1 1 2 3 4 * * * * * * * * * * * * * * * * * 5 6 BINGO ADVISORY COMMITTEE 7 MEETING 8 9 JULY 25, 2001 10 11 * * * * * * * * * * * * * * * * * 12 13 14 15 16 17 18 19 BE IT REMEMBERED that the BINGO ADVISORY 20 COMMITTEE meeting was held on the 25TH of JULY, 2001, 21 from 9:00 a.m. to 2:00 p.m., before Brenda J. Wright, 22 RPR, CSR in and for the State of Texas, reported by 23 machine shorthand, at the Offices of the Texas Lottery 24 Commission, West Sixth Street, Austin, Texas, 25 whereupon the following proceedings were had: WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 2 1 APPEARANCES 2 3 Chairman: Mr. William Neinast - Burton, Texas 4 5 Vice-Chairman: Ms. Virginia Bracket - Lubbock, Texas 6 7 Committee Members: Ms. Suzanne Taylor - Corpus Christi, Texas 8 Mr. Lexford Speed - Plano, Texas Mr. Saleem Tawil - Austin, Texas 9 Mr. Fabian Hoffner - St. Paul, Minnesota Mr. David Castillo - Kingsville, Texas 10 Mr. Robert Rinehart - Amarillo, Texas Mr. Louie George - Wake Village, Texas 11 12 Charitable Bingo Operations Director: Mr. Billy Atkins 13 14 15 16 17 18 19 20 21 22 23 24 25 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 3 1 INDEX 2 3 Appearances...................................... 2 4 AGENDA ITEMS 5 Item Number 1.................................... 4 6 Item Number 2.................................... 6 Item Number 3.................................... 7 7 Item Number 4.................................... 8 Item Number 5.................................... 12 8 Item Number 6.................................... 21 Item Number 7.................................... 48 9 Item Number 8.................................... 59 Item Number 9.................................... 82 10 Item Number 10................................... 99 Item Number 11................................... 100 11 Item Number 12................................... 101 Item Number 13................................... 105 12 Item Number 14................................... 126 Item Number 15................................... 146 13 Item Number 16................................... 156 Item Number 17................................... 156 14 15 Reporter's Certificate........................... 181 16 17 18 19 20 21 22 23 24 25 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 4 1 July 25, 2001 2 Bingo Advisory Committee Meeting 3 CHAIR NEINAST: Good morning. I would 4 like to call the Bingo Advisory Committee meeting to 5 order. It's 10:00 a.m., Wednesday, July 25th. A 6 couple of administrative announcements before we get 7 formally underway. As you may have noticed, we are 8 now being recorded verbatim by Ms. Wright, so I will 9 ask each of you, when you are speaking, that we don't 10 try to speak over someone else. She has to take 11 everything down and we have not been doing that in the 12 past, although I think this committee has been pretty 13 good on talking in order. But remember that we are 14 being recorded. And as Virginia said, that all of our 15 bad grammar is going to be recorded for posterity. 16 But if we do get into one of these situations where 17 more than one individual is trying to talk, I will ask 18 that one refrain so that Ms. Wright can get everything 19 down. 20 You may have noticed, or is there 21 anyone on the committee other than Saleem and me that 22 drives in? I would like -- do you drive in? 23 You may have noticed, and Billy sent 24 out the e-mail, that there is a real parking problem 25 that is going to get worse, because the parking lot WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 5 1 over on -- behind the building that is being used now 2 by the Lottery Commission will be lost as of the 1st 3 of August, so parking is going to be even more of a 4 premium, or a problem. And I have talked with Mike 5 about it this morning. We can possibly get some 6 information out to you, but for those of us who drive, 7 starting the first of August, it's going to be even a 8 worse problem than it is now. And David, I can talk 9 with you later about it and with Saleem, I think -- 10 there comes Saleem. There might be a temporary 11 solution or a solution that we can work out. But it's 12 going to be a problem in the future, more than -- 13 Saleem, did you drive in this morning? 14 MR. TAWIL: Yeah. 15 CHAIR NEINAST: Did you finally find a 16 parking place? 17 MR. TAWIL: Yeah, finally across over 18 that way. 19 CHAIR NEINAST: Okay. Well, I just 20 mentioned that parking lot is going to be lost as of 1 21 August, it will not be available anymore. So we -- 22 let's the three of us get together with Billy and/or 23 Mike after the meeting to talk about where we can 24 park, what we can do in the future. Everyone else 25 comes in by cab, so there won't be a problem, but WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 6 1 there will be a problem in the future. 2 I would like take up item number two on 3 the agenda, which is, consideration of and possible 4 action, including approval, of the minutes of the May 5 9, 2001, Bingo Advisory Committee meeting. 6 You have been provided a copy of the 7 minutes in your notebook. You've had -- that 8 constitutes a reading of the minutes. Are there any 9 amendments or changes to the minutes? 10 MS. BRACKETT: I have one question. I 11 can't find out what item it is. When you appointed 12 the study group, I thought that Bud Speed was included 13 in that. Is that correct? 14 MR. SPEED: I don't think so. 15 MS. BRACKETT: Oh. 16 CHAIR NEINAST: If you would identify 17 yourself for Ms. Wright again so that -- 18 MS. BRACKETT: Virginia Brackett. 19 CHAIR NEINAST: And your question 20 specifically was? 21 MS. BRACKETT: I'm sorry. I don't have 22 it marked here in the minutes, but it was that when 23 you appointed the subcommittee to look into the 24 question of extending the date of -- 25 CHAIR NEINAST: The quarterly report. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 7 1 MS. BRACKETT: -- reports, I was 2 thinking that Bud Speed was included on that. But he 3 has given us a disclaimer, so I think I was just 4 incorrect in that. 5 CHAIR NEINAST: Okay. 6 MS. BRACKETT: So I have no 7 corrections. 8 CHAIR NEINAST: Anyone else have -- if 9 there are no amendments and corrections, then the 10 minutes stand approved as read. 11 We'll move to item three on the agenda, 12 which is a report, possible discussion and/or action 13 on the Bingo Advisory Committee Chair's report to the 14 Texas Lottery Commission relating to the issues 15 discussed at the May 9, 2001 Bingo Advisory Committee 16 meeting. 17 Again, you have in your notebooks a 18 verbatim account of that report. I was unable to make 19 that meeting, and Billy made the report for me. And I 20 think he did an excellent job, and if you read through 21 those minutes, I think we got some good reflections of 22 what the Lottery Commission expects from us and how we 23 might meet their needs or desires better in the 24 future. But Billy, do you have anything further to 25 add about that report? WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 8 1 MR. ATKINS: No, sir. 2 CHAIR NEINAST: Are there any questions 3 or comments on the report to the Lottery Commission? 4 If there are no questions or comments, 5 I think that that item does not require a specific 6 action and was information only primarily, so we'll 7 move down to number four, which is a report, possible 8 discussion and/or action on the 77th Legislature's 9 activities relating to bingo. And that will be 10 provided by a much relaxed Nelda Trevino. Welcome, 11 Nelda. 12 MS. TREVINO: Thank you, Mr. Chairman. 13 For the record, I am Nelda Trevino. I'm the director 14 for the governmental affairs division. 15 In your packets, we provided to you a 16 tracking report that included all of the bills that 17 were filed during this last legislative session. And 18 as you'll note, there were a total of 14 bills that 19 were filed that pertained or had some sort of impact 20 on charitable bingo. A couple of bills that I just 21 want to take a very quick note on, and those were the 22 ones that were part of the agency's legislative 23 package, and I know that the advisory committee had 24 some discussion on, and you'll note that on each bill, 25 there is the bill history for each one of those bills, WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 9 1 and so it'll tell you what the last action was on each 2 one of those. 3 House Bill 2119, by Representative 4 Haggerty, that would have authorized a progressive 5 bingo game. That was a bill that passed both the 6 House and the Senate, and was vetoed by the Governor. 7 And on the last page of what is in your packet on this 8 particular section is the proclamation by Governor 9 that states the reason for his veto on this particular 10 bill. 11 Also, House Bill 2578, by 12 Representative Haggerty, that would have allowed the 13 subpoena power for the Lottery Commission for the 14 regulation of bingo. That did pass the House and was 15 never considered by the Senate committee, but there 16 was some discussion, obviously, that took place over 17 in the House. 18 House Bill 3234 by Representative Art 19 Reyna, that was the bill that I typically refer to as 20 the omnibus cleanup bill. It included a couple of 21 more major provisions, and that would have -- the 22 provision that would have eliminated the five percent 23 prize fee on prizes less than five dollars, and also 24 eliminating the 40 percent requirement on card minding 25 devices. Again, that was part of the agency's WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 10 1 legislative package. 2 The other two bills, House Bill 3360 3 relating to pull tabs, and House Bill 3361 relating to 4 the authority to summarily suspend licenses, those 5 bills were filed and were never given a committee 6 hearing. So again, I just wanted to highlight those 7 specific bills since they were part of the agency's 8 legislative package and this committee had had some 9 discussion on them. That basically concludes my 10 report, and I'll be happy to answer any questions that 11 you might have. 12 CHAIR NEINAST: So the only bill that 13 was passed that related to bingo was vetoed by the 14 Governor. Is that correct? 15 MS. TREVINO: That's correct. 16 CHAIR NEINAST: I would like to comment 17 just generally on that. The reasons given for the 18 veto by Governor Perry concerned me a little bit, 19 because it kind of signals what could happen to any 20 future legislation on bingo, but I don't think that 21 should affect this committee. I think we need to look 22 forward to the next legislative session. We may 23 have -- or probably will have a new legislature and 24 may have a different governor, but in any event, I 25 think we need to forge ahead and recommend to the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 11 1 Lottery Commission that legislation that we think is 2 needed to help the bingo industry without regard to 3 what might be reflected in the Governor's veto 4 message. And I think it's not too soon now to start 5 thinking about and working on proposed legislation 6 that we would like to see the Lottery Commission 7 propose, and taking a note from the minutes of the 8 Lottery Commission when I met with Billy on this, I 9 think possibly we could do a better job in our 10 proposals to the Lottery Commission in making our case 11 stronger. But also, it'll require each of us and 12 others in the bingo industry to get more active with 13 their legislators and their senators and, also, with 14 the governor to get the legislation we want. But 15 those are just my general observations. 16 Any other questions or comments from 17 the members of the committee on the -- on this 18 particular issue? 19 If none, we'll pass on to the other -- 20 thank you, Nelda. We appreciate all that you have 21 done through the year and the years in helping us. 22 Maybe we'll have better luck next time around. 23 MS. TREVINO: Well, we look forward 24 with working with the committee on future legislative 25 proposals. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 12 1 CHAIR NEINAST: Thank you. 2 I did not mention the visitors we have. 3 You are certainly appreciated and welcome, and you're 4 invited to come forward and comment on any of the 5 items that are on the agenda. This is an open meeting 6 and your comments will be welcomed. 