1 1 TRANSCRIPT OF PROCEEDINGS 2 BEFORE THE 3 BINGO ADVISORY COMMITTEE 4 (TEXAS LOTTERY COMMISSION) 5 AUSTIN, TEXAS 6 7 MEETING OF THE BINGO § 8 ADVISORY COMMITTEE § TUESDAY, NOVEMBER 30, 2010 § 9 10 11 12 COMMITTEE MEETING 13 TUESDAY, NOVEMBER 30, 2010 14 15 16 17 18 BE IT REMEMBERED THAT on Tuesday, the 30th 19 day of November 2010, the Bingo Advisory Committee 20 meeting was held from 10:04 a.m. to 11:43 a.m., at the 21 Offices of the Texas Lottery Commission, 611 East 6th 22 Street, Austin, Texas 78701, before KIMBERLY ROGERS, 23 Chair. The following proceedings were reported via 24 machine shorthand by Aloma J. Kennedy, a Certified 25 Shorthand Reporter. 2 1 APPEARANCES 2 BINGO ADVISORY COMMITTEE MEMBERS PRESENT: 3 Ms. Kimberly Rogers, Chair 4 Mr. Earl Silver Mr. Francis M. Ciancarelli 5 Mr. Emile S. Bourgoyne Ms. Melissa Young 6 Mr. Joe Williams Mr. Kenneth T. Messer 7 8 CHARITABLE BINGO OPERATIONS DIVISION DIRECTOR: 9 Mr. Phil Sanderson 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 1 TABLE OF CONTENTS 2 PAGE NO. 3 AGENDA ITEM NO. 1 - The Bingo Advisory Committee will call the meeting to order...... 5 4 AGENDA ITEM NO. 2 - Consideration of and 5 possible discussion and/or action on the minutes of the July 28, 2010 Bingo 6 Advisory Committee meeting.................... 5 7 AGENDA ITEM NO. 3 - Recognition of new Bingo Advisory Committee members and outgoing Bingo 8 Advisory Committee members ................... 6 9 AGENDA ITEM NO. 4 - Report, possible discussion and/or action on the 10 appointment of presiding officers ........... 8 11 AGENDA ITEM NO. 5 - Report, possible discussion and/or action on the 82nd 12 Legislature................................... 10 13 AGENDA ITEM NO. 6 - Report, possible discussion and/or action on calendar 14 year 3rd quarter conductor information........ 21 15 AGENDA ITEM NO. 7 - Report and possible discussion and/or action on draft amendments 16 to 16 TAC § 402.502 Charitable Use of Proceeds Recordkeeping........................ 24 17 AGENDA ITEM NO. 8 - Report and possible 18 discussion and/or action on draft new rule to 16 TAC § 402.501 Charitable Use of 19 Proceeds...................................... 35 20 AGENDA ITEM NO. 9 - Report and possible discussion and/or action on draft amendments 21 to 16 TAC § 402.205 Unit Agreements........... 41 22 AGENDA ITEM NO. 10 - Report and possible discussion and/or action on draft amendments 23 to 16 TAC § 402.100 Definitions............... 45 24 25 4 1 TABLE OF CONTENTS (continued) 2 PAGE NO. 3 AGENDA ITEM NO. 11 - Report and possible discussion and/or action on draft amendments 4 to 16 TAC § 402.203 Unit Accounting........... 53 5 AGENDA ITEM NO. 12 - Report and possible discussion and/or action on amendments 6 to 16 TAC § 402.604 Delinquent Purchaser..................................... 62 7 AGENDA ITEM NO. 13 - Consideration of and 8 possible discussion and/or action on the Bingo Advisory Committee work plan, including 9 report to the Commissioners on the accomplishments FY10 Work Plan................ 70 10 AGENDA ITEM NO. 14 - Report and possible 11 discussion and/or action on Bingo Hall Security...................................... 76 12 AGENDA ITEM NO. 15 - Report and possible 13 discussion and/or action on nominations for Bingo Advisory Committee positions, including 14 the formation of a Nominations Committee...... 81 15 AGENDA ITEM NO. 16 - Report and possible discussion and/or action on the 2010 Bingo 16 Advisory Committee Annual Report, including the formation of a subcommittee............... 83 17 AGENDA ITEM NO. 17 - Consideration of and 18 possible action on future Bingo Advisory Committee meeting dates and/or items to 19 be considered for future meetings............. 85 20 AGENDA ITEM NO. 18 - Public comment........... 87 21 AGENDA ITEM NO. 19 - Adjournment.............. 87 22 REPORTER'S CERTIFICATE........................ 89 23 24 25 5 1 P R O C E E D I N G S 2 TUESDAY, NOVEMBER 30, 2010 3 (10:04 a.m.) 4 AGENDA ITEM NO. 1 5 MS. ROGERS: Good morning, ladies and 6 gentlemen. It is now 10:04. I would like to call this 7 meeting to order. 8 We have two members this morning that are 9 absent. That would be Markey Beilue and Mr. Tom Weekley 10 are not present. All other members are here and 11 accounted for. 12 AGENDA ITEM NO. 2 13 MS. ROGERS: The first item on our agenda 14 is No. 2, consideration of and possible discussion 15 and/or actions on the minutes of the July 28, 2010, 16 Bingo Advisory Committee meeting minutes. These are 17 once again the minutes that are posted on-line. 18 And there is one correction that needs to 19 be made that I found, and that would be on Page 49, Line 20 6. The name Rucks -- it's spelled R-u-c-k-s -- needs to 21 be changed to Stutts, "S" as in "Sam," t-u-t-t-s. This 22 is the only correction that I found. Did anyone else 23 have anything? 24 With this correction, do I have a motion 25 to accept these minutes as they are posted on-line? 6 1 MR. BOURGOYNE: I move. 2 MS. ROGERS: Emile has a motion. Do I 3 have a second? 4 MR. CIANCARELLI: I second it. 5 MS. ROGERS: Francis, second. 6 All those in favor? 7 FROM THE COMMITTEE: Aye. 8 MS. ROGERS: Okay. With a unanimous vote 9 to accept these minutes, with the one change, as posted 10 on-line. 11 AGENDA ITEM NO. 3 12 MS. ROGERS: Moving now to Item No. 3, 13 recognition of new Bingo Advisory Committee members and 14 outgoing Bingo Advisory Committee members. 15 Mr. Phil Sanderson. 16 MR. SANDERSON: Good morning, members. I 17 would like to publicly recognize the efforts of Patricia 18 "Pat" Gifford that served three years on the BAC as a 19 public member. She, I believe, retired from the 20 Sheriff's Department and decided not to continue her 21 volunteer efforts on the BAC. But while she was here, 22 she participated and did some excellent work with some 23 of the subcommittees, and I would like to recognize her 24 for her efforts in serving on the BAC for the past three 25 years. 7 1 Additionally, I would like to welcome a 2 new member to the board of the Bingo Advisory Committee, 3 Mr. Ken Messer from Longview. Ken, if you would like to 4 introduce yourself and give us a little bit of brief 5 information about you, it would be appreciated. 6 MR. MESSER: Ken Messer. I'm from 7 Longview, Texas. I have been a conductor of bingo for 8 the last five years, father of two beautiful daughters. 9 My wife Rose is with me today, and looking forward to 10 serving on the board. 11 MR. SANDERSON: Well, we welcome you. 12 And I'll turn it over to you, Madam Chair. 13 MS. ROGERS: Welcome, Ken. Don't be 14 surprised if you leave here on some type of workgroup, 15 because the new ones usually always get headed up first. 16 MR. MESSER: All right. 17 MS. ROGERS: We love and I welcome you to 18 please comment, whether you're against or, you know, for 19 something. Let us know what you're thinking. That's 20 what this is about. We're here to try and make bingo 21 better as a whole for the State of Texas -- 22 MR. MESSER: Okay. 23 MS. ROGERS: -- not just for one area but 24 for the whole thing. So, please, we love comments, do 25 we not? We like interaction. 8 1 MR. SILVER: Right. 2 MS. ROGERS: So anyone else? 3 Welcome. 4 MR. MESSER: Thank you. 5 MS. ROGERS: Phil, you finished on that 6 one. Okay? 7 AGENDA ITEM NO. 4 8 MS. ROGERS: Moving to Item No. 4, report, 9 possible discussion and/or action on the appointment of 10 presiding officers. 11 Mr. Phil Sanderson. 12 MR. SANDERSON: As always, this is the 13 first meeting of the new fiscal year. And at that 14 meeting, the members of the BAC will elect a chair. And 15 so with that, I will be entertaining nominations for 16 Chair of the BAC for the ensuing year. 17 MS. YOUNG: I would like to nominate Kim 18 Rogers. 19 MR. SANDERSON: Melissa nominates Kim 20 Rogers. Any other motions -- any other nominations? 21 Is there a motion for nominations to 22 cease? 23 MR. BOURGOYNE: I so move. 24 MR. SANDERSON: Emile moves. 25 Second? 9 1 MR. WILLIAMS: Second. 2 MR. SANDERSON: Ken seconds. 3 All in favor of electing Ms. Kimberly 4 Rogers as Chair for the ensuing year say "Aye." 5 FROM THE COMMITTEE: Aye. 6 MR. SANDERSON: Any opposed? 7 (No response) 8 MR. SANDERSON: Kim, congratulations. 9 MS. ROGERS: Thank you. 10 MR. SANDERSON: With that, you may now 11 appoint your vice chair. 12 MS. ROGERS: Thank you. 13 I would like to appoint Mr. Earl Silver. 14 He has been a great voice and a lot of help, as all of 15 you have. 16 So, Mr. Silver, would you accept? 17 MR. SILVER: Yes, ma'am. 18 MS. ROGERS: Thank you. 19 Do I have to take a motion, a vote? No? 20 MR. SANDERSON: No. 21 MS. ROGERS: I just appoint. It's my own 22 vote. 23 Thank you so much. I appreciate it. 24 MR. SANDERSON: The one and only time you 25 get to do that. 10 1 MS. ROGERS: Thank you, Phil, for putting 2 me in my place. Okay. 3 AGENDA ITEM NO. 5 4 MS. ROGERS: Moving to Item No. 5, report, 5 possible discussion and/or action on the 82nd 6 Legislature. 7 Ms. Nelda Trevino. 8 MS. TREVINO: Good morning, Madam Chair, 9 members. For the record, I'm Nelda Trevino, and I'm the 10 Director of Governmental Affairs. 11 Included in your meeting packets for this 12 agenda item is a listing of legislative dates of 13 interest. And you will note that prefiling of 14 legislation for the 82nd Legislature began on November 15 the 8th. And the Legislature will convene its regular 16 session on January the 11th, 2011. 17 As of this date, there have been no bills 18 filed related to charitable bingo. And it's my 19 understanding that Phil will be posting some helpful 20 legislative links on the bingo website to assist you in 21 monitoring legislation that will be considered during 22 this upcoming session. 23 Also I wanted to provide a brief report 24 regarding the agency's legislative appropriations 25 request for Fiscal Years 2012 through 2013. As 11 1 background, prior to the convening of each legislative 2 session, state agencies are required to submit their 3 appropriations or budget requests for the next biennium. 4 The Texas Lottery Commission submitted its request on 5 August the 30th, and you can find this document on the 6 agency's website. 7 The Commission's request was developed in 8 accordance with the guidelines that were set out by the 9 Legislative Budget Board and the Office of the Governor. 10 And with regard to the budget for the regulation of 11 charitable bingo, the agency's baseline request could 12 not exceed the sum of the amounts expended in Fiscal 13 Years 2010 and what is budgeted for Fiscal Year 2011. 14 Additionally, it was also required that 15 the baseline request be adjusted to reflect the 16 five percent reduction that was required of all state 17 agencies earlier this calendar year. Any funding 18 requests above the baseline amount were required to be 19 submitted as exceptional items. Several exceptional 20 items included in the Commission's request pertained to 21 the funding of the regulation of charitable bingo, and 22 these include two items. 23 The first one, to restore the funding from 24 the previously required five percent reduction and, 25 secondly, funding for a redesign of the automated 12 1 charitable bingo system. And that is the system that is 2 used daily by agency staff for the administration and 3 the management of the bingo program. In its submission 4 for these exceptional items, the agency indicated that 5 these items would be supported by license fee increases 6 to bingo operators and to lessors. 7 Additionally, agencies were also required 8 to include a plan detailing how we would reduce the 9 baseline request by an additional 10 percent. Again, 10 the agency's legislative appropriations request -- and 11 you will hear that term during the session. It's 12 commonly referred to as the LAR. That's the acronym -- 13 is posted on the agency's website, and this request will 14 be the basis of the discussion for the agency's budget 15 for the next biennium. 16 Lastly, the Legislative Budget Board met 17 earlier this month and reported that it would be asking 18 state agencies to identify an additional two to 19 three percent in budget cuts for the current biennium. 20 And the official request has not been issued yet, but it 21 is anticipated that that is forthcoming. 