four. 25 MR. WHITTINGTON: Four? So just put six 0018 1 or something like that on there and talk about 2 everything and include people that's been involved in 3 the whole process of this bill. Unit accounting, as 4 well as other things I think need to be discussed and 5 come up with some type of concrete idea about how 6 we're going to make this new deal work because if it 7 passes, we got to make it work and it will help bingo 8 a lot if we do it the right way and discuss it. 9 CHAIR BRACKETT: What about Mario and 10 Danny continuing and that they get work groups 11 together as you see that you need to to bring other 12 people on, special things such as unit accounting? Is 13 that agreeable? 14 MR. MANIO: Well, that's fine with me if 15 it's okay with Danny. 16 MR. MOORE: Yeah. I just don't know if 17 that's going to be too much for us. I think we should 18 have at least two subcommittees of two people to 19 divide this up. I just think there's a lot of 20 material to cover, believe it or not. The unit 21 accounting is huge in itself. 22 MR. ATKINS: Yeah. 23 MR. MOORE: I mean, we could have 24 conference calls every day of the week, so... 25 MR. ATKINS: I don't know, Mario, if I 0019 1 would agree with your assessment that the rest of it 2 can be done relatively simply. Unit accounting is 3 big, but there are some other -- 4 MR. WHITTINGTON: There's a lot of 5 issues. 6 MR. ATKINS: You know, 7 operationally-wise some major issues, also. I thought 8 what I heard the discussion leading to was a 9 subcommittee on unit accounting and then essentially a 10 subcommittee on everything else. 11 MR. MANIO: That's fine, yeah. 12 MR. WHITTINGTON: Yes, that's good. 13 MR. MANIO: That might work, yes. 14 MR. WHITTINGTON: I like it. 15 MR. PAVLOVSKY: Do you agree with that, 16 Daniel? From what I hear you saying is that just unit 17 accounting is a -- is a big area to cover. 18 MR. MOORE: Right. 19 MR. PAVLOVSKY: For one committee. 20 MR. MOORE: Well, we got eight members 21 here. I think everybody should be involved on this, I 22 really do, or maybe at least one more subcommittee, 23 maybe three of them. 24 Because I mean like gift certificates, 25 nobody's even -- we've never seen anything about this. 0020 1 We want to make sure we handle that correctly. So I 2 think three groups. Anybody have any opinion on that? 3 MR. WHITTINGTON: Well, you know, most 4 of the stuff has definitely been discussed. I mean, 5 this is just not coming up and just thrown in the 6 bill. There's been a subcommittee on that before and 7 discussed. 8 And that's why this language has come 9 up. All we just got to do is just justify the 10 language, the same people, some of the same people 11 that discussed this and have one person from every 12 subcommittee, let them people get together. And then 13 one person report back to the main subcommittee and 14 come up with solutions. 15 Use the same people on their 16 subcommittee that they have but have our own 17 subcommittees of one person from each one of those 18 subcommittees and make a kind of like a firm 19 subcommittee for the Bingo Advisory Committee for them 20 people to report back on these issues. 21 CHAIR BRACKETT: Okay. And that's 22 really what I was trying to say, that this would be 23 Danny and Mario would be in charge of the overall 24 picture. And then you would bring in people to handle 25 things as you want them to. You would have somebody 0021 1 to -- you would say who's going to do unit accounting, 2 who's going to do whatever else you're looking at. 3 MR. MOORE: That's fine with me. 4 MR. MANIO: So this is going to be a 5 subcommittee to distribute the workload? 6 MR. WHITTINGTON: Exactly. 7 CHAIR BRACKETT: Right. 8 MR. MANIO: And then one member is for 9 the subcommittee. 10 MR. WHITTINGTON: And then those people 11 come back to you and then you come back to us and we 12 all get together and talk about it. Because I think a 13 lot of people need to be included. Those people that 14 were included before in coming up with these 15 provisions on these special unit accounting people 16 spent a lot of time trying to get that together. And 17 those people should have a voice in getting this done. 18 CHAIR BRACKETT: Okay. Who else from 19 the Advisory Committee would like to serve on this? 20 Would you, Marilyn? 21 MS. MATTHEWS: Yeah. I'll do unit 22 accounting. 23 CHAIR BRACKETT: Marilyn will do unit 24 accounting. She'll be responsible for that. 25 MS. MATTHEWS: I'm not exactly clear on 0022 1 what it is we're doing. Are we just interpreting this 2 rule? Because this is not a rule. Are we 3 interpreting this legislation? 4 MR. ATKINS: There are -- well, one 5 thing that has to be determined is if rules are 6 required for implementation. 7 MS. MATTHEWS: Okay. 8 MR. ATKINS: You know, just trying to 9 think off the top of my head, going back to the 10 reference of the gift certificates, you know, it 11 references, you know, records kept in accordance with 12 commission rule. There is no commission rule relating 13 to records for gift certificates. 14 MR. WHITTINGTON: Right. 15 MS. MATTHEWS: I see. Okay. 16 MR. ATKINS: I'm not sure if I'm clear 17 on where the committees are heading. 18 CHAIR BRACKETT: Okay. Maybe I was 19 trying to -- excuse me -- do that, too. I was 20 probably putting too much of a workload on Danny and 21 Mario. So we'll go back and let's forget what my 22 suggestion was and go back and Marilyn can handle unit 23 accounting. That's one thing that we need to look at 24 over there. 25 MR. ATKINS: Okay. 0023 1 CHAIR BRACKETT: And then Mario, what do 2 you want to look at? And what do you want to, Danny? 3 And then choose, recruit people to work with you on 4 this. 5 MR. MOORE: Well, for sure I'll do 6 402.555. I want to finish my job. What are we going 7 to do about public members, too? And is there a time 8 line on this, more importantly? 9 MR. ATKINS: Let me -- 10 CHAIR BRACKETT: Yeah, the time line. 11 MR. ATKINS: Let me step back. What is 12 it apart from the elimination of the 40 percent 13 requirement do you think affects the rule? 14 MR. MOORE: Maybe it isn't a big deal. 15 MR. ATKINS: Because I don't think it's 16 that big. 17 MR. MANIO: Yeah. So that may not be an 18 issue at all. 19 MR. ATKINS: I think that's exactly what 20 has to be -- happen, language just be deleted. 21 MR. WHITTINGTON: Exactly. 22 MR. MOORE: Right. 23 MR. ATKINS: Uh-huh. So I don't know 24 the posting -- 25 MR. MOORE: And the posting of the 0024 1 number, that will need to be deleted too, I guess, 2 right? There won't be any need to post a number since 3 we won't have a percentage to follow up. 4 MR. WHITTINGTON: What I'm saying, a lot 5 of these things have been discussed, drug out for 6 months that -- of course, that's what -- that's why 7 they came up with 2519 because it's been discussed and 8 implemented a bunch of times. 9 And of course, it's going to be law. We 10 just need to come up with some -- with other 11 provisions of what we want added or deleted or 12 whatever from this -- from these provisions. But it's 13 basically been discussed. I don't know why we're 14 saying that it's a whole different thing than what 15 we're trying to come up with. 16 We come up with a subcommittee to make 17 sure it's right. The people that's been involved in 18 the stuff should be included, one member from each 19 subcommittee. 20 MR. ATKINS: Because part of the 21 reason -- let me address some of that. There's a big 22 difference between talking about the language in this 23 bill and putting the language in this bill into 24 effect. That's why it needs to be talked about. 25 MR. WHITTINGTON: Exactly. 0025 1 MR. ATKINS: You know, I might suggest 2 just in flipping through this real quickly that if you 3 wanted to try and approach it this way, you could look 4 for a -- you could think about subcommittees to deal 5 with unit accounting, the registry of workers, the 6 amendment of licenses and temporary licenses. 7 CHAIR BRACKETT: Okay. 8 MR. ATKINS: And just in flipping 9 through the spreadsheet right here, that seems to 10 cover -- for lack of a better word -- some of the 11 major elements. 12 MR. MANIO: There is one major element, 13 Billy. 14 MR. ATKINS: Uh-huh. 15 MR. MANIO: One other major element, use 16 of net proceeds for charitable purposes. 17 MR. ATKINS: Yeah. 18 MR. MANIO: And if my recollection 19 serves me right, you already have a subcommittee on 20 charitable purposes. So it's probably something that 21 they can just think on. 22 MR. ATKINS: They would actually need to 23 be reconstituted, but that is a -- that's a good 24 point. 25 MS. MATTHEWS: I'd like to know just 0026 1 what do you want back from these committees. Do you 2 want a discussion of or something that we think would 3 be appropriate to disburse to the halls or what 4 exactly are we coming back to this committee with? 5 MR. ATKINS: Okay. Let me go back to 6 the example of gift certificates. Let me -- let me 7 just use that one. There's a provision in here that 8 says, you know, organizations can sell and redeem gift 9 certificates. I don't remember the exact language. 10 It has -- records have to be kept in 11 accordance with commission rules, okay? One of the 12 things a subcommittee would come back with is the 13 recommended language for that rule. 14 MS. MATTHEWS: Okay. 15 MR. ATKINS: Let me use another example. 16 I think on the registry of workers, it says that the 17 card for workers shall be in accordance with 18 commission rule. One of the things that subcommittee 19 would work on is what needs to be included in that. 20 MS. MATTHEWS: Okay. 21 MR. ATKINS: Now if there are 22 recommendations for notification, etcetera, etcetera, 23 that -- you know, that would be great, too. But I 24 think what we would look to is these subcommittees 25 looking at -- if you go with, you know, identifying 0027 1 say these -- because that's four, you know, five 2 groups, you know, looking globally at what's required 3 for implementation. 4 MS. MATTHEWS: Okay. So just whatever 5 action might be required? 6 MR. ATKINS: Exactly. 7 MS. MATTHEWS: Okay. 8 MR. ATKINS: Yeah. Because what's 9 valuable is y'all are going to bring to the table 10 what's required for implement from the licensee point 11 of view. And staff will bring to the table what's 12 required from the division's point of view. 13 MS. MATTHEWS: Okay. 14 MR. ATKINS: Because, for instance, some 15 of these changes could require changes to our forms, 16 to our existing forms. Some could require programming 17 changes, etcetera, so that everybody's on the same 18 page and knows what's involved. 19 MS. MATTHEWS: Okay. 20 CHAIRMAN CLOWE: Virginia, could I... 21 CHAIR BRACKETT: Yes, you certainly may, 22 Chairman Clowe. 23 CHAIRMAN CLOWE: If I could make a 24 comment, my name is Tom Clowe. I'm chairman of the 25 Texas Lottery Commission. I'd like to make a 0028 1 suggestion that might be responsive to your question, 2 Marilyn, about the response that the subcommittees are 3 to come up with. 4 My sense is that you're searching for 5 what the job is and what the product is that is being 6 asked for here. And I would like to ask you to 7 consider working with the staff. I think Billy had 8 said that the staff is going to be working on this and 9 is going to be generating with all the resources in 10 Charitable Bingo Division a lot of the work product 11 that you're talking about here. 12 And if I were you as the member, primary 13 member of a subcommittee, I would think about working 14 with the staff to try to develop what it is that 15 they're going to come up with and see as a member of 16 the BAC how you feel about that. 17 And my sense is you'll work together, 18 that the staff doesn't work in one area and you don't 19 work in another and then you come together and try to 20 reconcile because you don't have the resources and you 21 don't have so much of the knowledge and the time, 22 maybe. 23 But you act as an oversight or guidance 24 factor to the work that's being done. I don't know 25 how Billy would react to that and whether that serves 0029 1 the purpose that you had in mind when you laid out the 2 suggestion for subcommittees, but I think that keeps 3 you with what you have to provide and from having too 4 much of a burden on you. 5 And I think my sense is you are valuable 6 as an oversight and a general guide to the work that 7 the staff's going to do. What's your reaction? 8 MR. ATKINS: My reaction to that, Mr. 9 Chairman, is we look to you and the other two 10 commissioners for oversight. We would look to the 11 Advisory Committee for advice and assistance upon how 12 to go about doing that, making sure if there's 13 something that we haven't thought about. 14 CHAIRMAN CLOWE: Sure. 15 MR. ATKINS: Making sure that what we're 16 proposing, you know, is feasible. 17 CHAIRMAN CLOWE: And I didn't mean 18 approval when I said oversight. I meant advice and 19 assistance in the process. 20 MR. ATKINS: Yes. 21 CHAIRMAN CLOWE: But I sensed in 22 Marilyn's question, you know, she's saying: Gosh, 23 what am I supposed to do? This is a big job and I'm 24 not quite sure where to begin and how to do it and 25 what work product you're looking for. 0030 1 But if the subcommittees could work with 2 the staff for advice and counsel as they move along, I 3 think that clarifies a role that you would be 4 comfortable with as a member of subcommittee. And it 5 is the process, as I see it, of having the input of a 6 BAC member and the public as the process goes along. 7 So when the Charitable Bingo Division 8 offers up the rules to the commission, there's 9 unanimity and there's a general consent as much as can 10 be achieved and you have don't have a collision of 11 different thinking. 12 And Billy, that's where -- that's where 13 I'm trying to head my suggestion. 14 MR. ATKINS: And I would agree. 15 CHAIRMAN CLOWE: And I think that takes 16 some of you off the hook. Some of you have done a lot 17 of work. It's obvious that you're very familiar with 18 this. Some would be asked to do the task that you 19 haven't spent a lot of time on the segments of this 20 piece of legislation. 21 But if you could rely on the staff to 22 help you and you could have input, and I think Billy 23 used the right word -- advice and counsel about it. I 24 think that could have us end up with a good product in 25 the end of the process. 0031 1 And that's just a suggestion that 2 hopefully you'll be open to. 3 MS. MATTHEWS: Thank you. It makes 4 sense to me. 5 MR. WHITTINGTON: I think that's the way 6 it's being done now. We cooperate together, staff as 7 well as Bingo Advisory Committee as well as somebody 8 from the public whenever we form -- a subcommittee is 9 formed with everybody involved. And that's the way it 10 should be. 11 CHAIR BRACKETT: Okay. So Marilyn, 12 you're going to work with the unit accounting? 13 MR. MOORE: I'll do that, too. 14 CHAIR BRACKETT: Okay. And Danny will 15 do that, too. And Mario, the use of net proceeds for 16 charitable purposes, is that what you want to work 17 with? 18 MR. MANIO: (Nodding) 19 CHAIR BRACKETT: Pete, what do you want 20 to work with? 21 MR. PAVLOVSKY: I'll work with Mario on 22 that. 23 CHAIR BRACKETT: Okay, regulation of 24 approved bingo workers. And what did I mean? I wrote 25 down "license." What did I mean by that? 0032 1 MR. ATKINS: Well, there are provisions 2 relating to amending the license and temporary license 3 and that -- 4 CHAIR BRACKETT: Okay. 5 MR. ATKINS: -- might be one. 6 CHAIR BRACKETT: Yeah. 7 MR. ATKINS: And it could just be -- 8 MR. MOORE: Staffing. 9 MR. ATKINS: -- licensing. 10 MR. WHITTINGTON: Yeah. 11 CHAIR BRACKETT: What do you want to do, 12 Larry? Do you want to do the regulation of approved 13 bingo workers? 14 MR. WHITTINGTON: I'll be involved in 15 that, as well as the gift certificates. 16 CHAIR BRACKETT: Okay. And the gift 17 certificates, too? Okay. All right. And license and 18 temporary license? 19 MR. ATKINS: Let's just call it 20 licensing. 21 MR. WHITTINGTON: Yeah. 22 CHAIR BRACKETT: Okay. Licensing, okay. 23 And I will do that because I'm the only one left. 24 MR. MOORE: Well, we got Jack and 25 Suzanne. Maybe one of them -- 0033 1 CHAIR BRACKETT: Oh, yeah. 2 MR. MOORE: -- can be involved in that. 3 CHAIR BRACKETT: They can be -- they can 4 be involved in that. And it's up to you who are 5 working as chairs of these subcommittees to call -- to 6 call on people to work with you. 7 MR. WHITTINGTON: Uh-huh. 8 MR. ATKINS: And we will assign staff to 9 each of those to work with each of those. And they 10 will be in contact with the chairs. And, of course, 11 we'll also do like we did at the last Advisory 12 Committee and have these on the Web site, also. 13 CHAIR BRACKETT: Uh-huh. 14 MR. ATKINS: So you may be able to, if 15 you need to, recruit members that way. 16 CHAIR BRACKETT: And as far as public 17 members, you certainly need to be thinking of some 18 public people you want to work with and see if any 19 hands are waving at you right now if anyone happens to 20 be here today. 21 And some of these things I think 22 previously staff has done some research with, for 23 instance, gift certificates. And Larry, if you can 24 get somebody to dig that back out for you to do that. 25 I recall it as being a complicated thing, but maybe 0034 1 you can work from that. 2 MR. WHITTINGTON: Not complicated. 3 We'll simplify it very quick. 4 CHAIR BRACKETT: Okay. Does that 5 help -- does that cover everything, Billy, at this 6 point? 7 MR. ATKINS: Yeah. I think so. 8 MR. MOORE: So what is the time line 9 again? We didn't discuss it, I guess. 10 MR. ATKINS: Well, there are some 11 different provisions for effective dates in the bill. 12 You know, primarily the bill is effective September 13 1st. So I would for all intents and purposes just 14 encourage committees to work on that time line. 15 MR. MOORE: Okay. 16 MR. ATKINS: There are -- you know, I 17 think Mario, we may look a little closer at your 18 issue. That may actually have an effective date of, I 19 think, the first quarter of 2004. But we'll -- that's 20 something that we can confirm with the subcommittees. 21 CHAIR BRACKETT: Okay. You haven't 22 concluded your report, have you? 23 MR. ATKINS: No. Actually, I have. 24 CHAIR BRACKETT: You have? Okay. 25 MR. ATKINS: Yes, ma'am. 0035 1 CHAIR BRACKETT: Okay. Steve Bresnen, 2 would you like to -- while Steve is coming up here, I 3 want to remind you if any of you want to speak, please 4 sign a witness affidavit form. It's outside. And if 5 you change your mind later on and don't speak, that's 6 fine. But we do have to have it for you to. 7 MR. BRESNEN: Thank you, Madam Chair. 8 My name is Steve Bresnen. I'm here on behalf of the 9 Bingo Interest Group. 10 I'm passing out to you a document called 11 a "Positive Agenda, How to Help Charitable Bingo." 12 The top page is a summary. The rest of the document 13 is a detailed explanation. I've got some extra copies 14 of here if anyone would like to see it. 15 I dressed all in black today not because 16 I'm a particular fan of Johnny Cash, but because I 17 felt since it was my first meeting of the Mafia 18 following the 78th Legislative Session that it would 19 be appropriate. 20 We should be high-fiving today. A lot 21 of people busted their tails for a very long period of 22 time to make the 78th Legislature a successful one for 23 charitable bingo. And y'all may recall that in August 24 of 2001 we set out to work on a positive agenda for 25 bingo that culminated in this document, which was 0036 1 eventually drafted into House Bill 2519. 2 A few of the items didn't make it across 3 the finish line, but a couple of them -- couple of 4 them dropped out. But I think you can see from the 5 work product that we had a very striking success with 6 House Bill 2519. 7 Chairman Clowe, you told us some of 8 these problems need to be solved at the legislature. 9 We went to the legislature. This bill passed 10 legislature without a dissenting vote. 11 There's a real disconnect in my mind 12 when a member of the legislature can stand up on the 13 floor of the House and accuse bingo of being corrupt 14 and at the same time both bodies are passing without a 15 dissenting vote a bill to help bingo and get at some 16 of the problems that have affected bingo. 17 Obviously, Chairman Wilson believes 18 based on his experience that there are problems in 19 bingo that fall under the heading of corruption. If 20 that's the case, then this agency has not done its 21 job. 22 I've represented people in charitable 23 bingo for seven years. I don't know a single one of 24 them to be corrupt. I've attended hundreds of 25 meetings of people who worked on this agenda and 0037 1 worked on Sunset and I saw people trying to solve 2 problems and get to the -- get to the nub of the 3 problem with charitable bingo. 4 And I'm personally offended that there's 5 a cloud hanging out there that labels this industry as 6 corrupt. I don't represent corrupt people. So I 7 think one lingering odor from the session that's very 8 unfortunate is this notion of corruption. And I think 9 as we go about implementing House Bill 2519, that we 10 need to think about the ways that it -- that bill can 11 address potential corruption in this industry because 12 I don't think we can -- I don't think we can ignore 13 the label. 14 So how might it do that? We didn't -- 15 we didn't set out for that purpose. But I think we've 16 arrived there, anyway. If y'all will keep that very 17 unfortunate concept in your mind as you work on 18 implementation. 19 Unit accounting, fewer sets of books and 20 records for this agency to audit will increase 21 accountability, should reduce slippage and just plain 22 old mistakes. It should make the audit dollar of this 23 agency go a lot further than it's been going. 24 And I fully intend with his permission 25 and the other commissioners to visit with the 0038 1 commissioners about how some internal changes might be 2 made in this agency to drive those audit dollars into 3 ferreting out corruption if it's there or having 4 everybody on the same page with respect to the fact 5 that it's not there. 6 So Chairman Clowe, with your permission 7 I'll be getting back to you about that issue and other 8 problems that I think the process in this legislature 9 exposed within this commission that cannot be ignored. 