7 Number five is the status report, 8 possible discussion and/or action on the security 9 division's activities. 10 Mike Pitcock, commander of the security 11 division will give us a report that you have in front 12 of you, his written report. Welcome, Mike. 13 MR. PITCOCK: Thank you, sir. 14 CHAIR NEINAST: Do you have anything to 15 add to the -- 16 MR. PITCOCK: For the record, Mike 17 Pitcock, commander of security division. I have 18 nothing to add to the report. It speaks for itself. 19 Again, that's the flow of the investigations through 20 our security division for the quarter that is on your 21 sheets. And there was a typographical. It was March 22 1st, 2001 through May 31st, 2001. I think she had 23 March 1st, 2000. It's not that long of a report. 24 It's just for a quarter. Again, we received 35 25 complaints. We closed 37. We had total actions that WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 13 1 were referred to legal or D.A. is ten, and then you 2 see the breakdown of the referrals based on the 3 regions. We issued four warnings during that period. 4 And then down at the bottom, you will see at the top, 5 complaints received and the numbers beside it as to 6 what they are. 7 This quarter has been interesting. We 8 had a case resolved in the Houston area that resulted 9 in a conviction, criminal conviction on an individual 10 in the operation of bingo illegally, and then also we 11 seized, as the result of that, almost a complete set 12 of bingo equipment that was in that hall at that time, 13 and that was awarded to the State. So we're in the 14 process of distributing that equipment back here to 15 Austin at this time. It's one of those cases that we 16 worked undercover and discovered that they were 17 playing illegally without a license, and arrest 18 warrants were issued and we did arrest an individual 19 and he was convicted, and the courts did order us to 20 receive equipment and the monies that were a result of 21 illegal bingo. It was a long investigation, which, 22 you know, it's one of those that -- we're kind of 23 getting used to that. Bingo cases are tough cases and 24 they take a lot of man hours and a lot of 25 investigative work. Usually, the results, if you do WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 14 1 your work correctly, it works out. 2 I'll answer any questions if you have 3 any questions. 4 MS. TAYLOR: I do. Suzanne Taylor. I 5 was wondering, you said that you were going to be 6 distributing that here in Austin. Are you selling 7 that to -- 8 MR. PITCOCK: No. 9 MS. TAYLOR: Where are you going to be 10 distributing that to? 11 MR. PITCOCK: It's going to go to the 12 bingo section. We'll give it to Billy and Billy 13 will -- you know, if he needs any of the equipment -- 14 and I think what he plans to do is set up a training 15 facility for training, you know, people on bingo, so 16 it's going to be used for training. The rest of it, 17 if it's not used, will be destroyed. 18 MR. ATKINS: Are you in the market for 19 bingo equipment? 20 MS. TAYLOR: No. But what I'm thinking 21 is, is that there are a lot of nonprofits in the 22 market for bingo equipment. It seems like a complete 23 waste of funds to destroy perfectly good bingo 24 equipment when you could sell that and use that money 25 for advertising bingo. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 15 1 MR. ATKINS: Well, that's nice in 2 theory, Suzanne. First of all, a lot of the equipment 3 was apparently damaged in the flood, so we don't even 4 know the quality of it. And I doubt that several 5 hundred dollars that we would get for it would do much 6 of an advertising campaign. 7 MR. PITCOCK: Or the cost that it would 8 cost to get that hundred dollars. I understand the 9 equipment is not new equipment. It's not that good of 10 stuff. It's just equipment that's, you know, standard 11 equipment. It's nothing special or fancy or anything 12 else. 13 CHAIR NEINAST: I kind of agree with 14 Suzanne. If there is any usable equipment and you 15 cannot use it in your training program, you may 16 consider advertising it and letting the charities know 17 that it's available and put it out for bid, and then 18 use the money for whatever purpose rather than 19 destroying it if it's usable. Well, Mike, it looks 20 like you're gaining. You closed two more than you 21 received, so that's -- keep up the good work. 22 MR. PITCOCK: I think, if you look at 23 the last probably several reports, based on our 24 quarterly, you will see the same scenario. And I will 25 report again that through the cooperative work with WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 16 1 the auditors and investigators, you know, our 2 complaints have gone way down, and I think it's 3 because of going out and actually working inside the 4 bingo halls and talking to people and trying to answer 5 their complaints. And plus, I have to compliment the 6 bingo licensees for voluntarily complying with the 7 law, because without their cooperation, you know, we 8 wouldn't have those kind of stats. So I think people 9 are understanding the rules and regulations better 10 based on training that Billy is offering, and I think 11 that goes a long ways to the overall mission of what 12 we're trying to do. We have to have good enforcement, 13 we have to have people out there, you know, trying to 14 keep people in check and balance, because it is an 15 industry that seems to sometimes flow in directions 16 that may not be right. But it's -- the overall end 17 result has been good. I think we're still seeing 18 steady decline in the violations, which I think is 19 good. But the industry is again dictated by the 20 product and the people -- you have people playing 21 bingo, and it's one of those that that market is -- 22 it's an interesting study. So I think that the 23 investigators and the audit section and the bingo 24 section have done a good job over a long period of 25 time since we've started this. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 17 1 CHAIR NEINAST: Well, I would probably 2 be hard to measure, but I would think that the 3 training program should have a positive effect on it. 4 And you've kind of alluded to it, and it might be a 5 little early to see the full -- 6 MR. PITCOCK: I have seen the training 7 program, and I think it has a big effect on it. 8 Because I think that the people, you know, they're 9 starving for information to what they're supposed to 10 do or not supposed to do, and they get a chance to ask 11 those questions, and I think Billy offers that. And I 12 think that's great, because for us in enforcement, you 13 know, it makes it easier when you go in there and tell 14 them that you violated a rule or a law and they know 15 what that rule or law is or they can look it up, or 16 you can talk to somebody that at least has a working 17 knowledge of what we're talking about. Because we 18 have found when we first started that very few of the 19 people that we talked with from the charities had 20 knowledge of what the rules and laws are. And I think 21 this program has gone big jumps towards educating 22 those people as to what they're supposed to do or what 23 they're not supposed to do. And I compliment his 24 section for doing that. Our investigators, they asked 25 me the other day in a meeting we had about training, WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 18 1 you know, when a cop comes in and tells you, you know, 2 you're speeding, to slow down, that has an effect, but 3 you know, it's one of those, I think that to prevent 4 stuff, you have to have the training -- you have to 5 have people out there telling people the causative 6 effect of what you do is wrong and then how it affects 7 the overall industry. Billy has gone a long ways of 8 doing that. 9 CHAIR NEINAST: And if my memory serves 10 me correct, the top complaints received, it seems to 11 be the same types of complaints every time that make 12 the list and almost in that identical order. And -- 13 MR. PITCOCK: That's true. 14 CHAIR NEINAST: -- and taking up on 15 something you just said -- and Billy, I think we may 16 have discussed this earlier. Would any purpose be 17 served of just reflecting this in the bingo bulletins, 18 kind of like what Mike said, that the operators see 19 that this type of complaint or these complaints are 20 being received and if it might alert them to a 21 problem. I don't know what your men find when they go 22 out to investigate these, if they're just an unhappy 23 player who is reporting or whether there is a real 24 problem reflected in this failure to pay prize to 25 winners seems to crop up every time at number one or WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 19 1 two. 2 MR. PITCOCK: You have disgruntled 3 players that they feel they bingo, or they're slow in 4 some of the rules, you know, that the people enforce, 5 they conflict. And we kind of go in to try to 6 arbitrate that and look and see if it's been played 7 fairly and the prizes are awarded. And you know, a 8 lot of times it's the player's fault -- and more 9 times, I think the percentage is the player's fault 10 because the bingo halls usually set up rules and they 11 call their games the way they see it. But sometimes 12 the halls are a little bit less compassionate than 13 they need to be towards the player and understanding 14 their issues. And so that leaves them with nowhere to 15 turn, and so they turn to us and say, you know, they 16 wouldn't even talk to me or wouldn't listen to my 17 complaint. A lot of times what we do is try just to 18 get them to listen to the people and hear their 19 complaint, and explain to them what the rules of the 20 hall is or the house, and that, you know, the games 21 are played like this and you have to bingo by this 22 time and, you know, what your rules are. And the 23 players usually -- you know, they see that and they 24 see that it's really -- that you've got to play within 25 those rules, they understand. But you've got to be WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 20 1 compassionate to their issue. You've got to talk to 2 them. And sometimes, you know, the same players may 3 be the same complaining ones a lot, and we try to 4 listen to them and try to give what we know to be -- 5 listen, now, there is times when we get complaints 6 that if there is something going on, we get a lot of 7 complaints where they have people that come in real 8 frequent and bingo a lot based on the electronics. 9 What we do, we try to watch to see if there is any 10 collusion or any illegal activity to see if those 11 players do have the advantage or that it's unfair or 12 illegal. And we will take, you know, proper action, 13 either criminal or administrative, if we see that. 14 We do work undercover. I don't know if 15 I've told all of you that. We work undercover. If we 16 get complaints on the halls, it doesn't necessarily 17 mean that we're going to walk in and talk to the 18 people doing it. We may be sitting out there in the 19 audience playing bingo, or an auditor playing and 20 watching. And that's common with us. That's the way 21 we see actually how the people are treated and what is 22 going on and, plus, if there is violations that we 23 need to take action on. Not an uncommon thing for us 24 to do. If we do see violations of the law or rules, 25 then we take the appropriate -- or refer it to Billy WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 21 1 for the appropriate action to be taken. 2 CHAIR NEINAST: Billy, do you think 3 anybody would be served in reporting this in the bingo 4 bulletin or to alert the operators? 5 MR. ATKINS: I thought we had in the 6 past, Mr. Chairman, and I would have to go back and 7 check. I mean, we can. It's -- you know, it's like 8 Mike says, these numbers have dropped significantly 9 and, you know, we may be at the point where these are 10 as low as they're going to go. But we can certainly 11 publish them in the bulletin. 12 CHAIR NEINAST: I don't think it would 13 hurt. It may alert some of the operators that there 14 could be a problem. 