22 As it has been widely reported in the 23 media, the current state budget situation will be one of 24 the most significant matters the state leadership and 25 the Legislature will address this coming session. And 13 1 that's as it is anticipated, you know, state agencies 2 are expected to be significantly impacted. And what 3 this means in regards to the Bingo Division and to the 4 regulation of charitable bingo, you know, is unknown at 5 this time. We will be monitoring, obviously, and 6 serving as a resource to the Legislature, and we will 7 plan to provide you updates at your future meetings. 8 This concludes my report, and I'll be glad 9 to answer any questions that you might have. 10 MS. ROGERS: Thank you, Ms. Trevino. 11 Any questions? 12 No? 13 Summarize it for me in layman's terms. 14 MS. TREVINO: Yes. 15 MS. ROGERS: The Commissioners are going 16 to ask the Legislature to allow them to use some of the 17 funds to redesign the system for staff here. Is that 18 what you said? 19 MS. TREVINO: The way the appropriations 20 request is submitted, again, there is what's referred to 21 as the base line amount. 22 MS. ROGERS: Okay. 23 MS. TREVINO: So anything that's in excess 24 of that amount you have to request as an exceptional 25 item, so the redesign of the Charitable Bingo system is 14 1 one of those items. And the way that that item was 2 submitted was that the funding for that would come from 3 license fee increases. 4 MS. ROGERS: Okay. 5 MS. TREVINO: Currently in the Bingo 6 Enabling Act, the Commission has the authority to 7 increase license fees, and so that's how we submitted 8 that request. Does that make sense? 9 MS. ROGERS: Okay. That does make sense. 10 But that also means that we would have an increase from 11 I believe it's the -- off the top of my head -- J 12 license is $2,500 for a year. That will go up, that 13 will increase? 14 MR. SANDERSON: The plan, if the 15 Legislature approves the exceptional item through a 16 funding increase, would develop a license fee structure 17 similar to that that was implemented I believe back in 18 '99 or 2000, when the current system was designed. So 19 it would be -- for that particular item, it would be a 20 one-time increase, the way I see it, probably spread 21 over two years like it was before, to where it would be 22 a one-time increase that you could pay in a two-year 23 increment. 24 MS. ROGERS: Okay. Is there any idea what 25 the increase may be or who says what the increase will 15 1 be? 2 MR. SANDERSON: The exceptional item has 3 an estimated cost of $2.5 million for the design of the 4 system, and so that would be spread over the conductors 5 and the lessor license fees. At what prorate, we don't 6 know at this point in time. We are still studying that. 7 MS. TREVINO: What I was just going to 8 say, Madam Chair, was that, you know, I don't think 9 there is a specific plan developed. But I think what 10 Phil is referring to is that the classes of the 11 licenses, that there would be some sort of scale, if you 12 will, on what that increase would be, depending on the 13 license. 14 MS. ROGERS: Your larger license will pay 15 a heavier -- 16 MS. TREVINO: Correct. 17 MS. ROGERS: -- increase than your smaller 18 license, of course. That's appropriate. 19 MS. TREVINO: That's what the thinking is, 20 yes. 21 MS. ROGERS: Thank you. 22 MS. TREVINO: Thank you so much. 23 MR. BOURGOYNE: I have one question. Did 24 I hear you say that they asked the agency to prepare 25 their LAR for a 10 percent reduction as well? 16 1 MS. TREVINO: That's correct. 2 MR. BOURGOYNE: And have they estimated 3 what -- have they come up with how they plan to do that 4 or -- 5 MS. TREVINO: Well, the agency did submit 6 what that -- 7 MR. BOURGOYNE: What that 10 percent 8 reduction would look like? 9 MS. TREVINO: -- what that 10 percent 10 reduction would be like, and it's a plan that's 11 submitted. All agencies are required to do it. So it 12 will be something that the Legislature will be looking 13 at in the event, again, that -- 14 MR. BOURGOYNE: And that's posted on the 15 website? 16 MS. TREVINO: Yes. It is included as part 17 of the legislative appropriations request, so it's a 18 section in that document. 19 MR. BOURGOYNE: Thank you. 20 MS. TREVINO: You're welcome. 21 MS. YOUNG: Just to make sure I understood 22 that, the license will go up for a two-year period and 23 then it will return back to what it is today, to cover 24 the cost of developing the system? 25 MS. TREVINO: There's two exceptional 17 1 items, Melissa, and one of them is for the redesign of 2 the Charitable Bingo system, and the second one is for 3 the restoration of the five percent reduction that has 4 already been implemented. 5 MS. YOUNG: Right. 6 MS. TREVINO: What we have indicated in 7 the LAR -- and, Phil, correct me if I'm wrong -- for the 8 Charitable Bingo system, that license fee would be 9 what's referred -- you know, it would be sunsetted, if 10 you will, so it will be for a time period. 11 Now, if the Legislature approves the 12 restoration of the five percent reduction and approves 13 that that can be done through increasing license fees, 14 they did not indicate that that increase would be 15 sunsetted. 16 MR. SANDERSON: That is correct. 17 MS. YOUNG: Okay. Thank you. 18 MR. SILVER: I just have issues with fees 19 being raised when everybody else is cutting back. It 20 seems like everybody is trying to squeeze the charities 21 a little bit more. In my opinion, I don't think the 22 charities or the operators or lessors should have to 23 foot that bill, since bingo can fund itself. 24 I know a lot of money gets funneled into 25 the general Fund where -- I don't believe that when the 18 1 Bingo Enabling Act was established, that it was to fund 2 the state; it was to fund the charities. Now, the 3 charities have been prosperous, and they're able to put 4 money in the general fund. But why put an additional 5 burden and additional fees for probably a two-year 6 period? I've never known a tax to get repealed or a fee 7 to come down. 8 MS. TREVINO: And to that, Earl, we did, 9 as Phil referred to. I mean, there was a one-time 10 increase on the license fees when we originally put in 11 the charitable bingo system that's currently in place. 12 I don't remember what year that was, Phil. 13 MR. SANDERSON: It was '99, 2000, 14 somewhere in there. 15 MS. TREVINO: Yes. But it was for a time 16 period. 17 MR. SILVER: I understanded the state is 18 going to have a huge budget challenge ahead of them, I 19 mean, billions of dollars. 20 MS. TREVINO: Correct; that's correct. 21 MR. SILVER: And I know the charities can 22 contribute, but I think the money that goes to the 23 general fund, that $2.5 million or $3 million could be 24 funneled from where the charities already make their 25 money. The charities can fund it, to help regulate 19 1 their own industry, instead of putting additional fees, 2 additional taxes or something like that on the charities 3 or on the operators or lessors. It's just an opinion, 4 another avenue where the charities can fund this 5 advancement themselves. 6 MS. TREVINO: Well, certainly the agency 7 has made those kind of statements in regards to the kind 8 of funding that is generated as a result of bingo and 9 that can support the Bingo Division. You know, Earl, 10 like you said, it is going to be a big challenge for the 11 Legislature this year. This is the way the agency 12 proposed in its request. 13 As Phil alluded, it would be something 14 that the Legislature would have to approve. You know, 15 there's still a lot of sausage to be made, if you will. 16 But, you know, I will say -- and I don't want to -- I'll 17 let Phil speak for himself -- but the cuts that have 18 already occurred, the five percent cut already on the 19 Bingo Division, this additional two to three percent 20 that's about to take place, it's taking a bit hit on the 21 division. 22 MR. SANDERSON: Yes. 23 MS. TREVINO: And so the industry needs to 24 understand that as a result of that, licenses may not 25 get processed as quickly, audits may not occur -- 20 1 MR. SILVER: Audits. 2 MS. TREVINO: -- complaints and 3 investigations, you know. Phil has not been able to 4 fill some vacancies, so -- 5 MS. YOUNG: That was another question that 6 I had. Is that kind of -- is that why this system is 7 going to be redesigned, is because it will help run the 8 division more efficiently with maybe less salaries? 9 MS. TREVINO: The redesign on the computer 10 data system -- and again, Phil, if you'll jump in -- my 11 understanding is, is that these are technical terms, but 12 the toolset that will support the computer system will 13 expire in 2013. 14 MS. YOUNG: So it's a required upgrade? 15 MR. SANDERSON: It's a required upgrade 16 because of the support of the toolset that's used in the 17 system currently today, but there are avenues that will 18 make it more efficiently, run more efficient. And it 19 could help offset, you know, potential FTEs. Right now 20 we're at a eight to ten FTE less than what we were three 21 years ago, which is about 25 percent already. 22 And as Nelda said, it's having an impact 23 on, you know, timely issuance of licenses already and 24 some other things. And we'll get into that as we start 25 discussing some of the rules and some of the reasons 21 1 behind some of the rulemaking right now. 2 MS. YOUNG: Okay. Thank you. 3 MS. ROGERS: Any other questions for 4 Ms. Trevino? 5 Thank you so much for keeping us up to 6 date on what's happening in the Legislature. I truly 7 appreciate it, because -- 8 MS. TREVINO: Glad to do it. And again, 9 I'm sorry I'm not the bearer of the best news, but it's 10 going to be a very difficult session, as I know everyone 11 recognizes. 12 MS. ROGERS: Well, it's the real news, and 13 that's not always the greatest. But thank you so much. 14 MS. TREVINO: Thank you very much. 15 AGENDA ITEM NO. 6 16 MS. ROGERS: Next, moving to Item No. 6, 17 report, possible discussion and/or action on calendar 18 year third quarter conductor information. 19 Mr. Bruce Miner. 20 MR. SANDERSON: Well, Bruce went off and 21 took a Thanksgiving vacation and hasn't come back yet, 22 so I'm stuck with giving this presentation today. 23 For the third quarter of 2010, we'll be 24 comparing data as it relates to the first three quarters 25 of the current Calendar Year 2010, along with the 22 1 previous three years, 2007, '08 and '09. 2 As you can see, gross receipts for the 3 first three quarters over 2009 have remained fairly 4 flat, with a slight increase in pull-tab sales and a 5 slight decrease in the regular and -- regular sales are 6 a little bit of an increase in the electronic sales. 7 Overall, the gross receipts are down just under a little 8 over $2 million for the first three quarters. However, 9 they're still up over the same time period for 2007 and 10 2008. 11 Net receipts, which is the amount of funds 12 left after paying out the prizes, continues to show a 13 decrease over- -- or shows a decrease overall for the 14 first three quarters compared to last year. Once again, 15 pull-tab sales are up slightly, with the regular bingo 16 net receipts down slightly. 17 As it gets to the required distributions 18 for the first three quarters, the required distributions 19 remain fairly flat, between seven and $8.5 million, a 20 little bit of a decrease over the last year. That's the 21 calculated amount based on either the 35 percent 22 calculation prior to October of '09. And with the first 23 three quarters of 2010, it's based on net proceeds. 24 Then you have your net proceeds for the 25 same time period from the required distributions. And 23 1 once again, those last three quarters of 2010, there 2 were $23 million compared to $30 million over the same 3 time period last year. And the amount of distributions 4 ranged from $24.8 million to $27.9 million, with about a 5 one million dollar decrease over last year. 6 That concludes the information for the 7 first three quarters. Also in your notebook in an 8 analysis that's been prepared by Arlette Taylor of the 9 Bingo Department, Bingo Division. 10 And I'll be glad to answer any questions. 11 MS. ROGERS: Members, anybody have any 12 questions for Phil? 13 MR. BOURGOYNE: Just one. 14 MS. ROGERS: Okay. 15 MR. BOURGOYNE: The last item says 16 charitable distributions increased $975,000. I thought 17 you said decreased a while ago. I just wondered if that 18 was a typo. 19 MR. SANDERSON: They did decrease. 