Bingo Advisory Committee Minutes Bingo Advisory Committee Meeting, February 14, 2001, Austin, Texas I. THE BINGO ADVISORY COMMITTEE CHAIR WILL CALL THE MEETING TO ORDER. William Neinast called the meeting to order at 10:10 a.m. Committee members present: William Neinast, Suzanne Taylor, Saleem Tawil, Robert Rinehart, Lexford Speed, Fabian Hoffner, Louie George, and Virginia Brackett. Committee members absent: David Castillo. William N. addressed the attendees and requested them to submit agenda items to the Bingo Advisory Committee prior to the meeting. II. CONSIDERATION OF AND POSSIBLE ACTION, INCLUDING APPROVAL, OF THE MINUTES OF THE NOVEMBER 1, 2000, BINGO ADVISORY COMMITTEE MEETING. Fabian H. requested the minutes be amended, page 2 Item IV, Proposal #4 under MOTION AMENDED to read "MOTION AMENDED by Fabian H. for the BAC to approve just the subpoena power part of proposal #4, seconded by David C.". Minutes approved as amended. III. REPORT, POSSIBLE DISCUSSION AND/OR ACTION ON THE BINGO ADVISORY COMMITTEE CHAIR’S NOVEMBER 18, 2000, REPORT TO THE TEXAS LOTTERY COMMISSION RELATING TO THE ISSUES DISCUSSED AT THE November 1, 2000 bingo adVISORY committee meeting. William N. told committee members he reported to Commissioners about the following items discussed at the November 18th BAC meeting. He also discussed the Commissioners reactions. 1. expanding time and location where instant bingo can be sold. Commissioners approved. 2. repealing the 40% limit on electronic bingo. Commissioners approved. 3. allow progressive game. Commissioners approved. 4. issue an expanded definition of pull-tabs. This item was informational only and Commissioners did not approve or disapprove at this time. 5. authority to give Director of Bingo Division subpoena power only. Commissioners approved. 6. deleting tax on bingo supplies. Commissioners approved. 7. create a line item for the cost of operator training. Commissioners requested more information from the bingo division before considering this item. 8. authorize the Bingo Advisory Committee to hold three BAC meetings outside of Austin. Commissioners disapproved. William also advised the Commissioners about future BAC meeting dates. PUBLIC COMMENT: Scott Ingerman, (representing 10¢ Bingo in San Antonio) requested that the time for bingo occasions be expanded along with the time to sell pull-tabs. William N. said that this topic will be addressed later in the meeting today. IV. REPORT, POSSIBLE DISCUSSION AND/OR ACTION, ON THE 77TH LEGISLATURE’S ACTIVITIES RELATING TO BINGO. Billy Atkins (Director Charitable Bingo Operations Division) told committee members that there have been separate bills drafted and presented to the legislature for Summary Suspension Authority, Subpoena Power, and pull-tab sells. All other bingo items have been included in the omnibus bingo bill including the elimination of the 40% rule on electronics and eliminating prize fees on prizes under $5.00. He also told committee members that Eddie Lucio is sponsoring a progressive bingo bill in the Senate. William N. asked why eliminating prize fees was for $5.00 and under instead of $50.00 and under. Billy A. responded that players don’t like to pay tab on $1.00 tabs. Saleem T. told the committee that he has heard rumors that no bingo legislation is going to pass this session. Nelda Trevino (Director Governmental Affairs) responded that the staff is continuing to move forward and they have received a favorable response thus far. Note: this agenda item was revisited after item #VIII on page 4 V. STATUS REPORT, POSSIBLE DISCUSSION AND/OR ACTION ON THE SECURITY DIVISION’S ACTIVITES. Mike Pitcock (Commander Security Division) reviewed the statistics from September 1, 2000 through November 30, 2000 that were provided to committee members in their booklets. Mike told the committee when someone calls with a complaint they talk to an investigator at that time. If the complaint is valid, it is assigned to an investigator to investigate. Complaints are investigated within 45 days at this time. William N. reminded BAC members that all complaints need to be referred to the security division. VI. REPORT, POSSIBLE DISCUSSION AND/OR ACTION INCLUDING RECOMMENDATIONS TO THE BINGO TRAINING PROGRAM. Billy A. reviewed the information in the booklet with the BAC. As of now, about 81.12% of licensed organizations have had an operator attend a training session. The grace period to attend training is up