15 MR. ATKINS: Uh-huh. 16 CHAIR NEINAST: Any questions from the 17 members of the committee for Mr. Pitcock? If none, 18 thank you, Mike. 19 MR. PITCOCK: Thank you. 20 CHAIR NEINAST: The next three items, I 21 think there could be a lot of overlap. And we'll 22 still take them in order, but recognizing that there 23 could be overlap. We'll start with number six, which 24 is a consideration of and possible discussion and/or 25 action of a self-evaluation of the Bingo Advisory WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 22 1 Committee, including work provided to the Texas 2 Lottery Commission. 3 If you will recall from the report in 4 your notebook of Billy's report to the Lottery 5 Commission, it was discussed to a certain extent 6 there, and I think maybe this should be an ongoing and 7 a continuing item on our agenda, but are we doing the 8 job we're set out to do. The requirements or the 9 discussion in the rules, which are reproduced for you 10 in your notebook, are somewhat nebulous. My concern 11 is, are we getting from our -- for lack of a better 12 term, our constituents, the people we represent, a 13 full report. 14 MR. TAWIL: No. 15 CHAIR NEINAST: Saleem says no. 16 MR. TAWIL: There are several of them 17 off here -- there were several lawyers in this room on 18 several occasions, and I've gotten complaints on the 19 telephone from these people because they're not 20 willing to step forward and complain that this 21 advisory committee is being run by the Lottery 22 Commission and not by the independent part of the 23 advisory group. That the whole process is controlled 24 by the Bingo Division, and they're upset about it and 25 not coming to any more meetings. I don't know why WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 23 1 they won't come up here and complain and tell you 2 that, though. 3 CHAIR NEINAST: Did they give you some 4 specifics other than -- 5 MR. TAWIL: Yeah. They said the Bingo 6 Division runs this process. This whole process is 7 controlled by the Bingo Division. It's not 8 independent -- it can't be independent the way it's 9 being run, they're frustrated, they give up. One of 10 them stood right here and had a big confrontation with 11 Billy. They're just -- they're tired of it because 12 nobody listens. This thing is nothing more than a 13 mimicking of the process of the Bingo Division. 14 CHAIR NEINAST: What is the feeling of 15 the other members of the committee on that 16 particular -- 17 MR. HOFFNER: Mr. Chairman, Fabian 18 Hoffner, executive director of NAFTM, and I disagree 19 with my colleague, Saleem -- 20 CHAIR NEINAST: Pardon me, Fabian. 21 You're coming through awful -- is your -- 22 MR. HOFFNER: I said I disagree in 23 that -- in that I have never been told what to say, 24 what to do. 25 MR. TAWIL: That's not what I said. I WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 24 1 said their complaint -- by the way, I've been in this 2 now three years. Okay? You've only been on this 3 committee once. Now, these people complain -- these 4 are professionals who represent either halls or 5 distributors or manufacturers. You're not the only 6 representative. You represent pull tabs. Okay? They 7 complained -- they called and told me that this 8 process is not working, they've tried, they're 9 frustrated with it. More than one. That doesn't 10 mean, because they didn't call you, it didn't happen. 11 CHAIR NEINAST: Well, I as -- you would 12 think that complaints like that would be directed to 13 the chairman, and I have not received any such 14 comments or -- 15 MR. TAWIL: You don't remember Steve 16 Bresnen standing here and complaining? 17 CHAIR NEINAST: Well, I remember him 18 being here several times making a presentation. 19 MR. TAWIL: He hasn't been here since 20 the last time he complained. 21 CHAIR NEINAST: The fact that the 22 committee does not agree with him or adopt his 23 proposal does not mean that it's being run by the 24 Bingo Division. It means that the majority of the 25 committee does not agree with him for whatever reason. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 25 1 MR. TAWIL: I just -- you want 2 feedback, I'm giving you feedback. 3 CHAIR NEINAST: Well, that's what we're 4 here for. But I'm observing -- 5 MS. TAYLOR: I have had the same things 6 happen to me that Saleem is talking about. I can tell 7 you, I have received the same phone calls. And I ask 8 people, are you going to go to the meeting and their 9 response is, no, because the Bingo Advisory Committee 10 really doesn't accomplish anything. We go to the 11 meetings and, you know, we tell you things that we 12 feel that are important to us, and nothing really 13 happens on it. So it's truly a waste of time that 14 they feel they're -- instead of coming to us, they're 15 going to other ways to try and see things happen that 16 they want to have happen. And I mean, I understand 17 what he is saying, and I don't think that they say 18 that any of us are being run or any of us are being 19 told what to say or do here at the meeting. I think 20 they're frustrated that change is so slow in 21 occurring. That they would like to be able to come to 22 a meeting and see some movement on different things 23 that they're interested in, and they don't. 24 MR. TAWIL: Because I've told them, I'm 25 open. I said, any issue that I have, I bring up, you WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 26 1 respond to, Billy responds to. I haven't had 2 personally any problems. I said, y'all tell me 3 whatever you want. I'll be glad to bring it up. 4 They -- 5 CHAIR NEINAST: Well, I certainly hope 6 that's the situation, that we have not cut off any 7 discussion or refused to put on the agenda any item 8 they want. Suzanne, you've been on the committee 9 longer than -- you're the old woman of the committee 10 by way of service. Have you -- do you recognize that, 11 as an individual, as a problem? 12 MS. TAYLOR: I do think that -- I think 13 that wish we could be more effective as a group. I 14 wish that we were a more effective group, and some of 15 the suggestions that were made at the last meeting, 16 maybe are some of the things that could make us a more 17 effective group. Putting reports together, putting 18 statistics together, so that when we make 19 recommendations, we have some meat in our 20 recommendation, and they will receive, I think, more 21 consideration from the Lottery Commission, from the 22 Commissioners, because we do take a lot of different 23 things to them, but not much actually happens. I 24 mean, everything that we've talked about in the last 25 year, the only thing that really went anywhere was WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 27 1 progressive bingo, and nothing happened with that. So 2 anybody coming to the meetings, I mean you see, there 3 is nobody here. They know when the meeting is. It's 4 been published. I mean, you make sure that everybody 5 knows when this meeting was supposed to be and yet 6 there is nobody here. And I think it is just general 7 frustration that nothing happens. I mean, we meet and 8 we have meetings and we talk and nothing happens. And 9 I think that perhaps Tom was right. We need to put 10 more meat into things that we want to see happen and 11 maybe some change will happen for some of these items. 12 I personally am frustrated with some of the things. 13 You know, I would like to see a new rule on pull tabs. 14 You know, that's been ongoing now, that was six or 15 nine months ago that, you know, we talked about that. 16 We still don't have an additional definition for pull 17 tabs. So I mean, I am frustrated, so I imagine that, 18 you know, they are frustrated, too. 19 CHAIR NEINAST: Well, on that last one, 20 I will plead guilty. That's my fault because it just 21 slipped through my memory, and I have -- I have asked 22 Fabian to address that today. But -- and I certainly 23 think that we need to get more backup for our 24 proposals, but I hope that these people who are 25 unhappy with what we do will recognize, and if they're WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 28 1 the attorneys who are unhappy, they should recognize 2 that most of it, not all of it, will require a 3 legislative or a rule change and you just don't do 4 either one of those overnight. Look at what happened 5 to our proposals. A lot of those items that Nelda 6 talked about were -- originated from this committee, 7 that got to the legislature, and -- 8 MR. TAWIL: Several -- we weren't all 9 together. Several of us worked against different 10 bills, tried to kill them. Nobody is in unison. 11 CHAIR NEINAST: But would it -- I don't 12 think that the committee can be blamed for that. But 13 there is just a slowness in the process we need to 14 look and see if we can speed it up, but there are some 15 things that just cannot be moved any faster than they 16 are moving. But my concern is, and this is reflected 17 in one of the others that we will take up again, is 18 that we don't give a lot of the individual -- 19 individuals and individual organizations involved in 20 bingo an opportunity to come to this committee because 21 we do meet in Austin. And we'll discuss that later. 22 But it's unlike the Lottery Commission, that the 23 people who are interested in that are the people who 24 have a financial interest in it, and "financial" being 25 that it goes into their pocket. Whereas the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 29 1 charities, the operators in bingo, they're doing it as 2 a service to the community, and they've had to take 3 time off to -- of their work to further the -- 4 MR. TAWIL: Well, that's not exactly 5 right. But several distributors wanted to go for that 6 seat right over there. They're in-state companies 7 that operate here in Texas and have financial 8 interest. They were all rejected and a manufacturers 9 rep from out of state was put in that seat. There is 10 a lot of people complaining about that still. 11 CHAIR NEINAST: I look at the bingo 12 industry as being composed and organized and existing 13 more for the charities that are running the games than 14 for the distributors or -- 15 MR. TAWIL: I don't disagree with you 16 there. But I mean, the people in state ought to be 17 considered first, just like they do in other state 18 agencies. I got several complaints on that call -- 19 called on that. Why would they pick somebody from out 20 of state to represent the distributors, than let 21 them -- several of them tried. And I said, I don't 22 know. I can voice whatever opinions y'all want to 23 bring it up, but I -- you know, so that's not true 24 when you said financial interest. Some people -- 25 they're small. They're small businesses, so they're WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 30 1 ignored. 2 CHAIR NEINAST: I frankly have the same 3 question with that. And Billy, if you recall, I 4 called on that and was told that this -- Fabian's 5 organization or group was the only organization that 6 fit the requirement for that seat? 7 MR. ATKINS: No, I don't recall you 8 being told that. I recall that that seat that Fabian 9 holds represents not just distributors, but another 10 class of representatives that we have, called 11 manufacturers. And since the committee's inception, 12 that seat had been held by distributors. There had 13 never been a manufacturer's representative on the 14 seat. And it was his association that for whatever, 15 you know, reason decided to put him forward as a 16 candidate instead -- in the past, I think certain 17 manufacturers had submitted individuals, but I don't 18 believe this time they did. They submitted one. 19 MR. TAWIL: Those are all the things 20 that are making -- you know, that's why there is 21 hardly anybody here or people that takes part in the 22 process. There is just a lot of acrimony. As Billy 23 knows, I'm open. I just -- if I have a problem, I 24 just bring it up and speak it out. I wish most of 25 them would have done that. This could have been WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 31 1 resolved two or three years ago, the issues of how 2 they interrelate to the advisory committee. They 3 just -- go ahead, Billy. 