20 MR. BOURGOYNE: Does it not say increased 21 on your -- 22 MR. SANDERSON: It does say increased on 23 the memo, yes. I apologize. I'll have to get with 24 Ms. Taylor on that. 25 MR. BOURGOYNE: Okay. Thank you. 24 1 MR. SANDERSON: Thank you. 2 MS. ROGERS: Thank you, Phil. 3 AGENDA ITEM NO. 7 4 MS. ROGERS: Next, moving to Item No. 7, 5 report and possible discussion and/or action on draft 6 amendments to 16 TAC 402.502, charitable use of proceeds 7 recordkeeping. 8 Ms. Melissa Young. 9 MS. YOUNG: I did have a couple of calls 10 concerning this rule. If you look on -- let's see 11 here -- under Item (2) on Page -- under Item (d) on the 12 second page under recordkeeping, Item No. (2), the 13 information -- and I talked to Phil about this -- but 14 the information that was struck was of concern to not 15 necessarily units but to stand-alone charities. And I 16 think actually, if it's okay with the members of the 17 BAC, David Heinlein wanted to get up and give a short 18 presentation on that, explaining why that was of 19 concern. 20 MS. ROGERS: Yes. He's on the public 21 comment -- 22 MS. YOUNG: I guess we want to wait to 23 discuss it? 24 MS. ROGERS: -- and will discuss it. 25 MS. YOUNG: Okay. 25 1 MS. ROGERS: And then once the members are 2 done. 3 MS. YOUNG: Okay. So basically, if 4 anybody else on the committee has a concern about that. 5 I think the bottom line was that there was a question 6 about whether or not that requires the bingo accounting 7 to be responsible for the activities of the charity 8 itself. 9 MS. ROGERS: That could be a concern. I 10 agree with that; I agree with that. 11 Members, anyone else have any questions 12 about this rule or comments? 13 No? 14 And at this time we'll move to public 15 comment. Mr. David Heinlein, if you would like to come 16 up and speak to us. 17 MR. HEINLEIN: David Heinlein, 18 representing the charities. 19 Yes. On Item (d), recordkeeping, Item 20 (2), "All distributions for charitable purposes must be 21 made from the bingo checking account." And then what's 22 stricken is the area which would allow the charity to 23 take the funds that they're going to use for their 24 charitable purposes and put it in a separate bank 25 account which would be called the use-of-proceeds 26 1 account, separate from their general fund account, is 2 what we always recommended to them and be able to make 3 their charitable purposes documented from that account 4 rather than the bingo account itself, and I think that's 5 what the intention is. 6 But because we've struck all that, that 7 gives you that latitude, it would appear from this -- 8 and I've had several charities already call me about 9 this, because they were concerned because that's not 10 normally -- that's not how they do it today. 11 They take their bingo checking account, 12 and they pay all of their bingo expenses out of that 13 account, but they write a check to another account where 14 they have put it into an account that they will 15 distribute funds for their charitable purposes, buying 16 eyeglasses or whatever it is so they can document it, 17 the actual use of the proceeds. So this seems to limit 18 them to not be able to do that, and I'm not sure that 19 that's what we want to do. 20 MS. ROGERS: I happen to agree with that. 21 We don't have any stand-alone charities in our hall. 22 But I recommend highly to any charity that they keep 23 their bingo funds separate, their distributions 24 separate. 25 MR. HEINLEIN: I think the -- 27 1 MS. ROGERS: I mean, a lot of charities do 2 receive other distributions from other avenues. 3 MR. HEINLEIN: I think it's the only way 4 to give accountability -- 5 MS. ROGERS: Right. 6 MR. HEINLEIN: -- to be able to manage 7 that in an audit, to be able to separate those funds so 8 that you can manage how you're doing it. 9 One other item, too. On the next page, we 10 move from Item (5) to Item (7). I think there is a 11 renumbering problem right there that needs to be 12 corrected. 13 MS. ROGERS: Okay. 14 MR. HEINLEIN: So I would recommend that 15 there be some language here to allow them to take the 16 net proceeds and put them into an account that can be 17 managed separately from their general fund or separate 18 from the bingo checking account. I think that's the 19 only way to really manage the use-of-proceeds funds and 20 give a good accountability. 21 MR. SANDERSON: Now, are you talking about 22 an organization that is participating in unit accounting 23 or -- 24 MR. HEINLEIN: No, no. 25 MR. SANDERSON: -- is a stand-alone 28 1 organization? 2 MR. HEINLEIN: Item (3), "Accounting units 3 must make distributions for charitable purposes from the 4 unit bingo checking account to the unit member." Well, 5 right away we've solved the problem. Now the unit 6 member has got the money into another account that can 7 be managed and they can document all of the uses that 8 they have put that money to work in, to use for their 9 purpose of their charity, so that one we're good with. 10 It's just that when you have -- and I 11 don't actually have any stand-alone charities, but I 12 have people that call me all the time about this. And 13 one recently, when he read that, he said, "I've got to 14 change the way I'm doing business, then." And I said, 15 "Well, it would appear that that's what this is saying. 16 It appears that you're going to have to do all of 17 your -- you buy your eyeglasses out of the bingo 18 checking account." I don't think you want to do that. 19 MR. SANDERSON: Would No. (4) not cover 20 that? 21 MR. HEINLEIN: "A licensed authorized 22 organization must maintain bank statements, canceled 23 check and deposit slips or images," blah-blah-blah, "and 24 bank reconciliations for all accounts to which it 25 deposits charitable distributions from the proceeds of 29 1 bingo." Well, does it? In your mind, does that -- 2 MR. SANDERSON: That was what the intent 3 was, that that language somewhat replaced the struck-out 4 part of No. (2), the new No. (2). 5 MR. HEINLEIN: Somehow in that Item (4), 6 then, it might should say, then, a use-of-proceeds 7 account. 8 MR. SANDERSON: Well, that's where -- are 9 you saying that an organization that conducts bingo has 10 a use-of-proceeds account as well as a bingo account as 11 well as a general revenue account? 12 MR. HEINLEIN: Yes. 13 MR. SANDERSON: Okay. Well, we were 14 trying not to require them to keep another bank account 15 open. 16 MR. HEINLEIN: Don't you think they 17 should? 18 MR. SANDERSON: Yes, I do think they 19 should. 20 (Laughter) 21 MS. ROGERS: I think they should, too. 22 MR. HEINLEIN: If they want to do that, 23 then, they should be able to do that. And you believe 24 that Item (4) would then allow them to have that 25 separate account? 30 1 MR. SANDERSON: They distribute the money 2 from their bingo account to -- for their charitable 3 purpose, they can put that in the use-of-proceeds 4 account if that's what they have, and from there 5 maintain the documentation of how it's used. 6 MR. HEINLEIN: As long as you can read it 7 that way and I can tell them that that's what they can 8 do, then I'm fine with it. 9 MR. SANDERSON: We can certainly look at, 10 you know, potential language modification. 11 MR. HEINLEIN: I would have to let the 12 legal staff decide on that. I don't really -- 13 MS. ROGERS: Because Item No. (4) does say 14 all accounts. So is that what you're -- because you're 15 thinking if they do have multiple accounts -- 16 (Simultaneous discussion) 17 MR. HEINLEIN: Well, it just says must 18 contain bank statements. 19 MR. SANDERSON: Multiple accounts. 20 MR. HEINLEIN: Of course, if you've got a 21 bank account, you're going to have a bank statement. 22 And maybe somewhat that does cover that. I have to get 23 my legal counsel over here, Steve Fenoglio, to decide if 24 it says that. 25 MS. ROGERS: Okay. 31 1 MR. HEINLEIN: You recall what I said 2 about the renumbering there? 3 MR. SANDERSON: Yes, I got that. Thank 4 you. 5 MR. HEINLEIN: I think that's it. 6 MS. ROGERS: Thank you, David. Appreciate 7 it. 8 Any other questions from this rule? 9 Any other public comment? 10 Mr. Steve Fenoglio. 11 MR. FENOGLIO: Steve Fenoglio, for the 12 record. I'm an attorney in Austin. I haven't filed but 13 I'll prepare one and send a witness affirmation. I 14 represent the state VFW, its member posts and a number 15 of other charitable and business organizations. 16 The first concern -- and I share David's 17 comment. When you struck the language in new 18 Subparagraph (2) of Subparagraph (d), which had the 19 language, Phil, that we had worked on three or four 20 years ago about the type of documentation that's needed, 21 and I see where you could read it both ways. I could 22 read it where they only -- the distributions for 23 charitable purposes have to be made from the bingo 24 checking account, which I now understand is not your 25 intent. But I could read (2) in Subparagraphs (d)(2) 32 1 and (d)(4) two different ways. 2 And my sense is, most of the VFW posts 3 have a bingo account if they're a stand-alone, and then 4 they'll have their general fund, and they may also have 5 a bar account, if you will. The bingo monies come into 6 the general fund sometimes, and then they're disbursed 7 out for whatever their purposes are being used for, for 8 promoting veterans' activities. Sometimes those checks, 9 though, are written from the bingo account for that 10 activity. So as long as there is -- and it could even 11 be a clarification in the Bingo Bugle about that, which 12 you do on occasion. 13 MR. SANDERSON: Bulletin. 14 MR. FENOGLIO: Bulletin. Thank you. 15 The other issue I have, turning to 16 Subparagraph (d)(9), the language says, "A licensed 17 authorized organization must maintain minutes and 18 attendance records of regularly scheduled meetings." 19 Some organizations do maintain minutes but 20 not necessarily attendance records. And, for example, 21 the ARC of the Capital Area, which I regularly 22 represent, and you've heard me talk about, their board 23 meeting minutes, their regular more or less monthly 24 meetings have minutes and attendance records. Their 25 annual meeting will have minutes but not necessarily 33 1 attendance records, other than the fact that there was a 2 quorum present. It's an organization of several hundred 3 members. And it would be -- you may have a sign-in 4 sheet, but that wouldn't necessarily be the attendance. 5 Other organizations do the same thing. 6 They may have a sign-in sheet, but no one suggests that 7 that's actually the attendance record. We all have been 8 to meetings where we didn't sign in, for whatever 9 reason. And that doesn't mean -- so some language 10 should maintain -- and again, I don't have a problem 11 with minutes, because I think the majority of 12 organizations will keep accurate minutes of meetings. 13 Some of the smaller organizations may not, what we would 14 recognize as meeting minutes. It may be a couple of 15 bullet points about what was discussed and/or 16 accomplished. 17 But then the attendance records is where, 18 my feeling is, they don't necessarily maintain good 19 attendance records. Someone may note that there is a 20 quorum present, and that may be all that you're 21 requiring, Phil, as opposed to an attendance record that 22 says Francis Ciancarelli, Melissa Young, Emile 23 Bourgoyne, Earl Silver, Kimberly Rogers, Joe Williams 24 and Kenneth Messer were present. I think most people 25 would view that would be an attendance record, that's 34 1 what you're requiring. So again for certain meetings, 2 especially annual meeting minutes of organizations, they 3 won't have that type of attendance record. 4 Be happy to answer any questions. 5 MS. ROGERS: Would it be better if that 6 said attendance records slash sign-in sheet? 7 MR. SANDERSON: We'll look at some 8 language on it. 9 MR. BOURGOYNE: I think when it says 10 "regularly scheduled meetings," I don't necessarily 11 think that refers to annual meetings. 12 MR. FENOGLIO: Well, some organizations 13 have a regularly scheduled annual meeting. It's the 14 second month of -- second Monday of March, and that's in 15 their -- some of them will have bylaws that actually 16 state that. Or, if they don't, it says they shall have 17 an annual meeting. And I could argue that is -- that's 18 a regularly scheduled meeting. 19 MR. BOURGOYNE: I think that's where the 20 language needs to be tweaked. 21 MR. SANDERSON: Right. Thank you. 22 MS. ROGERS: Yes, sir, Francis? 