10 The issue of how you spend your net 11 proceeds from bingo once you have made the money, I 12 think, can also go towards reducing this notion that 13 there's a slippage perhaps due to corruption between 14 the dollar that comes in the door and what gets to 15 charitable purposes in this state. 16 People are no longer going to have to 17 chase around a vague statute that has a lot of 18 high-flown language in it and that nobody knows what 19 it means. There will now be an external established 20 referee on those issues. And furthermore, people are 21 not going to have to spend five and 10 thousand 22 dollars at a whack to go and defend themselves over 23 issues that they shouldn't be having to defend 24 themselves over. 25 As the agency's involvement with those 0039 1 issues is reduced, additional dollars should be freed 2 up to go into the audit function to ferret out the 3 corruption that supposedly exists in this industry. I 4 could go on, but I think you get my drift. 5 As you can tell, I'm more than my usual 6 animated self about this. And here's why: Because 7 Velma Markham, who uses a walker, came to a bunch of 8 meetings to develop this agenda. She stayed there 9 until the wee hours of the morning in multiple 10 legislative hearings to see this agenda through. 11 And to have that broad brush of 12 corruption attached to all these people who did that 13 work is personally offensive to me as a citizen of 14 this state. Consequently, for the next two years I 15 intend to step up my level of work on this client and 16 this issue to ensure that when it's over, if there's 17 corruption, we by God know about it and something's 18 being done about it. 19 And I want to say thanks to a few 20 people. I want to say thanks to all these people in 21 this room here who come to all of these meetings. 22 They didn't make a dollar off of doing it. I made a 23 dollar off of doing it, but they didn't make a dollar 24 off of doing it. 25 There's too many of them to list, but I 0040 1 do want to mention a few of them. Larry, I want to 2 thank you for coming down during the legislative 3 session when you were called and asked to come and 4 work on some issues. You showed up about an hour and 5 a half later just like that. 6 Danny Moore, Jane Thompson, Ken 7 Griffith, Hal Ryan with the Littlefield Corporation, a 8 whole lot of people have put a lot of effort into 9 shepherding this industry and this legislation in 10 getting this bill across the line, and you-all are all 11 due a tremendous debt of gratitude and respect from 12 this industry. 13 And Danny, when you said to me that you 14 had friends asking you what kind of industry are you 15 involved with when they're reading about this 16 corruption thing in the newspaper, that really got to 17 me. 18 MR. MOORE: Yeah. That's an 19 embarrassment. 20 MR. BRESNEN: And I'm sorry that you had 21 to -- I'm sorry that you had to experience that. 22 Carl Fontenot, all the folks from the 23 Houston area, Phil Arnold, y'all ought to know who you 24 are. Bill Smith -- Bill Smith could barely get out of 25 bed half the session and came down here as did Trace, 0041 1 Gene. Thank you, Gene. 2 Now I would like to suggest some 3 priorities in the implementation of this bill. And 4 they are unit -- the unit accounting portion. That's 5 the single most important thing that's happened in 6 this industry in a very long time, but it has some 7 things that have to be done in order for it to be 8 accomplished. 9 We've got the issue of whether these -- 10 whether these units, how they're going to be treated 11 for federal tax purposes. That seems to me to be the 12 most serious issue facing how we organize that and 13 whether there's a way around it. If we don't have 14 some CPAs involved with that, we need to get them 15 involved because I believe there's a way to skin that. 16 And I think until you do that and until 17 you encourage people to start operating in that form, 18 they're going to spend millions of dollars complying 19 with an outmoded, fragmented regulatory system that 20 nobody in their right mind would design looking at it 21 today. 22 And we've got to get the industry into 23 that mode of operating and this agency into that mode 24 of addressing regulatory issues or that same sort of 25 inefficiency is going to occur forever in these same 0042 1 numbers that have been given to the legislature and 2 are distorting the picture in charitable bingo. 3 That's going to continue year after year after year. 4 We'll be here having the same discussion two years 5 from now. 6 The other thing is also involves the 7 IRS, and that's the how you can use your net proceeds 8 issue. It seems to me because those both involve 9 issues that need to be addressed to the IRS, that it 10 would be appropriate to structure your implementation 11 work around those issues and those -- that kind of 12 assistance that we can get from the Internal Revenue 13 Service. 14 The sooner people out here in inner 15 lands understand what they can do with their money and 16 the sooner they have the benefits of unit accounting 17 available to them, I think the better off we're all 18 going to be for a lot of reasons. 19 One of the things that may not -- I'm 20 sorry about the stream of consciousness effort of 21 this. But when I get angry, it's usually the way I 22 talk. 23 One of the things that I don't think has 24 been mentioned yet is that this agency gets to go back 25 through the Sunset Review process again. Despite all 0043 1 of the work that we did on Senate Bill 270 to try to 2 make the Sunset Commission's recommendations work, 3 that went for not. 4 We put a lot of time and effort into 5 that. Many of you came to the hearings. Many of you 6 worked on pieces of that. And so the legislature 7 determined that they would change the Sunset date, put 8 it two years off into the future. And they asked the 9 Sunset Advisory Commission to review its 10 recommendations and determine if they were appropriate 11 going forward. 12 So we're going to get to go through at 13 least some truncated part of that process again there. 14 And I think what we need to do, as far as implementing 15 that action of the 78th Legislature, is correct the 16 numbers. The very numbers that we talked about in 17 this BAC and in front of this commission were once 18 again used in the House of Representatives to draw 19 conclusions about this industry when the numbers 20 themselves are rotten numbers. 21 They've been repeatedly demonstrated to 22 be rotten numbers. It's a bogus way of accounting for 23 human activity and ought not to be tolerated further. 24 So one of the things I would ask as we implement that 25 part of the 78th Legislature is to focus on Item No. 0044 1 1. It's Item No. 1 for a reason. 2 And that is to have a way of accounting 3 and describing to the legislature what happens in 4 charitable bingo that reflects the reality of it. 5 Y'all didn't get credit for seven million dollars of 6 productivity for charity during the year that was last 7 reported in the Sunset -- by the Sunset staff. 8 The commercial lessor and the 9 distributors' proceeds were described in terms of 10 gross proceeds and compared to the charities' 11 revenues, net revenues. And it made it look like the 12 charities made more money -- I mean the for-profit 13 actors made more money than the nonprofit actors. 14 That's not true. 15 And yet, many people in the legislature 16 think it's true because those numbers have been 17 routinely reported that way. It's been going -- it's 18 gone on for a long time. So part of implementing that 19 is to implement number one. And y'all can play a role 20 in that over the next, I would suggest, year or so. 21 That is an item from the 78th Legislature that will 22 require implementation. 23 Well, I'm out of gas. Y'all can tell 24 that I'm not happy about this. I think we've got a 25 lot more work to do. I'm sorry to tell y'all this, 0045 1 but when you cross the finish line and there's another 2 mile to run. 3 I think this is a very good bill. I 4 feel very good about my contributions to this bill. I 5 feel very good that everybody from bingo, people in 6 bingo are not fighting with each other. We came down 7 here. We worked on rules. Mr. Chairman, we did what 8 you told us to. 9 And I'm personally proud of it. I hope 10 y'all will focus on those priorities that I mentioned. 11 And I also would ask Madam Chair that at the 12 appropriate time, whether it's today or another day, 13 that the subject of corruption in the bingo industry 14 be placed on your agenda, that there be a -- that that 15 be made a high priority if you have to amend your work 16 plan. 17 And I think we should get to the bottom 18 of it. And if there are people who are corrupt, they 19 need to be put in jail or run out of bingo. And in 20 the meantime, all you good people don't need to be 21 slimed from the floor of the House of Representatives. 22 I'd be happy to answer any questions. 23 CHAIR BRACKETT: Are there any 24 questions? 25 MR. BRESNEN: Thank you. 0046 1 CHAIR BRACKETT: Thank you, Steve. And 2 I -- as a bingo operator and have my name listed that 3 way, I, too, felt very misused and accused. 4 Steve Fenoglio will speak on Item No. 4. 5 MR. FENOGLIO: Thank you, Madam Chair 6 and committee members. My comments, Madam Chair, will 7 be brief. I would be happy to work on any of the 8 subcommittees that y'all have reported and I would 9 encourage you, Billy, to continue to put those 10 meetings on the Web site so that others can know A, 11 who to contact with. 12 I had -- one of the things that y'all 13 have done well on your BAC members is if there's a 14 click-on where you can contact immediately on e-mail 15 and a phone number so that you can -- if you wanted to 16 comment, for example, on unit accounting and Danny is 17 the contact person, it's easy to make the contact for 18 it. 19 By the way, my name is Steven Fenoglio 20 and I represent over 950 charitable organizations. 21 I've provided the list before. I'll be happy to do so 22 again, but I'm trying to save trees. 23 The clients that I represent, too, were 24 concerned about some of the comments that were made in 25 the legislative session. I've practiced here in front 0047 1 of the Lottery Commission since 1994. I've regularly 2 attended at least two-thirds of the Commission 3 meetings and all but a couple of the BAC meetings. 4 And I'm unaware of any allegation of any 5 widespread fraud or corruption. And if it is, it's 6 been well-hidden. And I'm looking at Billy and he and 7 I had some discussions through the years about whether 8 a particular charity was following the law or -- and 9 there was -- there were sometimes healthy 10 disagreements about what is intended by the law. 11 But I've never heard the staff ever 12 suggest or allege that there's some sort of corruption 13 widespread or even narrow spread, for that matter, in 14 the industry. And I've seen the Lottery Commission 15 revoke licenses for charities who didn't pay their 16 taxes on time or at all, but I've never even -- where 17 the State actually lost money. 18 But I've never even seen that anyone at 19 the commission has suggested that that action in 20 violation of the Bingo Enabling Act amounted to any 21 sort of corruption. By the way, the same is true on 22 the lottery retail licenses. They also revoke retail 23 licenses for failure to pay to the State its due on 24 the lottery side. 25 I look forward to working with y'all. 0048 1 We are hopeful that the governor will allow House Bill 2 2519 to come into law. And on the unit accounting 3 issue, some of you heard me discuss River City Bingo. 4 We think we can save about 10 thousand a year once we 5 implement it in reduced accounting costs, direct 6 costs. 7 And I would suggest that for mature 8 halls, it will be that kind of number. And I say 9 mature hall, large halls where you're keeping five 10 separate books and trying to more or less levelize or 11 equal all of the distributions across the board. 12 We pay about 23 thousand a year to 13 someone just to keep track of all those books and 14 records, five charity organizations, five sets of 15 paperwork, five quarterly reports. When there's a 16 problem with one of the reports, it's usually five 17 sets of paper that have to be corrected. 18 So we're looking forward to one set of 19 books, one set of paper, one set of inventory with a 20 significant cost associated with it. So I would agree 21 with to the extent that you prioritize with, Madam 22 Chair, members, that unit accounting be the first. 23 And also the second priority would be 24 the use of bingo proceeds. I have a couple of cases 25 like cases where we're litigating the use of bingo 0049 1 proceeds. I know that's a difficult issue from the 2 staff's position, as far as, you know, licensee's 3 position. And I think once the commission gets up to 4 speed on the use of bingo proceeds, that you'll 5 eliminate a lot of headache on both sides. 6 I'd be happy to answer any questions. 7 MR. ATKINS: Steve, since you raised the 8 issue, I just -- on the Web site, if you keep looking 9 at that, I think that if we haven't already made some 10 changes, there's some that are coming on the work 11 groups whereby they cannot only contact members but 12 also obtain copies of working documents and submit 13 on-line comments at the same time. 14 MR. FENOGLIO: Excellent. 15 MR. ATKINS: Has that be implemented, 16 Rick? Do you know? 17 MR. FRYFINGER: Draft rules? 18 MR. ATKINS: Yeah. 19 MR. FRYFINGER: No. No draft rules. 20 MR. ATKINS: Okay. But that's -- 21 MR. FRYFINGER: It's ready. It's ready. 22 MR. FENOGLIO: That would be great. 23 CHAIR BRACKETT: Any other questions? 24 MR. FENOGLIO: Thank you. 25 CHAIR BRACKETT: Thank you. 0050 1 AGENDA ITEM NO. 5 2 CHAIR BRACKET: Okay. I believe that 3 we're ready to move on to Item No. 5, consideration of 4 and possible discussion and action on a new rule 5 relating to transfer of funds. Terry Shankle? 6 MS. SHANKLE: Good morning. My name, 7 again, is Terry, T-E-R-R-Y, Shankle, S-H-A-N-K-L-E. 8 This was last read at the April 23rd 9 meeting. And since then, we posted on the Web site. 10 I have not received any comments regarding this 11 proposed rule. And I'm asking today for you to allow 12 us to go forward to the commissioners to have this 13 published in the Texas Registry. 14 CHAIR BRACKETT: Okay. We have one 15 person that would like to make a comment on this, 16 Charles Hutchings. 17 MR. HUTCHINGS: Good morning. My name 18 is Charles Hutchings. In reading this draft, and I 19 may be, you know, pretty -- pretty simple on this, but 20 everything that appears on here is readily available 21 as a -- monthly bingo income, monthly bingo expenses, 22 payroll, all of this stuff is basically available on 23 quarterly reports. 24 I do not understand why, you know, they 25 would want an organization to send something in. They 0051 1 would just do the same thing. They would undoubtedly 2 just take it off the quarterly reports. So suggesting 3 a transfer of funds back or forward, whichever the 4 case may be from the general fund, you know, I don't 5 see the need for all that paperwork. 6 Also in line E, if the loan is not paid 7 back to the organization's general fund by the renewal 8 date of the license, the last few words: Operation 9 may then initiate disciplinary actions. 10 Well, what does this reach to? Does 11 this mean we're going to send them a nonpayment 12 letter? Is that what they're going to get? You know, 13 are they going to fine them something? They're having 14 problems paying back the loan, so they're going to get 15 a fine? You know, that wouldn't really help them. 16 You know, I just fail to understand 17 where it's going and why some of this information 18 would be necessary for them to compile and send in. 19 Thank you. 20 CHAIR BRACKETT: Terry, would you like 21 to address that? 22 MS. SHANKLE: Please. 23 Thank you, Mr. Hutchings. I appreciate 24 your comments. The reason that we had this rule, 25 again, is that we've had it in the past. And it's 0052 1 just a guideline. The reason that we're asking for 2 the monthly bingo income, the expenses, the payroll, 3 etcetera are for those organizations that are asking 4 for an original license. 5 They have never played bingo. This is 6 their initial more or less start-up cost. And so we 7 need to know from them what their anticipated income 8 and expenses will be to see if they're going to be 9 able to pay back this loan because we don't want for 10 an organization to be able to borrow 25 thousand 11 dollars for bingo equipment, supplies, etcetera for 12 their start-up and not be able to pay themselves back. 13 And so again, the initial is for the 14 original applicants. And also, the initiate 15 disciplinary action, the -- yes, we could send out an 16 administrative disciplinary action such as an 17 opportunity to show compliance with why are you not 18 able to pay back this loan and go forward, as far as 19 revocation of the license. 20 CHAIR BRACKETT: Okay. Does anyone have 21 any questions of Terry? Charles, does that help you? 22 MR. HUTCHINGS: Yes, Madam Chair, it 23 does. But if that's what it's for and that's what I 24 wrote down beside this is on an original application 25 this stuff is out there and it's merely for bond and 0053 1 license fee purposes is what I've always, you know, 2 considered it to be for is original application. 3 So I mean, you know, if they wish to say 4 original application for, you know, that would be one 5 thing. But just to issue a transfer of funds, well 6 that takes in the whole spectrum. And like I say, I 7 don't think a fine or revocation of license -- if 8 they're doing anything at all, this disciplinary 9 action thing I think goes way too far. 10 CHAIR BRACKETT: Go ahead. Do you have 11 further comment, Terry? 12 MS. SHANKLE: No, ma'am. I don't. 13 CHAIR BRACKETT: Okay. Phil -- Phil 14 does, Phil Sanderson. 15 MR. SANDERSON: Phil Sanderson, 16 assistant director of the Charitable Bingo Operations 17 Division. 18 The items in paragraph A-1 that Mr. 19 Hutchings is referencing to first off is -- Terry is 20 correct in that primarily the original applicant is 21 the one that we need to get that information from. 22 Secondly, the bingo financial summary is 23 currently called schedule F. And it's a required form 24 for an original applicant to complete. So it's 25 already in the packet. And secondly, it's one page. 0054 1 And even for organizations that are currently 2 conducting bingo, filling out that form and sending it 3 would be just as simple as requesting -- you know, 4 writing a letter and requesting it. 5 So there's not any additional burden to 6 submit that form. I just wanted to offer that 7 comment. 8 CHAIR BRACKETT: Anyone have any 9 questions of Phil while he's here on this subject, of 10 course? All right. Thank you. Anything further, 11 Terry? 12 MS. SHANKLE: No, ma'am. Thank you. 13 CHAIR BRACKETT: Are you ready to vote 14 -- I mean to make these recommendations? 15 MR. FENOGLIO: Madam Chair, I had filled 16 a -- in mine on this item. 17 CHAIR BRACKETT: Okay. I'm sorry. 18 Yeah, you sure did. I'm sorry. 19 MR. FENOGLIO: For the record, my name 20 is Stephen Fenoglio. Two observations, and as I 21 indicated, I opposed the rule as drafted. 22 The -- in subparagraph B, it says: 23 Prior -- prior to approval, the commission must find 24 that. 25 And I don't think the commission staff 0055 1 is meaning that literally whereby the commissioners 2 would approve that. And I hope that's the case 3 because I don't think that historically they've 4 actually waited for a commission meeting before the 5 commission can approve those funds. 6 I assume that would be discretionary 7 where either the staff could do it and if the staff 8 for some reason refused to approve the loan, they 9 might come to the commissioners for a decision. But 10 the way I read it, I could read it two ways where if a 11 charity applied for it, the approval would not occur 12 at Billy Atkins' level or Phil Sanderson's level, but 13 you'd have to bring it to the commissioners for final 14 approval. And I don't think that's what y'all 15 intended. 16 The other thing is to nitpick. And I 17 think that's a nitpick. I see Billy nodding his head 18 in agreement, so -- 19 MR. ATKINS: No. I think that's a good 20 comment. 21 MR. FENOGLIO: And I apologize, Billy. 22 We've been focused so much on the legislature. I knew 23 this rule was out here, but I didn't give it any 24 thought until this morning. 25 Subparagraph E, it says if the loan is 0056 1 not paid back by the renewal date. But Billy, in the 2 earlier provision you're giving them up to 12 months 3 to pay it back under subparagraph B-3. So you give 4 them 12 months. 5 Let's say they apply for a loan. The 6 license renews December 31st. They apply in June of 7 that year and you're giving them a 12-month payback. 8 But when the renewal comes around, the way it's read, 9 the commission has to initiate disciplinary action on 10 the renewal date in December, even though they're 11 complying with the previous approval and they've got 12 six more months to pay it off. 13 And I know -- I know that's not what 14 y'all intended. I think what you intended was if it 15 had been out there, if they were violation of their -- 16 of their payback term/terms, that if you didn't take 17 initiate -- that if you did not initiate disciplinary 18 action before, that you would initiate disciplinary 19 action upon renewal when it came forward. 20 And those are the only two comments that 21 I have and I think that's easy to remedy as really 22 technical corrections. And I'll be happy to answer 23 any questions. Thank you, Madam Chair. 24 MR. ATKINS: Would you mind following up 25 with Terry? 0057 1 MR. FENOGLIO: Sure. 2 MR. ATKINS: Making sure she has all 3 that. 4 MR. FENOGLIO: Thank you. 5 CHAIR BRACKETT: Okay. I'm sorry I 6 overlooked you there, Steve. 7 MR. FENOGLIO: That's all right. 8 CHAIR BRACKETT: And I hope I'm not 9 overlooking anyone else who wants to speak to this. 10 And are we ready to take the requested action, that 11 the Charitable Bingo Operations Division request that 12 the Bingo Advisory Committee recommend to the Texas 13 Lottery Commission that proposed new administrative 14 rule 402.584, transfer of funds, be published in the 15 Texas Registry for formal comment? 