4 MR. ATKINS: I'll let you know this. 5 I'm pretty troubled by the fact, Saleem, that you've 6 never raised these issues with me. I mean, you're 7 right. In the past, you've never been shy about 8 calling and voicing whatever concern -- 9 MR. TAWIL: No. And I didn't want to 10 bring -- 11 MR. ATKINS: -- but to come -- I'm 12 sorry. But to come here out of the blue and then all 13 of a sudden accuse the Bingo Division of running this 14 committee, et cetera, et cetera -- 15 MR. TAWIL: No, no. I'm not making -- 16 MR. ATKINS: -- I find very 17 disheartening. 18 MR. TAWIL: Okay. These are not -- 19 these are comments of people calling and telling me. 20 People telling me after the meeting. I didn't get 21 this blue document. Okay? They usually come the last 22 day. I would have mine here today and I would have 23 been aware that this issue was going to be on. I have 24 no other way of knowing. When he brings it up, it 25 triggered the fact that I've gotten five or six WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 32 1 complaints within the last year, and I just felt like 2 I needed to let them be known. And in particular, on 3 that seat over there, there was several complaints, 4 but I felt like this really is an issue that Bill and 5 you are overlooking overall as to whoever recommends 6 to the Commissioners on the seat assignments. And 7 then when the blowup occurred here with -- I forgot 8 his name. 9 MR. ATKINS: Bresnen. 10 MR. TAWIL: Steve. I got a call that 11 evening. 12 MR. ATKINS: From Steve? 13 MR. TAWIL: No. From one of the other 14 guys, from the other people, saying, this process just 15 is not working for us. It doesn't do anything. It -- 16 we have no avenue. This advisory committee was 17 created for a specific purpose. It's supposed to be 18 independent of the Lottery division -- or the Bingo 19 Division as a body, and they don't see it that way. 20 So I -- I don't know what to tell you. I'm just -- 21 you want feedback, I'm giving you what I get. And as 22 far as I'm concerned, it seems like this chair is open 23 for anybody, any time. There is always public notices 24 and everything, but they don't feel like anything 25 happens as the system takes the information in. And WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 33 1 it just don't go anywhere. 2 MS. TAYLOR: And if we went back to -- 3 back to the same thing that Tom Clowe was talking 4 about and put together reports that had -- where we 5 would go out and ask people, you know, where we do 6 surveys and where we do more work on the item than 7 just talk about it for ten minutes here and make a 8 decision and say, yeah, this is what we think. 9 Because we don't have anything to back up what we 10 think. I mean, this is, you know, just a very few of 11 us. If we had more information, if we went back out 12 into the local communities and had more, more in these 13 reports, and said, well, this is how many people I've 14 asked and this is how many -- which people said this, 15 and which people said this, and this is how they feel. 16 So that instead of just our opinion, nine measly 17 little people, it's the opinion of the whole group of 18 bingo. I mean, we don't. We come here and we talk 19 about it for ten minutes, and because we don't have 20 anything to back up our feelings, I think a lot of 21 things -- the good ideas are just let drop because 22 they don't go anywhere. But, I mean, some of it is 23 our fault because we need to put more into the 24 suggestions and the items that we have on the agenda. 25 I mean -- and I'm personally responsible, too. I WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 34 1 mean, I think debit cards would be used, but I was 2 hoping somebody else would come forward and bring that 3 information and I didn't do any more research on it. 4 I mean, it's each and every one of us. 5 MR. ATKINS: Well, and I appreciate you 6 raising that point, Suzanne. You know, the staff, for 7 the last meeting, put considerable amount of effort 8 into gathering that information. So there is going to 9 be a frustration on our part if there is nothing 10 further discussed about it at this time. Now, another 11 point you just raised is -- I mean, it seems to 12 conflict directly with what you're talking about. You 13 know, you're saying we come here for ten minutes and 14 make a decision, you know, and then it goes to the 15 commission and the commission wants hard data. Well, 16 now you're talking about coming here, talking about 17 something, going away, and for a period of time, you 18 know, analyzing it, et cetera, so you're still talking 19 about that drawn-out process that the people are 20 coming to you and saying they're frustrated with. So 21 is that the Bingo Division's fault? I don't think so. 22 MS. TAYLOR: Well, maybe what we need 23 to do is the items that are on the agenda, before it 24 comes right back to the agenda, it's going to be on 25 the agenda, those two months or three months in WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 35 1 between times, we need to have everything together 2 when we come back to the meeting. We more or less 3 need to know what direction we are looking to go 4 forward in before we come back to the next meeting and 5 discuss it again and go away again. It's just 6 things -- I think we do need to work on these agendas 7 and have a pretty complete agenda and what we need to 8 bring to these next meetings, and then maybe we could 9 get people interested in coming again. 10 CHAIR NEINAST: I want to comment on 11 that, and Suzanne and Virginia and I discussed it a 12 little bit before the meeting started, another thing, 13 and that is that our agenda and notebook are put 14 together too late to give us sufficient time to review 15 it ahead of time. And we'll discuss this a little bit 16 later, but I think -- I see no reason why we cannot 17 set the agenda at least a month ahead of the -- of the 18 meeting. It may -- even though it -- and that may 19 conflict with the requirements for publishing in the 20 Register, I still think we can, for our internal use, 21 can develop an agenda and get the agenda and this 22 notebook out to the members at least two weeks in 23 advance. I got my copy Monday and Virginia got hers 24 Monday. I know, Saleem, you never got yours. 25 MR. TAWIL: I know. And I usually get WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 36 1 them the day before, also. 2 MR. RINEHART: I didn't get mine 3 either. 4 CHAIR NEINAST: Okay. So that does not 5 give us sufficient time to review the material ahead 6 of time. That may help some. 7 MR. TAWIL: Billy, can we put it on the 8 web? 9 MR. ATKINS: The notebook? 10 MR. TAWIL: Yeah. I mean, as well? Is 11 that an option? 12 MR. ATKINS: I don't know. I will have 13 to check. 14 CHAIR NEINAST: There may be some that 15 wouldn't have access to the web. David, it looks like 16 you have a -- 17 MR. CASTILLO: Yes. I received mine 18 through Airborne, and I received it Monday. Usually I 19 get it about two or three days before the meeting. 20 And my observation -- David Castillo. My observation 21 is that bingo is faltering. I mean, and the people, 22 the organizations know about it, and I can't show if 23 we have -- the mutualistas and the polistas, they gave 24 up their license, and they're trying to have sales and 25 rental of the hall and they're faltering. And KC 3389 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 37 1 also have been dormant with their license. And there 2 was a bingo hall that opened in -- it went through 3 real well for about six months, and then afterwards 4 they went down on their prices. They were faltering. 5 They were not giving the monies that they had. They 6 had complaints. So the people operating down in south 7 Texas know that bingo, we have a lot of debt. People 8 that used to go to bingo all the time are not 9 attending, so it's really a problem of the bingo all 10 over the state, sales are going down. How -- they're 11 looking for ways to manage through -- advertise bingo 12 and get it up again to what it was when it started. 13 That's one of the things that I have seen. And I 14 think that this committee recommended a whole bunch of 15 things for the legislature, and that's a process. And 16 we need to start working for the next session and 17 start getting our eggs together and see what happens. 18 But if it goes to a committee and it just bottles and 19 never gets a hearing, it's not the bingo committee's 20 fault or the Commissioners, it's just there. And the 21 only one thing that we got and it was vetoed, I think 22 we did pretty good. Zero out of zero. 23 MR. ATKINS: A hundred percent. 24 CHAIR NEINAST: I would like to comment 25 on one thing, make it a matter of record, as to WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 38 1 whether the division runs this committee. And I'll 2 tell you that -- for the record, that Billy and I have 3 a lot of discussions by phone and by e-mail as to what 4 the agenda will be. He does not set it. He comes in 5 with suggestions, I have suggestions, and we mutually 6 agree on what the agenda will be. And as you know, we 7 include now, routinely, the last item will be a 8 consideration of agenda items for the next meeting. 9 So I think the observation that it is run by the -- 10 the division, is just not correct. Billy is here and 11 he has his say on everything we do, but he does not 12 set the agenda. I set the agenda in consult -- in 13 consultation with Billy. 14 The other part of that that bothers me 15 a little bit personally, and that would indicate that 16 maybe there is a belief on the part of the public that 17 I am running this too dictatorially or not giving 18 leeway. And I'm open to your comments. If that's the 19 case, I'm not letting the committee run the business, 20 I want to know about it. If there is something that I 21 can do to -- 22 MR. TAWIL: We heard that. There is 23 too much influence from the Bingo Division. And I 24 think you've been wide open. My recollections on some 25 of the things you did last year, we worked with you WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 39 1 and others in Billy's office on the lessor problems. 2 Remember that? You were quite thorough, quite open to 3 (inaudible). If all things happened like that, these 4 people, I guess, would have -- I don't know. I'm 5 just -- there is frustration in general on people's 6 part. They don't see this committee having any great 7 value. The biggest distress that I heard comments 8 about was the fact that we work together with the 9 division, and if the division didn't like what we were 10 doing, the division said, well, we'll just go to the 11 Commissioners on our own. I don't know what the issue 12 was. There was some issue two or three meetings back. 13 But, I mean, that kind of opened things up again. 14 And, of course, my reactions have always been, you 15 know, I can -- I don't see anything wrong with -- if 16 anyone is wanting to do something and takes the 17 initiative, they can either talk to you or Billy. 18 Those avenues have always been unobstructed. 19 CHAIR NEINAST: Well, there was a 20 specific issue like that. I have forgotten what it 21 was. But I remember specifically when I took it to 22 the commission, I said, this is what the committee 23 thinks and we are in disagreement with the division on 24 this. And I do not recall what the issue was, and I 25 do not recall what the commission did with it, but WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 40 1 there was at least one specific item that went before 2 the commission, and I presented it to them as being an 3 area in which we were in disagreement. And if you 4 recall, we were in disagreement on the -- 5 MR. ATKINS: May the comment, 6 Mr. Chairman? The issue I remember dealt with the 7 Bingo Division charging for the operator training 8 program. And the Bingo Division went forward to the 9 commission saying that we would like to be able to 10 charge a fee, and you reported on behalf of the Bingo 11 Advisory Committee that the BAC did not believe that 12 there was a need for a fee. And the Lottery 13 Commission sided with the advisory committee. 