23 MR. CIANCARELLI: Yes, this is Francis. 24 I think I agree with Steve. I had made a 25 mark on that same paragraph. And if I may -- for 35 1 example, the Rotary Clubs, they meet weekly and they 2 meet monthly for the board, which is their officers and 3 leadership team. They keep attendance for the weekly 4 meetings but not minutes. But I think the intent may be 5 here that it's for the board. 6 MR. SANDERSON: Well, this is probably 7 encompassing both. It's wherever -- if the meeting 8 discussion centers around the disbursement of bingo 9 proceeds for charitable purposes, then the intent is 10 that we have some documentation of the meeting, how the 11 vote went that we -- you know, whether it was a 12 unanimous vote that the money goes to buy the eyeglasses 13 or the dictionaries or, you know, something of that 14 nature. So we'll look at some language that will help 15 clarify that. 16 MS. ROGERS: Thank you. 17 Thank you, Phil. 18 Members, any other comment? 19 Okay. 20 AGENDA ITEM NO. 8 21 MS. ROGERS: If not, we'll move to Item 22 No. 8, report and possible discussion and/or actions on 23 draft new rule 16 TAC 402.501, charitable use of 24 proceeds. 25 Mr. Francis Ciancarelli. 36 1 MR. CIANCARELLI: Okay. Thank you, Madam 2 Chair. 3 This was a one-page rule, and it seemed 4 like it was going to be kind of an easy rule. That's 5 not why I took it. But the comments you see in the 6 notebook -- and there were copies out there -- 7 everything you read was my own comment. There is a 8 yellow highlight and that's just -- I love that word 9 "inure." And the blue was from Tom Weekley, and I 10 expected him to talk about that today. 11 But most of my comments were about the 12 wording or language. And Tom took exception on his 13 behalf to the influence or attempt to influence 14 legislation, and he thought there should be some 15 opportunity to use the money to petition for things to 16 go bingo's way. Now, I'm kind of summarizing what he 17 told me on the telephone. So with that, I'll probably 18 leave that, unless there is something that the Chair 19 would like to put into that. 20 Line 22 and 21, I was just trying to tie 21 it back to recordkeeping, because I think the 22 recordkeeping kind of had a little more meat to this. 23 The only thing that's not there, there is no statement 24 about the proceeds to benefit Texas, Texans in Texas. 25 And that's all my comments. Anyone else 37 1 is welcome to pitch in there. 2 MS. YOUNG: I did. I had a question about 3 the part that Tom had questioned, and I was wondering, 4 like -- and let's just use an example. If, say, my 5 charity was to spend a hundred dollars to put together a 6 little pamphlets that we were going to pass out that 7 said something like, "So-and-so charity is in support of 8 House Bill 1474, because we believe it's good for 9 charities and charitable bingo," the way I think that 10 this is written, that's a violation. But I'm wondering, 11 is that, in the view of the Commission, a violation? 12 MR. SANDERSON: We may have to revisit 13 this rule. Since we started drafting it, there's been 14 some changes in activity taking place in the world, so 15 we'll have to revisit No. (2) probably in its entirety. 16 MS. YOUNG: Okay. That's kind of why we 17 were wondering. Thank you. 18 MS. ROGERS: Emile? 19 MR. BOURGOYNE: As pertains to that recent 20 court ruling? 21 MR. SANDERSON: Yes. For the most part, 22 Paragraph (b) is almost verbatim out of the statute, 23 2001.457 -- 455, something like that, and we were just 24 trying to emphasize the use of the proceeds. So that 25 Paragraph (2) may need to be revisited, yes. 38 1 MS. YOUNG: Okay. 2 MS. ROGERS: So we will take this rule 3 back and look at it and -- 4 MR. SANDERSON: If there's no other 5 comments, other than on Paragraph (2), then, you know, 6 we'll make that determination and move forward. 7 MS. ROGERS: Okay. Any other comments? 8 Members? 9 Okay. Public comment. Mr. Heinlein? 10 No? 11 Okay. Mr. Fenoglio. 12 MR. FENOGLIO: Steve Fenoglio again. 13 The one question that I had, and there has 14 been litigation under Subparagraph (b)(2). But (b)(3), 15 "for any purpose or activity that is illegal or violates 16 fundamental public policy," and that does not come from 17 456. And I'm trying to figure out what is fundamental 18 public policy, and how do you know it? 19 There are charitable organizations that 20 advocate strenuously for changes in Texas law. They 21 have been vetted by the IRS. They have a 501(c) 22 designation. ADAPT is one, the wheelchair bowling 23 associations. And sometimes they are confrontational, 24 trying to get doors opened, if you will. And it was not 25 too long ago, 20 or 30 years ago, that regularly people 39 1 with disabilities were denied access to public 2 facilities. And we have an ADA now, Americans With 3 Disabilities Act, that changed that. 4 But my point on that is, 30 years ago I 5 think many people would say, if someone were advocating 6 for public access for people with severe handicaps, that 7 was against the state's public policy, and I would argue 8 that that's not against the public policy. But I can 9 see where someone -- what is fundamental public policy 10 people could reasonably disagree about. 11 And, yet, if the charity is using its 12 bingo money and the division determines -- I'm going to 13 make up something outrageous -- that a Nazi organization 14 that is a 501(c) is advocating certain activities that 15 are not politically correct, it puts Phil Sanderson in 16 an awkward position of trying to referee what 17 constitutes fundamental public policy, and that's where 18 I have a -- I mean, that's where I make some money on 19 occasion. 20 But I would like to keep my friend Phil 21 out of making -- you know, parsing -- well, take 22 gambling, for example. About a third of the state is 23 fundamentally against any type of expansion of gambling. 24 Y'all see that in your lottery stuff -- polls. And so 25 does that violate public policy? Who knows? But a 40 1 charity can get in harm's way for supporting its mission 2 when it's not politically acceptable to do so, and I 3 would suggest that's wrong. 4 MS. ROGERS: Thank you for that. 5 Members, any comments? 6 MR. FENOGLIO: And one other thing. I 7 would guess if we had a round-table discussion at a 8 neighborhood bar about what constitutes fundamental 9 public policy, we could have a great disagreement of 10 minds as to what some of those issues on the cusp of 11 being politically incorrect. But that kind of 12 highlights the point of charities shouldn't be thrown in 13 harm's way when they're doing whatever their mission is, 14 even if it's politically unpopular. 15 Thank you. 16 MS. ROGERS: Thank you. 17 MS. YOUNG: I agree with that. I think 18 it's really difficult to say what's correct for one. 19 And that could be really awkward for you, Phil. 20 MS. ROGERS: Yes, Melissa. 21 MR. BOURGOYNE: I'm pretty sure I disagree 22 with some fundamental public policies. 23 MS. ROGERS: Is fundamental public policy, 24 since you're the expert, is that as it sits right now? 25 MR. SANDERSON: I don't believe that's in 41 1 the current rule, no. 2 MS. ROGERS: Okay. So will you have that 3 listed also? 4 MR. SANDERSON: Yes. 5 MS. ROGERS: I think we could find many 6 different opinions on fundamental policies. Okay. 7 AGENDA ITEM NO. 9 8 MS. ROGERS: No other public comment, 9 we'll move to Item No. 9, report and possible discussion 10 and/or action on draft amendments to 16 TAC 402.205, 11 unit agreements. Myself, Kim Rogers. 12 I did not receive any comments on this 13 rule, and I didn't find anything in here that I had any 14 comment on. 15 Members, does anyone have any comments on 16 this? 17 No? 18 Okay. At this time, do we have any public 19 comment? 20 Mr. David Heinlein. Yes, sir. 21 MR. HEINLEIN: For the record, David 22 Heinlein. Item (d), "A unit must notify the Commission 23 of a change in unit membership on a Commission- 24 prescribed form seven calendar days prior to the date 25 the units membership changes." 42 1 Why are we asking for it to be done prior, 2 when it would seem that where we have a membership 3 change, then we have seven days after? 4 MR. SANDERSON: Two things. One, not 5 everybody tells us seven days after, so we're busily 6 having to make program changes on a computer system 7 that's using up my valuable resources to try to issue 8 licenses to correct a system that has added a member or 9 taken a member off the unit accounting group. 10 So we're now requiring that just the 11 notification -- you should know a week before you, when 12 you're going to change membership, and you notify us 13 that you're making that change. You still have 25 days 14 to submit the executed unit agreement. 15 MR. HEINLEIN: Right, which we definitely 16 need that. 17 MR. SANDERSON: But the notification of 18 the change needs to be received at least seven calendar 19 days prior to the date of that change, or the effective 20 date of the change. 21 MR. HEINLEIN: So that was the reason for 22 that. Well, I can understand it if it's a matter of 23 saving money on your end to -- you really have some 24 problems there to begin with. But that's going to be a 25 new wrinkle for us to consider to do, because these 43 1 people change stuff and they don't tell me, you know, 2 and then I have to find out. 3 MR. SANDERSON: Well, that's kind of like 4 we find out, too. 5 MR. HEINLEIN: Yes. So I'm having to deal 6 with the same thing you're dealing with. 7 MS. ROGERS: Okay. Clarify something for 8 me, Phil or David. I don't know. On this, this is 9 change in the unit membership. So are you talking about 10 the charities within the unit or a charity in a unit? 11 MR. HEINLEIN: In a round, I think. 12 MR. SANDERSON: That is the membership in 13 the unit. You've got Charities A, B, C and D -- 14 MS. ROGERS: Right. 15 MR. SANDERSON: -- that are members of 16 Unit A. All right. Effective January 1st, D is going 17 to leave and E is going to come in. You have to notify 18 seven days prior to the effective date that D is leaving 19 and E is coming in. 20 MS. ROGERS: Okay. Because most, I would 21 think, unit agreements do have 30 days at least, 22 minimum -- 23 MR. HEINLEIN: Yes. 24 MS. ROGERS: So okay. Yes, I understand 25 now better. Thank you. 44 1 MR. HEINLEIN: But somebody coming in 2 could be brought in, in an emergency situation, and a 3 charity loses their license unavoidably. 4 MS. ROGERS: Will there -- 5 MR. HEINLEIN: If they will not replace 6 them right away, then I've got a problem. 7 MS. ROGERS: Would there be something that 8 could be put in there to the extent of a unit loses two 9 members, so they have two slots available, they find a 10 charity and they really need them in there to play. If 11 they notify that the staff or that y'all can give them a 12 24-hour okay or -- you understand what I'm saying? 13 MR. SANDERSON: Well, in that scenario, 14 there's other issues to consider, as in the amendment to 15 a license change, changing a playing location or playing 16 times that may take more than 24 hours to solve. 17 MS. ROGERS: Right. 18 MR. SANDERSON: So, you know, that's 19 another reason for the seven days on this notification 20 so that we can make sure that all the proper amendments 21 are filed. We've had several scenarios where 22 organizations have played without licenses because they 23 didn't file the proper paperwork in time, and so it can 24 be costly for the charities. 25 MS. ROGERS: Right. Okay. 45 1 MR. HEINLEIN: So it's a problem on both 2 sides of the fence that we have to deal with. 3 Okay. That's all I have on that. 4 MS. ROGERS: They'll still have to tell 5 the charities they can come in in seven days and hope 6 that they have everything together. 7 Any other comments? 8 No? 9 Then we will move -- any other public 10 comment at this time? 11 No? 12 AGENDA ITEM NO. 10 13 MS. ROGERS: We'll move to Item No. 10, 14 report and possible discussion and/or action on draft 15 amendments to 16 TAC 402.100, definitions. This also is 16 mine, myself. I did not have any comment nor did I 17 receive any comments. There is one bullet in here, that 18 comment post. Is that -- 19 MR. SANDERSON: That was my comment. The 20 term "operator" is actually defined in the -- I want to 21 say the worker registry rule, 402.402. And so the 22 question -- I made a mental note for myself -- is should 23 we remove it from here and leave it in the other rule, 24 since that's where it is used most often, is in the 25 worker registry aspect. And so I just made that note 46 1 for a comment to myself. 