16 Are all of you in favor of that? Please 17 say aye if you are. 18 MS. MATTHEWS: Well, what about the 19 changes that Steve mentioned? 20 MR. WHITTINGTON: Yeah, with proposed 21 changes. 22 CHAIR BRACKETT: Yeah. Do you want to 23 accept it with those changes that Steve proposed? 24 MR. WHITTINGTON: Yes. Aye. 25 CHAIR BRACKETT: Okay. Then the motion 0058 1 is to accept -- to take the action with the changes 2 that were proposed by Steve, correct? 3 MR. ATKINS: Yes. 4 CHAIR BRACKETT: Okay. All those in 5 favor? 6 CHAIR BRACKETT: No one opposes that? 7 All right. Thank you. Let's move on to Item No. 6. 8 AGENDA ITEM NOS. 6, 7, & 8 9 MR. ATKINS: Can 6, 7 and 8 be taken up 10 together? 11 CHAIR BRACKETT: Yeah. Marilyn, do you 12 want to take 6, 7 and 8 together since you did all 13 three of these? 14 MS. MATTHEWS: Yes. Roy, I have not 15 been able to talk to him this morning and we have not 16 met regarding this. I did not know that this was 17 going to be requested to be published in the register. 18 I don't believe we're ready for that. 19 We had some changes we talked about that 20 have not been implemented here, so I don't think that 21 this is ready. 22 CHAIR BRACKETT: Now are you talking 23 about location verification inspection? 24 MS. MATTHEWS: All of them. 25 CHAIR BRACKETT: All of them? All 0059 1 three? The general audit, location verification, tax 2 review? 3 MS. MATTHEWS: Right. The other issue 4 that came up when we were discussing this is that 5 there are some other rules that most people would say 6 are audits. They're not technically audits, but 7 compliance reviews, people think those are audits. 8 Seems to me that those things should all 9 be taken up together. And I notice there is a further 10 agenda item that suggests a committee be formed to 11 take up these other two items. I would suggest we 12 just take up all of these items together with the same 13 subcommittee. 14 MR. ATKINS: I don't think staff would 15 agree with that. And I'm caught a little off guard 16 that you've had no contact with Roy and it's your 17 opinion these aren't ready because I got an opposite 18 statement from Roy that he had sent you the enclosed 19 memorandum, that there was a discussion at at least 20 one of the -- I guess at the last meeting that this is 21 what the committee was going to bring forward. 22 MS. MATTHEWS: The last meeting we had, 23 I guess it was May 27th according to this time line, 24 we discussed changing the format of all of these rules 25 into more of a whole instead of separate rules because 0060 1 the reader -- I believe most readers are going to view 2 these all as audits. You can call them inspections or 3 reviews or compliance reviews. 4 They're going to say they're being 5 audited, so why not put them all in one rule? Seems 6 to me it would be easier to understand and then 7 delineate each item as you went along. And that's 8 what we talked about at the last meeting. And Roy was 9 going to take that up with you and meet with counsel. 10 And I have not heard back. Now I may 11 have missed getting something. 12 MR. ATKINS: Do you recall that, Tom? 13 MR. LIECK: My name is Tom Lieck. I'm 14 the audit manager in San Antonio. The last meeting on 15 May 27th, I wasn't able to be involved with that. 16 MR. ATKINS: Okay. I don't recall Roy 17 discussing that with me. My initial reaction, I -- I 18 would not agree that it would be simpler to have one 19 big rule with everything in it. I think it would be 20 more useful for organizations to have separate rules 21 relating to the separate activities. 22 MS. MATTHEWS: Well, it may be a minor 23 point. But it seems to me a comment that Roy had made 24 was that this failed the last time it was brought 25 forward because people did not like that there were so 0061 1 many more rules and that's why it failed. 2 And I can sort of understand that. And 3 I know the auditor came -- and I said audit and I 4 should know better. She was doing a compliance 5 review. I didn't know the difference, and I don't 6 think very many people do know the difference. 7 All they know is there's an auditor 8 coming out there to look at their records. 9 MR. ATKINS: And it's our intent that 10 having these rules will let people know so that 11 they'll understand. 12 MS. MATTHEWS: Right. 13 MR. ATKINS: And I know that we have 14 discussed in the past, Marilyn, if the general 15 consensus is, you know, nobody just doesn't want any 16 more rules. 17 MS. MATTHEWS: Right. 18 MR. ATKINS: You know, I would not view 19 that as a reason not to move forward. 20 MS. MATTHEWS: I agree. I agree. 21 MR. ATKINS: I mean... 22 MS. MATTHEWS: You have to have the 23 rules. You have to have a lot to back up what you're 24 doing. And all I'm saying is let's make it as 25 readable as possible. And if some -- if an auditor 0062 1 came to me and said "Your charity is going to have a 2 location verification inspection," we would say we're 3 being audited. 4 Most of us would say we're being audited 5 because it's an auditor doing an inspection. So it 6 seems that these things are all part of a whole to me. 7 Why do we have separate rules? We think it's more 8 readable separately. 9 MR. ATKINS: I think it's more readable 10 if -- you know, if someone gets a letter that says 11 we're -- you know, are going to conduct a compliance 12 review, I think it's easier if they go to a list and 13 see compliance review instead of having to just assume 14 that compliance review appears under one rule relating 15 to, say, audit. 16 To me it's more telling to the public 17 if, you know, there's something that says compliance 18 review. 19 MS. MATTHEWS: Okay. Well, that was 20 about the only thing I think that we had left. 21 Sharon, you're back there. Do you recall anything 22 else or Larry? 23 MR. WHITTINGTON: Yes. What we 24 basically discussed, this diagram in the agenda book 25 is what we did amend and we agreed to. But at the end 0063 1 of the meeting, we also discussed separating audit 2 rule and inspection, having audit rule and the 3 provisions that pertain to audit rules and having 4 inspection rules, the provisions that pertain to 5 inspection rules. 6 And, of course, it was a lot more rules 7 that wasn't -- wasn't presented. And but we didn't 8 have time. We said once we all got together we should 9 have the same subcommittee and present those rules. 10 And then we might can incorporate all these rules into 11 one section like an audit section and inspection 12 section. 13 We did discuss that. But as it was in 14 the book, we did approve and went over them with Roy 15 exactly what was in the book, this part of it. 16 MR. ATKINS: And I think what you're 17 describing is what will ultimately occur. 18 MR. WHITTINGTON: Yes. Yes. 19 MR. ATKINS: But you know... 20 MR. WHITTINGTON: We'll keep -- the time 21 wasn't there. 22 MR. ATKINS: Yeah. This is a start. 23 MR. WHITTINGTON: But we want to -- yes. 24 Yes. 25 MR. ATKINS: And then there are some 0064 1 additional rules that cover some other specific 2 provisions. 3 MR. WHITTINGTON: Yes. 4 MR. ATKINS: So I think that it's not 5 the best use of the subcommittee's time to wait and do 6 it all at once. I think that's part of what we heard 7 the last time is we put everything out there at once. 8 And they said, you know, that's too much. Let us -- 9 you know, we haven't had time to discuss it. 10 MS. MATTHEWS: Right. 11 MR. ATKINS: Etcetera, so that's why we 12 were suggesting breaking it up like that. And then it 13 will ultimately cover those other items that you're 14 talking about. 15 MS. MATTHEWS: Uh-huh. Well, that's 16 another approach to it that may make it more readable 17 to -- or acceptable to people that they don't have to 18 try to digest so much. I just think that most people, 19 an audit is everything. You coming out there, an 20 auditor coming out there, it's an audit. And that's 21 not what an audit is. 22 MR. ATKINS: And there's only so much 23 you can do to make someone understand something. You 24 know, auditors conduct the operator training program. 25 I hope people don't think that's an audit. 0065 1 MS. MATTHEWS: They probably do to an 2 extent. 3 MR. ATKINS: And this may be a way to -- 4 you know, to help educate and clarify some of that. 5 MR. WHITTINGTON: Yes. 6 MS. MATTHEWS: Well, I think as far as 7 the wording goes, we've gone through that and have 8 agreed to it. It's just the structure that we were 9 discussing. 10 MR. ATKINS: And you know, it may be 11 that the -- okay, then that the structure is something 12 that would actually be eligible for consideration in 13 another subcommittee. But if the subcommittee has 14 reviewed and come to agreements on the language, then 15 the staff would still look for the Advisory Committee 16 to move forward on these. 17 And maybe on the subsequent ones, the 18 structure could be discussed in more detail on that. 19 MS. MATTHEWS: Okay. That's fine. 20 CHAIR BRACKETT: Okay. So you're saying 21 that you are ready for this action requesting -- we're 22 not ready to take action yet because we have some 23 people that want to speak. 24 Okay. Charles Hutchings, you wanted to 25 speak on Item No. 6? 0066 1 MR. HUTCHINGS: Let me see what that is. 2 CHAIR BRACKETT: It's the location 3 verification inspection. 4 MR. ATKINS: And make sure he knows 5 we're doing 7 and 8, also. 6 CHAIR BRACKETT: Yeah. And you can also 7 comment on Agenda Item No. 7 and 8. We're doing them 8 all together. 9 MR. HUTCHINGS: One moment, please. 10 Madam Chair, I'll pass on 7. I didn't get a chance to 11 really -- I had one little item on it, not a -- not a 12 major deal. 13 I'm Charles Hutchings. Location 14 verification inspection, 402.591, under one on the 15 front under where it says A, purpose then a little 16 down it says 1 where it's talking about an 17 organization applying for a license or changing the 18 location of a license wanting a verification, a site 19 inspection. 20 I'm not -- I'm just not real sure, but I 21 believe there needs to be a commercial license at a 22 location before a charity can go there, whether 23 they're new or existing charity, and that site should 24 have already had an inspection before. 25 So the locations have all been inspected 0067 1 by the time there's a commercial lessor license. So 2 why do we have to come back and do that again? It 3 just -- looks to me just like spending -- there may be 4 some reasoning behind it, but I can't understand it. 5 It looks to me like spending, you know, 6 the commission's money for really not much outcome. 7 MR. ATKINS: Chuck? 8 MR. HUTCHINGS: Yes, sir. 9 MR. ATKINS: I don't think that's 10 addressing necessarily the playing location as it is 11 when it talks about the principal business address. 12 Now it does address new organizations that are 13 applying. And if you -- lots of times we have 14 organizations where everything is new: the lessor 15 location, the organizations, etcetera. 16 MR. HUTCHINGS: That's understandable. 17 MR. ATKINS: So they do it all then for 18 -- so that's why the organization applying for a 19 license is talking about. But then it's talking about 20 the principal business location, which could be 21 different from the playing location. 22 MR. HUTCHINGS: Well, I'm sure 23 there's -- you know, from what I've heard here at 24 these meetings, there's basically really -- you know, 25 over the state there's several spots where these 0068 1 licenses or a lot of the licenses in this state their 2 books are kept. 3 I mean, you know, so why would you want 4 to repeatedly go out to -- the young man down in 5 Houston has 30-something charities. Why would you 6 want to -- if there's someone moving their records 7 over there, why would it need verification that that 8 spot is there? 9 Or are you going down and actually 10 physically look at that organization's records to be 11 sure they're there? I mean, it just seems like, you 12 know, redundant activities that, you know, just cost 13 the Commission money. And I can't see that it really, 14 you know, adds anything to the mix. 15 MR. ATKINS: Let me give you one 16 example. We have organizations that conduct bingo in 17 Texarkana or they apply to conduct bingo in Texarkana. 18 And we go out there and we do this inspection and it 19 turns out their primary business office is actually in 20 Arkansas. They're not actually a Texas organization. 21 So that's one reason. 22 Another reason: As strange as this 23 sounds, if you look at the city of Amarillo, it 24 crosses between two counties. And in one county, 25 bingo isn't legal. 0069 1 MR. HUTCHINGS: Well, but that's 2 already -- that's knowledgeable. Unless they're, you 3 know, placing something on their application that it's 4 falsehood, why then, you know, that -- that would be 5 known right away as soon as the application came into 6 the division. 7 MR. ATKINS: Well, no. It's usually not 8 known until we go out and do the inspection. And then 9 it turns out where they have the records isn't 10 actually what they put on the application. 11 MR. HUTCHINGS: That's what I said. If 12 they -- 13 MR. ATKINS: Yeah. 14 MR. HUTCHINGS: You know, if they put 15 some falsehood on the application, I can understand. 16 But I think most -- most people are reputable people 17 in the bingo industry. They understand the rules 18 quite well. And, you know, they do everything they 19 can to comply with those rules. 20 And so a lot of this I see just as 21 redundant. I mean, there may be special little deals 22 somewhere or something but, you know, we don't -- I 23 can't see, you know, trying to penalize the whole 24 state over a minor problem here or there. 25 Maybe there needs to be a little fine 0070 1 tune to it or something of that -- something of that 2 area. 3 As is here it says, you know, the 4 organization applying for a lessor license wishing to 5 move. I mean, I understand why that would be, you 6 know, something that would need to be verified. 7 I believe that's -- I believe that's all 8 I have on that. 9 CHAIR BRACKETT: Does anyone have any 10 questions of Mr. Hutchings? 11 Thank you. 12 MR. MANIO: I have a question. 13 CHAIR BRACKETT: Oh, wait. You have a 14 question? 15 MR. MANIO: This really needs for 16 clarification that I'm seeking rather than a question. 17 Now as I go over these proposed rules, is this 18 something that is already done in practice today? 19 MR. WHITTINGTON: Basically. 20 MR. MANIO: And what we're trying to do 21 is put in writing what is already being practiced? 22 MR. ATKINS: Yes. 23 MR. MANIO: That is what I wanted to 24 clarify. 25 MR. ATKINS: We are trying to provide 0071 1 licensees with additional information. 2 MR. WHITTINGTON: Well, the main thing 3 is a lot of this is already being done. We're putting 4 into writing because we want to be a part of that. 5 That's what subcommittees are all about so we can act 6 as the concerned citizens from the general public, so 7 they'll understand and simplify it as much as possible 8 because a lot of people don't understand bingo. 9 If they did, to a certain extent nobody 10 would ever get into trouble about anything. These 11 people want to do right. So we want to make sure we 12 put it into the right simplification form of 13 communications so they can do things right for the 14 Texas Lottery Commission because they want to comply 15 and that's what we're trying to do. 16 MR. MANIO: Well, now the question in my 17 mind is: If I am going to apply for an original 18 license, would I expect a site inspection? And the 19 answer is probably yes. And these are the 20 requirements. 21 And I guess what I'm trying to say or 22 let me make an observation here. And during my 23 experience with the -- with this committee in the last 24 year or so, I detected a tendency to formulate rules 25 for every possible situation -- well, not -- that's 0072 1 probably an exaggeration, but for a lot of situations 2 that we probably don't need rules for them because a 3 lot of situations can probably be addressed by 4 generally accepted -- and there's no need for a rule. 5 If it's absolutely necessary to have a 6 rule, then I have no problem making a rule. 7 MR. WHITTINGTON: Well, the Texas 8 Lottery Commission is going to have their rules. Just 9 to be part of their rules and implement certain things 10 with them so we can understand it for the general 11 public for the bingo people in Texas, we should 12 definitely be a part of that. 13 MR. ATKINS: And let me -- let me 14 respond to that, Mario. We don't make up rules just 15 to have something to do. If we bring a rule forward, 16 we believe there's a reason for it. 17 MR. MANIO: Well, yes. I -- and that 18 was in my statement that if it's absolutely necessary 19 to have a rule, then I have no problem with that. And 20 I'm just reacting to comments I've heard from the 21 public about, you know, too many rules and that kind 22 of thing. 23 And in the meeting today, there are two 24 more items that will be up for subcommittee 25 appointment to subcommittees or formation of a work 0073 1 group. And I don't know if it's absolutely necessary 2 to have those subcommittees at this point. There are 3 a lot of more important things like the unit 4 accounting and net proceeds. 5 And perhaps those two new items can be, 6 you know, deferred for a later time. 7 MR. ATKINS: Well, wait a minute, Mario. 8 You've moved to another agenda item. 9 MR. MANIO: I'm sorry, yes. But I was 10 just stating a case in point about my statement about, 11 you know, regarding rule formulation. And maybe a 12 moratorium on rules for the next six months might be 13 something to consider. 14 MR. ATKINS: Well -- 15 CHAIR BRACKETT: Okay, we'll talk -- 16 MR. ATKINS: I suggest you pick that up 17 under an appropriate agenda item. 18 CHAIR BRACKETT: Yeah. We're going to 19 pick that up under another agenda item, yes. Now 20 we're considering Agenda Items No. 6, 7 and 8, which 21 requires some action. 22 And did you have something you wanted to 23 say? 24 MR. LIECK: No. I was just here to 25 answer questions. 0074 1 CHAIR BRACKETT: Okay. Have you heard 2 questions that you would like to add information to? 3 MR. LIECK: Well, I just wanted to 4 clarify a little bit on the question about the 5 location verification. 6 CHAIR BRACKETT: You need to identify 7 yourself for the court reporter. 8 MR. LIECK: Tom Lieck, audit manager, 9 San Antonio. Just to clarify the principal business 10 location, what we're looking at is where the 11 organization keeps their business records, not bingo 12 records. This is -- we're verifying that they are in 13 existence and this is where they're at and verifying 14 what county they're in. 15 MR. MOORE: Can I make a comment? I 16 understand that, but why does it have to be a rule 17 actually? I mean, you're the authority. They -- 18 somebody wants to get into bingo. They apply for a 19 license. You just tell them: We're coming out to see 20 you at your location. 21 Why does it have to be a rule? 22 MR. ATKINS: I'm going to -- I'm going 23 to ask Kim Kiplin, the agency's general counsel, to 24 come up and discuss again -- because it's occurred in 25 the past -- why we adopt rules. 0075 1 MR. MOORE: Okay. 2 MR. ATKINS: So sorry Kim, but there's 3 apparently still confusion. 4 MS. KIPLIN: My name is Kimberly Kiplin. 5 I'm the general counsel for the Texas Lottery 6 Commission. 7 The question in general is? Why do you 8 have to have rules? Why does a state agency have to 9 have rules when you've got statutes? 10 MR. MOORE: No, I wasn't talking about 11 rules in general. I was talking about this specific 12 point here where somebody applies for a license that 13 wants to apply to play bingo or be a distributor or 14 manufacturer, why should there be a rule in place to 15 say that you're going to tell them you're coming out? 16 Just tell them you're coming out to see 17 them. Why would there have to be a rule for that? It 18 really doesn't make sense to me. You're the agency. 19 You have the right to do things. And if they don't 20 want to play by -- you know, I don't know. 21 I just don't understand why there has to 22 be a rule for that, but go ahead. I'm sorry. 23 MS. KIPLIN: Well, let me just talk 24 generally. 25 MR. MOORE: Okay. 0076 1 MS. KIPLIN: Okay? Because my advice 2 goes to the agency and the Bingo Division. Generally, 3 you have -- an agency operates under statutory 4 framework, which is created by the legislature and 5 becomes law. 6 And then administrative agencies that 7 have the authority, the ability to adopt rules, the 8 purpose of a rule is to put out for the public for 9 those that are also licensed in a licensing 10 environment those interpretations or those policies, 11 those practices and those procedures that affect those 12 folks. 13 And under the administrative -- and I'm 14 talking generally. And I don't have the statute in 15 front of me, so I'm going to qualify my remarks to say 16 that I'm talking off the cuff. 17 But the point is that if an agency 18 engages in a practice or a policy or an interpretation 19 and it's not part of a rule, then their practice can 20 be challenged as being subject to an unpromulgated 21 rule, and therefore can't be -- can't be imposed on a 22 licensee. 23 I think that's to the extent where 24 something's unclear or there's a need for clarity or 25 interpretation. If there's clear statutory authority 0077 1 and the agency just wants to rely on just that 2 statutory authority, it can. 3 But what I think the Bingo Division is 4 trying to do is embody in its regulatory framework, 5 its rulemaking framework their practices and 6 procedures that affect persons. And that's pretty 7 much the definition of what needs to be a rule. 8 MR. MOORE: Okay. 9 MS. KIPLIN: Does that help? 10 MR. MOORE: Yeah. I mean, I don't have 11 a problem with rules. I just -- sometimes you start 12 thinking about it, but I know. 13 MS. KIPLIN: Well, you know, it cuts 14 both ways. 15 MR. MOORE: Where do you cut it off, you 16 know? 17 MR. ATKINS: Yeah. That's right. And 18 you know, Danny, if -- I guess if everybody, you know, 19 reacted, you know, the way you said, "Oh, you're the 20 agency, you tell me not to do something, okay, no 21 problem." 