14 CHAIR NEINAST: At least to the extent 15 that -- that's it. That they deferred it, in effect, 16 for a year to see how it worked, as I recall, the 17 actual actions on it. And then, again, looking at our 18 past history, just recently, there was disagreement on 19 the -- between the committee and the division on the 20 subpoena and summary suspension power. And if you 21 recall, we sided with the -- those from the general 22 public who were against the summary suspension power, 23 and we sided with them. So, again, I'm not -- I'm 24 looking for answers as to what we can do to better 25 perform our function. So I think a couple of things WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 41 1 have come out of it. One would be to possibly to 2 have -- set the agenda earlier and get the notebooks 3 out earlier will certainly help us. And I would hope 4 that would give the members an opportunity, between 5 their receipt of the agenda and the backup notebook, 6 for them to talk with the individuals in the 7 constituency that they represent and get their views. 8 If you recall -- or Suzanne, I know you were on, and 9 Virginia, when we had the issue of minors working in 10 the halls, that's one we -- and maybe that's where 11 they say it takes too long. We considered it the 12 first time, and we, in effect, tabled it to let the 13 members of the committee go out and get more 14 information from their constituencies as to whether 15 this was -- not only was it a good idea, did they want 16 it, but give some specific information with which to 17 back it up. So that took us two meetings to resolve 18 the issue, which is a three-month period, and that 19 might be why they're complaining it takes too long to 20 act. But that was one of the cases where -- the thing 21 that you mentioned, Suzanne, of getting more 22 documentation, more information, and more input from 23 the community to back up to the table. 24 Robert, did you have a comment? I 25 thought I saw you with your hand up. Maybe it was WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 42 1 David. 2 MR. CASTILLO: I think that where they 3 got their impression that the attorneys were running 4 the committee or something was, one time we were 5 talking about subpoena power and we asked if we had a 6 hearing officer that the enabling law -- and some 7 attorney got up and he clarified the law, and it would 8 take a long time to -- once you got the administrative 9 hearing and all that, it would be a long time between 10 that and it would stop the bingo, and that's what he 11 clarified. Maybe that's what the audience saw that 12 day that they think it's running the bingo committee. 13 MR. SPEED: Mr. Chairman, I think maybe 14 there is a -- Bud Speed. I think we might be a little 15 frustrated by not accomplishing more than we did in 16 the legislature, and I think maybe that's the cause of 17 some of this conversation. I do see that we go over a 18 lot of things and don't get it -- don't get an end 19 result on them. I don't particularly think it's 20 Billy's problem. I think it might be our problem. 21 This is my first year out here, so some of these 22 people have got a lot more experience on the committee 23 than I have. 24 CHAIR NEINAST: Well, and I think also 25 that I feel a little frustrated personally when I do WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 43 1 appear before the commission -- and I was hoping that 2 Chairman Clowe or some other commissioner would be 3 here. I -- this is my personal feeling, my personal 4 observation, that the Lottery Commission is so 5 involved, as they should be, with other activities of 6 the commission, they don't give -- have not in the 7 past, in my opinion, given full consideration to the 8 needs of the Bingo Division as we present them to 9 them. And I'm partly responsible for that because I 10 certainly don't give the detailed report to the 11 commission that Billy did at the last meeting. I 12 think he did an excellent -- at the last meeting. I 13 mean, the meeting of the commission where he presented 14 the report for the committee, and he did a much better 15 job than I normally do. So it might be my fault that 16 I'm not bringing it to the attention of the commission 17 in the right way. And I think, if you read that 18 exchange between the commission and Billy, I think 19 that they are open to receiving more information and 20 want to receive more information. And so it's up to 21 us to present it. 22 But I would like to say also, while I'm 23 thinking about it, if any of you get a complaint such 24 as the -- of the type that Saleem and Suzanne have 25 mentioned, I wish that you would ask them to please WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 44 1 call me and discuss it with me. I think -- 2 MR. TAWIL: Most of them are afraid. 3 CHAIR NEINAST: Am I that much of an 4 ogre? 5 MR. TAWIL: Well, people are afraid. 6 If they're a licensee, they're afraid Billy -- I know 7 Billy is impartial. That's why I'm open in the 8 meeting. But you can't get everybody to believe that. 9 They're afraid that they may -- I don't know. That's 10 the comments that I get. 11 MS. TAYLOR: Call undue attention to 12 themselves. 13 MR. TAWIL: Yeah. There is 14 something -- do you know what I'm talking about, 15 Billy? 16 MR. ATKINS: Well, I do, Saleem. Now, 17 I will tell you this. There is no shortage of 18 organizations -- well, licensees, any licensee, that 19 will call me on a moment's notice and, you know, 20 they're not afraid, they're not ashamed or anything 21 else. Now, I do think it's quite common for 22 organizations that have some sort of pending 23 administrative action against them, they're less 24 likely to do it. But I get calls every day. Calls 25 every day come into this office, on any number of WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 45 1 issues. 2 MR. TAWIL: I've talked to you on every 3 one, except there was one issue that we couldn't talk 4 about, but I think you said at the outset, I can't 5 talk to you about that issue. It was -- whatever the 6 issue was. But other than that, it's perfectly open. 7 But there are people out there, whether they have done 8 something or they're hiding something, whatever, I 9 don't know, but there is a lot of people that complain 10 but they have fear of personal attention, either 11 sitting up here or calling Billy or -- I'll try to 12 refer them. I will make a concerted effort to 13 persuade somebody to call. 14 MR. ATKINS: Well, and I'll call Steve 15 Bresnen, because I didn't know that we had gotten 16 crossways, so -- 17 MR. TAWIL: Steve didn't tell me that. 18 Now, I made that very clear because -- Bill said, was 19 it Steve, and said, no, it was somebody else. Steve 20 was involved in an altercation of frustration. And I 21 saw Steve at the Legislature, you know, and he was -- 22 I don't think that he lost any sleep over it. 23 MR. ATKINS: I saw him and he didn't 24 convey anything to me. 25 MR. TAWIL: So -- but there is a WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 46 1 testament here that this room is typically empty, and 2 those are the reasons. 3 CHAIR NEINAST: Well, again, calling me 4 is not calling the division. And I would certainly 5 like to talk to these people to see if there is 6 anything that I can do or if there is anything that I 7 have done that has given that impression. And again, 8 I think it's -- comments or complaints like that ought 9 to be directed to the chairman, and they are 10 indirectly now, since you're bringing them forward. 11 MR. TAWIL: I tell you what I'll do. I 12 may not be able to get names, because people -- their 13 own protection, but I will try to get a list of items, 14 get people to write stuff down and get it to me of all 15 the different kinds of issues. The mostly that I get 16 information from are from the commercial side, meaning 17 either they're in the commercial leasing business or 18 they may be distributors, or some are charities, but I 19 will make a concerted effort to get a list as to the 20 kinds of things that they think needs change or 21 whatever. If everybody was like Ms. Thompson, we 22 would have this room full all the time. But that's 23 not the case. Most of them come once and they're gone 24 because they're -- they said, oh, yeah. So and so 25 told me that's the way it is, and I saw it for myself. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 47 1 CHAIR NEINAST: Linda, to summarize, 2 unless some member has additional comments, and I get 3 the feeling that it's the opinion of at least part of 4 the board that we are not -- or the committee that we 5 are not doing a good job, that we could do a better 6 job. And one way of doing that is getting more of an 7 input from the community as a whole and giving due 8 consideration to their concerns. And I as chairman am 9 certainly willing to do that. I welcome it. I am 10 disappointed that there are so few people in the 11 visitors gallery today, and this is unusual. We had a 12 trend there for the last few meetings where we did 13 have a lot of participation. It could be because of 14 the legislature now adjourned, they don't see a 15 pressing need to bring any of the items forward. 16 Again, I think they need to recognize that most of the 17 things that we're going to get into and recommend, 18 most of them I think will require a legislative or a 19 rule change, and that cannot be done overnight. It 20 may take several meetings of the committee before we 21 can reach a consensus on what should be proposed. 22 Any other comments on wrapping this 23 part of the discussion up? I would hope that, while 24 it might be rather lengthy, that we can make at least 25 that portion of the verbatim record available to at WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 48 1 least Chairman Clowe. I think he is now acting as the 2 liaison between the commission and the committee, is 3 he not? 4 MR. ATKINS: Yes. He is the designated 5 bingo representative. 6 MR. TAWIL: What is Sadberry doing? 7 MR. ATKINS: Making money. 8 CHAIR NEINAST: The next item is number 9 seven, consideration of and possible discussion and/or 10 action on conducting Bingo Advisory Committee meetings 11 at locations other than Austin. 12 You will have noticed from the item in 13 your notebook, and for those of you who did not get 14 the notebook, the committee voted sometime in the past 15 to do this, or at least to request permission from the 16 Lottery Commission that we be able to hold some 17 meetings outside of Austin. That was presented to the 18 commission, I presented it. And in your notebook, 19 there is a verbatim account of that exchange. The 20 commission, primarily through Chairman Clowe, was 21 opposed to that and disapproved it. And, again, I 22 think it's one of those cases where I did not make 23 the -- the case strong enough, because I assumed, and 24 obviously assumed wrongly, that it would just go 25 through the commission without much comment. But I WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 49 1 was wrong. And they disapproved it. But I think we 2 need to visit -- or revisit that again for the reasons 3 that we have already discussed. 4 I think the -- I look at this, and 5 maybe wrongly, that our primary community for the 6 charities are operators, because that's what the Bingo 7 Enabling Act was passed to help, to make bingo, 8 charitable bingo legal in the State of Texas. And so 9 that, to me, is -- are the main constituency. So the 10 people who are running the charitable bingo for the 11 most part are volunteers, and they're doing it to help 12 their organization raise money for their charitable 13 purposes. To come down here from Amarillo, or 14 Kingsville, or wherever, is money out of their pocket 15 that doesn't reflect in the profit from the 16 distributors and others who are on the committee. I 17 think there would be -- it's quite different from 18 those who appear before the Lottery Commission who 19 are, to a large extent, the people who are selling the 20 lottery tickets and making money that way, so they 21 have a real profit incentive to get on the plane and 22 come to Austin to appear before the commission. You 23 don't find that incentive among the charitable 24 organizations who are running the games. And I do 25 think -- I could be wrong, at least for that WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 50 1 community, for the community for which the Bingo 2 Enabling Act was passed, it would give those people an 3 opportunity to appear before the commission. If you 4 notice, of the people that we have had appear before 5 the -- I mean, the committee, to appear before the 6 committee in the past have been generally from Austin 7 or Houston or San Antonio. There is a lot of Texas 8 out there that we never, ever hear from. And I think 9 if we could hold maybe just a couple of meetings a 10 year outside of Austin, it will give those voices a 11 chance to be heard. So that was my basis for putting 12 it on the agenda to open it up again. 