2 MS. ROGERS: I wouldn't see any problem 3 with that. 4 Anyone else? 5 MR. BOURGOYNE: I would think that's 6 consistent with what you've done with these other 7 definitions that are in statute. 8 MR. SANDERSON: Yes. 9 MS. ROGERS: Okay. Any other comment, 10 members? 11 Any public comment at this time? 12 Okay. You go first. Mark, I believe? 13 MR. GOTTSCHALK: Yes. 14 MS. ROGERS: And your last name would be? 15 MR. GOTTSCHALK: Mark Gottschalk. I'm 16 with Austin Capital Group. 17 MS. ROGERS: Okay. Did you get his last 18 name? 19 THE REPORTER: No. 20 MS. ROGERS: Can you spell your last name, 21 please, sir. 22 MR. GOTTSCHALK: Sure. 23 G-o-t-t-s-c-h-a-l-k. 24 MS. ROGERS: Thank you. 25 MR. GOTTSCHALK: My comment is on 47 1 Paragraph (15), the definition of "Real Party in 2 Interest." It seems to be a pretty broad definition. 3 And one of the thoughts that occurred to me was that 4 would a charitable organization have to put on -- say 5 someone doing business within that facility, someone 6 that might be conducting the concession stand, maybe 7 that's a separate organization. 8 Well, now this person would be a real 9 party in interest, because their business would benefit 10 by the charity doing business there or conducting bingo. 11 This appears to be a little broad to me. I don't know 12 if anybody had thought this through, but we might want 13 to tighten that up a little bit. And, honestly, I don't 14 even know where that definition or the -- 15 MR. SANDERSON: Well -- 16 MR. GOTTSCHALK: -- if it's statutory. 17 MR. SANDERSON: We can go back and clarify 18 it a little bit. It is in statute, and it pertains to 19 commercial lessor licenses. And it requires the 20 notification on the application of trying to find the 21 exact section of who the real party in interest -- or 22 have to disclose any real parties of interest in the 23 application, and I'm trying to find it. 24 Section 2001.159 -- is it 55? 25 MR. FENOGLIO: 159(5). 48 1 MR. SANDERSON: 159(5): The Commission 2 shall issue or renew a commercial lessor license if they 3 determine that the person whose signature or names 4 appear on the application is in all respects the real 5 party in interest and is not an undisclosed agent or 6 trustee for the real party in interest. And I believe 7 that's the only place that I'm aware of that it's in 8 there. I think that's it. 9 MS. ROGERS: So this scenario that Mark 10 has brought up, would that -- 11 MR. SANDERSON: It would not pertain to 12 non-profits or -- this definition would not pertain to 13 non-profits that are licensed. 14 MR. GOTTSCHALK: It strictly is dealing 15 with lessors? 16 MR. SANDERSON: Yes. 17 MR. GOTTSCHALK: Okay. Thank you. 18 MS. ROGERS: Thank you so much for your 19 comment. 20 Members? 21 Mr. Fenoglio. 22 MR. FENOGLIO: Thank you again. For the 23 record, Stephen Fenoglio. And to follow -- I have two 24 comments. But to follow up on that one, under the real 25 party in interest, what I can't tell with the definition 49 1 that's used, if you have the owner of the strip center 2 that's not licensed and you have a grandfathered lessor 3 or a tiered lessor that is licensed, and let's say that 4 within the ownership of the strip center, it's under a 5 trust, a real estate trust, and there are some known 6 members of the trust and unknown members of the trust, 7 if you apply the definition that you have to the real 8 party in interest, each and every one of those owners of 9 the real estate trust, investment trust, would have to 10 be named, and I don't think that's what you're trying to 11 get at. 12 I think what you're trying to find out is, 13 is there a strawman -- or strawwoman -- hidden who is 14 the puppet master who is controlling the strings. And 15 it seems to me this language would get to that person, 16 but it would also get to a lot of other individuals that 17 I don't think the agency has any interest in knowing 18 about. And, in fact, because some of the strip centers 19 are owned by real estate investment trusts, even the 20 manager, the trustee, may not know who all those folks 21 are, because their ownership springs from different 22 trusts. And under federal law, the ownership of some of 23 those trusts is legally undisclosable. 24 MR. SANDERSON: Well, there is one other 25 place in the statute where it's listed, and that's in 50 1 2001.156, and that's the license application for a 2 commercial lessor. And it says the application must 3 include "the name and address of the applicant and each 4 other person who has a financial interest in or who is 5 in any capacity a real party in interest in the 6 applicant's business as it pertains to this chapter." 7 MR. FENOGLIO: Right. 8 MR. SANDERSON: So I'm trying to define 9 that term. 10 MR. FENOGLIO: Okay. And you're right. 11 156 is seeking different information than arguably the 12 other information in 159(5). And again, I don't think 13 you care if -- because you're right, your focus in 156 14 is, who is running that business, that commercial 15 lessor's business? 16 MR. SANDERSON: Yes. 17 MR. FENOGLIO: 159(5), with this 18 definition, you're looking arguably for the unregulated 19 lessor/owner that historically you don't really care 20 about. So there is a way around that, and I'll be happy 21 to work with staff on that. 22 The same comment occurs of overbroad in 23 the definitions under credit interest, Subparagraph (7); 24 equitable interest, Subparagraph (10); and proprietary 25 interest, Subparagraph (14). And Sandy and I have had 51 1 some healthy discussions over the last five years, and I 2 had with you, Phil. We tried to define those in an 3 earlier version with I believe Chairman Flores, and it 4 didn't go very far, on what those words mean. And they 5 come up in the context of both commercial lessors under 6 154(5); again, 2001.154(5) of the Bingo Enabling Act; 7 2001.202, Subparagraphs (8) and (9) for manufacturers; 8 and 2001.207, Subparagraphs (8) and (9) for 9 distributors. 10 And when I read that -- and I regularly 11 represent all of those categories -- I can't tell who 12 I'm supposed to -- I can't tell the client, if this was 13 the language, who you have to disclose as having a 14 credit interest, an equitable interest or a proprietary 15 interest. The language, for example, "in proprietary 16 interest and ownership interest in a business which 17 might be in the form of," well, might or might not. If 18 it might be, but it also might not be, am I covered 19 there? I don't know. 20 And it's the same type of language that's 21 not particularly precise. And I'll be happy to work 22 with staff on some language. We've proposed some in the 23 past. But what I want -- and I think what the staff 24 wants -- is, everyone knows the interest you have to 25 have, because if you guess wrong, the lessor's license 52 1 is at risk, the distributor's license is at risk, and 2 the manufacture's license is at risk. 3 This language is common among several 4 licensing statutes in the Alcohol Beverage Code, Bingo 5 Enabling Act and in a number of states. And different 6 states have applied different rules to reach those 7 interests. And I know Sandy and I had a discussion 8 about three or four years ago about that. The concern I 9 have is, because it's never really been litigated much 10 in Texas, you could give advice to a manufacturer: 11 "Okay. You're okay. You can have this ownership 12 interest, this equitable, proprietary or credit 13 interest. And you don't have to disclose it, and it's 14 not anything that you have to deal with." 15 And then later, a Pennsylvania ruling is 16 relied upon by staff and oops! Now the manufacture's 17 license is at risk or the lessor or the distributor. So 18 from my perspective, I just like it to be clear as to 19 what is allowed and what is prohibited so that there's 20 no litigation unless I'm getting paid to litigate, in 21 which case I like it imprecise. 22 Thank you. 23 MS. ROGERS: Thank you, Mr. Fenoglio. 24 Any other questions on Mr. Fenoglio's 25 comment? 53 1 No? 2 Okay. Any other public comment? 3 AGENDA ITEM NO. 11 4 MS. ROGERS: Then we will move to Item No. 5 11, report and possible discussion and/or action on 6 draft amendments to 16 TAC 402.203, unit accounting. 7 This also is mine. And I did receive one 8 comment, which I happen to agree with. The way it's 9 written right now -- let me go here and tell you 10 where -- Page 3, Line 19. That would be No. (3). 11 "Except for the transfer of funds to the unit account by 12 new members or funds transferred in accordance with 13 §402.202 of this chapter (relating to Transfer of 14 Funds), only the following may be the deposited" -- I'm 15 sorry. I'm reading the wrong one. I covered it up. 16 I'm sorry. 17 No. (6), "An organization that is required 18 to file a Texas {Bingo} Quarterly Report," what this 19 basically says is that when -- No. (1) says, "If, upon 20 leaving a unit, an organization receives a distribution 21 of funds from the unit's bingo account, the unit must 22 classify the distribution as a charitable distribution." 23 The comment that Ms. Greenfield sent to me 24 that I also agree with is, the way it's written, if the 25 charity is stuck and tied to one unit account, are we 54 1 reading it correct in saying after everything is said 2 and done and all their bills are paid, if the charity 3 wants to leave a unit and move across town to another 4 unit, any money that they have, leaving that unit that 5 they're presently in, they cannot use as start-up funds, 6 because it's all distributions? So now they have to use 7 it in accordance with their 501. Well, if you're a 8 501(c)(4) or (6), you can't use that, I believe. 9 MR. SANDERSON: Which paragraph are you 10 reading from -- page, line number? 11 MS. ROGERS: My pages are different than 12 y'all's. 13 MR. BOURGOYNE: Page 5. 14 MS. ROGERS: Page 5, yes. It's Line -- 15 well, it starts at Line 14 and goes down. It's No. 6(j) 16 and then (1). 17 MR. SANDERSON: Okay. That's the current 18 language. That's not even being proposed for changes. 19 MS. ROGERS: Okay. But is that correct? 20 MR. SANDERSON: Upon leaving a unit, an 21 organization receives distributions, that is correct, 22 yes. It would be -- it's considered bingo proceeds from 23 their bingo operations. 24 MS. ROGERS: Okay. So they cannot use any 25 of their funds from one, when they move, to another one, 55 1 to start up another unit? 2 MR. SANDERSON: They can use some funds 3 from their account that, you know, are not considered 4 bingo proceeds. 5 MS. ROGERS: Okay. And that's not even 6 being changed or looked at to be different? 7 MR. SANDERSON: It wasn't in this first 8 draft, no. 9 MS. ROGERS: Okay. That makes it 10 difficult for any -- I understand the reasoning behind 11 it, but I know that does make it difficult on charities 12 if they want to move. 13 Any other comments? 14 MR. CIANCARELLI: Yes, I'm Francis. 15 That's a concern for authorized 16 organizations that rotate, because we have that problem 17 where we get a check and then we are supposed to give a 18 check to the next hall, so I think that may need to be 19 looked at a little more. 20 MR. SANDERSON: Well, one of the things 21 that we were looking at in this is that, you know, we're 22 looking at it from the standpoint of the requirement, 23 now they have to make net proceeds. And if you have 24 organizations that are possibly moving from unit to 25 unit, they're moving bingo proceeds from one to pay 56 1 bingo expenses at another possibly. And so once they 2 leave that unit, they get their bingo distributions, and 3 that's their charitable distributions. If they want to 4 get back into another unit, then they need to put 5 non-bingo funds as their starting capital in there, to 6 get that money back out or to start back up in another 7 unit. 8 Does that make sense? 9 MS. ROGERS: It makes sense, and I 10 understand the reasoning for doing it. But if there is 11 a charity -- I mean, they're moving across town and they 12 just don't want to be in that unit any longer, it 13 doesn't leave -- if bingo is their only source of 14 income, their only source of distributions, then they 15 don't have -- because the unit across town requires 16 $10,000 to join, they don't have any startup. But I do 17 understand the reasoning for it. 18 MR. BOURGOYNE: It's required to make 19 their required donations. And then anything above and 20 above that, they should be able to use for startup. I 21 mean, it just seems like that should be possible. 