22 MR. MOORE: Right. 23 MR. ATKINS: But, you know, there are 24 people who say "No, I think I want to do that anyway." 25 MS. KIPLIN: And the -- the public 0078 1 policy aspect obviously is to put the public on notice 2 as to the agency's practices, procedures, 3 interpretations and policies in a way that invites 4 notice and comment, notice and opportunity for public 5 comment. 6 And that's what you-all are engaged in 7 now. You're engaged in a debate, as I see it, in 8 terms of the content of a potential contemplated rule. 9 And then from there, it will go to the commission that 10 will also invite that level of input from the public 11 and may or may not propose the rule for public 12 comment. 13 But it's to -- it's to have an 14 engagement of more than just the agency saying: 15 I'm -- you know, I'm the agency and this is the way 16 it's going to be. 17 MR. MOORE: No. And I think we all 18 appreciate that opportunity to be a part of it in the 19 end, so... 20 MR. WHITTINGTON: That's a big part of 21 it. 22 MS. MATTHEWS: Kim, can I ask you 23 something? I have the same problem Danny's having. 24 You know, why -- if this is what you're doing, why do 25 we need these? 0079 1 And what I came to understand and 2 hopefully I understand correctly, this is a like a 3 rule of law. This is what the Audit Division does and 4 this is where they get their authority to do what they 5 do. Otherwise, they don't have -- they don't really 6 have that authority; is that correct? 7 MS. KIPLIN: Well, I think just to go 8 back to my earlier remarks, the authority that an 9 agency gets is that statutory framework. It has the 10 authority -- if it has the authority to adopt rules, 11 the purpose of the rule is to -- is to carry out the 12 purpose of the statutory authority in making the 13 policies and procedures, interpretations, 14 clarifications of the statute so to the extent they're 15 not inconsistent, obviously, with the statutory 16 language carry that out into a rule for the public for 17 the use of the public and for the use of the agency. 18 And just because the agency may have the 19 authority from a statute, once you get into the -- you 20 know, the minutiae, the devil-in-the-details aspects, 21 really the preferred practice, I think, is to have 22 those kind of activities embodied in the rule so that 23 those that are being regulated along with the 24 regulators know -- for lack of a better phrase -- what 25 the rules of the game are. 0080 1 And it puts all on notice and it gives 2 people an opportunity to comment about whether they 3 think that that authority is interpreted correctly. 4 Does that help? 5 MS. MATTHEWS: Yes, thank you. 6 MS. KIPLIN: Do y'all have any other 7 questions? 8 CHAIR BRACKETT: Thank you. 9 MR. HUTCHINGS: Madam Chair, I 10 understood it was 6 and 7 earlier. I have something 11 on 8 if that's... 12 CHAIR BRACKETT: Yes, uh-huh. 13 MR. HUTCHINGS: Charles Hutchings. On 14 Item No. 8 under three -- on mine it's on the second 15 page, three, the organization shall pay all costs 16 incurred, talking about coming out to the halls or the 17 locations to do the audits and having to pay for the 18 expenses for that. 19 Well, for how long? The audits that 20 I've been involved in, all of them have gone on for 21 over a year. They'll -- the auditors call you up. 22 They say "We'll be out there in the morning at eight 23 o'clock." 24 They call you at 9:30 and say "We can't 25 come today. We had to do so and so." These audits go 0081 1 on for extended periods of time. That's just not a 2 reasonable request at all that the organization bear 3 that expense. 4 If they can conduct the audit in 30 5 days, that's probably a reasonable request just to pay 6 for the travel pay, whatever minor expenses are there 7 unless, of course -- you know, in most cases, that 8 would be into a area where they would drive every day. 9 So that would just be for travel pay and meals or 10 however that per diem deal is done through the State. 11 And that might not be a, you know, 12 really unreasonable request. But if this thing is 13 going on for an extended period of time, that's 14 totally unreasonable. There's no reason for that. 15 And you can -- you can make copies. It speaks of 16 making copies and sending them in. 17 I know of one that done that three or 18 four times over the course of the next year or so they 19 had had to reproduce a bunch of that stuff and send it 20 again. It gets lost. I mean, they got all them 21 records in there. They're doing lots of stuff in 22 there. They take all these records in. They work on 23 this one a while, the way I understand it. They work 24 on that one a while. 25 And these records get lost. So then you 0082 1 have to figure out what they don't have anymore, 2 reproduce, find it, reproduce it and send it back to 3 them. The best way to do it is just have it done at 4 the halls where you can keep control of the records. 5 You can keep that stuff set aside for them. 6 They -- the major request is a copy 7 machine and a what, a -- something else they always 8 want when they come in. I don't remember. I saw it 9 set up one day which, you know, just readily available 10 at most offices. So that shouldn't be a problem. 11 They issue a list of records they wish 12 you to present at this. You present those records. 13 You know, and as auditors who have done these things, 14 they should know what records they need, I mean, and 15 maybe one more request for production of records. 16 But, you know, they can go on and on and on with this 17 production of records. 18 I mean, it can just be a -- it can just 19 get into a terrible deal. So there needs to be some 20 guidelines for that. 21 Over in resolution, that's number two, 22 they speak of at the exit conference if the 23 organization is required to make a redeposit and it 24 starts naming number of days for amounts of money and 25 such. It doesn't allow there -- it's just at the end 0083 1 of the exit conference. 2 It doesn't allow for any contesting of 3 those findings or anything else. They -- that just 4 simply states that the money will be put back in X 5 number of days, you know, legal hearing or no legal 6 hearing as to whether that -- you know, that 7 organization feels that is a good deal or not. 8 I mean, it's just -- you know, I think 9 it's -- I think that's -- I think it should be after 10 all the legal hearings have been had. 11 That's all I have. Thank you. 12 CHAIR BRACKETT: Okay. Thank you. 13 Okay. We have some further comment on agenda Item No. 14 6, 7, or 8 and Stephen Fenoglio? 15 MR. FENOGLIO: Stephen Fenoglio again 16 for the record. 17 My comments are only on Item No. 8, the 18 general audit rule. These are some of the same 19 comments that we made in the original audit rule that 20 was ultimately pulled down by the staff. 21 And it has to do with the type of 22 records that are either produced or required to be 23 produced at the beginning of the audit under 24 subparagraph C-1 or alternatively under E-2, 3 and 5 25 where the auditor can ask for additional records. 0084 1 And the concern that I have is -- and 2 this was an existing prior situation where one of the 3 charities at River City Bingo, the particular records 4 that were requested in the initial audit and they 5 asked for all records for the five charities. Two of 6 the charities have -- the records were over 30 7 thousand pages. 8 And you can imagine the cost involved to 9 either copy those or to produce the originals. And 10 what happens if they're lost? Some of those records 11 are by law confidential under either a contract with a 12 state agency, a federal agency or a local agency. And 13 the agency -- the charity upon legal advice refused to 14 produce those records, certainly the confidential 15 records. 16 We offered to request a waiver of the 17 confidentiality clause with the particular agency. We 18 ended up resolving the issue informally. But my point 19 on that is: When they ask for the records, if the 20 charity refuses because they can't under the law, that 21 in and of itself is a violation of this rule. 22 And once it's a violation of the rule 23 under the Bingo Enabling Act subchapter M sections 24 2001.601 through 611, the agency then can take adverse 25 action against the charity solely for the failure to 0085 1 produce the records. 2 And I don't think that's necessarily 3 what the agency had in mind, but I'd hate to get to 4 that point with the rule as drafted if it became law 5 and have to litigate the issue that on the one hand we 6 can't produce the records because of a confidentiality 7 requirement and would be in violation of that, which 8 could include penal provisions, or we lose the license 9 or we're subject to a thousand-dollar-per-day 10 violation for that. 11 And again, those type of requests were 12 made to all five charities at River City Bingo. 13 The -- 14 MR. ATKINS: Steve, can I -- can I 15 follow up? 16 MR. FENOGLIO: Sure. 17 MR. ATKINS: How -- I guess I'm not 18 clear as to how the rule could force someone to -- how 19 it could be a violation of one rule to force an 20 organization to violate another statute. 21 MR. FENOGLIO: Because the rule says 22 the -- under subparagraph C-1 as its drafted must 23 provide the requested records. And then under E of -- 24 subparagraph E, the auditor may require other records. 25 And if you refuse to produce the records -- I mean, if 0086 1 they just say, Billy, no without an excuse, well, you 2 know, that may be the appropriate time that you're 3 worried about some shenanigans going on. Or it may be 4 the appropriate time to sanction them. 5 But under subparagraph 601 of the Bingo 6 Enabling Act, the commission may impose an 7 administrative penalty against a person who violates 8 this chapter or a rule. So they've made the request. 9 If we work it out, I don't have a beef 10 about that. But we came close to not working it out 11 and it came close to when the auditor initially said 12 you have to produce all those records and our solution 13 was -- you know, there's 30 thousand pages of records. 14 Not all the records obviously were confidential. 15 We'll be happy to make them available at 16 our office if you want to come in and do some random 17 inspection. But we're not going to go take 30 18 thousand pages out of our filing cabinets and give 19 them to you where we don't have access to them or 20 we'll make copies and the agency can pay for it. We 21 don't want to pay for it. 22 And so I mean, you see the point on 23 that. So which way do you go? Either way if we 24 refuse to produce them because we think it's onerous, 25 we're in violation of the rule, which raises the 0087 1 spector of an administrative penalty. 2 The other thing is let's say we decide, 3 okay, the auditor said we want the 30 thousand pages 4 and we want you to produce those to us. Okay. We -- 5 and the charity says we can't let all those records -- 6 those are our daily records for the particular period. 7 We haven't finalized our tax return, so we're going to 8 make copies. 9 Who pays for them? The way the rule's 10 drafted, of course, the charity pays for them. 30 11 thousand pages is not an easy copying job. You're 12 going to have to send that out most likely for a copy 13 service. 14 None of those -- as I read the -- where 15 there's question whether you can actually use bingo 16 money to pay for that type of an audit issue. And I 17 question whether we ought to use bingo money for 18 something like that. 19 The other issue is under the costs that 20 are assessed under subparagraph C-3 and Mr. Hutchings 21 addressed that. If the organization wants the audit 22 to be conducted at a location other than the 23 commission's regional office, the organization shall 24 pay all costs incurred. That's a -- that's a new cost 25 to the charity. 0088 1 Under the current law if the charity has 2 to come out, that's part of the licensing fees that 3 are paid to this -- to the Lottery Commission. And as 4 most of you know, the State makes -- not the Lottery 5 Commission, but the State makes over 20 million 6 dollars a year over and above what it costs to 7 regulate bingo based on all the taxes and fees and 8 licenses that are paid to the State. 9 And if they elect to say -- if, let's 10 say, they're in Big Springs, Texas and there happens 11 to be an ARC in Big Spring and there are voluminous 12 records and they say we're not going to -- we don't -- 13 we don't want our records to leave and so the auditor 14 comes -- I guess the nearest office is Lubbock. 15 MR. ATKINS: Odessa. 16 MR. FENOGLIO: To Big Springs, which is 17 a hundred miles, I guess, to Big Spring, 80 -- 18 MR. GARRISON: 58. 19 MR. FENOGLIO: Someone travels it 20 regularly. There's certainly other examples over at 21 East Texas where it would be much longer than that. 22 But the point on that is the cost to -- they get a 23 bill. They can't use under the Bingo Enabling Act 24 bingo proceeds to pay for it. 25 Darned if you do and darned if you 0089 1 don't. My suggestion is if that's the way it has to 2 be, that's part of the cost that the State incurs in 3 regulating bingo. And again, the State makes plenty 4 of money on bingo. 5 And then the final observations are 6 you've got some time frames in here -- actually two 7 observations. You've got some time frames built in 8 that I think are optimistic. In subparagraph F-1 at 9 the bottom of -- these pages aren't paginated -- I 10 guess page -- bottom of page three. 11 The response that the charity has the 12 opportunity to give to an auditor is not later than 10 13 working days after they've received the draft audit 14 report. It's been my experience that's not enough 15 time if the charity wants to respond because at that 16 point, they may not have hired anyone outside to look 17 at the issue, including either a CPA or an attorney. 18 Under -- and finally under subparagraph 19 F-2, resolution, the second and third sentences: 20 Proof of corrective measures taken to address any 21 audit must be submitted in writing within 10 to 20 22 working days of the exit conference. 23 And then the follow-on comment is: If 24 you owe money, you have a certain amount of time to 25 redeposit. Again, if a charity disputes that and they 0090 1 say we either A, we don't think there was a violation 2 so we're not going to take any corrective measures or 3 we think there may have been a violation but we 4 dispute the amount that's owed, unless they agree to 5 whatever the agency says, they violated this rule. 6 There's no other language that says if 7 you disagree -- honest disagreements occur. What 8 happens? And my point again is: If you violate the 9 rule, then you're subjecting the charities to a 10 potential administrative penalty under sections 11 201.601 through 611, including the imposition of fees. 12 And so the agency has the ability to use 13 a hammer over the head of the charity in order to 14 encourage its view of the world. Otherwise, we're 15 going to sanction you. And to my knowledge, Billy, 16 that's not been the practice in the past. 17 Of course, you haven't had an audit rule 18 in the past. But I don't want to get a charity in 19 that position where they're darned if they do and 20 darned if they don't where they said we don't think we 21 owe this amount of money or we don't think we actually 22 violated the rule, there's no finding by the 23 commission that there has been a violation, there's 24 been a determination, an interim determination by an 25 auditor. 0091 1 And by way of example, again River City: 2 The auditor initially took the position that triple 3 net payments under a standard commercial lease 4 agreement were not authorized and disallowed the 5 triple net payments that the charities had contracted 6 to pay and were obligated to pay under the lease. 7 And if you don't know, triple net 8 payments in a standard shopping center lease include 9 your proportionate share or the tenant's proportionate 10 share of common area maintenance, proportionate share 11 of insurance as an example. 12 And the auditor initially said no, you 13 cannot use those -- bingo money to pay that rental. 14 That's a part of the stated rental. And it was, by 15 the way, about a total of 180 dollars a session is 16 what they were paying when you look at the base rent 17 plus the triple net. 18 But my point on that is: If you 19 disagree and you want to go to a hearing, the agency 20 has the ability to hold it over your head that you're 21 in violation of a rule. 22 I'll be happy to answer any questions. 23 MS. MATTHEWS: Maybe there should be 24 something in place like the IRS that if you disagree 25 with the auditor, he does not have the final say. 0092 1 MR. FENOGLIO: Yes. 2 MS. MATTHEWS: You can go to an 3 appellate court and you can go to the next court up 4 the line. 5 MR. FENOGLIO: I would agree, 6 Ms. Matthews. 7 MR. ATKINS: You would -- you would 8 agree to go to court? 9 MR. FENOGLIO: I think that would be one 10 of the results is if the charity says we disagree. 11 MR. ATKINS: Right. 12 MR. FENOGLIO: Then -- I mean, the 13 agency, if you don't -- 14 MR. ATKINS: What happens now? 15 MR. FENOGLIO: Well, effectively, yeah. 16 But you have the problem, though, Billy, with the 17 statute that says if you refuse to do something under 18 this rule. 19 MR. ATKINS: Uh-huh. 20 MR. FENOGLIO: The agency can then 21 initiate a separate administrative action for 22 violation of a rule. 23 MR. ATKINS: Right. 24 MR. FENOGLIO: And whether -- ultimately 25 if I'm correct, I've still got to fight two 0093 1 proceedings. 2 MR. ATKINS: Now you lost me. 3 MR. FENOGLIO: Okay. 4 MR. ATKINS: What two proceedings? 5 MR. FENOGLIO: The administrative 6 penalty proceeding under subchapter M of the Bingo 7 Enabling Act sections 2001.601 through 611 because the 8 agency has now determined that the -- and the charity 9 is not trying to hide it here. We refuse to comply 10 with this rule. 11 MR. ATKINS: Uh-huh. 12 MR. FENOGLIO: We refuse to produce the 13 records because we believe A, we cannot. 14 MR. ATKINS: Uh-huh. 15 MR. FENOGLIO: Or we believe we haven't 16 violated the statute. 17 MR. ATKINS: Right. 18 MR. FENOGLIO: And we're willing to 19 litigate that at SOAH, not necessarily in court yet 20 but at the SOAH proceeding. And so while that 21 proceeding is going on, the agency could initiate 22 administrative penalty provisions under 601 or dump 23 those on top. 24 And again, you've got a heck of a hammer 25 while there's a healthy dispute going on about whether 0094 1 the records have to be produced or who has to pay for 2 them, by way of example. But you're still swinging 3 potentially a hammer of: We're imposing a 4 thousand-dollar-a-day penalties. 5 MR. ATKINS: I don't guess I had 6 envisioned that they would be separate proceedings. 7 MR. FENOGLIO: There's nothing to 8 preclude it. 9 MR. ATKINS: I mean, I don't -- I don't 10 know if I'm -- maybe I'm not following you. But I 11 didn't -- I didn't understand that there would be one 12 proceeding for the imposition of the -- of the fine 13 versus one for administrative action against a 14 license. 15 MR. FENOGLIO: Well, the fact that 16 you're obviously contemplating both is a -- is another 17 concern that I have. 18 MR. ATKINS: Well, I hadn't until you 19 raised the issue. 20 MR. FENOGLIO: Maybe you ought to talk 21 to your lawyers. Do y'all know each other? I'm 22 kidding. 23 I'll be happy to answer any questions, 24 but I don't think that's what was intended. 25 MR. ATKINS: Can you submit suggested 0095 1 language? 2 MR. FENOGLIO: I can't today, but yes, I 3 can. 4 MR. ATKINS: Oh, no. I understand that, 5 but particularly on the issue you raised regarding 6 confidentiality, etcetera. 7 CHAIR BRACKETT: Do you have an example 8 of a confidential file you'll be giving up? 9 MR. FENOGLIO: Well, in the case of the 10 ARC, they provide counseling services to the 11 Association for Retarded Citizens. That was their old 12 name. They provide counseling services to -- 13 CHAIR BRACKETT: Okay. So you're 14 talking about administrative records and not bingo 15 records; is that correct? 16 MR. FENOGLIO: Correct. And I'm not 17 worried about the bingo records. I think the agency 18 has perfect requirements for the bingo records. I'm 19 talking about general fund records. 20 CHAIR BRACKETT: Okay. 21 MR. FENOGLIO: And the argument would 22 be: Were these bingo proceeds used for -- prove to us 23 that your bingo proceeds were used for charitable 24 purpose. We want to see all of the activities that 25 occurred. We want to see all of the records 0096 1 associated with charitable purpose. And in the case 2 of yours, we want to see all your client files. 3 CHAIR BRACKETT: Uh-huh. 4 MR. FENOGLIO: At the High Plains -- 5 CHAIR BRACKETT: South Plains. 6 MR. FENOGLIO: South Plains, excuse me. 7 As to the South Plains organization's charitable 8 distributions, charitable purpose and records 9 relating, pertaining to any expenditures. 10 CHAIR BRACKETT: Okay. 11 MR. FENOGLIO: And I'm assuming some of 12 those records are confidential, yes. That's one of 13 the problems. 14 CHAIR BRACKETT: Any other questions of 15 Steve while he's still here? 16 MR. WHITTINGTON: The main thing we're 17 just saying this draft is okay. We just need to 18 follow up with some changes? 19 MR. FENOGLIO: I think we should have an 20 audit -- 21 MR. WHITTINGTON: The language? 22 MR. FENOGLIO: I think we should have a 23 reasonable ARD rule. And the reality is a lot of 24 these things that are going on in the audits, they 25 don't have a written rule, but they do have some 0097 1 informal procedures. 2 We've talked about that and I think it's 3 time to, yes, have some things in place for that. I 4 mean, you already have them. The auditors already 5 have this list of issues. It would be helpful if the 6 charities had an idea -- okay, well, I see why they're 7 asking that record -- for that record. 8 I don't agree that we need to produce 9 them, but I see why we've been asked for that record. 10 I think that would help. Thank you. 11 CHAIR BRACKETT: Any other questions? 12 Okay. All right. On what we -- what 13 these are on the agenda for is to recommend to the 14 Lottery Commission that these proposed rules be 15 published for formal comment. 