September 1, 2001. Roy Gabrillo (TLC) told committee members that each organization must send an operator, not just an officer, to the training. Operator training information is posted on the web site. Billy A. told members that those organizations that have not had an operator attend a training session would receive a non-compliance letter. Saleem T. asked why operators could not take a test and only be required to take the training if they do not pass. VII. CONSIDERATION OF AND POSSIBLE DISCUSSION AND/OR ACTION ON INCREAING THE $2,500 GAME LIMIT PER OCCASSION. William N. told committee members that Landon Swearingin had asked for this item to be placed on the agenda. Since Landon is not present, William asked that this item be passed. VIII. CONSIDERATION OF AND POSSIBLE ACTION, INCLUDING RECOMMENDATION TO THE TEXAS LOTTERY COMMISSION, ON THE USE OF DIFFERENT PULL-TAB STYLES. Suzanne T. requested this item be added to the November 1, 2000 BAC meeting agenda and had Ronnie Baker, from Texas Bingo Supply, and Susan Schultz, from Douglas Press, give a brief presentation to the committee. At that meeting Fabian H. requested the committee’s approval for him to compile a larger presentation of pull-tab styles and present the findings, including samples, at the this meeting. Fabian H. and William N. were also to propose a draft rule change to the Administrative Rules for the committee to vote on at this meeting. Fabian requested Susan Schultz from Douglas Press make the pull-tab presentation to the committee. PUBLIC COMMENT: Susan Schultz (representing Douglas Press, a paper and tab manufacturer) made the presentation to committee members. She gave committee members two samples of event tickets and showed members how they are used. She told members that this is a new way to play an existing game and allows for more player interaction. Event tickets are played during the regular bingo games and some event games use the ball blower to pull the winning number. Susan also gave committee members samples of ‘sealed cards’ and showed them how they are used. Susan told committee that she had reviewed the Bingo Enabling Act and Administrative Rules and the use of sealed tabs would not require any changes in the act, but would require a definition of sealed cards in the rules. Fabian H. told committee members that these games are extremely popular in other states and he is looking for the BAC to vote to expand the pull-tab definition. Billy A. said that changing the definition is doable, but not simple. He told committee members that if the event ticket were conducted with the current bingo game, it would have to be part of the prize payouts. In order to authorize the broadest authority to approve games, it will take the staff time to work on a revised definition. MOTION by Fabian H. that the BAC request the bingo staff to consider changes to the rules relating to different pull-tabs which would allow the definition to include a wider variety of pull-tabs, seconded by Louie G. PUBLIC COMMENT: Steve Bresnen (representing Bingo Interest Group) told committee members that this is a good idea, now move on it. Phil Arnold (representing Reunion Ministries, Houston S.W. Lions Club, I. Weiner Jewish School, Parents Association for Jewish Education, Ukranian American Cultural Club, Fine Arts Association, Mount Carmel High School Club, Living History Studies, and other Houston Charities) told committee members that even with the best efforts, sales have dropped during the last seven months, people are tired of the same old product. Diane London (representing the seven organizations from Palace Bingo in Victoria) told committee members that sales are down, all bingo organizations would appreciate any new ideas. Billy A. told committee members that this process was started two years ago by the staff and there was no interest from manufacturers at that time. This process will not be done post-haste but the staff will move forward. VOTE: 7 approve 0 oppose BREAK 11:25 – 11:35 The committee was requested to revisit legislative issues. IV. REPORT, POSSIBLE DISCUSSION AND/OR ACTION, ON THE 77TH LEGISLATURE’S ACTIVITIES RELATING TO BINGO. - continued PUBLIC COMMENT: David Heinlein (representing Jetta Management and charitable bingo conductors) told committee members that we need to focus on why we are here. It is good to provide organizations with funds for charitable activities, but we need to do something