13 What are the views of the committee 14 members? 15 MS. BRACKETT: I agree with you. I 16 have served on the board of directors of a group 17 concerned with children's services and foster 18 children, because that's what my agency does, and find 19 that it really is disheartening over how everything 20 that affects me out in west Texas is -- all the 21 decisions are made by the core group you just talked 22 about from the places you can drive in very easily and 23 very inexpensively. I think, if we could meet at 24 some, what people here consider remote places like 25 Lubbock, Texas, it would be very encouraging to the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 51 1 charities and maybe make them feel a little bit more 2 prideful and more respected in what they're doing, and 3 have a lot more interest in some of these legislative 4 issues that they just think, okay, that's been 5 proposed, I can sit back and forget it and not write 6 in the letters that they should be doing, or not 7 making the phone calls that they should be doing to 8 their elected officials. I think the visibility -- 9 that's what I'm trying to say, the visibility would be 10 exceedingly important. And then the education of the 11 individual operators and the charities that they 12 represent would be very, very important, too. 13 One thing that I have -- that I think 14 has created a little bit of interest was the operator 15 training. Having the operator training in different 16 locations, and people coming together and then 17 privileged to really good smooth, slick presentation 18 that people thought -- that the Bingo Division thought 19 was important enough to bring to them to make business 20 better. 21 CHAIR NEINAST: Further comment? 22 MR. TAWIL: I think you ought to have a 23 quarterly meeting that's assigned to cities a long 24 time in advance. I think that would be beneficial. 25 It could be in Odessa one quarter, Lubbock one WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 52 1 quarter, Corpus through the Valley one quarter, Austin 2 one quarter. 3 CHAIR NEINAST: And this has to be 4 considered in connection with the budgetary -- 5 MR. TAWIL: Oh, we can't fly first 6 class? 7 CHAIR NEINAST: No. What I mean -- 8 MR. ATKINS: On Southwest. 9 CHAIR NEINAST: As discussed at the 10 previous meetings, there is a problem of how much 11 money is available, because it would require some of 12 the staff to travel that's not required now. It would 13 cut down -- be offset to a little extent by less 14 travel for some of the other members. But anyway, 15 that is a consideration that needs to be considered. 16 My personal opinion is stated -- 17 MR. RINEHART: I'm sure that in our 18 part of the country, we would have people participate, 19 to come out -- 20 CHAIR NEINAST: That was Mr. Rinehart, 21 Robert Rinehart. 22 MR. RINEHART: Well, I'm just not sure, 23 you know, how many we would have to turn out in our 24 part of the country for this. But -- by movement. I 25 don't know whether the good part would be to WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 53 1 accomplish -- the bad part to try to set it up and 2 bring the commissioners or Billy with all his staff, 3 or whatever it might be. And he would have time to do 4 it -- 5 MS. BRACKETT: It would be a chance -- 6 MR. RINEHART: I'm just talking about 7 now, about the Amarillo territory, which is close to 8 Lubbock, but Lubbock may turn out a lot better 9 turnout. 10 MS. BRACKETT: Listen there is not a 11 bingo player in Lubbock that doesn't want to tell 12 Billy Atkins how to run the thing. And what -- 13 anyway, I just think that we would have a turnaway 14 crowd, just about. They tell us every day how to run 15 our show. And we listen to our customers, you know. 16 We need to listen to our customers. Every industry 17 has to listen to their customers. 18 MR. HOFFNER: Mr. Chairman, Fabian 19 Hoffner again. I'm generally -- I'm generally for 20 those kinds of -- 21 CHAIR NEINAST: Can you speak up for 22 the -- 23 MR. HOFFNER: I said, I'm generally for 24 those sorts of programs where agencies and boards go 25 out and meet with folks that are directly affected, WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 54 1 but it's seems like that the chairman of the Lottery 2 Commission has already sort of made a decision. Am I 3 wrong? I mean, it says here that -- that in the 4 November meeting that he said, it elevates this 5 committee to a high level. It's an advisory 6 committee. The commission looks on it and the staff 7 with great prestige and it would be improper for the 8 commission to meet anywhere else other than Austin. 9 This is where the people's business is conducted. And 10 I feel the same towards the advisory committee. I 11 think the members ought to come to Austin and conduct 12 that business, which is the people's business, here in 13 Austin. 14 You know, I'm for it. You know, I 15 think it would be a good idea for us to go around, but 16 I'm wondering if anything has changed on behalf of the 17 chairman or the commission that sort of opens -- 18 MR. TAWIL: He's in charge of bingo 19 now. That's the difference. 20 MR. HOFFNER: That opens this 21 discussion -- 22 CHAIR NEINAST: And I know that this 23 might be beating a dead horse, but one of the things I 24 think that I did not do a good job, because I was 25 caught by surprise, by pointing out a vast difference WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 55 1 between the commission and the committee. The 2 committee is more or less a fact finding committee and 3 just as a number of years ago, I know the State 4 Legislature, the House of Representatives committee 5 that had to do with bingo -- I've forgotten what the 6 name of it was, but -- I can't even remember what 7 the -- 8 MR. TAWIL: Administrative licensing. 9 CHAIR NEINAST: But they held a 10 hearing -- the committee convened in Brenham, Texas to 11 consider items on bingo, and members of the Bingo 12 Division came to Brenham to appear before the 13 committee. So that committee went out to gather 14 information, and possibly if we presented this 15 proposal, if it becomes a proposal, in that fashion, 16 there might be a different consideration, particularly 17 since there is now one new member on the commission 18 who was not there in November. Commission Sadberry, 19 who commented on the proposal, is no longer on the 20 commission. So we do have, to a certain extent, a new 21 commission. Chairman Clowe is still the chairman. 22 MS. TAYLOR: Billy, what was that 23 committee? I know you didn't just go to Brenham. 24 They went to Brenham when they were going around the 25 state right -- during the legislative time or before, WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 56 1 because I know they met in the Valley and San Antonio 2 and Brenham. 3 MR. ATKINS: The committee that Bill is 4 talking about is the House committee, and it met in 5 Austin, Brenham, and El Paso. The Senate committee 6 met at several other locations throughout the state. 7 But I did want to follow up, 8 Mr. Chairman, on your comments in that there is a new 9 committee member, and if you'll recall, even 10 Commissioner Sadberry, in his comments -- his comments 11 was, he didn't support it at this time. So I do think 12 it's valid to go back, given two things. One, with 13 the new commissioner; and also, with the additional 14 information that you've been talking about here. Now, 15 there was a lot of concern, I think, on behalf of the 16 Commissioners centering around the cost in relation to 17 either having to get a location or staff travel costs. 18 And I think that can be effectively addressed through 19 the specific agenda items that are put on any one 20 agenda. I mean, obviously the agenda items today are 21 going to require, you know, the presence of at least 22 myself and three additional staff members. So, you 23 know, that's something that would be more -- you know, 24 more costly. But if there was an agenda item that, 25 you know, didn't have items on it that required the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 57 1 presence of additional staff members, then that would 2 reduce the -- your travel costs. 3 CHAIR NEINAST: Well, even with those 4 items today where we had some of your staff members 5 present, like Mike and Nelda, both of their reports 6 could have been handled just by the written reports 7 they submitted. 8 MR. ATKINS: That's correct. 9 CHAIR NEINAST: So the only one that I 10 think that might generally -- we might want to have 11 easy access to would be Kim or her staff, and we don't 12 call them -- where we need their advice for an item at 13 the time, we can refer it to the legal general counsel 14 later. 15 Okay. I think we've discussed this 16 enough. Is there a motion on this particular item? 17 MS. BRACKETT: A motion that you 18 continue to pursue it? 19 CHAIR NEINAST: No. The motion that -- 20 the chair would entertain a motion that the committee 21 recommend to the commission that the rule be changed 22 to allow meetings of the Bingo Advisory Committee 23 outside of Austin. 24 MR. SPEED: I second. 25 MS. BRACKETT: I so move. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 58 1 CHAIR NEINAST: We now have a motion 2 that's been made and seconded to recommend to the 3 Lottery Commission a rule change to authorize the 4 Bingo Advisory Committee to meet outside of Austin. 5 Further discussion? Saleem. 6 MR. TAWIL: I'm just anticipating an 7 issue that might be -- now, let's say, they asked 8 it -- they say, well, now Houston would benefit more 9 and Dallas. You know what I'm saying, Billy? 10 MR. ATKINS: I know exactly what you're 11 talking about. And I'm telling you right now, 12 staffing won't have anything to do with that. 13 MR. TAWIL: They need to wrap that up 14 as part of the thing so that -- you've got a big 15 controversy that's going to come out as soon as you 16 get this approved, so -- 17 MR. ATKINS: And Saleem is talking 18 about where to hold the meeting. 19 MR. TAWIL: Mr. Chairman, you might 20 want to consider articulating in some fashion by 21 zoning it in advance. That keeps people from -- 22 because there is a legitimate reason. We're talking 23 about four million people versus 200,000. 24 MR. SPEED: I think you'd better try to 25 get it approved first. I'm not sure you're going to WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 59 1 get it approved. 2 CHAIR NEINAST: I understand what you 3 say, Saleem. And again, the way the motion is 4 written, the way we go to the commission is that the 5 committee would set up the -- where we meet. And then 6 when we get to that, I think you've got a good point 7 of -- I do think that, as was in the original motion, 8 by that I mean, the one that we considered some time 9 ago, that it would require one meeting to be in 10 Austin. And maybe two or three. But the way the 11 motion was presented then was that the committee would 12 set its meeting places so long as one was in Austin. 13 And -- a kind of a -- that's not the exact wording of 14 the motion, but that was the way it was presented. 15 Any further discussion? Call the 16 question. All in favor of the motion, aye. Opposed, 17 no. The motion carried unanimously. 18 The next item is number eight, 19 consideration of and possible discussion and/or action 20 on whether the Charitable Bingo Operations Division 21 should be a separate state agency. 22 I am listed as being the member 23 responsible for that. Again, I'll throw it open for 24 discussion. Certainly, bingo, charitable bingo in 25 Texas is a big business. I think there are probably WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 60 1 some activities in the state that have their separate 2 commissions or agencies. Certainly, the Bingo 3 Division, since its inception, has been bounced. It's 4 been the stepchild of three different agencies. 