16 MR. WHITTINGTON: With changes, and with 17 suggested language. 18 CHAIR BRACKETT: Yeah. And with 19 suggested language. Is everyone -- are y'all ready to 20 take action on that? 21 MS. MATTHEWS: Do we have to say what 22 changes? 23 MR. BRESNEN: Madam Chair, I'm sorry. I 24 had not intended to speak because I didn't -- I didn't 25 realize you were that far. 0098 1 MR. ATKINS: Steve, can you come up? 2 MR. BRESNEN: Yeah. Now if you don't 3 mind just writing in Item No. 8 on my form up there. 4 CHAIR BRACKETT: Okay. 5 MR. BRESNEN: I'm Steve Bresnen here on 6 behalf of the Bingo Interest Group. And I apologize. 7 I'm playing catch-up a little bit here due to 8 involvement with the legislative session, but I didn't 9 realize y'all were quite that far along since the -- 10 it was draft for discussion only. 11 I didn't realize you were at the point 12 now where you might be -- 13 CHAIR BRACKETT: Well, actually what 14 we're doing is discussing all three at one time. 15 MR. BRESNEN: Okay. 16 CHAIR BRACKETT: 6, 7 and 8. 17 MR. BRESNEN: All right. Well, let 18 me -- let me talk about 8 real quick, if I might. And 19 I'll be -- I'll be brief and I'll try not to be 20 redundant, although I do want to point out that once 21 again, this is a cost. This is a -- this rule imposes 22 new costs on people and the -- specifically the 23 charities. 24 And if we're trying to give more money 25 to the charities, bottom line: This ain't going to 0099 1 get it. 2 On the first page down under what Item 3 No. B, subsection B, notification, it's talking about 4 forms that may be issued, which I understand that the 5 sentence says the forms may include, but are not 6 limited. I think that speaks volumes that they're not 7 limited. 8 So it can be anything at any time. But 9 you're asking the charity to basically to create new 10 documents here, including the summary of charitable 11 activity, which is to include a list of all charitable 12 activities during the audit period. I think this 13 might be a holdover from the old regimen pre-2519 14 where you had these four or five categories of 15 charitable activities. 16 And so I would suggest, number one, that 17 we ought to rethink this in light of the fact that the 18 charity may make any expenditure that's consistent 19 with their federal tax exempt status. 20 And I would make the same comment with 21 regard to the item on E-3. I think that's probably a 22 holdover concept. I think if what you're getting at 23 is the ability to determine whether a check that was 24 written in compliance with the 35-percent requirement 25 that's still in law, then that's one thing. 0100 1 But the questioning of -- beyond that, 2 it's -- this rule, this audit rule needs to be tied in 3 with: Is it consistent with your federal tax exempt 4 status? 5 I hope that's -- it's not a fully-formed 6 thought, but I hope it got the point across. 7 MR. ATKINS: Well, and if I followed 8 your thought, Steve, I think what that is relating to 9 is that charitable purposes pay for it, etcetera, from 10 bingo funds. 11 MR. BRESNEN: Sure. 12 MR. ATKINS: I'm looking at Tom to see 13 if I'm saying that right. 14 MR. BRESNEN: That's the only thing 15 you've got jurisdiction over. 16 MR. ATKINS: Right. 17 MR. BRESNEN: So it would have to. But 18 I guess my point is this: We need to get out of this 19 notion of are we analyzing that to see if it, you 20 know, advanced the principles upon which the country 21 was founded, which is the current law into is -- is 22 it, was the purpose, was the expenditure consistent 23 with your federal tax exempt status. 24 Because we -- you know, what most people 25 don't realize about 2519, I think, or the gravity of 0101 1 it may not be. What it says is the money is to be 2 spent for the charitable purposes of the organization. 3 It says except as -- all net proceeds derived from 4 bingo are dedicated to the charitable purposes of the 5 organization. 6 That's the constitutional language, as 7 well. So going back now to the -- to the old of where 8 you're looking at these specified categories there in 9 the statute to see if there's a connection between 10 this expenditure and that enumerated charitable 11 purpose in the statute, that's all gone. 12 The question is: Is it consistent with 13 the federal tax exemption of the -- of the 14 organization? 15 So I think this audit rule needs a 16 serious reworking in light of that being the standard 17 for the expenditure unless you got some -- there's 18 another rulemaking somewhere that's going to 19 incorporate that or tie the two together. But you 20 know, we had this discussion once about we could have 21 done the charitable purpose rule in the context of the 22 audit rule that was pulled down at one time, 23 previously pulled down. 24 I think we're sort of back to that 25 crossroads right there. And I would suggest that that 0102 1 thing needs to be way thought through before you go 2 forward with publishing this rule in the register. 3 Number two, you're -- I don't know why 4 we're asking organizations to create a new document 5 here, a list of all charitable activities during the 6 audit period. It's irrelevant. The only thing that's 7 relevant is whether an expenditure that was made is 8 consistent with their federal tax exempt status and 9 the plain language there in 2519. 10 It seems to me that if you get people 11 into creating lists here, and then try to tie the list 12 over to the language in E-3 or any of these other 13 documents, that we're just setting up a trap. 14 MR. ATKINS: I'm sorry, Steve. Where 15 does it reference the list? 16 MR. BRESNEN: Subsection B on the first 17 page under subsection B, the sentence that begins: 18 The summary of charitable activity. 19 MR. ATKINS: Oh, okay. 20 MR. BRESNEN: There's a form that 21 requests a list of all charitable activities during 22 the audit period. It's irrelevant. We -- somebody's 23 going to have to sit down and do that. 24 You know, for one organization it may be 25 as simple as saying we served 12,500 clients. For 0103 1 another organization, you know, maybe it's a list of 2 15 items that they did. But the point is: Why are we 3 making them create a new document here? 4 Then that document is going to be 5 cross-referenced to the expenditures made. If there's 6 a hole or a defect in that document, we've just 7 created a trap for them when the real focus should be: 8 Was the expenditure consistent with their federal tax 9 exempt status? 10 So I see no reason to require anybody to 11 create a new -- any new report in the body of this 12 rule, especially when it's going to be done on an ad 13 hoc basis with a limited amount of notice. 14 And finally, when -- if a charity pays 15 these costs for one of your staff members to travel 16 somewhere, I assume they're going to write that out. 17 We know it's going to be consistent with the state 18 travel guidelines that Ms. Strayhorn produces. 19 They're going to write that check and 20 they're going to give it to y'all. You're going to 21 deposit it. What happens to the funds at that point? 22 MR. ATKINS: That would be a question 23 best suited for Phil, who's not here at the time. It 24 would -- my assumption is it would go to general 25 revenue. 0104 1 MR. BRESNEN: Is it appropriated? Is it 2 money that's appropriated to? 3 MR. ATKINS: I don't know the answer to 4 that, Steve. 5 MR. BRESNEN: I don't -- I don't know, 6 either. And I wish I did, but I think we need to know 7 that. If this is another way for, you know, charities 8 to just be putting money back into State GR -- you 9 know, I'm against it to begin with because it's a new 10 cost. 11 Y'all are appropriated money for that. 12 I've already mentioned a number of ways in which I 13 think more dollars can be driven into the audit line 14 or your budgetary function. So I think we ought to 15 figure out A, we ought to at least know what's 16 happening to that money before we do it and B, whether 17 you have the authority to do it. 18 MR. ATKINS: Phil -- 19 MR. BRESNEN: I think -- 20 MR. ATKINS: Steve, Phil walked in now. 21 MR. BRESNEN: Did you hear the question, 22 Phil? 23 MR. ATKINS: And then we're going to be 24 catching him cold, too. 25 MR. BRESNEN: Yeah. If under the audit, 0105 1 the proposed audit rule? 2 MR. SANDERSON: Yes. 3 MR. BRESNEN: That the charity can be 4 required to pay the cost if somebody has to travel 5 from Odessa to Big Spring to do the audit, the charity 6 says no, I want you to come here and do it. 7 So the charity says okay, we're going 8 pay the cost. They write the check, send it to y'all, 9 you deposit. Then what happens to the money? 10 MR. SANDERSON: Since that is 11 statutorily authorized to -- we're authorized to get 12 reimbursed for the cost of conducting investigations 13 or audits, then it goes back into the appropriation to 14 be -- offset the travel expenses and is considered 15 revenue to the agency or to the Bingo Division that -- 16 to offset the travel expense. 17 MR. BRESNEN: Okay. So it is -- it is 18 appropriated to you? 19 MR. SANDERSON: It's re-appropriated 20 back, yes. 21 MR. BRESNEN: Okay. So if your -- if 22 your line item says -- in the Appropriations Act says 23 3.5 million dollars -- I can't remember what it does 24 say, but let's -- 25 MR. SANDERSON: 2.5 million. 0106 1 MR. BRESNEN: Okay. If it -- okay. So 2 that money is appropriated back to you. Does that 3 mean it goes from 2.5 million plus any of the amounts 4 that are collected under this audit rule? Do you get 5 my drift? 6 MR. SANDERSON: It's -- yes, it does. 7 MR. ATKINS: Is it in addition to or in 8 lieu of? 9 MR. SANDERSON: It would be in addition 10 to. But there again, it's offset by the expense that 11 we reimburse back to the employee for the travel, 12 so... 13 MR. BRESNEN: Well, yeah. You'd make 14 the expenditure, of course. But my point is: If the 15 appropriations bill says 2.5 plus whatever monies you 16 recoup through this mechanism, that's a -- that's an 17 increase in the amount of revenue you have to engage 18 in that expenditure and expenditures for audits. 19 MR. SANDERSON: Yes. 20 MR. BRESNEN: Okay. Okay. Anyway, 21 those are my comments right now. I think this 22 particular rule needs a lot of work and ought to be 23 meshed up with the changes in 2519 about how you can 24 spend your money. 25 And I would urge you to put this off and 0107 1 make sure that they mesh up properly. Thanks. 2 Thanks, Phil. 3 CHAIR BRACKETT: Marilyn, do you have 4 any further comments on any of this? 5 MS. MATTHEWS: No, but I think his point 6 is well-taken. I think we should postpone until we 7 understand the 2519 better. 8 CHAIR BRACKETT: And that's Item No. 8 9 you're talking about? 10 MS. MATTHEWS: Yeah, at least Item No. 11 8. I don't think there's anything in the other 12 sections. 13 CHAIR BRACKETT: Do you want to make a 14 comment? Are we ready to take action on Item No. 6? 15 The proposed action -- this is just to correct. As 16 it's printed in our books, it's not including Items 7 17 and 8. 18 MR. ATKINS: It's including all of them. 19 MS. MATTHEWS: It's just out of order. 20 Eight is first. 21 CHAIR BRACKETT: Okay. This is out of 22 order here. Okay. Do I hear -- suggest a motion for 23 what action we recommend? 24 MS. MATTHEWS: I move that we accept the 25 language in Items 6 and 7. 0108 1 CHAIR BRACKETT: Okay. It's been moved. 2 Do I hear a second to accept the language in Items 6 3 and 7? 4 MR. MOORE: I'll second. 5 CHAIR BRACKETT: This would be -- you 6 gave a second? 7 MR. MOORE: Uh-huh. 8 CHAIR BRACKETT: It's been moved and 9 seconded that we accept the language in Item 6 and 7. 10 All those in favor, please say aye. 11 CHAIR BRACKETT: Any opposed? Okay. 12 And regarding Item 8, what do you recommend on that, 13 Marilyn? 14 MS. MATTHEWS: I think it's going to 15 take some time to fully understand 2519 since it has 16 not even really passed yet. And but once presuming 17 that it does, these things that have been brought up 18 need to be addressed within here and the changes made. 19 CHAIR BRACKETT: Okay. So you're 20 suggesting that the discussion today be considered and 21 changes proposed and we consider it at our next 22 meeting? 23 MS. MATTHEWS: How long, three months 24 until our next meeting? 25 CHAIR BRACKETT: I don't -- 0109 1 MS. MATTHEWS: Is that enough time? 2 CHAIR BRACKETT: Yeah, I think it would 3 be. 4 MR. WHITTINGTON: It would be before 5 September 1st. 6 CHAIR BRACKETT: Yeah. It would be 7 before September 1st. 8 MS. MATTHEWS: Okay. 9 CHAIR BRACKETT: Do you understand the 10 proposal and we're ready to vote on it? But it's to 11 recommend, to not take action on Item No. 8 except to 12 recommend that it be restudied and considerations of 13 today's discussion be made and it be submitted to us 14 at our next meeting, a proposed action be presented to 15 us at our next meeting. 16 Okay. That suggestion meets all your 17 approval, correct? 18 MR. WHITTINGTON: Yes. 19 CHAIR BRACKETT: All right then. Let's 20 take a lunch break now. It is 12:20 and we'll 21 reconvene in one hour in this room and we'll be taking 22 up Item No. 9. 23 (Recess from 12:20 p.m. to 1:25 p.m.) 24 AGENDA ITEM NO. 9 & 10 25 CHAIR BRACKETT: We're to Agenda Item 0110 1 No. 9, which is consideration, possible discussion or 2 action on appointment of a subcommittee in connection 3 with a rule relating to books, records -- and records 4 inspections. 5 MR. ATKINS: And if we could, Madam 6 Chair, also take up Item 10 with that similar as we 7 did with the previous rules. And Tom Lieck, the audit 8 manager from our San Antonio regional office is 9 available to answer any questions that there may be on 10 the draft rules. 11 Staff would be looking for either 12 appointment of a subcommittee or we can continue with 13 the previous subcommittee since these are additional 14 audit rules, continue with the consideration on these 15 two rules, one relating to books and records 16 inspections and one relating to compliance reviews. 17 And as Marilyn noted earlier, those are 18 separate activities. So these rules would be laying 19 out the requirements unique to each one. 20 CHAIR BRACKETT: Okay. Would you like 21 to speak, Mr. Lieck? Would you like to speak to us 22 now? 23 MR. LIECK: I'm just here -- Tom Lieck, 24 Texas Lottery. I'm just here to answer any questions 25 you might have on the proposals. 0111 1 CHAIR BRACKETT: What is it that you're 2 wanting the subcommittee to do? What is it -- are you 3 wanting them -- just give us briefly what you want 4 them to do. 5 MR. LIECK: Basically we're going to be 6 -- we're asking to -- a subcommittee be appointed to 7 review these rules and comments and so to report back 8 to get your input on them. 9 CHAIR BRACKETT: Okay. And you would be 10 working with them? You'd be the staff person working 11 with them? 12 MR. ATKINS: It would be actually Roy 13 Gabrillo would be the staff contact. Tom would work 14 with them. Again, I would just envision if it were 15 the committee's desire again continue with the same 16 subcommittee including the same staff representatives. 17 CHAIR BRACKETT: Marilyn, is that -- 18 MS. MATTHEWS: That's fine. 19 CHAIR BRACKETT: Okay. All right then. 20 Then the action that we're taking on this is that we 21 have -- they will be part of the original 22 subcommittee. Did that committee have a name? What's 23 the name of your committee? 24 MS. MATTHEWS: Audit committee, I guess. 25 CHAIR BRACKETT: Audit committee, okay. 0112 1 And will be considering these additional two items. 2 What is the work schedule? When would you need 3 suggested comments and suggestions from them? 4 MR. ATKINS: I -- I mean, Tom can 5 follow -- Tom or Roy can follow up with the 6 subcommittee after this meeting and schedule, you 7 know, in connection with -- for example, Marilyn's 8 going to be working on other subcommittees, also. 9 CHAIR BRACKETT: Uh-huh. 10 MR. ATKINS: So we can work with all of 11 the subcommittee members to schedule, you know, 12 appropriate time lines for everybody. 13 CHAIR BRACKETT: Okay. 14 MR. ATKINS: And you know, I would just 15 say if possible, you know, hopefully the subcommittee 16 can have a recommendation by the next committee 17 meeting. 18 MS. MATTHEWS: We'll shoot for that. 19 CHAIR BRACKETT: Recommendation by next 20 committee meeting. 21 Did anyone have any questions? 22 MR. WHITTINGTON: While we're talking 23 about structure, this will definitely help complete 24 the structure that Marilyn talked about because 25 without all the entities, our structure can't be 0113 1 complete. So this is part of it. 2 AGENDA ITEM NO. 11 3 CHAIR BRACKETT: Item No. 11 is possible 4 -- is report, possible discussion and/or action on 5 calendar year 2003 first quarter for bingo financial 6 information and statistics. And Billy Atkins is going 7 to lead that discussion. 8 MR. ATKINS: And I'd ask also, Madam 9 Chairman and members, that Terry Shankle come up. She 10 can -- if you have any specific questions about any of 11 the data, she can help address this. 12 But this is one of the specific areas 13 that is addressed in the charitable bingo 14 administrative rule relating to the Bingo Advisory 15 Committee and their responsibilities. And that is to 16 report at least annually on review and comment and 17 report on charitable bingo gross receipts 18 distribution, expenses, attendance and other areas 19 requested by the commission. 20 We wanted to start the process at least 21 as it relates to those four data elements: gross 22 receipts, distributions, expenses and attendance. As 23 you know, we report on this quarterly to the 24 commission and we're now bringing it forward to the 25 Advisory Committee. 0114 1 Since the committee is charged with 2 reporting annually to the commission on this matter, 3 we think now the time is appropriate for the committee 4 to begin consideration of these elements and the 5 formulation at least of -- of their final report. Of 6 course, the final report isn't due yet. 7 But since we have finished the first 8 quarter, we do think it's appropriate. And we had 9 suggested again the possibility of submitting a -- or 10 creating a subcommittee to begin the analysis of this 11 information. 12 And what we've given you in your 13 notebook, Members, is the first document. We call it 14 a detail report. It lists a number of data elements 15 by quarter so that you're able to compare figures for 16 similar quarters. For example, it shows -- you can 17 compare through this the first quarter of 2003 to the 18 first quarter and of 2002, 2001. That's that block in 19 the bottom, right-hand corner. 20 The next page is quarterly comparisons. 21 And again if you look, it will give you not just the 22 figures, but the difference and the percentage 23 difference. One of the things that we pointed out to 24 the commissioners is, of course, you'll see 25 significant increases in the line item relating to 0115 1 instant bingo. 2 Again, we attribute that to the changes 3 that were made to the pull-tab rule. I've heard from 4 some licensees. I think one of which, Danny, I think 5 said that they had been in touch with you about some 6 of the new paper that's -- that's out there. So we'll 7 continue to monitor paper sales to see if we see 8 changes similar to those that we saw with the 9 pull-tabs. 10 But one of the things that we noticed 11 that is unique on the page for quarterly comparisons, 12 you know, generally the first quarter of a -- of a 13 year is better than the fourth quarter of the 14 preceding year. 15 But we did notice one difference in here 16 that we were pleased with, and it dealt with just the 17 overall, I think, increase from the first quarter of 18 2002 to the first quarter of 2001 in that you do see 19 -- although it's small -- increase in total gross 20 receipts. And again, we attribute that to the -- of 21 course to the increase in pull-tabs. 22 And then we've also just included for 23 your information a series of graphs that will show 24 those elements from 1983 on, which is essentially the 25 time frame for which we have those figures. 0116 1 And again, if you have any questions 2 about either of these figures, either Terry or I will 3 try and answer them for you. This data, again, comes 4 from the -- from the quarterly reports filed by 5 organizations with the agency. 6 MR. MOORE: Those instants, we didn't 7 even change them. When did they go in, last fall, 8 or... 9 MS. SHANKLE: September. 10 MR. ATKINS: They -- they went in -- 11 yeah. The first full quarter for which they were 12 reported was the fourth quarter of 2003. 13 MR. MOORE: Wow. 14 MR. ATKINS: That's the first full 15 quarter. 16 MR. MOORE: Well, then it's -- this year 17 I would expect that to probably almost double. I 18 mean, it's up 25 percent there over the previous year 19 with just those four months reporting. 20 MR. ATKINS: Right. 21 MR. MOORE: So it could be significant. 22 CHAIR BRACKETT: Could save your life in 23 some instances. 24 MR. MOORE: Yeah. 25 CHAIR BRACKETT: We had an equipment 0117 1 breakdown one Sunday and we sold pull-tabs like crazy 2 and we turned out okay. 3 MR. ATKINS: From the pull-tabs? 4 CHAIR BRACKETT: Because of pull-tabs. 5 MR. WHITTINGTON: You thought about 6 breaking the equipment down every day, huh? Hey, the 7 equipment's broke down. 8 CHAIR BRACKETT: No, it wasn't that 9 good. We just saved our lives with it. If we hadn't 10 had those new pull-tabs, though, I think we would 11 have -- 12 MR. WHITTINGTON: Oh, they're great. 13 CHAIR BRACKETT: It would have been a 14 total disaster. Do y'all have any questions or 15 observations, other observations to make? 16 Does that conclude that part of your 17 report? 18 MR. ATKINS: Yes, ma'am. 19 CHAIR BRACKETT: Item No. 10 is 20 consideration of and possible discussion or action -- 21 MR. WHITTINGTON: 11. 22 CHAIR BRACKETT: 11, I'm sorry. I'm 23 sorry. I wrote a note and didn't read my note. So 24 Item 11 is report, possible discussion and/or action 25 on calendar year 2003 and first quarter -- well, 0118 1 that's what we just did. 2 MR. WHITTINGTON: Yeah, we did just do 3 11. 