22 MR. SANDERSON: Well, but now the required 23 distribution is all of net proceeds. So that's -- 24 having that net proceeds requirement has changed a lot 25 of the bookkeeping requirements. 57 1 MS. ROGERS: Yes. 2 MR. CIANCARELLI: Madam Chair? 3 MS. ROGERS: Yes. 4 MR. CIANCARELLI: Some of the units 5 that -- some of the organizations that rotate don't do 6 it at their own choice, so it's not like they are 7 quitting and moving to another hall. 8 MS. ROGERS: They're being forced to. 9 MR. CIANCARELLI: Escorted to the next 10 hall. 11 MS. ROGERS: I can't believe someone would 12 voluntarily want to do all that paperwork to change 13 them. 14 Okay. Any other comments? 15 MR. CIANCARELLI: If you put up your money 16 initially, that comes from -- 17 THE REPORTER: I'm sorry. Would you speak 18 up. Is your microphone on? 19 MR. CIANCARELLI: I turned it off. 20 Most organizations put the money into 21 bingo from their general accounts, and then it's coming 22 out in distributions, so it's sort of like turning it 23 over into the wrong place. 24 MS. ROGERS: So let's say they did go into 25 this with $10,000. 58 1 MR. SANDERSON: I believe there is a -- 2 and I'll check with Meagan in just a minute -- there is 3 a line item for funds going into a unit and funds coming 4 out of the unit. And that's where, if you put in 5 $10,000 in startup, then you can take your $10,000 back 6 out. 7 That's not correct? 8 MR. AHMAD: No. But there is a line item 9 in here -- 10 MR. SANDERSON: You have to get up here. 11 MS. AHMAD: Yea! There is a provision in 12 the rule that does allow an organization to move to 13 another unit and that the unit itself can amend their 14 agreement and withhold the charitable distributions, or 15 a percentage of them, while they build up their funds. 16 MS. ROGERS: Please state your name for 17 the record. 18 MR. AHMAD: I'm Meagan Ahmad with the 19 Charitable Bingo Operations Division. 20 MS. ROGERS: Okay. So if they did take 21 all their funds from that one charity when they're 22 leaving, that was their distributions, and they were 23 going across town to this other charity, they could 24 still join and that unit could withhold -- 25 MR. AHMAD: As long as the unit itself 59 1 makes the correct amount of distribution, they can 2 withhold that amount as part of their initial 3 contribution. 4 MS. ROGERS: Oh, so they would -- 5 MR. AHMAD: So they can build it up so it 6 would be equally fair to all organizations. 7 MS. ROGERS: And this would also catch and 8 prohibit those who like to jump around and pay bills 9 from one hall to another hall, so that would catch that. 10 But they can still move -- if they're legitimately 11 moving for a reason? 12 MR. AHMAD: Okay. 13 MS. ROGERS: I'm satisfied with that, and 14 I think -- my comment. 15 MR. AHMAD: They just have to amend their 16 agreement to indicate that. 17 MS. ROGERS: Okay. Great. So it is 18 possible to move. Great! 19 Any other comments? 20 Any public comment at this time? 21 Mr. Heinlein. 22 MR. HEINLEIN: For the record, David 23 Heinlein again. 24 Yes, I'm having a problem -- I understand 25 what is being said here, and I'm doing it. I'm having a 60 1 problem with how to do it. Item (j)(1), "If, upon 2 leaving a unit, an organization receives a distribution 3 of funds from the unit's bingo account, the unit must 4 classify the distribution as a charitable distribution." 5 Well, I'm actually doing that and 6 classifying it as a distribution to a former member of a 7 unit. My question is, how do I report that? I have 8 reported it on Schedule B, and I got a letter from you 9 that says my Schedule B doesn't balance to the amount, 10 which it does, because I've got that fund that was sent 11 to that former member on Schedule B, but you don't pick 12 that up as that. You only pick up the current members. 13 So where should that distribution to the member that's 14 left be put on the report? 15 MR. SANDERSON: I don't know. 16 (Laughter) 17 MR. SANDERSON: Call the Taxpayer Services 18 Department. 19 MR. HEINLEIN: Okay. But I am doing it 20 correct, then. I am distributing money to a former 21 member, and it has to be called a charitable 22 distribution. So it will be recorded and put on Line 23 30, and that's going to make me out of balance with 24 Schedule B. 25 MS. ROGERS: Maybe Meagan could help. 61 1 MR. SANDERSON: You'll need to get with 2 the Taxpayer Services. I can't answer that question 3 without looking at the reports and what you're, you 4 know, talking about. 5 MR. HEINLEIN: Okay. 6 MR. SANDERSON: If you're classifying it 7 as a charitable distribution, then you are in 8 compliance. 9 MR. HEINLEIN: I am doing it correct? 10 MR. SANDERSON: Yes. 11 MR. HEINLEIN: Okay. Meagan will have to 12 help me. 13 MR. AHMAD: Okay. 14 MS. ROGERS: Thank you, Mr. Heinlein. 15 Ms. Greenfield. 16 MS. GREENFIELD: I'm Patricia Greenfield 17 with Greenfield Bingo Services, and I'm the one who make 18 the comment on there I was talking about. 19 I think they should be able to leave with 20 what they brought into the unit. And I understand they 21 could go to another unit. But what if they don't want 22 to join another unit? What if they want to go 23 somewhere? And they still need something to start up 24 with. 25 So I think it would be worthwhile to take 62 1 a look at it and see if we could maybe make some kind of 2 adjustment where they could only move, you know, once 3 every year or two years or they couldn't move to the 4 same lessor or something to stop the problem that 5 Francis mentioned earlier. 6 Thank you. 7 MS. ROGERS: Yes, ma'am. Thank you. 8 Ms. Greenfield, if you would fill out a witness 9 affirmation form at the front. They're at the front 10 table. 11 MS. GREENFIELD: Thank you. 12 MS. ROGERS: Any other public comment at 13 this time? 14 AGENDA ITEM NO. 12 15 MS. ROGERS: Okay. We will move to Item 16 No. 12, report and possible discussion and/or action on 17 amendments to 16 TAC 402.604, delinquent purchasers. 18 Mr. Phil Sanderson. 19 MR. SANDERSON: Members, this rule was 20 voted by the Commission and published for public comment 21 I want to say sometime in September. The public comment 22 period came and went. We received some comments. We 23 want back to address the Commissioners at their November 24 meeting, and there was initial discussion that we would 25 make more changes to this Rule 402.604, delinquent 63 1 purchaser. So now I'm bringing that before the BAC to 2 look at and offer any comments. I've e-mailed the same 3 draft out to the industry. 4 So if there is anyone that would like to 5 propose some informal comments. The purpose of this 6 rule is to define the term "immediate payment." If an 7 organization goes on the delinquent purchaser list, then 8 the statute requires payment on delivery. And the 9 definition here is to determine what immediate payment 10 on delivery is. It actually I think says COD. And so 11 were trying to allow mechanisms to pay by check, other 12 than cash or certified check. 13 So with that, I'll open up for discussion 14 on any comments from BAC members. 15 MS. ROGERS: This delinquent purchaser 16 list -- I'm going to ask you a question -- is that 17 on-line, on the website? 18 MR. SANDERSON: It is. 19 MS. ROGERS: It is. On the Bingo Service 20 Center or -- 21 MR. SANDERSON: It is on the Bingo 22 Services Center, yes. 23 MS. ROGERS: Okay. So a charity would 24 know if they're on there? Okay. 25 MR. SANDERSON: They should know, yes. 64 1 MS. ROGERS: Okay. Yes, they should. 2 Members, any comment on this? 3 MR. BOURGOYNE: Just one. On that 4 website, is it separated by licensees, distributors, 5 manufacturers -- or distributors or is it just 6 all-inclusive? 7 MR. SANDERSON: If you'll hold on just one 8 second, I'll show you. 9 MS. ROGERS: And while you're looking at 10 it, is it public or is it. 11 MR. SANDERSON: It's completely public, 12 yes. 13 MS. ROGERS: Okay. 14 MR. SANDERSON: Delinquent purchasers in 15 the Bingo Services Center. And you can do it by name, 16 by taxpayer number or by city, or you can just -- if you 17 hit "Search," it will search all and bring them all up, 18 tell you who the organization is, where they're located, 19 their address and their taxpayer number. 20 MR. BOURGOYNE: I guess my question would 21 be, I would have to sort through that entire list to 22 find out if a particular distributor was on that list? 23 MR. SANDERSON: You can download the 24 report and it will go into Excel, and then you can 25 filter it, yes. 65 1 MS. ROGERS: But if you know their name -- 2 MR. SANDERSON: But if you know their 3 name, you can put their name in there. 4 MS. ROGERS: So organization means also 5 distributor? 6 MR. SANDERSON: Yes. 7 MS. ROGERS: Okay. 8 MR. SANDERSON: Or if you know their 9 taxpayer number, you can put that in there. 10 MS. ROGERS: And I will say this -- I said 11 at the last meeting -- for your charities, to help them, 12 this I have found to be one of the best tools to help me 13 and not have to call staff and say, "What is this?" or 14 "What is this?" You can go on here and get so much 15 information. 16 And speaking of lists, I noticed on the 17 website also -- I don't know if I can speak about 18 this -- there is a list of charities that are delinquent 19 that the IRS sees, so maybe that is a good thing, too, 20 to make sure your charities know to look at that with 21 their taxes with the IRS. 22 Any other comments? 23 Yes, Francis. 24 MR. CIANCARELLI: Just for clarification, 25 was that listed on the public side of the website or the 66 1 service center? 2 MR. SANDERSON: It's on the public side. 3 MR. CIANCARELLI: Okay. Thank you. 4 MS. ROGERS: Okay. Any public comment on 5 this? 6 Mr. Fenoglio. 7 MR. FENOGLIO: For the record, my name is 8 Stephen Fenoglio, and I was one of the individuals who 9 filed comment on behalf of K&B Sales and then later for 10 Danny Moore, Moore Supplies, and for Jane Thompson. 11 And the issue concerns the specific 12 language Phil addressed, in light of what's commercially 13 reasonable from the distributor, and that's where the 14 rubber meets the road, because charities are required to 15 pay within 30 days. And occasionally -- and the website 16 will reflect -- pretty regularly there are charities 17 that aren't paying regularly. 18 And so the question is, from the 19 distributor's perspective, "Well, when do you turn them 20 off?" It's real clear when you're delivering product, 21 when the distributor is delivering product. They get 22 payment when they deliver. They leave the paper or they 23 leave the pull-tabs. 24 The harder question is on the electronics 25 and how do you get immediate payment? Because you're 67 1 literally not showing up and delivering a piece of paper 2 on a loading dock. It's all electronic. And as we all 3 know, the rule requires those organizations to keep 4 their electronics connected to a phone line, but 5 occasionally the phone line is disconnected 6 intentionally or otherwise. 7 If the charity isn't paying for their 8 bingo product, they're probably not paying for other 9 bills, including phone bills. So does that then require 10 the distributor to dispatch someone to disconnect that 11 card-minding device? 12 And I thought we had a good consensus 13 within our group. This isn't the staff's problem; this 14 is the industry's -- different commercial practices and 15 how do you deactivate? And we still haven't reached a 16 100 percent unanimity. I haven't tried to reach out to 17 the other distributors in the state. It so happens that 18 the three I mentioned are about 80 percent or 90 percent 19 of the market, and so that's what we're still wrestling 20 with. 21 And specifically it's Subparagraph (f)(4) 22 where the manufacturer or distributor does not timely 23 receive payment for leased bingo equipment -- that's the 24 card-minder -- although occasionally they will lease the 25 bingo blower, the other electronics. The manufacturer 68 1 or distributor must within 24 hours deactivate the 2 equipment. And again, what does that mean? Because one 3 of the common concepts is, from the distributor and 4 manufacturers is, we want to know with precision if 5 we've complied with the law and the rule. 6 And when it says "deactivate," if the 7 charity has their phone line up and running, it's easy 8 to do. The Commission can deactivates it or the 9 distributor or the manufacturer. But if they've cut the 10 phone line, then how do you deactivate? And so we hope 11 to have some language back to staff real soon on that 12 point. 