5 MR. ATKINS: Mr. Chairman, I take 6 exception to that comment. 7 CHAIR NEINAST: What? They're -- 8 MR. ATKINS: That it's been the 9 stepchild of three separate agencies. 10 CHAIR NEINAST: Well, I -- that's the 11 way it would appear. It's been just a section put in 12 and imposed on them by the outside is what I meant. 13 MR. ATKINS: Then, if you believe it's 14 been done by a stepchild, but if by an outside agency. 15 But I don't think this agency considers it a 16 stepchild. 17 CHAIR NEINAST: Okay. Well, that might 18 be a bad choice of words, but it's been moved from 19 agency to agency. This is the third agency of which 20 it's been a part. And I meant that just to indicate 21 that, well, we don't want it, or whoever made the 22 decision. There will be a lot of budget 23 considerations, of course, in setting it up as a 24 separate agency of the state. Is it worth pursuing? 25 Would there be anything gained by doing it? WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 61 1 Certainly, it goes back to the discussion we had 2 earlier where the bingo community, at least part of 3 it, thinks that it's a -- just a -- I can't think of 4 a -- since stepchild was not a good word, I'm looking 5 for another description. That it's under the thumb of 6 the Lottery Commission that does not have the bingo 7 industry as its first priority or a major priority. 8 So with that, I'll throw it open. 9 MR. SPEED: Mr. Chairman, I've been 10 involved in all three, and the current one has done -- 11 has given it a lot more attention than the previous 12 two. My thoughts are about the proposal is, I would 13 love to see it, but I don't think we would ever get it 14 done. That doesn't mean that we shouldn't try. The 15 Comptroller and -- the TABC was the worst of all the 16 three, by far. The Comptroller was not far behind 17 them. And the Lottery Commission, I think we are 18 small compared to what they're doing, and I would like 19 to see us separated, but I don't see a shot at it. 20 Maybe other people disagree. 21 MR. TAWIL: We tried in '95, I think. 22 When I say "we," someone tried at the legislature and 23 it didn't get anywhere. Do you remember that, Billy? 24 I don't remember. 25 MR. ATKINS: Was it '95 or '97? WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 62 1 UNIDENTIFIED SPEAKER: '95. 2 MR. ATKINS: '95. 3 MR. TAWIL: So I am kind of like my 4 colleague here, is that I think there is more 5 attention here. But in reality, when you think about 6 lottery versus bingo, they are really two different 7 agendas. And I know they have a big job in just 8 handling the lottery alone, so -- and it would be 9 meritous to have us in a separate organization. I 10 think Billy would do just as good a job the way it is 11 now as the other way. But at least, I would think the 12 greater goals for higher achievement as a separate 13 organization would take on new life. We would not be 14 tied down with the security and the legal staff that 15 has to tend to both children, if you will, whether 16 it's lottery or bingo. They can just focus on bingo 17 or focus on lottery, and they're separate. It may be 18 a problem from the standpoint of cost. Do you create 19 another whole new administrative division? I don't 20 know. Because Billy's division is augmented with the 21 security and legal -- there is one big budget. 22 Do they allocate yours from that, 23 Billy, or is separate from that? 24 MR. ATKINS: Charitable Bingo Division 25 gets a straight line appropriation. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 63 1 MR. TAWIL: Yeah. But I mean, for your 2 security and legal needs, those are not broken out, 3 are they? 4 MR. ATKINS: No. We pay an indirect 5 cost to the Lottery Commission for those services. 6 MR. TAWIL: So it could be identified 7 and separated without adding more cost to the state's 8 bill. 9 CHAIR NEINAST: When was the bingo 10 division transferred to lottery? 11 MR. ATKINS: April 1st, 1994. 12 CHAIR NEINAST: So the move -- I was 13 not aware that there had been a move to create a 14 separate agency. 15 MR. TAWIL: That particular session, 16 they tried to get it separated out. But if the 17 division is paying indirectly, they do find the 18 dollars with respect -- from the legal and security 19 standpoint on the division, it would seem to me that 20 it would be easy to do because they're carrying their 21 weight as it is. 22 MR. ATKINS: Let me clarify one thing. 23 We're paying a percentage of the cost. We don't pay 24 the entire amount. So it's sub -- it's -- I don't 25 want to say subsidized, but based on a recommendation WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 64 1 by the State Auditor's Office, we pay the Lottery 2 Commission, the agency as a whole, a percentage for 3 those support services that they provide in relation 4 to the number of FTEs in the bingo division versus the 5 entire commission. 6 CHAIR NEINAST: I think one definite 7 positive action or result of setting it up as a -- the 8 Bingo Division as a separate state agency would be in 9 the advertising budget. And I know we're going to 10 discuss this subsequently as an agenda item for the 11 next meeting, but if there could be some advertising, 12 generic advertising for bingo, it would certainly, I 13 think, help turnout at bingo games. If it -- if the 14 agency would have a separate advertising budget to 15 devote strictly to bingo. The fact that it is 16 probably facing an uphill battle should not be a 17 reason or a primary reason not to pursue it, in my 18 opinion. Nothing ventured, nothing gained. We don't 19 know what the climate will be with the next 20 legislature or the next legislators, how they may view 21 it or how the Commission may view it. So I agree and 22 I think I stated it in my opening comment that this 23 would be extremely difficult to do, but I think it's 24 something we need to look at and decide, within the 25 committee, whether this is something we want to WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 65 1 pursue. And I don't think that any action we take, 2 assuming that we were to approve pursuing setting up 3 the division as a separate agency, I don't think that 4 could be construed as any reflection on either the 5 Lottery Commission or the Bingo Division in any way. 6 It just should be viewed as an item that this 7 committee thinks might make the bingo operation in the 8 state of Texas more efficient. 9 Yes, ma'am. 10 MS. THOMPSON: I haven't filled out a 11 sheet. I'm Jane Thompson. 12 MR. ATKINS: Jane, you need to come up 13 here. 14 CHAIR NEINAST: And let me have a sheet 15 from you later. 16 MS. THOMPSON: Yes. 17 CHAIR NEINAST: And would you identify 18 yourself. 19 MS. THOMPSON: I'm Jane Thompson with 20 Thompson Allstate Bingo Supply. Would it be too 21 costly to go out with a poll to the bingo industry and 22 get opinions from anybody that is interested to see -- 23 get their ideas and see how they feel about it. You 24 know, I hear from customers both for it and, you know, 25 moving it somewhere else. And I hear from them that WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 66 1 say, you know, that everything is fine the way it is. 2 So I think it would help a lot to get -- you know, get 3 opinions from everybody. But is it costly to go out 4 and kind of take that kind of poll, and who has to -- 5 who has to take that cost to do that. 6 CHAIR NEINAST: Billy? I think that 7 there is some discussion -- 8 MR. ATKINS: Is that a question to me? 9 CHAIR NEINAST: Yes. There is some 10 discussion also in one of the items of our handbook 11 talking about various polling methods and how you do 12 it and how you can do it. So would this be feasible 13 to conduct some type of a poll and would it be within 14 your budget to do so if that were the desire of the 15 committee? 16 MR. ATKINS: The short answer is, I 17 don't know. The more detailed answer is, generally, a 18 truly impartial scientific poll is, yes, difficult and 19 expensive to conduct. Even if we only got it, you 20 know, paid to have the poll itself developed and we 21 conducted the poll ourselves, you know, 22 telephonically, it would be expensive in terms of man 23 hours. So -- 24 MS. THOMPSON: If you did it through 25 the bingo bulletin, like you've done some, haven't WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 67 1 you, and requested replies back from the people. If 2 you could do it that way. I think when people know 3 that you are -- you want information from them, it's 4 going to make them feel, you know, more involved in -- 5 and I think it's a -- it's a good way to get people 6 involved is to ask them. 7 MR. ATKINS: Well, let me give you a 8 little history, Jane. You're right. We have tried to 9 conduct polls through the bingo bulletin and we've 10 stressed that we're desperate for their input. And 11 the last one we did, we mailed out over 2,000 bingo 12 bulletins and I think we got 38 responses. 13 MS. THOMPSON: That's distressing. 14 Well, it's just a suggestion. 15 CHAIR NEINAST: Ms. Thompson, what is 16 your personal view on whether it should be a separate 17 state agency? 18 MS. THOMPSON: I think overall I would 19 like to see it be a state agency, but I think -- and 20 mainly because I think there has always been such a 21 problem with the perception of us being with the 22 Lottery Commission. And because we're two -- you 23 know, two distinct divisions and we've always felt 24 like we were, you know, second in line and we were 25 having to compete against the Lottery. So, you know, WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 68 1 when you think about the perception, with us having 2 our own state agency would be good. I still think 3 there is lots -- I think it's a really -- it would be 4 a hard thing to get passed. And I think it would take 5 an awful lot of work from a lot of people. I think 6 things are going very well as they are now with the 7 Lottery Commission, having the Bingo Division here. 8 But I think just when you think about the perception, 9 and in the end, it might benefit bingo to have our own 10 agency and have our own advertising budget. I think 11 that's one of the biggest things we've got to do. If 12 we could advertise like the Lottery advertises, I 13 think that would do so much for bingo if we could do 14 something like that. And whether it be in our own 15 state agency or whether we do it within the Lottery 16 Commission, either way, I think that's one of the 17 biggest assets that we need to strive for. 18 CHAIR NEINAST: Any questions of this 19 Ms. Thompson? 20 MR. TAWIL: I do respect her opinion 21 and comments and I think they have great value. But 22 based on past experiences here in Texas, this is a 23 political issue, so it has nothing to do with -- and I 24 realize we're going to come back with a survey that 25 says 50 percent or 75, really -- it just gives you a WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 69 1 better feel for what's happening. But in reality, 2 what this is going to take is the committee agreeing 3 to do it and each one of us committed to contact those 4 legislators, senators and representatives in their 5 district and tell them, if they don't support this 6 issue, we're going to work against them. It's a 7 political issue. That's what it's going to take to 8 get this changed. That's the only way it'll get 9 changed, and not because anybody is being personal 10 about it, but just because organizations will not like 11 to make the change. Nobody likes change. If we -- I 12 know the representatives, having worked on other 13 legislation, this is what it's going to take. And 14 particularly earmarking one or two people in the 15 Senate and one or two people in the House to 16 committing themselves to serving right now. We can 17 make it happen, all of us on this committee alone can 18 make it happen if we really commit ourselves to making 19 it work. 20 CHAIR NEINAST: Any further questions 21 or comments of Ms. -- thank you, Ms. Thompson. 