4 MR. ATKINS: Yeah. We were -- we were 5 on Item No. 11 and I don't know if there's any action 6 that the committee wants to take in terms of follow-up 7 on that. 8 Again, there's a lot of work pending. I 9 don't think it's imperative that a subcommittee be 10 appointed right now. But as the end of the year gets 11 closer, you know, there will need to be some work done 12 on this. 13 And even though Item No. 11 doesn't 14 reference specifically the appointment of a 15 subcommittee, I did talk to the agency general counsel 16 yesterday and she didn't feel that the way it's 17 recorded here that it would preclude the appointment 18 of a subcommittee if that's what the Advisory 19 Committee so chose to do. 20 CHAIR BRACKETT: I have a question on 21 your annual -- on this annual report. How fancy is 22 it? Is it -- do you have -- 23 MR. ATKINS: That is, I think, if you'll 24 recall when we gave the orientation on the Advisory 25 Committee several months ago, we said specifically, 0119 1 you know, that is entirely up to the will of the 2 Advisory Committee. It doesn't have to be a 3 full-blown, you know, three -- color glossy, you 4 know -- page document. 5 It can be just, you know, a series of 6 typewritten reports. Staff will be available to 7 assist, you know, the Advisory Committee in the 8 production of it. You know, we would just suggest 9 that it be professional. 10 CHAIR BRACKETT: Well, definitely that. 11 Will it include things on this is what the bingo 12 dollar has done for my nonprofit? 13 MR. ATKINS: It could. 14 CHAIR BRACKETT: Stories, I think that 15 would be a good idea. 16 MR. ATKINS: It would if you -- 17 CHAIR BRACKETT: And it might be a 18 way -- it might help our gangster image. 19 MR. ATKINS: If you look to the rule 20 specifically, it outlines -- it's 402.567 E. No, it's 21 not E. Now I got to -- I'm sorry -- annually the 22 Bingo Advisory Committee will report to the commission 23 the specific recommendations for improvement the 24 status of the following areas relating to charitable 25 bingo in Texas: one, gross receipts; two, charitable 0120 1 distributions; three, expenses; four, attendance; and 2 five, any other area requested by the commission. 3 So if there are other areas that the BAC 4 would want to include in that, I would suggest that in 5 your report to them you cover those. 6 CHAIR BRACKETT: Is that agreeable that 7 we cover some things on what it is we actually do with 8 our money? 9 MR. PAVLOVSKY: Absolutely. 10 CHAIR BRACKETT: And that's from 11 everyone in the industry, the children that have the 12 horseback therapy and women's programs and children's 13 programs. We could come up with a pretty good soap 14 opera before we get through with it. We have some 15 pretty good causes there. 16 MR. WHITTINGTON: Yes, we do. 17 CHAIR BRACKETT: We have wonderful 18 causes. 19 Now are we ready to move to Item No. 12? 20 MR. ATKINS: No. 21 CHAIR BRACKETT: We're not? 22 MR. ATKINS: Is it the committee's 23 desire other than your recommendation to the 24 commission to not take any other action on this at 25 this time? 0121 1 CHAIR BRACKETT: What action would you 2 want us to take? 3 MR. ATKINS: Again, the only one I could 4 consider would be the appointment of a subcommittee to 5 start the process to either, you know, perform the 6 analysis of this data, to perform, you know, the 7 formatting of the report, whatever. That -- that 8 would be my suggestion. 9 Again, I don't necessarily think it's 10 imperative that that be done at this meeting. 11 CHAIR BRACKETT: Uh-huh. 12 MR. ATKINS: But having said that, I 13 would also, you know, advise the commission not to 14 wait until September to start doing it. 15 CHAIR BRACKETT: Is there any -- go 16 ahead. 17 MS. MATTHEWS: Could we wait until the 18 next meeting since we have so many -- 19 MR. ATKINS: Uh-huh. 20 MS. MATTHEWS: -- other things? 21 MR. ATKINS: Yes. 22 MS. MATTHEWS: I would like to work on 23 that. 24 MR. ATKINS: Okay. 25 MS. MATTHEWS: But I've kind of got a 0122 1 full load here right now. 2 CHAIR BRACKETT: But you want to work on 3 it when the time has come. 4 MR. MANIO: And so would -- so would I. 5 CHAIR BRACKETT: So would Mario. 6 MR. ATKINS: Okay. It's the committee's 7 intent to table this until the next meeting? 8 CHAIR BRACKETT: But we -- but we have 9 two people who can be appointed and then start work 10 after the next meeting. And I could work with you on 11 the story lines. 12 AGENDA ITEM NO. 12 13 All right. Item No. 12 is report, 14 possible discussion and/or action on the activities of 15 the survey of bingo player subcommittee. And who's 16 giving that report? Pete, I thought it was -- Pete, 17 you're giving this report? 18 MR. PAVLOVSKY: Yes, ma'am. It's going 19 to be short. Jack is chairman of this committee. 20 Obviously, he's not here. He's in Omaha where the 21 Horns lost. Get 'em, Rice. Anyway, I know that's not 22 on the agenda but it's in the minutes, anyway. 23 As of June the 5th, the operation 24 division here has completed entering 68 -- or surveys 25 from 68 of the 174 halls that were selected in this -- 0123 1 to do the bingo player survey. Right now staff has 2 entered 900 of the approximately 11 thousand surveys 3 that were sent out and due to the number of those, the 4 sheer numbers, all of the data hadn't been entered 5 yet. 6 So we really don't have a -- we won't 7 have a report today except that hopefully there's some 8 good numbers going to come out of this with some good 9 ideas. Jack and I talked several times. One of the 10 things that he was -- what's the word I'm looking for? 11 He wasn't real excited about the fact 12 that he had so many phone numbers that were not good 13 numbers from halls or operators. Just, I mean, 14 couldn't get a hold of a lot of people that were on 15 this list. And I found the same thing to be true, but 16 I guess it goes with the territory. 17 But anyway, we got some -- we got some 18 forms back. And hopefully we're going to have some 19 good results out of this thing. And I think, Norma, 20 it should be ready for our next meeting? 21 MS. QUEZADA: I hope so. 22 MR. ATKINS: Norma, please identify 23 yourself. 24 MS. QUEZADA: I'm sorry. I'm Norma 25 Quezada, audit manager for Austin Region. Actually, 0124 1 we received 68 packets out of the 174 halls that we 2 sent out. And that's -- that's about 40 percent. And 3 according to Dr. Liz Jambor, if we had gotten anywhere 4 between 35 or above, that was a good enough survey 5 population to get good results from. 6 And as the memo says, as of today, 7 actually, that 900 has gone up to like 14 hundred. 8 There's only been one employee data entering the 9 information from the surveys due to the new system 10 that this -- the division has acquired now, the ACBS, 11 and there's been a lot of testing going on with that. 12 Our sources are limited, so right now 13 there's only one. And for that reason, we're having 14 to modify our time line, as you can tell from the 15 memo. We're moving the data entry surveys from May 16 29th through June 12th to May 29 through July 18th to 17 do that data entry. 18 And the analysis from Liz will 19 probably -- well, it will be moved from June 13th 20 through the 30th to July 21 through the 31st. And 21 we're going to try our very best to keep with that 22 time line. 23 And if you have any questions about the 24 player survey, I'll be happy to answer them. 25 CHAIR BRACKETT: If no one has any 0125 1 questions, and is there anyone in the public here 2 whose hall was included in that survey? Would you 3 mind telling us how that went with your hall and how 4 your customers responded to it? 5 MR. GARRISON: Well -- 6 CHAIR BRACKETT: Could you come down -- 7 MR. ATKINS: Gene, you need to come up 8 and identify yourself. 9 MR. GARRISON: I'm Gene Garrison, 10 Daytime Bingo of Midland. Actually, we just received 11 the surveys and forms and distributed the letters, got 12 them back, sealed them and sent them in. We didn't 13 attempt to analyze them, so... 14 CHAIR BRACKETT: Well, what I was 15 wondering: How did your customers cooperate and was 16 it -- 17 MR. GARRISON: They were very 18 cooperative. 19 CHAIR BRACKETT: No problem at all? 20 MR. GARRISON: Had no problem at all. 21 But we did not attempt to analyze results because we 22 knew it was a partial sample, so no use in getting 23 ourselves worried over what some of our customers 24 think. 25 CHAIR BRACKETT: Okay. Thank you. I 0126 1 was just -- just a curiosity on how it was received. 2 MS. QUEZADA: To add to that, we 3 actually got -- can you hear me? We actually got a 4 lot of positive response and from -- from the bingo 5 halls that did receive the surveys. Unfortunately, 6 mail didn't help. They were getting it a lot later 7 than we anticipated and therefore, we're getting them 8 later. 9 And like I said, right now we're up to 10 40 percent. We are anticipating some more to trickle 11 in. That may happen. But for the most part, most of 12 them are filled out. Most of the surveys are filled 13 out. There's maybe a handful that I can count that 14 came back that were blank, individual surveys that 15 were blank. 16 But for the most part, it's been a 17 success. 18 MR. ATKINS: And y'all think, Norma, 19 that you've essentially received the bulk of what 20 you're going to get back? 21 MS. QUEZADA: Pretty much, Billy. 22 CHAIR BRACKETT: All right. Thank you. 23 Any other questions or anything else? 24 MR. MOORE: Yeah. Pete, why were you 25 calling because you mailed out a survey, right? 0127 1 MR. PAVLOVSKY: Well, we were -- we 2 were -- we were checking with the -- with the halls in 3 our particular area. Jack was calling people that we 4 call and I was calling the ones that -- in our 5 immediate area that was within my phone -- but we were 6 just encouraging the hall operators or the charities 7 to encourage the players to fill those things out. 8 MR. MOORE: Right. Did you -- what list 9 would he be using? He said he had trouble. 10 MS. QUEZADA: He was -- he was actually 11 using the list from our CBS system. 12 MR. MOORE: Okay. 13 MS. QUEZADA: And, you know, if that's 14 the number that was sent in in the application and in 15 our system, that was the number we had. 16 MR. MOORE: I -- yeah, I've noticed that 17 in the past if I use that list, I don't have quite as 18 much success as using the directory. 19 MS. QUEZADA: But yeah. And my -- 20 MR. MOORE: I don't know why that is. 21 It's -- 22 MR. ATKINS: Yeah. We don't know why 23 that is, either. 24 MR. MOORE: It is pretty odd, though. 25 MR. ATKINS: Yeah. Uh-huh. 0128 1 MR. MOORE: That the numbers aren't 2 corresponding with the charity or location. 3 MS. QUEZADA: But I can assure you it's 4 not our data entry people. 5 MR. MOORE: I've known that for years. 6 I don't even bother, so... 7 MR. ATKINS: Yeah. 8 CHAIR BRACKETT: All right. Thank you. 9 MS. QUEZADA: You're welcome. 10 CHAIR BRACKETT: And I think that we 11 want to go on record that we really appreciate all the 12 work that's been done on this, that you and Jack have 13 had direct contact. It's been -- it's turned out a 14 lot better than I thought. 15 I always thought questionnaires just 16 didn't do anything. Apparently this one's going to do 17 something. 18 MR. PAVLOVSKY: I hope it does. 19 AGENDA ITEM NO. 13 20 CHAIR BRACKETT: All right. Item No. 13 21 is report and possible discussion of -- and/or action 22 on the activities of the charitable bingo Web site. 23 And Terry Shankle, are you going to 24 report to us on that? 25 MS. SHANKLE: I think Mario is going to. 0129 1 MR. MANIO: Yeah. I'm just filling in 2 for Suzanne, who is not here with us today. She's the 3 chair of the Web site subcommittee and I'm a member of 4 that subcommittee. 5 And our review -- during our review 6 process, we got assistance from Terry Shankle and Dan 7 and there was an engineer on -- during the conference 8 call, David. That's what his name? 9 MS. SHANKLE: Rick Glassco. 10 MR. MANIO: Oh, Rick. And. 11 UNKNOWN PERSON: David Glassco. 12 MS. SHANKLE: David Glassco. 13 MR. MANIO: And we would like to give -- 14 we would like to appreciate or to give our 15 appreciation for all of your help in coming up with 16 these recommendations. 17 During the review process, we looked at 18 three areas of the Web site: appearance, navigation 19 and content. 20 Now the design, the appearance and the 21 design of the Web page is of equal, probably better 22 quality than most Web sites from other states that we 23 have visited. And again, that's good work. Great 24 credit should go to our technical support group for 25 coming up with that artwork and design of the Web 0130 1 page. 2 Navigation, there was some question -- 3 or well, it wasn't really a question. It was some 4 comment about how easy or how difficult is it to go 5 from one place of the Web page to another. And let me 6 just say in here that based on available technology 7 today, our Web site is one of the easiest to navigate. 8 And there was -- there was -- we were 9 getting comments like: It's hard to move one place to 10 another. 11 And the answer to that is that it is not 12 our -- well, when a user logs on to our Web site, he 13 or she is expected to have some basic knowledge of 14 computers. It's not our function to educate them on 15 use of computer. But what we can say is on the 16 technology that is available today, this is the 17 best -- this is as easy as it can get on the 18 navigation. 19 Now on the contents, we had the benefit 20 of comparing contents of our Web site with the 21 contents of, you know, Web sites from Massachusetts 22 and Washington and Missouri. And we learned some -- 23 well, we got some ideas from other states like from 24 Massachusetts, for instance. 25 And we have adopted one of their ideas 0131 1 in the -- one of the nine recommendations that we have 2 that we are presenting to the committee today. When 3 we looked at the contents, what we were focusing on 4 how we can generate public interest in bingo. In 5 other words, we were looking at revenue enhancement 6 ideas. 7 Granted that the Web site is a medium 8 that is used by the lottery community. It's an 9 official medium of the Lottery Commission and it's a 10 vehicle to communicate official or legal information. 11 But since in the last legislature we did 12 not get any bills passed that will enhance revenue, 13 this is probably a vehicle right now that we will have 14 to depend on in the next two years in order to 15 generate public interest. 16 And so seven out of the nine 17 recommendations that we are presenting today are 18 really intended to stir interest among public to be -- 19 you know, to play bingo and generate more revenue. 20 The other two, the last two items in the 21 recommendations are more for internal use, internal 22 meaning not internal within the Lottery Commission, 23 but within the bingo industry. These are items number 24 8 and number 9 are for the benefit of the charitable 25 organizations and the commercial lessors and systems 0132 1 providers because that's how they can get information 2 or communicate information to the Lottery Commission 3 and get some information from the Lottery Commission 4 that would not otherwise be available except through 5 open records. 6 Now the action that we would like to do 7 today is to present recommendations to the committee 8 for adoption. And then the subcommittee elected to 9 put more -- put more workload on itself by saying we 10 would like to recommend that this subcommittee topic 11 be added to future BAC meetings' agendas as necessary 12 for progress reports. 13 And here's the reasoning behind that: 14 When all of these nine items will be prioritized by 15 the Lottery Commission and, you know, for 16 implementation purposes, there will be an 17 implementation based on technical feasibility and 18 costings. 19 And so they will come up with: Okay, 20 this is number one that we recommend, number two that 21 we recommend, and number three. But all that -- all 22 that is well and good. But what we need to do is have 23 some check point two months or three months down the 24 road and then measure whether what has been 25 implemented is effective. 0133 1 And fortunately, our technical support 2 group today has the capability to measure the number 3 of visits that the page in our Web site will be 4 visited. So that will be our gauge to measuring, you 5 know, in trying to gauge how effective or ineffective 6 some changes are going to be. 7 And that's probably what we can do at 8 future meetings, just work with the technical support 9 group and find out how many hits did they get on this 10 particular page. And then if we're not getting enough 11 hits, that's money that's lost and we should probably 12 change or get on to the next item in our priorities. 13 And with that, I'd like to -- well, 14 Terry Shankle is here with us today to address any 15 questions that you might have. 16 MR. WHITTINGTON: I know the Web site -- 17 I mean, we really need that. I'm glad it's been 18 updated. But your marketing point is people knowing 19 it's there. That's the key. 20 You can update it all you want to, put 21 everything on there pretty and make it look great. 22 But if we don't market the people and tell them that 23 it's there for them to see -- and I'm sure a bingo 24 hall itself is not going to market the Texas Lottery 25 Commission's Web site for bingo in their hall because 0134 1 they're only concerned with their bingo hall, not 2 concerned interest of bingo overall for every hall 3 that's around them. That's their competition. 4 So they're not going to advertise the 5 Texas Lottery bingo Web site in their bingo hall. So 6 how do we get to the point of showing these people 7 that we have upgraded our bingo Web site for Texas? 8 That's basically what you're talking about. 9 And we need marketing. We need 10 marketing to do that. We need some kind of way to 11 tell them please visit the Texas lottery charitable 12 bingo Web site through a paper or some type of media 13 so they will know that it's there so they can look at 14 it. 15 And that's the only way it's going to 16 increase, as far as people viewing that site. 17 MS. SHANKLE: Well, I would like to 18 respond to that. Everything that we send out as far 19 as publications has our Web site on it. I know you 20 think well, that's just to the licensees. I don't 21 know -- I can check on it. We write articles for the 22 Bingo Bugles. 23 We can certainly make sure that they 24 have our Web site address so that their players or 25 their readers can go in and look. But it's -- you 0135 1 know, the lessors need to advertise our Web site, as 2 well. 3 MR. WHITTINGTON: Yes, I understand 4 that. But I was saying as far as what's being -- 5 what's status quo, what most people are looking at. 6 They're concerned about just making a dollar for their 7 hall. And, of course, number one is I wouldn't 8 advertise my bingo hall and advertise Mario's, no kind 9 of way. 10 I mean, that ain't going to happen. I 11 mean, I'm not going to tell my customers: Hey, go to 12 Mario's. Come over here today. Go to Mario's 13 tomorrow. 14 That's basically what I'm saying. 15 That's not going to happen because times are so tight. 16 I'm saying since I've been saying from conception of 17 this Bingo Advisory Committee we need a few dollars to 18 advertise for bingo. 19 And that should be included. I don't 20 care if it's a public announcement saying hey, look at 21 our Web site or play bingo. We just need that. I'm 22 sure it would increase dramatically if we do something 23 like that, just let the people know hey, we got a Web 24 site for bingo in Texas. Look at it. And that would 25 definitely get the numbers way up. 0136 1 MR. PAVLOVSKY: Larry, what percentage 2 of your bingo players would you consider to be 3 computer literate? 4 MR. WHITTINGTON: Well, in our bingo 5 halls, most of our people, about 85 percent are 6 totally computer players. 7 MR. PAVLOVSKY: Are they? 8 MR. WHITTINGTON: Yes. And the -- in 9 the now -- or should I say right now as of today, most 10 people if you're looking for new players, they are 11 totally pro-computer. 12 MR. ATKINS: Let me make sure I 13 understand the question because I'm a little confused. 14 Are you saying that people who play bingo using 15 card-minding devices, that that translates into they 16 know how to operate a personal computer when it 17 comes -- 18 MR. WHITTINGTON: No. 19 MR. ATKINS: Was that your question? 20 MR. PAVLOVSKY: That's my question. 21 MR. ATKINS: Okay. 22 MR. WHITTINGTON: As far as just knowing 23 computers per se, no. I mean, you can look at the 24 national average on that. But as far as in the bingo 25 hall, I can tell you when it comes to bingo and doing 0137 1 computers, okay? 2 MR. PAVLOVSKY: I think -- and your 3 comments a while ago I think led me to ask this 4 question: How many bingo players are going to get on 5 a computer and look at the Web site? 6 MR. WHITTINGTON: If they hear about it 7 through announcement or through advertising, quite a 8 few would probably ask about it, yes. 9 CHAIR BRACKETT: And I agree bingo 10 players are computer literate. And that's -- 11 especially bingo players in West Texas who have 12 children that live on the East Coast, that's how they 13 talk to each other daily. 14 And from using e-mail, they start using 15 other things. And all I use my computer for is a 16 typewriter with spell check. And they use theirs for 17 everything. 18 MS. SHANKLE: I would like to say 19 something about what the subcommittee -- the first 20 bullet or the first number is that they wanted to have 21 a player page that describes everything possible that 22 a player could -- to read or look at to know how to 23 play bingo. 24 So that is what we wanted to do is draw 25 new people in. And hopefully these computer geeks, 0138 1 word of mouth will say well, I went to a bingo page 2 and I found all of these terms. Let's go play. Let's 3 go see what it's all about. 4 MR. ATKINS: You know, one way you can 5 do that is: There are some sites where you can refer 6 a page to someone. So I don't know if I would agree 7 with Terry's term of computer geeks, but let's that 8 say there was -- 9 MS. SHANKLE: Excuse me. 10 MR. ATKINS: There was a person who was, 11 you know, especially computer literate and also -- 12 savvy, thank you -- and enjoyed bingo and came across 13 this page and knew of other bingo players that would 14 be of interest, you can add a function out there where 15 they can enter their e-mail address in that and it 16 sends the page to them. 17 So that's a way to advertise it. 18 MR. WHITTINGTON: Let me ask you another 19 question. How much would it cost for -- I know the 20 Internet bingo, if people -- a lot of people playing 21 Internet bingo, these are computer people, okay? A 22 lot of them are. 23 And how hard is it to get this message 24 to these computer people? 