different because from 1998 to 2000 distributions are down by 15%. He provided committee members with two handouts, the first entitled Charitable Bingo State of Texas Statistics (handout 1) showed charitable distribution from 1997 through 2000, the second handout entitled Charitable Bingo Considerations to Improve the Total Charitable Bingo Distribution (handout 1A) outlined proposed changes. David told members that some things that need to be done include: 1. eliminate sales tax on bingo supplies 2. lower license costs (William N. said this will need to be added as a separate agenda item) 3. allow the use of gift certificates 4. eliminate the 40% rule on electronics 5. raise the number of temporary licenses to 12 a year for each organization 6. raise the limit on prize payouts to $1500.00 per game 7. allow progressive bingo games 8. eliminate all prize fees to put bingo on par with the lottery David told members that bingo needs new revenue, it is going down again and we need to add something new quickly and swiftly. William N. advised those present that the next BAC meeting will not be until May. Billy A. said that gross receipts have not declined as much as charitable distribution. PUBLIC COMMENT: Janice Woods (representing BIGNO – Bingo Is Good for Non-Profits) told committee members that BIGNO: 1. supports the repeal of prize fees for prizes $5.00 and under 2. supports the repeal of the 40% card minder rule 3. supports the repeal of sales tax on bingo supplies. The Jones/Madla bill supports an exemption on sales tax on equipment including electronics. 4. supports progressive games with a cap not to exceed $2,500.00 5. supports increasing temporary licenses to twelve per year 6. supports keeping the $2,500.00 current cap for bingo games and supports raising the per game cap from $750.00 to $1,000.00 Stephen Fenoglio (representing over 100 charities and lessors from around the state) and Don Truman (representing seven charities conducting bingo in Victoria) requested the committee support summary suspension authority only in cases of non-payment of fees and taxes. They provided committee members with two handouts. The first handout (handout 2) was a copy of Docket No. 362-00-0924.B Proposal for Decision which was a request by the Texas Lottery Commission for revocation of the bingo license of the Victoria Community Theatre for conducting bingo games at times other than those at which the organization was specifically licensed to conduct them. The second handout (handout 3) was a copy of Docket No. 3620090-0924.B Order of the Commission, which was the concurrence of the Commissioners with the Administrative Law Judge that the Victoria Community Theatre’s bingo license be suspended for three consecutive bingo occasions for violations of the Bingo Enabling Act. William N. asked why there is not limitation on summary suspension power as requested by the BAC. Billy A. said that the BAC made the recommendation to the Commissioners, but after hearing the staff reasons for full summary suspension power, the commissioners went for the whole thing. Saleem T. reiterated that the BAC supported this issue only on non-payment of fees and taxes. Billy said that no draft legislation has been presented to the legislature as of this time. PUBLIC COMMENT: Don Truman told the committee that Victoria Community Theatre could have received summary suspension and it would have put them out of business. The staff wanted a one-year suspension, the charity asked for a two-session suspension, the judge gave them a three-session suspension. William N. said he will meet with the Commissioners tomorrow, he will raise this issue again at that time if he has the opportunity. PUBLIC COMMENT: Steve Fenoglio told BAC members that he remembers an extended discussion about this issue with the Commissioners. The TLC has eight ways to get documents, there are a variety of tools already available without subpoena power. Steve also told committee members that the reason distribution is going down more than gross receipts are is because the cost of electronics is high. William N. told the committee summary subpoena authority would be used in limited cases only. 12:25 Saleem T. leaves PUBLIC COMMENT: Steve Bresnen told the committee that he intends to do all in his power to kill legislation on subpoena power. He is very disappointed the Texas Lottery Commission did not listen to the Bingo Advisory Committee about summary