13 MS. ROGERS: I have a question for you. 14 Are you reading it to where (f)(4) relates back to (b)? 15 Tell me if I'm correct. The bingo hall plays seven days 16 a week -- or five days a week, whatever -- they pay 17 their -- they're supposed to be paying for their 18 electronics every week. And then if they don't do that 19 within a 24-hour period, then that's when the 20 manufacturer is supposed to cut it off? 21 MR. FENOGLIO: Yes, I believe that's the 22 way -- 23 MS. ROGERS: Is that correct? 24 MR. FENOGLIO: And the (1)(b) language was 25 language that I had proposed to staff, which they agreed 69 1 with. But again, once they're in that, you must collect 2 immediately. And again, that's a good example of the 3 difference between delivery of paper product and 4 electronic, because when the manufacturer shows up on 5 the loading dock with the papers, "Here is your 6 invoice," it's real direct and personal: "We're going 7 to collect our money or we're not going to leave with 8 the product on your dock." As opposed to electronic, 9 they're issuing typically weekly bills. 10 I think probably everyone who is a 11 conductor knows that you're typically getting a weekly 12 bill on the leased product. And then if you're ordering 13 paper product, it may be every two weeks or a month 14 typically. But, yes, that's the issue, is once that 15 invoice is issued, they've got five days to pay it. 16 Well, if they don't, then how do you deactivate? 17 MS. ROGERS: I understand. 18 MR. FENOGLIO: Where there is not 19 cooperation from the standpoint of they can't hit the 20 switch and deactivate it, because the line is not open. 21 I would be happy to answer any questions. 22 MR. SANDERSON: We may address some of 23 that in the card-minding rule as it's being developed. 24 MR. FENOGLIO: And to that extent, where 25 are you on the card-minding as far as publishing? 70 1 MR. SANDERSON: We'll probably start 2 sending it out for informal comments in about the next 3 60 days. 4 MR. FENOGLIO: Thank you. 5 MS. ROGERS: Thank you, Mr. Fenoglio. 6 Any further public comment? 7 Members? 8 AGENDA ITEM NO. 13 9 MS. ROGERS: Then we will move to Item No. 10 13, consideration of and possible discussion and/or 11 action on the Bingo Advisory Committee work plan, 12 including report to the Commissioners, on the 13 accomplishments of Fiscal Year '10 work plan. 14 Ms. Melissa Young. 15 MS. YOUNG: Okay. I completed this -- or 16 the committee, the workgroup completed this item, and 17 not in time to get it into the notebook. So if it's 18 okay, I'll just kind of go through and hit the high 19 points. Will that work for -- 20 MS. ROGERS: Can you bring it up on the 21 screen, Phil, or no? 22 You're awesome. 23 MS. YOUNG: Okay. So the first item on 24 the work plan is to comment on the improvement and 25 status of the bingo industry. And the BAC continued to 71 1 work through the last fiscal year, with the Commission's 2 help, analyzed the data from the quarterly reports to 3 give the Commission an understanding of what factors 4 influenced this data. For example, most of the country 5 has been experiencing a recession over the past several 6 years. This recession has impacted proceeds from 7 charitable bingo games. The BAC is a forum for 8 discussion of how the industry is seeing these external 9 forces impact their business, and the information that 10 comes from these meetings is presented to the 11 Commissioners and to the division. 12 The following workgroups are currently 13 active to help subdivide some of the topics that come up 14 in the BAC. There is a Business Plan workgroup, Market 15 Conduct, Prize Board Management, the Licensing Group, 16 Books and Records Requirements, the BAC Annual Report 17 and the Work Plan Update. This item is going to stay on 18 the work plan for the next fiscal year. 19 And the next item is No. 2, comment on 20 proposed rules. This is a particularly important one 21 for this last year, since we have seen so many changes 22 in the rules as a result of House Bill 1474. There used 23 to be 53 administrative rules before HB -- or HB 1474 24 required an additional 11 rules, and then three were 25 repealed. It required 25 rules to be amended or 72 1 revised. And most of these revisions were minor. 2 We say -- one example of that, some of the 3 legislation change notification requirements from 10 to 4 14 days, so that ended up impacting more than one rule. 5 You would have to go into multiple rules and make that 6 change. There were 111 different application forms and 7 schedules, and 40 of those required a change. Fifteen 8 were deleted or removed altogether. We will also keep 9 this item on the work plan for the next fiscal year. 10 The third item is to comment on the effect 11 of administrative rules and regulations on bingo 12 operations. Again, kind of see No. 2. As discussed in 13 Item 2, there have been many changes to the 14 administrative rules, the BAC and the industry, 15 through public comment. This was kind of a forum for us 16 to discuss questions or concerns related to these rules, 17 and we're also going to keep this in the work plan 18 ongoing. 19 The fourth item is the study of 20 alternative styles of bingo games that are not currently 21 available. Some of those things that we have listed 22 down here -- progressive bingo, mega-progressive bingo, 23 electronic video bingo, 24-number bingo and electronic 24 pull-tabs, which we understand most of those will 25 require a legislative change, but they're things that 73 1 are of interest to the industry, I think. 2 And then one other thing that is currently 3 available in Texas that the BAC addressed was, we heard 4 a presentation on reverse raffles and how that could be 5 an avenue for revenue enhancement or bringing new 6 players into the bingo hall. 7 Under the next agenda item, the review of 8 new legislation, including the utilization and impact 9 study. And this again was of particular significance in 10 the last fiscal year. The passage of HB 1474 required 11 the focus of the last year to be the implementation of 12 this new legislation. The BAC continues to work with 13 the Division and the Commissioners to provide 14 information that helps to write administrative rules 15 that work both in theory and in practice. That will 16 stay on our work plan for the next fiscal year as well. 17 No. 6 is to review specific 18 recommendations for positive public awareness of 19 charitable bingo. There were several meetings where we 20 discussed and then heard revisions to the public service 21 announcement that was developed by the Lottery 22 Commission. And it was said in multiple meetings that 23 that is available to anybody who requests it, in 24 multiple formats. So that could be put up on Facebook 25 or Twitter or put on your bingo hall website, YouTube, 74 1 et cetera. So that's one thing that is available to us 2 to utilize in terms of advertisement and good public 3 relations. 4 Let's see. The citizens of Texas are 5 interested in the impact that charities have on their 6 communities, and it's through the education of the 7 citizens of Texas that bingo halls operate for the 8 benefit of charities, that we can increase attendance at 9 bingo halls. 10 One way that we believe that you can do 11 this is like the reverse raffle where you get something 12 or a product that can be sold outside of the bingo hall 13 and used to attract new players into the hall. This 14 item will also stay on the work plan, and we'll continue 15 to work on more effective ways to educate the public 16 about the importance of charitable bingo. 17 Item No. 7, review specific 18 recommendations for the improvement of bingo. The BAC 19 looks at issues that exist in specific locations and 20 issues that are universal to bingo operators statewide. 21 The BAC looks at things like prize board management and 22 market conduct. The prize board management is important 23 because they have been able to make suggestions about 24 ways to pay out prizes to keep the players interested. 25 There are many ways to play this game, and this 75 1 discussion helps the operators learn about best 2 practices for others that they can use in their own 3 halls, and the BAC has been an important forum for this 4 discussion. 5 The Market Conduct Committee also studied 6 other games of chance, among other things, in the last 7 fiscal year. The BAC attempted to study the impact that 8 8-liners have on bingo operations in Texas. And this 9 will also be an ongoing BAC agenda item. 10 And the final item is to advise the 11 Commission on the needs of the industry for operator 12 training. Again, back to HB 1474. During the Fiscal 13 Year 2009-2010, the most important items to be added to 14 the operator training are items that were added, deleted 15 or changed as a result of HB 1474. There are more than 16 50 changes to the administrative rules, including 17 charitable bingo records requirements, licenses and 18 accounting procedures. 19 The Bingo Division put together a 20 PowerPoint presentation outlining these changes and 21 posted it on the website, and it's a great resource for 22 anybody that's curious about what changed and what the 23 current rules are. In that we addressed it because it 24 was the greatest need for BAC to address during the last 25 fiscal year. This item will also be an ongoing item in 76 1 our work plan. 2 And that concludes this report. 3 MS. ROGERS: Thank you very much. That 4 was a great job, well very put together. Thank you. 5 Members, anyone have any questions or 6 comments? 7 Okay. Any public comment at this time? 8 No? 9 AGENDA ITEM NO. 14 10 MS. ROGERS: All right. Then we will move 11 on to Item No. 14, report and possible discussion and/or 12 actions on bingo hall security. 13 Francis Ciancarelli. 14 MR. CIANCARELLI: Yes, this is Francis. 15 And I suggested we add this as a topic, after reading 16 the news article that -- it was a link on the Charitable 17 Bingo Operations Division website that took me to the 18 story about shots during a robbery at a Waco bingo hall. 19 And having thought about that, I thought this might be a 20 good platform to bring some awareness or remind us all 21 to be careful and to disseminate some information. So 22 these are just some things that a few people gave me 23 feedback on. And then at the end, I'll invite all the 24 members to participate with their comments. 25 The first thing was the panic buttons. 77 1 People mentioned to me they had some panic buttons that 2 were used, you know, to call for help. Some were direct 3 to the police and some were to the alarm company, and 4 the alarm company would call and verify and then 5 dispatch. I personally think push the button, the 6 police come, if you're being robbed. 7 Surveillance cameras. Surveillance 8 cameras, not all halls have them. I guess there's 9 different levels of surveillance, the quality of the 10 cameras and all that. I think advertising with the 11 signage that you are using surveillance cameras could be 12 helpful. 13 The improvement of lighting, easy one. 14 Restricted access after bingo starts. And a couple of 15 people questioned me on that when we were talking. And 16 what I meant is like, if they had security guards or 17 peace officers, that once the session started, that they 18 would be a little more challenging, you know, the open 19 door, make sure who is going in. 20 One other thing that came up that -- oh, I 21 think Earl added that they used peace officers rather 22 than security guards because they carry a weapon and 23 they're able to make arrests if needed. 24 And one thing that came up was security of 25 the game. And George Lasko (phonetic) mentioned that to 78 1 me, and I thought that's kind of interesting about 2 having cameras that are on the blowers and different 3 things, and so that security kind of works two sides of 4 the bench, I guess. But I just wanted to again make all 5 of us aware of it and maybe some of the other members, 6 or the Chair or the Vice Chair have some comment. 