25 MR. ATKINS: You're getting to another 0139 1 agenda item. 2 MR. WHITTINGTON: Oh, okay. 3 MR. ATKINS: Slow down. 4 MR. WHITTINGTON: Okay. Well, I just 5 thought in general, because it is. It's out there. 6 MS. MATTHEWS: What is the Web site 7 address? 8 MS. SHANKLE: www.txbingo.org. 9 CHAIR BRACKETT: Are there any other 10 questions of Terry or Mario? 11 AGENDA ITEM NO. 14 12 All right. Then we're now to Item 13, 13 report, possible discussion and/or action on the 14 activities of the charitable bingo Web site committee. 15 Oh, that's what we just did. I'm sorry. 16 14, possible bingo -- possible 17 discussion and/or action on the activities of the 18 Bingo Bulletin subcommittee. 19 MR. MANIO: That's me and Terry again. 20 CHAIR BRACKETT: Okay. 21 MR. MANIO: The Bingo Bulletin has a 22 different audience than the bingo Web site. The Web 23 site is for the general public. The Bingo Bulletin is 24 an official publication of the Lottery Commission and 25 it goes to all charities in the whole state. That's 0140 1 about over a thousand copies. 2 Well, one observation before I go on. 3 The commercial lessors don't get -- don't receive 4 copies of the Bingo Bulletin, by the way. 5 MS. SHANKLE: I'm sorry. Who doesn't? 6 MR. MANIO: The commercial lessors, we 7 don't get copies of the Bingo Bulletin in the mail. 8 MS. SHANKLE: We address them to all -- 9 to all licensees. 10 MR. MANIO: Well, okay. But yeah. 11 MS. SHANKLE: I'll check on that. 12 MR. MANIO: Do you get yours? 13 MR. WHITTINGTON: Yes. 14 MR. MANIO: How come I don't get mine? 15 MR. WHITTINGTON: Probably because you 16 live in Garland, because you live in a suburb. 17 MR. MANIO: All right. The Bingo 18 Bulletin, all of the past issues have been dealing 19 mostly with rules and regulation and rightly so, 20 because this is the official publication of the 21 Lottery Commission. 22 However, we looked at the -- well, like 23 the Web site, we looked at the -- the appearance and 24 then we looked at the contents. And again, we are 25 happy to say that artwork is great on the Bingo 0141 1 Bulletin. Compared to other states we are most -- 2 well, we are better than most states in terms of the 3 appearance of the Bingo Bulletin. 4 Now on the contents, we made several 5 suggestions on -- to include certain items, again, 6 that will help increase our revenue. It's revenue 7 enhancement items. And those are the seven 8 recommendations that you have in your -- in your list. 9 Bullet -- items number 1, 4 and 7 are 10 particularly of importance to us, and especially item 11 number 1 because if this report is adopted by the 12 Bingo Advisory Committee, there is a request that goes 13 with this report to each member of the BAC to nominate 14 a charity in your area that can be featured in the -- 15 in the Bingo Bulletin. 16 And the whole idea is we would like to 17 communicate ideas to other charitable organizations 18 that this particular charity is implement -- has 19 implemented, this particular -- you know, campaign or 20 something, operational ideas. And that's why they -- 21 you know, they are successful in their bingo 22 operations. 23 That's the kind of articles that we 24 would like to publish in addition to the useful fare 25 of bingo rules and regulations. 0142 1 Now items number 4, 5 and 6, these are 2 statistical information that are probably significant 3 to certain segments of our industry. 4 And number 7, we are going to wait for 5 the results of the survey and that's one of the 6 recommendations is to publish the results of the 7 survey that's being conducted right now. And we will 8 print those in a future record or we recommend that 9 they be printed in a future copy of the Bingo 10 Bulletin. 11 And with that, I'd like to, again, 12 offer -- present the recommendations to the committee 13 and open the floor for questions. Terry is here with 14 us. 15 MR. ATKINS: If I could comment on one 16 of those. I think that the staff would be very 17 impressed and appreciative of the Advisory Committee 18 if they can pull off the first bullet, that is if they 19 can find organizations that are going to be willing to 20 share their secrets with the other ones because if -- 21 I don't remember specifically what -- it was one of 22 the very early issues of the Bingo Bulletin when we -- 23 when we asked organizations to do that, share your 24 good news, share your success stories or whatever. 25 And nothing. Now we have -- you know, 0143 1 recently Phil Arnold from Houston provided quite a bit 2 of information about their activities as it relates to 3 pull-tabs and we've gotten positive feedback from 4 other organizations. And we have an upcoming article 5 about an organization -- I don't think it's been 6 published yet -- about an organization that just 7 conducts a temporary, once a year. 8 But they have had phenomenal success 9 with that. You know, it's something that they've 10 built up over a period of years and it's, you know, 11 essentially like the event in that town. And they, 12 you know, have been very successful with that. 13 And so we just -- we look forward with, 14 you know, Larry, you sending up tips that Mario can 15 use in his hall. 16 MR. WHITTINGTON: Well, like I said, 17 with unit accounting coming, that will be almost 18 impossible for any charity to do this, especially the 19 same procedures going out. I can understand if it 20 would have said for bingo hall if it's successful 21 because on a public level, you can't -- you cannot say 22 one charity is going to do better than the other four 23 if you're inviting the public in. It's almost 24 impossible. 25 But still if we was doing good, just 0144 1 like Richardson compared to I-30, which is two of our 2 bingo halls. I-30 and Richardson was neck and neck, 3 but Richardson is doing two times better now because 4 of certain reasons. So I cannot say. That's another 5 agenda. 6 MR. PAVLOVSKY: Billy, I think one 7 thing that -- and I don't know. Maybe it's, you know, 8 not going to work. But one area of information may be 9 if we talk to the distributors because the 10 distributors know what halls are doing good and what 11 halls have just taken off in the last few months or 12 the last year and done real good. You know, that may 13 be another source of information. 14 MR. MOORE: I'll be running off some 15 customers, won't I? 16 MR. PAVLOVSKY: You don't necessarily 17 have to give the name of the organization, just you 18 know, hey this is what -- what one organization is 19 doing. 20 MR. MOORE: I think Jane Thompson would 21 be happy to take care of that for us. 22 MR. MANIO: But Billy has issued a 23 challenge to the BAC members. And you know, we all 24 come from different regions of the state. You're from 25 the South. 0145 1 MR. WHITTINGTON: Billy was being 2 sarcastic, I'll tell you right now, when he said. 3 MR. ATKINS: Not completely. Not 4 completely. 5 MR. MANIO: We should be able to find a 6 couple of charities that we can nominate to Terry 7 for -- 8 MR. MOORE: Terry -- excuse me, Mario. 9 I'm sorry. 10 MR. MANIO: That's okay. 11 MR. MOORE: No. I was going to say, we 12 -- when we were talking about this, though, I thought 13 we discussed the fact that maybe the charities would 14 just talk about some of the ways they use the proceeds 15 in their charities, kind of like in the Web site you 16 were just talking about. 17 MS. SHANKLE: Well, and I think it goes 18 along the same lines. I think what Billy was 19 referring to earlier was the library that -- whatever 20 they did. But success stories as far as 21 distributions, no. 22 MR. ATKINS: Oh, but we have done it. 23 You're right. 24 MS. SHANKLE: We have done that. And I 25 think that's a great seller, too. 0146 1 MR. ATKINS: Yeah. 2 MS. SHANKLE: Compassion stories. 3 MR. WHITTINGTON: Yes. Now that will -- 4 that will definitely work, a charity giving their 5 story about what bingo has done for them and how much 6 it will help them. 7 MS. SHANKLE: Exactly. 8 MR. ATKINS: But I do read this item 9 differently than what they're done -- than what's 10 being done with proceeds. I view that item as how to 11 increase proceeds. 12 MS. SHANKLE: Whether it's that you 13 light your parking lot or you paint your building or 14 whatever you think is making your revenue go up. 15 CHAIR BRACKETT: Okay. Something like 16 that, not how you sold more pull-tabs or something? 17 MS. SHANKLE: Well, no. I would like 18 that. That would be great. 19 CHAIR BRACKETT: That is very important, 20 do you have a security man in the parking lot. And 21 that makes a lot of people come. Do you have good 22 light, yeah. Nice rest rooms. 23 MS. SHANKLE: But how you sell those 24 pull-tabs, too, would be a good story. 25 CHAIR BRACKETT: All right. Mario, is 0147 1 there anything else you'd like to add to this? 2 MR. MANIO: No, that's it. Terry, do 3 you have anything else? 4 MS. SHANKLE: No, I don't. I think you 5 did a wonderful job and we appreciate all that you did 6 and that Danny did and Suzanne on the subcommittee. I 7 would like to go back to Item 13. We did not -- 8 CHAIR BRACKETT: Let me interrupt you 9 here. Why don't we go ahead and get our action 10 reported? Is this the action you want to request, 11 subcommittee request that the BAC adopt the following 12 recommendations? And that's a recommendation for the 13 committee? 14 All those in favor, please say aye. 15 CHAIR BRACKETT: And we've adopted that. 16 Now we can go back to 13. 17 MS. SHANKLE: And we need to do the same 18 thing. 19 CHAIR BRACKETT: Okay. And Mario, this 20 was yours, too. The subcommittee requests that the 21 BAC adopt the recommendations for the Charitable Bingo 22 Division Web site. We'd also like to recommend that 23 this subcommittee activity topic be added to future 24 BAC meeting agendas as necessary for progress reports. 25 MR. MANIO: That's right. And the last 0148 1 item, we need -- we need help from the technical 2 support group of the Lottery Commission, if they'll 3 provide feedback on how effective changes of the Web 4 site is going to be. 5 CHAIR BRACKETT: Okay. Do you accept 6 the first nomination, too, on the Item No. 13 -- I 7 mean action of 13? 8 All those in favor? 9 Do you have any other comments? 10 MS. SHANKLE: No, ma'am. Thank you. 11 CHAIR BRACKETT: Thank you for your 12 work, both of you. Very good work. 13 AGENDA ITEM NOS. 15 & 16 14 I think he covered -- he covered Bingo 15 Bulletin activity, didn't he? Yeah. 16 We will do 15 and 16 together. And that 17 includes consideration of and possible discussion or 18 action on appointment of a subcommittee to study 19 alternative styles of bingo games and also on the 20 appointment of a subcommittee to study Internet bingo, 21 the alternative styles of bingo including Internet 22 bingo. 23 MR. ATKINS: Members, the study of 24 alternative styles of bingo, as you'll recall, is one 25 of the items that was adopted by this committee as 0149 1 well as the commission in their work plan. 2 And the reason that I ask that the study 3 of Internet bingo be included in that is: If you read 4 the description of the study of alternative styles, it 5 references, you know, alternative styles of bingo 6 games that would be of benefit to licensees, including 7 but not limited to linked bingo, progressive bingo, 8 etcetera. 9 Additionally, the BAC will stay apprised 10 of any technological changes in the bingo industry. 11 Staff would bring this forward at this time. As 12 you'll recall, there were several bills filed during 13 this session of the legislature. There was one 14 dealing with progressive bingo. There was one dealing 15 with satellite or linked bingo. There was another 16 bill dealing with electronic pull-tabs. 17 So there are, you know, a variety of 18 ways out there that the traditional bingo games can be 19 played that don't even necessarily encompass new 20 technologies. For example, your progressive bingo 21 game is a variation of nothing more than the 22 traditional bingo games that's being played. 23 But with the advent of technology, 24 there's certainly the ability to link multi bingo 25 halls across an entire state. So and also at the last 0150 1 commission meeting, Commissioner Cox asked 2 specifically that the Advisory Committee begin to 3 study the issue of Internet bingo, specifically 4 for-profit bingo games that are conducted over the 5 Internet that players in Texas would have access to. 6 He was specifically interested in any 7 detailed information that the Advisory Committee could 8 come up with. You know, there again is not a great 9 wealth of information out there as it relates to 10 Internet bingo. I know that some of the tracking that 11 we've done in the past -- for example, one of the 12 Internet bingo sites that we monitored, they reported 13 a player from Texas that won, I want to say, 10 14 thousand dollars at their Web site. 15 So specifically, the commission, I 16 think, is interested in if there is any quantifiable 17 evidence of traditional bingo players that, you know, 18 in the past have been going to bingo halls in Texas 19 that are now essentially staying home and getting 20 their bingo fix, if you will, over the Internet. 21 In terms of the alternative styles of 22 bingo, you know, we've referenced just today 23 progressive bingo, linked bingo, electronic pull-tabs. 24 We would like to ask that the subcommittee, you know, 25 really be open to any type of alternative forms of 0151 1 bingo. 2 Now I'm sure that we're always going to 3 have to walk, you know, the fine line, you know, when 4 does a bingo game not become a bingo game. But we 5 would at least like to be able to put the issues out 6 there for consideration. And I know that, for 7 example, the Advisory Committee has already had one 8 presentation from a company regarding their linked 9 bingo system and their linked bingo games. 10 We are aware of other organizations out 11 there that operate linked bingo games. So one of the 12 things that I think we would envision working with the 13 Advisory Committee on is developing -- and I guess I 14 would call it a list of standard questions for us to 15 pose to, you know, all of the people who come before 16 us with presentations in terms of how their particular 17 games operate and how they would envision their games 18 being implemented in Texas so that both the 19 subcommittee, the Advisory Committee and ultimately 20 the commission are able to, you know, where possible 21 actually compare apples to apples and they're looking 22 at the same things. 23 And I think that is essentially all the 24 staff had to lay out and request. Again, we think 25 that all of this can be done with one -- could be 0152 1 included in one subcommittee. 2 CHAIR BRACKETT: Did you have anything 3 else, Mario? 4 MR. MANIO: Just one comment. Is this a 5 high priority right now? And the reason I'm asking 6 is: Like alternative styles of bingo would require 7 legislation, so it's going to be two years from now 8 before we see anything like that. 9 So I thought is this something that we 10 can form maybe one or two meetings from now and just 11 focus our attention on 2519. 12 MR. ATKINS: And I think that this is a 13 perfectly, you know, legitimate statement and, you 14 know, justifiable for the committee. I would just 15 make the same caveat I made earlier on in that, you 16 know, this not be something that is allowed to slip 17 through the cracks. 18 And also, I think it's important for 19 each of you to keep in mind -- you know, we know the 20 comptroller hasn't certified the budget. So that 21 means that the legislature is going to have to be 22 addressing something or addressing budget issues in a 23 special session, which means that they're going to be 24 looking for revenue. 25 And it's just that if called upon to, 0153 1 you know, provide this information, we're essentially 2 going to be limited to what we have already been able 3 to gather. And again, I just -- I put that out there. 4 I seriously don't put it out there to sway the 5 committee one way or another, just to provide you with 6 both sides of the information. 7 Is it imperative that this be done now? 8 No, I can't say that it is. Is there the possibility 9 that, you know, we could be asked to provide this 10 information, you know, within -- before two years? 11 Yes. 12 CHAIR BRACKETT: So are you saying that 13 we need an ongoing committee who's always looking at 14 this? 15 MR. ATKINS: No. No. I'm saying that 16 this is a viable issue for this committee to consider. 17 CHAIR BRACKETT: Yeah. 18 MR. ATKINS: And again, if they -- if 19 they don't do it now, which given the other workload I 20 think is justifiable -- you know, just so they know, 21 those questions can still be asked. And we're going 22 to be left with the information we currently have. 23 And I'm not even saying that the information we 24 currently have is bad. It's just that I think there's 25 a lot more out there. 0154 1 MR. MOORE: Virginia, I just want to 2 back Billy. I think he's correct. And I think having 3 one company down here didn't justify what we need to 4 know about linked bingo or satellite bingo. And the 5 idea of maybe doing a questionnaire that's uniform 6 would maybe answer some people's questions. 7 I know there's people in this room 8 probably don't agree on that subject. And you know, I 9 think it's not fair to everybody because they don't 10 know all the facts behind some of these companies. 11 And you know, we got to be careful where we go with 12 this stuff because it's not proven in all markets. 13 Satellite bingo seems to work in the 14 Indian games, but charitable is still up in the air a 15 little bit. So we just need to look at it. I think 16 it's a good idea that we put some questionnaire 17 together. 18 MR. ATKINS: And it's not just -- Danny 19 raises a good point in that it's not just, you know, 20 this new stuff, you know, the link or whatever where 21 there are questions out there. I think everybody more 22 or less has come to an -- to an agreement that a 23 progressive game could be beneficial. 24 But there are still questions out there. 25 Should there be caps to what the jackpot amount can 0155 1 grow to? There are people out there that still oppose 2 it because they say that, you know, what happens is 3 only the people that are able to build up to the high 4 jackpot get their players. 5 You know, even though when you look at 6 other jurisdictions that have progressive bingo that 7 have faced these so-called jackpot chasers, you know, 8 what their -- what their records show is that actually 9 over a period of time, say over a year, attendance 10 actually, you know, levels out. 11 Yeah, your attendance may be down this 12 time because you have a low jackpot, but your jackpot 13 is going to build up. And when that builds up, you're 14 going to get the attendance. You're going to get the 15 players, etcetera. 16 So those also are the types of questions 17 that we would look to this subcommittee to help us in 18 addressing. 19 MR. WHITTINGTON: Is it a legislative 20 issue when you come to like raising the cap per 21 session past 25 hundred a week? Is that cut in stone 22 forever? Is that a legislative issue? 23 MR. ATKINS: That's a legislative issue. 24 MR. WHITTINGTON: So maybe we need to 25 look at that, too. 0156 1 CHAIR BRACKETT: But if we're armed with 2 facts, we can maybe get some changes made. 3 MR. ATKINS: And I wouldn't -- I don't 4 know that I'd see raising the prize payout as an 5 alternative style of bingo. I mean, I'm not saying 6 it's not, you know, something for them to consider, 7 but... 8 MR. WHITTINGTON: I mean, just like if I 9 had another -- see, we play our full pay. We don't 10 have no room to do nothing else, do any other special 11 games like half pay-off. We're full pay-offs. And we 12 don't have any room to do anything else, as far as a 13 special game for 200 dollars before the regular 14 session start. 15 Because if we cut in on the 25 hundred, 16 people are going to get upset. And they're set in 17 their ways and we can't do nothing else, no other like 18 a mini game or whatever, we can't do that. That's why 19 I was asking the question. 20 MR. PAVLOVSKY: Sometime I think it's 21 going to be real hard to find that line that the 22 legislature will -- legislators will buy off on. I 23 mean, look at the changes that were recommended for 24 this year. You know, progressive bingo. You know, I 25 don't know. 0157 1 Maybe it's not an alternative style of 2 bingo, but -- type of bingo. But there were a lot of 3 changes that were made that were recommended and 4 didn't fly, you know. I hope Chairman Clowe has some 5 insight. I really do. 6 MR. WHITTINGTON: But I agree we got to 7 keep on top of it, talk about it and keep pushing it 8 and cranking it up. 9 MR. ATKINS: You know, and I can't -- I 10 tell you that it's imperative that it be done at this 11 meeting. 12 CHAIR BRACKETT: That we appoint a study 13 committee? 14 MR. ATKINS: Yeah. 15 MR. MOORE: Would a staff member be 16 involved or... 17 MR. ATKINS: Uh-huh. 18 MR. MOORE: Okay. Who are you thinking 19 in that capacity? 20 MR. ATKINS: I'm not sure right now. I 21 mean, just like y'all, I'm going to have to go back 22 and look at everything. I mean, I do know that there 23 are at least two members of the, you know, public that 24 have already -- one approached me and then one 25 approached Virginia that, you know, they're ready to 0158 1 serve on this. 2 MR. MOORE: Right, Jamie. 3 MR. ATKINS: Jamie and Shayne Woodard. 4 MR. MOORE: Okay. I'll throw my hat 5 into the bucket. 6 MR. WHITTINGTON: I would, too. 7 CHAIR BRACKETT: Okay. So it's your 8 pleasure that we go ahead and appoint a committee 9 to -- or a subcommittee to evaluate the alternative 10 forms of bingo and investigate the organization and 11 include Internet bingo in that? 12 And Suzanne had said that she would work 13 on that. And you want to work on that, Danny? 