suspension authority, after Mr. Truman’s comments he feels ashamed to try to work on summary suspension authority recommendations. Some of these are: 1. summary suspension should not be applied to the first offense 2. if summary suspension is targeted at a charity in a hall with multiple charities, it will affect the business of the other charities, therefore, a notice should be given to the other charities and the lessor, and additional temporary licenses should be issued to fill the hole for a seamless operation for as long as it takes to fill the hole in the schedule 3. a Commissioner should sign off on summary suspension after it is requested by Billy and the target of the proposed suspension advised who signed off on the summary suspension 4. if commercial lessor leases to an organization that does not hold a current license, give notice of the status of organization’s license to the lessor Steve told the committee that there were those that introduced legislation to clean up bingo and keep it clean during the ’97 legislative session. Current legislation that he is proposing include: 1. repeal the 40% rule on electronics. The cost structure should be looked at and addressed, can the charity purchase the unit? There needs to be a proper balance between paper and electronics, and it must be maintained for good business. 2. remove the sales tax on bingo supplies 3. single bingo division with it’s own security 4. no more for-profit commercial lessors should be created in this state, any new commercial lessors should be charities IX. REPORT, POSSIBLE DISCUSSION AND/OR ACTION ON THE USE OF DEBIT CARDS IN BINGO HALLS. Billy A. told BAC members that one item that came up during research on debit cards was 2011.402 requiring that funds from the conduct of bingo be deposited in the bingo account no later than the next business day following the day of the bingo occasion on which the receipts were obtained. Two different firms contacted by the division provided the information that although the funds are immediately deducted from the user’s account, it would be forty-eight to ninety-six hours before the funds are transferred into the bingo account. This would be a violation of the act. There may also be a problem with trace ability of the funds from a debit card to a certain session. Phil Sanderson (Assistant Director of Charitable Bingo) told the committee that because the funds could take two to four days to be deposited into the bingo account, they might encompass more than one occasion and it would be difficult to track them back since there would be more than one debit card transaction and the deposit might not be itemized. Billy A. asked if the holding company would provide the organization with a detailed list of each transaction. William N. noted that they might find that there is a paper trail that very easily could be traced. Billy A. also told the committee that there is a fee associated with the use of the device, both for the device and per use and he would need to see if it is an allowable expense. William N. said he would put this item on future agendas. PUBLIC COMMENT: Stephen Fenoglio told the committee that funds from checks are not actually deposited into the bingo account until two or three days later and it can take weeks to find out about NSF checks. There would probably be better accounting with debit cards then with checks. Stephen feels that we need to find out what documentation is given to customers, he has a client in town next week that should be able to provide this information, he will make this information available to the committee at the next meeting. MOTION by Louie G. to table this item until the additional information is available to the committee, seconded by Robert R. VOTE: 6 approve (Saleem T. was not present for this vote) 0 oppose X. CONSIDERATION OF AND POSSIBLE DISCUSSION AND/OR ACTION ON EXTENDING THE LENGTH OF TIME A BINGO OCCASION CAN BE CONDUCTED AND THE NUMBER OF BINGO OCCASSIONS THAT CAN BE CONDUCTED DURING A WEEK. This item was tabled since Saleem T. was not available to present it to the committee. XI. CONSIDERATION OF AND POSSIBLE DISCUSSION AND/OR ACTION ON THE USE OF GIFT CERTIFICATES IN CONNECTION WITH THE CONDUCT OF BINGO. Suzanne T. gave members copies of a portion of the minutes of the February 26, 1999 BAC meeting that were approved at the May 26, 1999 meeting (handout 4). The minutes included a motion by Ronnie H. "that the BAC