7 Thank you. 8 MS. ROGERS: Thank you, Francis. 9 I will say in San Antonio, we had quite a 10 few -- when the recession started and our economy 11 started going down, we noticed quite a few robberies and 12 things of that nature. I know some bingo halls have had 13 problems in their parking lot and things like that. 14 Everything up there, I think they implemented at the 15 bingo hall where I am last year, except moving the sales 16 away from the main entrance, but that is a very good 17 idea. 18 I would like to see -- I know, of course, 19 we cannot force people to do these things, but it would 20 be great maybe to put something on the website maybe 21 just as a reminder, or maybe in the Bingo Bulletin, you 22 know, be aware, especially around Christmastime. I know 23 that we switched from just regular security guards also, 24 because we were having a problem in the parking lot just 25 with radios and things. I think they get a little bit 79 1 brave after a while. 2 So I agree. Thank you, Francis, for 3 bringing this. This is a very important issue. 4 Members? 5 MR. SILVER: With the panic buttons, it's 6 not just one panic button. You need one at each cash 7 point and then preferably a back door or a door that 8 opens. And if you have a janitorial crew, you really 9 need to teach them how to use your panic button also, 10 because if they go take trash out, it takes nothing to 11 knock somebody on the head and you have access to the 12 hall. 13 With the cameras -- I mean, our halls have 14 surveillance cameras. For one, we were able to document 15 other things besides people stealing -- trips and falls 16 and stuff like that -- anything to protect the 17 charities. But the signs do help. We did have a 18 break-in once in Conroe. They peeled the back door 19 probably with a crowbar or something like that, and they 20 got into the hall, took the charity's safe, did some 21 damage to the change machine and other stuff they went 22 into. We have since reinforced that and put signs up. 23 And for security, security guards are 24 good, I mean, if that's all you can get. There is a 25 huge cost difference between security guards and peace 80 1 officers, but peace officers do have arrest powers. 2 They can arrest somebody. They can file criminal 3 trespass citations. They can do everything that you're 4 going to need to do. And that's actually a deterrent 5 itself from a guy sitting there, a security guard, where 6 you have a gentleman with arrest powers who is going out 7 and talking to somebody. 8 And they're also good as far as crowd 9 control. If someone does something interesting in the 10 bingo hall, creates a disturbance or brings a 11 disturbances from outside into the bingo hall, that can 12 be handled immediately and not have to go through a 13 security guard, then call the police. 14 And make sure your hall is lit. And 15 Francis did bring up a good point, restricted access 16 points. It's not just making people have one way in and 17 one way out. You could have one way in and multiple 18 ways out. You just want to have your security guard at 19 that point where people come in, to where people pay 20 attention to them. And make sure your staff always 21 sales hello -- they should anyway -- to people when they 22 walk into the door. Somebody needs to greet them. 23 That's why a lot of the big stores have 24 greeters, because if somebody walks in and they're going 25 to even think in their mind they're going to steal 81 1 something or do something, if somebody says hello, it 2 kind of sets them back a little bit: "Well, this person 3 can recognize me." So it's just common sense. We've 4 met with our security before Thanksgiving, because it's 5 the time of year, Christmastime, people look for extra 6 money. They try to take advantage of situations. 7 Just make sure your security guard or law 8 enforcement agency in the area is aware of the time of 9 year, and just pay a little bit more attention to your 10 bingo hall. If could help. 11 MS. ROGERS: Thank you; thank you for that 12 comment. I agree with that. 13 Any other comment, members? 14 Any public comment on this? 15 Okay. 16 AGENDA ITEM NO. 15 17 (A/K/A/ Agenda Item No. 14 and a half) 18 MS. ROGERS: We have two items that were 19 added after the book was put together, so I will go to 20 the next item here. So 14 and a half, report and 21 possible discussion and/or action on nominations for 22 Bingo Advisory Committee positions, including the 23 formation of a Nominations Committee. 24 We are going to have -- I see in 2011 we 25 will have three positions become available. Correct? 82 1 MR. SANDERSON: Yes. There's three 2 positions that are opening up. The current members 3 whose terms expire are Markey Beilue, Francis 4 Ciancarelli and Tom Weekley. 5 MS. ROGERS: Okay. 6 MR. SANDERSON: So you'll need to put 7 together a Nomination Committee, and kind of just to be 8 on call. Nominations go out, I believe, February 1st, 9 or the call for nominations go out February 1st. 10 MS. ROGERS: Okay. Great. 11 MR. SANDERSON: So just to be on the safe 12 side, that you have a committee formed, I would go ahead 13 and take this opportunity to name a Nominations 14 Committee. 15 MS. ROGERS: Yes, sir. 16 Do I have any volunteers to chair the 17 position of a Nomination Committee? 18 Okay. I will have to assign a chair if no 19 one would like to volunteer. 20 You escaped this one, because it's new, 21 but you have not escaped being on the workgroup yet. 22 Melissa, can you handle nominations? 23 MS. YOUNG: I would love to. 24 MS. ROGERS: Thank you very much. I 25 appreciate it. You are now open to pick your members on 83 1 your group. And do not pick your three that are 2 becoming unavailable. 3 MS. YOUNG: I think Kenneth is going to 4 have to join this committee. 5 MR. MESSER: Absolutely. 6 MS. YOUNG: Earl -- how many have we got? 7 Four? 8 MS. ROGERS: Yes. 9 MS. YOUNG: Earl and then Joe? 10 MR. WILLIAMS: Sure. 11 MS. YOUNG: Okay. Thank you. 12 MS. ROGERS: Okay. So our Nomination 13 Committee will be Melissa as Chair. And her co-workers 14 will be Kenneth, Earl and Joe. Correct? 15 AGENDA ITEM NO. 16 16 MS. ROGERS: All right. The next item is 17 report and possible discussion and/or action on the 2010 18 Bingo Advisory Committee annual report, including the 19 formation of a subcommittee -- I'm sorry. There's four 20 items, actually. Okay. So we need to make a 21 subcommittee that can now go back and do the annual 22 report for 2010. 23 MR. SANDERSON: And this is the annual 24 record that Suzanne Taylor had done previously, and I 25 believe you did this last year, compiling the 84 1 information for the Calendar Year 2010, report of gross 2 receipts, prizes, distributions. The information for 3 that report will be ready somewhere in the middle of 4 March to start working on the charts and graphs, so 5 there's not much work for the committee up until that 6 point in time. 7 MS. ROGERS: Do I have any volunteers of 8 who would like to chair this committee? Someone who 9 likes numbers. Anyone? 10 MR. SILVER: I'll do it. 11 MS. ROGERS: Thank you, Earl. I greatly 12 appreciate that. This will be for the 2010 Bingo 13 Advisory Committee annual report which, like Phil says, 14 is the gross prizes and things like that. But you will 15 not have any of your information, in order to put this 16 together, until March. 17 Would you like to pick someone on the 18 board to help you and maybe someone out in public -- 19 MR. SILVER: Yes. 20 MS. ROGERS: -- to help you that is rather 21 good with numbers? 22 MR. SILVER: Emile. Melissa will help. 23 And there was a finger pointed at David Heinlein, so 24 David will help. 25 MR. HEINLEIN: I did it last year. 85 1 MS. YOUNG: You did a really good job last 2 year, so welcome back. 3 MS. ROGERS: Exactly. So Earl will be the 4 Chair, with assistance from Emile, Melissa, and public 5 member, David -- David Heinlein, for the record. 6 And this will be for the 2010 Bingo 7 Advisory Committee Annual Report Workgroup. 8 AGENDA ITEM NO. 17 9 (A/K/A Agenda Item No. 15) 10 MS. ROGERS: The next item is 11 consideration of and possible action on future Bingo 12 Advisory Committee meeting dates and/or items to be 13 considered for future meetings. And I believe that is 14 actually No. 15 in your notebook, so we've gone back to 15 that. 16 As y'all know, members, at the last 17 Commissioners meeting, they made the suggestion, which I 18 believe staff -- I believe Phil agreed with and I did 19 agree with myself also -- if we don't have anything 20 that's pressing and coming up, because the legislatures 21 aren't in session right now, then it seemed unnecessary 22 for us to absolutely have a scheduled meeting. A lot of 23 you travel from out of town. A lot of our individuals 24 in the public come from out of town. 25 So we were calling it upon either staff's 86 1 call or myself, if y'all had something that we needed to 2 discuss or take care of, and so that's why we did not 3 have a scheduled meeting. And I believe you-all 4 received an email from Phil telling you about that. 5 So at this moment, I really don't know. 6 Are we just going to say we will contact or -- 7 MR. SANDERSON: We will definitely contact 8 at least 30 or 45 days in advance of when we start 9 seeing enough agenda items come together. 10 MS. ROGERS: Right. 11 MR. SANDERSON: There are still a few 12 other rulemakings that we're working on. One of them is 13 the books and records requirement for the conductors 14 and, as mentioned earlier, the electronic card-minding 15 device. And potentially the pull-tab bingo ticket rules 16 may be modified. 17 However, another consideration is, of 18 course, the session starts on January the 11th. I 19 believe the last day to file bills is sometime in the 20 first part of March. So at that point, we'll know what 21 potential bills have been filed related to the bingo 22 industry. So there may be an opportunity, either late 23 February or late March somewhere, to have a meeting. 24 We'll probably try to stay away from spring break, for 25 those that have kids -- or those that are kids in us, 87 1 one of the two. So if that's fine with everybody, then 2 sometime after the first of the year, we'll start 3 looking at a potential date in late February or early 4 March. 5 MS. ROGERS: Exactly. Now, this does not 6 exempt anyone from going home and just totally 7 forgetting about the BAC until March. If you have 8 something on your plate, you know, email, phone, so 9 let's all try. And I'm the biggest procrastinator 10 probably of all of you. But we'll have to keep in touch 11 and keep working on our items. 12 Any comments on that? 13 Everyone is kind of set around February, 14 March, we'll have something, because that will also 15 bring us into the nominees. The applications and 16 everything will go out. 17 AGENDA ITEM NO. 18 18 MS. ROGERS: Okay. At this time do we 19 have any public comment on these items? 20 No? 21 Members, any other comments on anything? 22 AGENDA ITEM NO. 19 23 MS. ROGERS: Okay. Then it is now 11:42. 24 Do I hear a motion to adjoin this meeting? 25 MR. CIANCARELLI: I make the motion. This 88 1 is Francis. 2 MS. ROGERS: Thank you, Francis. 3 Do I have a second? 4 MS. YOUNG: I second. 5 MS. ROGERS: All those in favor? 6 FROM THE COMMITTEE: Aye. 7 MS. ROGERS: It is a unanimous vote to 8 adjourn the meeting at 11:43. 9 (Bingo Advisory Committee meeting 10 adjourned at 11:43 a.m.) 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 89 1 C E R T I F I C A T E 2 STATE OF TEXAS ) 3 COUNTY OF TRAVIS ) 4 I, Aloma J. Kennedy, a Certified Shorthand 5 Reporter in and for the State of Texas, do hereby 6 certify that the above-mentioned matter occurred as 7 hereinbefore set out. 8 I FURTHER CERTIFY THAT the proceedings of 9 such were reported by me or under my supervision, later 10 reduced to typewritten form under my supervision and 11 control and that the foregoing pages are a full, true 12 and correct transcription of the original notes. 13 IN WITNESS WHEREOF, I have hereunto set my 14 hand and seal this 9th day of December 2010. 15 16 17 ________________________________ 18 Aloma J. Kennedy Certified Shorthand Reporter 19 CSR No. 494 - Expires 12/31/10 20 Firm Registration No. 276 Kennedy Reporting Service, Inc. 21 8140 North Mo-Pac Expressway Suite II-120 22 Austin, Texas 78759 23 24 25