14 MR. MOORE: (Nodding) 15 CHAIR BRACKETT: And then we have two 16 people from the public that want to work on it, who is 17 Jamie McNally and Shayne Woodard. Anyone else that 18 would like to work on this? 19 Okay. Let's take a vote. And is 20 everybody in favor of that, appointing the committee, 21 subcommittee? Okay. Everybody's in favor? 22 Then I would like to ask people in the 23 public if you get home and think about and decide you 24 would like to work on it, you certainly may. You are 25 cordially invited to attend. 0159 1 MR. WHITTINGTON: Virginia, could I say 2 something about the -- 3 CHAIR BRACKETT: Sure. 4 MR. WHITTINGTON: -- Internet bingo? I 5 was approached by a young man. He's, I guess, a 6 computer whiz. Or he said he's -- he has -- he can 7 put my Web site on about three or 400 thousand homes 8 through the computer. And he had a certain price. It 9 wasn't that much. 10 But I thought about doing it. I said 11 well -- when we was talking about that really came 12 through the Texas Lottery Commission Web site for 13 bingo. If he can put mine on there, he sure can put 14 the Texas Lottery for everybody. 15 So that will attract. Otherwise, 16 somebody would go and visit -- some would see bingo, 17 okay, or Texas Lotto, or Jupiter Bingo. And they 18 basically say oh, bingo and just look at it and go 19 into it. 20 And I need to get back to him, but he 21 left a lot of information. And I think it might be 22 something for the Texas Lottery Commission to look at 23 at because I think it's just a fractionable cost for 24 me to do it. And he said he would go all over Texas 25 with this and have just a little icon bingo on 0160 1 whatever -- he represent a bunch of Web sites, he 2 said. 3 But he can also add bingo to it if I 4 ever wanted to involve myself, you know, with his 5 company. But he was strictly Internet. So I will 6 find the information and fax it down to you, Billy. 7 MR. ATKINS: Good. Was Suzanne going to 8 chair that? 9 CHAIR BRACKETT: Yes. And it has been a 10 long-term interest of hers. 11 MR. ATKINS: Okay. 12 AGENDA ITEM NO. 17 13 CHAIR BRACKETT: All right. We'll move 14 on to Item No. 17. And this involves the impact of 15 smoking ordinances. 16 MR. ATKINS: Specifically, again, at the 17 last commission meeting, Chairman Clowe requested that 18 this item be put on the -- on the agenda for 19 consideration by the Advisory Committee and to report 20 back. 21 Y'all know very well that a number of 22 local jurisdictions in Texas have opposed or imposed 23 ordinances relating to smoking in cities throughout 24 Texas. This isn't a matter that's unique to Texas, 25 though. It's more or less sweeping the nation. 0161 1 We've begun our research on the topic 2 and found numerous cities throughout the state -- I'm 3 sorry -- throughout the nation, as well as the -- I 4 want to say the entire state of Rhode Island is 5 considering the measure to ban smoking in public 6 places throughout that entire state. 7 And just recently, I think it was the 8 World Health Organization that adopted the resolution 9 encouraging the curtailing of smoking in local 10 jurisdictions. 11 But based on, I think, conversations 12 that several members of the bingo industry in Texas 13 have had with Chairman Clowe, he's requested that the 14 committee look at this matter and provide to the 15 commission some specific examples of the impact that 16 these smoking ordinances -- I guess actually they 17 should be called no smoking, nonsmoking ordinances -- 18 have had on bingo organizations. 19 So to that end, the staff would request 20 that a subcommittee be appointed to work with staff on 21 some of the information that we've already begun -- 22 began to gather from other jurisdictions and 23 specifically bring specific examples of halls and the 24 impact that these ordinances have had on them. 25 MS. MATTHEWS: Was this something 0162 1 addressed in our survey? We could have gathered some 2 information. 3 CHAIR BRACKETT: Was it addressed in the 4 survey? 5 MS. QUEZADA: I think there was a 6 question -- there was a couple of -- 7 MR. ATKINS: Come up to the table. 8 Don't speak from the audience -- 9 CHAIR BRACKETT: Was the issue -- 10 MR. ATKINS: And identify yourself. 11 CHAIR BRACKETT: Was the issue of 12 smoking or nonsmoking -- 13 MS. QUEZADA: I think -- 14 CHAIR BRACKETT: Smoking or nonsmoking 15 halls? 16 MS. QUEZADA: That was a -- that was a 17 choice on the priority as to why they visit the hall. 18 CHAIR BRACKETT: Oh, okay. 19 MS. QUEZADA: They had to choose from 20 the list. And there was one, I'm a smoker and they 21 have a smoking section. And the other one was: I'm a 22 nonsmoker and they have a nonsmoking section. 23 CHAIR BRACKETT: I recall that now and I 24 recall how -- 25 MR. ATKINS: That was Norma Quezada. 0163 1 CHAIR BRACKETT: But I thought that was 2 a wonderful way to word that because it didn't really 3 make it so prejudicial, you know. So anyway, that 4 would be some information to work with on that, 5 whether it's a -- what it's done to the bingo 6 industry, though. 7 MR. MANIO: Just a point of 8 clarification. This subcommittee, if we're going to 9 form this subcommittee, what is it going to do 10 exactly, just prepare a report and submit it to the 11 commissioner? 12 MR. ATKINS: That's what they've asked 13 for. 14 MR. MANIO: Okay. 15 MR. ATKINS: And they've asked for 16 specific examples of -- from organizations where 17 smoking ordinances have been enacted. 18 MR. MANIO: Right. 19 MR. ATKINS: And the impact to those 20 organizations from that organization -- from that 21 ordinance. So I think, you know, they're particularly 22 looking for, you know, maybe a snapshot of what the 23 organization's bingo activities were like for a period 24 prior to the smoking ordinance compared to what it was 25 like for, you know, a comparable period after the 0164 1 smoking ordinance. 2 MR. MANIO: Right. 3 MR. ATKINS: And I'm sure that they 4 would also be receptive to any, you know, suggestions 5 if there are, you know, organizations that have found 6 a way to address that. You know, I know that there 7 are some -- did Lubbock County get an exemption? 8 CHAIR BRACKETT: It wasn't a county 9 thing. It was a city thing. 10 MR. ATKINS: The city, yes. 11 CHAIR BRACKETT: The city. And what do 12 you mean? 13 MR. ATKINS: Well, because most -- it 14 seems like most ordinances when they're first proposed 15 are these, you know, broad-reaching -- you know, they 16 outlaw smoking everywhere. 17 CHAIR BRACKETT: Okay. Right. 18 MR. ATKINS: But then certain 19 organizations come forward. I know Mr. Fenoglio can 20 address this because he was involved in the smoking 21 ordinance here in Austin. But certain groups, be they 22 bars, restaurants, etcetera, get certain exemptions 23 from that ordinance. 24 CHAIR BRACKETT: That's right. And what 25 we did in Lubbock is the bingo people -- mainly me. I 0165 1 joined the bars and we went out and we spoke. And I 2 was doing the same -- saying the same thing that the 3 restaurant owners and the bar people were saying. 4 The bar people turned out the best. 5 They were able to just not change much. I can't -- I 6 cannot tell you that they really changed anything, but 7 it cost restaurants a lot. And it didn't cost us, in 8 particular, a lot because our hall is already set up 9 for it. 10 However, the halls that were not, you -- 11 the ordinance read that you have to have a separate 12 room, a separate wall. You can't have a section. It 13 has to be a separate room. And so it hurt, added a 14 lot of overhead to some of the places. 15 And one thing, too, that it called for 16 was separate ventilation. If you had a nonsmoking 17 room, it had to have separate ventilation. However, I 18 really have not seen any enforcement of that. And 19 that was a big question. How do you enforce this? 20 MR. WHITTINGTON: Well, let me tell you 21 how they enforce it. 22 CHAIR BRACKETT: One thing we had to do, 23 too, I can just say this is: We had to purchase signs 24 from the City of Lubbock Health Department that say: 25 Warning -- Danny, have you seen them on our doors, our 0166 1 entryways? 2 MR. MOORE: I don't remember. 3 CHAIR BRACKETT: It says it's -- you 4 didn't even notice it? 5 MR. MOORE: No. 6 CHAIR BRACKETT: There's a big sign that 7 says: Warning. And then underneath it says: Smoking 8 is conducted within. Beware of your health and blah, 9 blah, blah. The City of Lubbock City Health 10 Department has determined that you'll die if you smoke 11 and all this stuff. 12 So it kind of -- you don't have as much 13 fun opening the door and walking in as you used to. 14 But what were you going to say, Danny? 15 MR. MOORE: It was Larry. 16 MR. WHITTINGTON: Well, I'm going to say 17 that the bingo hall in Dallas City is about to go 18 under because of the smoking ban, not because of what 19 was amended -- put on the table for smoking -- for a 20 smoking section and nonsmoking section. 21 It wasn't that. They said no smoking 22 absolutely whatsoever. 23 CHAIR BRACKETT: Right. That's the 24 damage. 25 MR. WHITTINGTON: And that's what's 0167 1 killing us, okay? These halls in Dallas during the 2 last three months have lost close to almost a million 3 dollars. And they can't go too much longer. People 4 I'm talking about closing their doors. 5 All we asked for was an amendment, but 6 we didn't get that. California has a smoking ban, a 7 real tough smoking ban. But bingo halls are not 8 included. Most places are not included if you got a 9 smoking section and a nonsmoking section and 10 ventilation. 11 And we got all that. We even went and 12 changed our nonsmoking strictly where the card sales, 13 rest rooms, snack bar and had a separate door put in 14 so they wouldn't even have to walk into the smoking at 15 all. That still didn't do it. 16 So Dallas City is a smaller entity when 17 it comes to the metroplex, Dallas County. It's a very 18 small part. I can see if the whole Dallas County 19 enacted smoking ban, it would be okay. But it -- but 20 we don't. It's only Dallas City. 21 And like I was telling Billy, if we had 22 anything from the commissioners or from the State of 23 Texas, somebody with authority, if they'd write a 24 certified letter saying: Please, this is the way 25 bingo is set up. It's for charity. It's under -- the 0168 1 Texas Lottery Commission has been a gambling 2 institution for charity, that we got our own little 3 world. 4 Please if they come up to certain 5 standard, will you exempt them from the smoking ban? 6 And I think anything will help at this point because 7 we're dying and we've lost a lot of money. And I'm 8 sure a couple more people are going to speak about 9 this, but it's been real bad. 10 CHAIR BRACKETT: Well, I think that's 11 the huge disadvantage that metropolitan areas have 12 that you -- so what? You leave Dallas and you're in 13 Garland. You leave Dallas and you're in Richardson, 14 whatever. 15 But we have the advantage that we're out 16 in the open plains and you go quite a distance if you 17 leave town. 18 MR. WHITTINGTON: Cowgirl. 19 MR. PAVLOVSKY: Billy, are you looking 20 for locations only where smoking is prohibited by 21 ordinance as opposed to nonsmoking by choice of the 22 hall? 23 MR. ATKINS: Well, you raise a very 24 interesting point. I had -- we had originally just 25 assumed, you know, those locations that were affected 0169 1 by nonsmoking because of an ordinance. You know, I 2 think if there was a hall that elected of their own 3 accord to go nonsmoking, that information would be 4 useful, also. 5 Now let me -- let me follow that up 6 with, you know, something, just a clarification to 7 something that Larry was saying, you know. The 8 commissioners haven't indicated to me that they need 9 this information for purposes of writing any letter or 10 anything like that. 11 MR. WHITTINGTON: I just said that. 12 MR. ATKINS: This is, you know, their -- 13 you know, they're at the beginning of their 14 information-gathering stage. So, you know, what they 15 ultimately do with that information is up to them. So 16 that's why I think more information, the better. 17 MR. PAVLOVSKY: I might suggest that, 18 you know, if we choose to do that, I would hate to see 19 that information combined. I'd like to see -- 20 MR. ATKINS: Sure. 21 MR. PAVLOVSKY: -- you know, two 22 different columns. Because one is mandated and the 23 other one is volunteered, so to speak. You know, I 24 mean, it's their choice. It's not, you know, like 25 Larry had a choice. But you know, there could be some 0170 1 good information out there. 2 MR. ATKINS: No, I -- I agree. I think 3 you're right. I just -- you know, speaking off the 4 cuff, are you aware of a hall that's gone -- 5 MR. PAVLOVSKY: Yes. 6 MR. ATKINS: -- nonsmoking voluntarily? 7 Yours? 8 MR. PAVLOVSKY: Five of them. 9 MR. MOORE: The smaller -- 10 MR. ATKINS: I didn't know there were 11 any out there. 12 MR. MOORE: -- VFWs and American 13 Legions, it's probably more common to do that than -- 14 MR. PAVLOVSKY: Yeah. KC halls, yeah. 15 MR. ATKINS: An American Legion or VFW 16 that's nonsmoking? 17 MR. MOORE: I know it's just -- 18 MR. PAVLOVSKY: Billy, let me -- 19 MR. MOORE: Not the commercial. 20 MR. PAVLOVSKY: Let me add a little bit 21 to that. One big factor was the lack of help coming 22 out to work those bingos, especially the ladies. They 23 hate to go in there, especially a nonsmoker. They 24 hate to go in there because that -- you know, their 25 hair stinks when they come out of there. It really 0171 1 does. Danny, it does. Anyway, that's part of it. 2 MR. ATKINS: I think -- I think that 3 that is, you know, perfectly, yeah, legitimate issue 4 subject to -- that would be subject to the 5 subcommittee. 6 MR. WHITTINGTON: Well, all I've got to 7 say is they better stay down there in West Texas, not 8 to move to Dallas and do that because they'd have the 9 same -- the same stats we got, which is real bad, the 10 worst I've ever seen. 11 And I've given those stats to Billy on 12 about 25 charities, thanks to Chuck. And we're 13 fighting that, you know everything we can. But it's 14 kind of hard to compete when you're open to the 15 general public and bingo players, when they get 16 addicted, they're basically gamblers and they're going 17 to smoke when they get close to bingo halls. 18 If they get close to bingo and they're 19 sitting there like this and they want to pick up a 20 cigarette, they can't. Driving 15 minutes and be in 21 Desota or Duncanville, they're going to do that. 22 And that's what's happening. 23 CHAIR BRACKETT: Okay. I feel like it's 24 pretty much general agreement that we will appoint a 25 subcommittee to evaluate the impact of smoking 0172 1 ordinances imposed by units of local government on 2 charitable bingo. 3 And Pete, will you and Larry work on 4 that along with public people? Are you tired of the 5 issue? 6 MR. WHITTINGTON: There ain't too much 7 more work I got to do. I mean, I've been working for 8 three months on this. 9 MR. PAVLOVSKY: You need to get the 10 other cities to pass that ordinance and then y'all 11 would all be equal. 12 MR. WHITTINGTON: That's the whole point 13 about it is they're exempt in almost every -- every 14 state, as well as every city. Bingo halls are exempt 15 from the smoking ban no matter what kind of smoking 16 ban they have. 17 CHAIR BRACKETT: I'm sorry. I started 18 discussing that before we got a second and voted on 19 this. Does anybody want to second that? Pete, will 20 you please second this? 21 MR. PAVLOVSKY: Yes, ma'am. 22 CHAIR BRACKETT: Thank you. 23 MR. PAVLOVSKY: I wasn't clear on your 24 motion, but I will. 25 CHAIR BRACKETT: Okay. I'll repeat -- 0173 1 I'll repeat the motion or I could get the court 2 reporter to read it back. But the motion was to 3 evaluate, to form a subcommittee to evaluate the 4 impact of smoking ordinances imposed by local -- units 5 of local government on charitable bingo, the impact of 6 smoking ordinances of charitable bingo. 7 MR. ATKINS: Unless you want to amend 8 that to include the -- 9 MR. PAVLOVSKY: Please. 10 MR. ATKINS: For organizations that have 11 voluntarily. 12 MR. PAVLOVSKY: Electively. 13 CHAIR BRACKETT: Well, I'd like to put 14 that in the charge of what they would look into rather 15 than in the motion. 16 MR. ATKINS: Okay. 17 CHAIR BRACKETT: And I would like to 18 appoint Pete chairman and Larry, if you could work on 19 that since you already have all your work done. And 20 then if y'all would get public members. 21 And include in this, you know, are 22 people going to no-smoking by choice or by ordinance, 23 by law. And then if you can talk -- you know, and 24 also be sure and use the questionnaire, the results 25 from the questionnaire as you come back because you'll 0174 1 have some good information from that. 2 MR. MOORE: Hey Pete. I think El Paso's 3 had that ordinance for a while, too. 4 MR. PAVLOVSKY: Who? El Paso? 5 MR. MOORE: Yeah. 6 MR. PAVLOVSKY: If anyone knows of any 7 other city or any other organization that's no 8 smoking, I sure would love to hear it. Appreciate it. 9 CHAIR BRACKETT: Okay. Is there 10 anything else on this item? 11 AGENDA ITEM NO. 18 12 Okay. We'll go on to Item No. 18., 13 which is report, possible discussion and/or action on 14 the rule, review of charitable bingo rules, 16 TAC 15 Chapter 402. 16 And Billy, that's your -- 17 MR. ATKINS: That's mine. Members, this 18 is submitted for informational purposes. The 19 Administrative Procedures Act requires that 20 organizations every four years conduct a rule review 21 to determine if the reason that the rule was 22 originally adopted still exists, is essentially to 23 determine that there's still a reason for having the 24 rule. 25 And I think by way of background, it 0175 1 turned out that, you know, in some cases you had 2 agencies that were hundreds of years old, you know, 3 like the Railroad Commission. And they might have 4 adopted a rule back in, you know, 1875 and then it 5 turned around. 6 You know, in 1975 the rule was still out 7 there, although, you know, what it was originally 8 adopted for had ceased to exist, etcetera. Rule -- 9 again, that's all that a rule review does. It goes 10 through comment period in the -- in the Texas 11 Register. 12 It's published, but it doesn't entail 13 necessarily or it doesn't entail amendments to the 14 rule. The rule review can result in: Yes, there's 15 still a need for the rule, but the rule needs to be 16 amended or it needs to updated or something like that. 17 So it -- just for information purposes, 18 it is our intent to go ahead with the rule review to 19 publish that for the comment in the Texas Register. 20 CHAIR BRACKETT: We agree. 21 MR. ATKINS: Okay. 22 AGENDA ITEM NO. 19 23 CHAIR BRACKETT: All right. Is there 24 any public comment that anyone would like to make now? 25 All right. No one wanted to make public comment. 0176 1 AGENDA ITEM NO. 20 2 And then we need to set our future Bingo 3 Advisory Committee meeting and items that -- there 4 were several things that have already come up for the 5 agenda. 6 And I believe that everybody feels like 7 we need to meet in August. I'm going to throw these 8 ideas out and you tell me if they sound good: 9 August 21st? 10 MR. ATKINS: That's a Thursday. 11 CHAIR BRACKETT: Thursday, August 21st, 12 August 7th. That's pretty early in the month. It 13 might be better to meet either on the 21st or the 14 28th. 15 MR. WHITTINGTON: 21st. 16 CHAIR BRACKETT: 28th? 17 MR. ATKINS: Well, the 21st or 28th. 18 CHAIR BRACKETT: I agree. 19 MR. MOORE: Works for me. 20 MR. MANIO: 28th is too close to 21 September 1st. 22 CHAIR BRACKETT: That's true. Okay. So 23 21st, August 21st. We'll meet here in Austin at 10 24 a.m., yes. 25 All right. I want to thank you for 0177 1 being here today and for all of your work between 2 meetings, everything that you all -- the reports that 3 you bring and all the study and consideration that you 4 do. 5 We want to thank the public. It's very 6 important to us that you come. We learn a lot and we 7 like what you share with us. 8 Thank you. The meeting is adjourned. 9 (Meeting adjourned at 2:50 p.m.) 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 0178 1 CHANGES 2 PAGE LINE CHANGE REASON 3 ______________________________________________________ 4 ______________________________________________________ 5 ______________________________________________________ 6 ______________________________________________________ 7 ______________________________________________________ 8 ______________________________________________________ 9 ______________________________________________________ 10 ______________________________________________________ 11 ______________________________________________________ 12 ______________________________________________________ 13 ______________________________________________________ 14 ______________________________________________________ 15 ______________________________________________________ 16 ______________________________________________________ 17 ______________________________________________________ 18 ______________________________________________________ 19 ______________________________________________________ 20 ______________________________________________________ 21 ______________________________________________________ 22 ______________________________________________________ 23 ______________________________________________________ 24 ______________________________________________________ 25 ______________________________________________________ 0179 1 REPORTER'S CERTIFICATION 2 3 STATE OF TEXAS ) 4 COUNTY OF TRAVIS ) 5 6 I, David Bateman, RPR, Certified Shorthand 7 Reporter for the State of Texas, do hereby certify 8 that the above-captioned matter came on for hearing 9 before the BINGO ADVISORY COMMITTEE as hereinbefore 10 set out, that I did, in shorthand, report said 11 proceedings, and that the above and foregoing 12 typewritten pages contain a full, true, and correct 13 computer-aided transcription of my shorthand notes 14 taken on said occasion. 15 16 Witness my hand on this the 27th day of 17 June, 2003. 18 19 20 ___________________________________ David Bateman, RPR, Texas CSR #7578 21 Expiration Date: 12-31-03 1609 Shoal Creek Blvd, Suite 202 22 Austin, Texas 78701 (512) 474-4363 23 24 25 JOB NO. 030619DPB