recommend to the Lottery Commission that the proposed rule on gift certificates be processed through the rule making procedure with the deletion of sentence 2 under (a) (7) The maximum amount of change to be returned to the bingo patron will not exceed $2.00 or 20% per gift certificate, seconded by C. M. Matthies." The vote was 8 approve 0 oppose. Suzanne noted that this item has been left off agendas since the May 26, 1999 meeting and wanted to know if the BAC was interested in pursing this item. Billy A. told the committee that he is still waiting for an opinion from the legal department to see if the Texas Lottery Commission can authorize gift certificates. Phil S. said the proposed rule was still being reviewed. PUBLIC COMMENT: Stephen Fenoglio gave BAC members a copy of a letter dated February 6, 2001 to Penny Wilkov, Assistant General Counsel, Texas Lottery Commission (handout 5) concerning the use of gift certificates in bingo halls. Stephen said if the position of the Bingo Division is to wait for legal for a decision before taking any action, then they need to let the investigative division know since they are already taking action against gift certificates. Scott Ingerman asked if "Bingo Bucks" are the same thing as a gift certificates. Billy A. said he did not know the answer at this time. William N. said we will revisit this issue in May. 1:22 p.m. Louie G. and Robert R. leave MOTION by Robert R. to table this item, seconded by Louie G. VOTE: 4 approve (Saleem T., Robert R. and Louie G. were not present for this vote) 0 oppose XII. CONSIDERATION OF AND POSSIBLE DISCUSSION AND/OR ACTION ON EXEMPTION ON THE REQUIREMENT TO PAY PRIZE FEES IN CONNECTION WITH CERTAIN PRIZE LEVELS. Billy A. told BAC members that the loss in revenue from not collecting prize fees on prizes of less than $5.00 would be $890,000.00. Not collecting prize fees on prizes of $10.00 to $50.00 would cost a loss in revenue of $2.9 million to the state. Half of this would be a loss to local jurisdictions. Any bill recommending a decrease in revenue must have a fiscal note attached outlining the loss. He has heard that any bill with a fiscal note of more than $100,000.00 will not be heard. Suzanne T. felt that maybe it is time to send a message of less tax on bingo prizes and more tax on lottery prizes. PUBLIC COMMENT: Scott Ingerman told BAC members that playing times should be extended for games as well as tabs, most of the proposed changes would only affect large halls and not smaller halls which give away prizes of $5.00 to $50.00. MOTION by Suzanne T. that the 5% prize fee be collected only on prizes of $50.00 or more, seconded by Lexford S. Billy A. said that small halls can play pull-tabs if they choose to play pull-tabs. PUBLIC COMMENT: Scott Ingerman said eliminating prize fees on small prizes of under $50.00 could help the hall by inducing customers to tip workers, thereby reducing required salaries. Phil Arnold said that eliminating prize fees on $5.00 or less would help with pull-tab sales thereby increasing profits for charity and would help state by increasing pull-tab sales and increasing prize fees collected. Billy A. said that he cannot quantify the increase in prize fees because of increased pull-tab sales but he can quantify the loss of revenue. He also felt that including eliminating prize fees on prizes of less than $50.00 could kill the whole omnibus bill. VOTE: 3 approve (Saleem T., Robert R. and Louie G. were not present for this vote) 0 oppose (Virginia B. abstained) XIII. CONSIDERATION OF AND POSSIBLE ACTION ON FUTURE BINGO ADVISORY COMMITTEE MEETING DATES AND/OR ITEMS TO BE CONSIDERED FOR FUTURE MEETINGS. The next BAC meeting will be held Wednesday, May 9, 2001. The other quarterly meetings will be held the second Wednesday of July and October. Items for the next agenda will include: 1. increasing the number of temporary licenses 2. license fees commensurate with income 3. raising the $2500 per occasion limit 4. the use of debit cards 5. bingo bucks 6. gift certificates 7. allowing individuals to test out for operator training 8. increasing the length of time and number of occasions 9. changing the due date of quarterly reports 10. spring 2002, bingo is "officially" 20 years old, celebration items will be discussed 11. approval of 10/10/2000 sub-committee minutes XIV. ADJOURNMENT Meeting adjourned at 1:55 p.m. by William N. Minutes as prepared by Suzanne Taylor, BAC Recorder.