22 Appreciate it. 23 MR. TAWIL: You can probably get people 24 like her and other to help support it. 25 CHAIR NEINAST: Billy, do you know WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 70 1 offhand what the general status of bingo is in other 2 states? Are they generally a separate agency or -- 3 MR. ATKINS: No, sir. 4 CHAIR NEINAST: You don't know or -- 5 MR. ATKINS: No, they're not generally 6 a state agency. We did a real quick survey of -- 7 earlier, of the states that we could identify, and I 8 think there was only one or two where bingo was the 9 only activity at the agency. Let me just, real quick, 10 run through this. There were three states where bingo 11 was a division of the Attorney General's Office. 12 There were seven where bingo was a division of the 13 Secretary of State's Office. There were two where it 14 was what is listed as Department of Inspections. It 15 was a division in five state police departments or 16 comparable to our DPS. Seven where it was a division 17 of the Department of Revenue, which I think would be 18 comparable to the Comptroller's Office. Five where it 19 was part of a state lottery. And eight where it was 20 part of a -- a gaming or a gambling commission. And 21 all but, it looks like two, of those gaming 22 commissions regulated other forms of gaming also, such 23 as river boats, racing commissions, raffles, Indian 24 casinos, et cetera. 25 CHAIR NEINAST: And are most state WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 71 1 bingo laws, bingo operations limited to charitable 2 organizations as it is in Texas, or do they have a 3 regular commercial bingo? 4 MR. ATKINS: They're generally, bingo 5 is a form of charitable fund raising. There are some 6 states, I think they have a little different licensing 7 structure in that they actually license or authorize a 8 commercial entity to conduct the games, or whatever, 9 but again, a certain percentage of those proceeds have 10 to go to some designated charitable purpose. But 11 bingo is -- I mean, generally, a charitable fund 12 raising activity. 13 MR. HOFFNER: Mr. Chairman, if I could 14 just add to that. An enormous percentage of bingo 15 played in America is charitable. I think that a small 16 percentage is Indian bingo, as far as percent -- you 17 know, total percentages. But I think Mr. Atkins is 18 right. Most charitable gambling is regulated in 19 agencies not part of -- or that they are part of other 20 bigger agencies. There are several states that have 21 gone back and forth. North Dakota, for example, had 22 a -- had an independent agency like we're talking 23 about here. They decided that it wasn't big enough -- 24 it wasn't a big enough industry to have its own 25 independent board, so they went back into the Attorney WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 72 1 General's Office. In Minnesota, they went from the 2 Revenue Department to a full commission. There is a 3 commissioner of gambling. Then they changed that back 4 to a lawful gambling commission. And they went back 5 into the revenue department, and now they're their own 6 agency. But they do almost -- you know, they do a 7 bigger percentage of pull tabs than just bingo. So I 8 think Mr. Atkins is right. There are very few that 9 are established only for bingo. In fact, I can think 10 of only two. 11 CHAIR NEINAST: In the state of Texas 12 is racing, do they have their separate agency? 13 MR. TAWIL: The Texas Racing 14 Commission. But you've got -- most of these agencies 15 you're talking about over there, they're small 16 revenues. They're all under a hundred million 17 dollars, except Minnesota. So obviously, a 50 million 18 dollar agency annually, it wouldn't work. But here 19 you've got an 800 million dollar agency. It would 20 generate the kind of revenue to be on its own. The 21 Racing Commission's laws and rules were created at the 22 same time for the tracks as well as the agency, and 23 it's got separate commissioners and legal staff and so 24 on. So this ought to be the same way. 25 MR. ATKINS: Let me correct a couple of WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 73 1 the things Saleem said. I wish it was an 800 million 2 a dollar year industry, but it's not. 3 MR. TAWIL: Six? 4 MR. ATKINS: I think we've got less 5 than six. 6 MR. TAWIL: That's reported -- 7 MR. ATKINS: There are comparable 8 states where the proceeds are the same. I'm thinking 9 of Washington state. And, again, Washington -- 10 MR. TAWIL: Minnesota is much, much 11 bigger. 12 MR. ATKINS: -- regulates a lot of 13 other activities besides bingo. 14 MR. SPEED: What is the horse racing 15 numbers, Billy? Do you know? 16 MR. TAWIL: About 400 million. 17 MR. SPEED: 400? 18 MR. ATKINS: I don't know. 19 CHAIR NEINAST: Okay. What is the 20 pleasure of the committee? 21 MS. BRACKETT: I think, before we make 22 a recommendation, we've got to have some more 23 information. What is this going to cost us, what will 24 it cost to do this, and where is the money coming 25 from? Because that's what -- when you start surveying WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 74 1 the charities, the bingo operators, and everyone else 2 connected with bingo, that's the first thing they're 3 going to say, and they're going to be quite frightened 4 of doing it if they think it's going to cost 5 something. 6 MR. TAWIL: It will. To be honest, I 7 think it's going to cost. 8 MS. BRACKETT: So we've got to have 9 over here the advantages of doing it, such as the 10 advertising and just running our own show the way we 11 know it will needs to be run without this slow process 12 of, we meet and then you go to the Lottery Commission 13 and they make a decision based on their 14 recommendations, which they really don't perceive what 15 bingo is. We think that they really don't. 16 MR. RINEHART: I think Virginia is 17 right. I think we need to do a lot more research and 18 get a lot more information and put it together and 19 then present it to them. 20 MS. BRACKETT: Yeah. I would hate to 21 go right now. 22 MR. RINEHART: As we said the other 23 day, get us good information, and then we'll have 24 something to look at. So I think that's what we need 25 to do is get good information together and try to WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 75 1 justify it. 2 MS. BRACKETT: And when we present this 3 good information, I think people are going to say, 4 hey, that's what we need to do. I really do. But I 5 have to agree with what Bud was saying. We're so much 6 better off than we used to be, we're kind of afraid of 7 change. 8 MR. SPEED: Absolutely. 9 MR. TAWIL: I think your fees are going 10 to go up by about 25 percent -- 11 MS. BRACKETT: And I just see dollar 12 signs -- 13 MR. TAWIL: The license fees will go 14 up. 15 MS. BRACKETT: But are the advantages 16 worth the fees going up. That's what we have to 17 decide. 18 MR. TAWIL: I think they would be. 19 MR. SPEED: Do you have a feel for what 20 we're being subsidized? What's your just off the 21 top -- 22 MR. ATKINS: Oh, what the -- 23 MR. SPEED: -- thinking on that? 24 MR. ATKINS: I couldn't even guess, 25 Bud. I really couldn't. Because what we pay -- you WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 76 1 know, again, we pay a percentage for personnel who 2 provide support services. You know, for example, a 3 percentage of the salary for the staff in HR 4 department. So, you know, in creating an entire new 5 agency, you're going to go from just the Bingo 6 Division now, of 46 employees, to you're going to have 7 to have an HR department, you're going to have to have 8 those security personnel, which we know we don't have. 9 You're going to have to have the financial 10 administration to deal with just the business of 11 paying the bills and, you know, the payroll and 12 everything that they do. You're going to have to 13 have, you know, facilities staff to make sure that we 14 have all this. That the air-conditioners work, et 15 cetera. You're going to have to have your own entire 16 legal staff. I think it would be substantial. 17 CHAIR NEINAST: Let me ask Billy one 18 question on that. Would it be feasible or possible 19 for you to take some time, of course, to get just a 20 rough estimate of what it would cost to operate as a 21 separate agency as opposed to the cost of operating it 22 now as part of the Commission? 23 MR. ATKINS: Sure. 24 CHAIR NEINAST: Now -- 25 MR. HOFFNER: If I could just add WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 77 1 something that I have -- when I took this job, like 2 almost three years ago, one of the first things I did 3 was look at what makes these sorts of changes happen. 4 And the two things that I have found in common with 5 all of this is, the first thing that makes this sort 6 of a change happen is a -- is a deep distrust of the 7 agency as it currently exists based upon some sort of 8 scandal or some sort of big problem that they have. 9 Every time it's been moved, it's been as a result of 10 some big newsworthy scandal. 11 And the second thing that they all have 12 in common is that the -- the -- that the regulated 13 agents -- the regulated agents have enormous political 14 power or capital in the legislature, and I don't see 15 that here, either of those two things. And I don't 16 know if I -- I think that there are a lot more 17 important pieces of business that the -- that this -- 18 that this committee should be looking at in helping 19 increase the dollars that the charities are getting 20 that -- than talking about whether or not it would be 21 nice to have our own state agency. I mean, it seems 22 to me that there is no deep distrust of the way it's 23 set up right now, and it also seems to me that there 24 is not a lot of political will in the Legislature to 25 make any sorts of changes like this. So I am of the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 78 1 feeling that we should concentrate on ways that we can 2 increase the dollars that are spent on bingo, and 3 consequently, increasing the dollars that are -- that 4 are received by the charities in Texas. And for that 5 reason, I -- you know, I don't necessarily feel like 6 this is the sort of thing that we should be 7 contemplating right now. 8 MR. TAWIL: Mr. Chairman. 9 CHAIR NEINAST: Let me comment on one 10 thing that Fabian said. That I think that this 11 discussion or the agenda item is not that it would be 12 nice to have the -- a separate agency. I think what 13 we're looking at, or should be looking at is, would 14 the Bingo Division be more efficient and more attuned 15 and more responsive to the bingo community if it were 16 a separate agency is the way I look at it. Is 17 there -- it goes back to some of the earlier 18 discussion we had of having the thing -- the Lottery 19 Commission is controlling everything the division 20 does. That's the way I see the issue. 21 MR. TAWIL: I make a motion that a 22 subcommittee be created by you that would work with 23 Billy's office, same as in any business, where you're 24 trying to partition two things. Just look at them, 25 what the costs are, and how that impact. That would WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 79 1 give Virginia and you and others a chance to see. We 2 can't make a decision without knowing what the dollar 3 impact is and what the benefits would be, but that's 4 the starting place, is somebody be responsible to work 5 with Billy's office to get these things identified and 6 what those costs are when they move stand-alone versus 7 the way they are. Then you can make a rational 8 decision. Because if there is no dollars involved, it 9 would be real easy to follow on with this right now. 10 And I think we should continue with this. I don't 11 think we should drop it. 12 CHAIR NEINAST: The motion is to 13 appoint a subcommittee to further study this issue and 14 with the specific emphasis on getting a dollar and 15 cents cost information. Is that a proper statement of 16 your -- 17 MR. TAWIL: Yes. 18 CHAIR NEINAST: Is there a second? 19 MR. RINEHART: Second. 20 CHAIR NEINAST: Further discussion? 21 MS. BRACKETT: I have one question. 22 Saleem, do you want to consider also, will it -- the 23 things that Bill were saying, will it be more 24 efficient and will it help bingo to have it 25 separately? Do you want the committee to continue WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 80 1 that or -- 2 MR. TAWIL: I think that would be 3 something that we would all talk about after we come 4 back together again. 5 MS. BRACKETT: Get the money facts, 6 then we can -- 7 MR. TAWIL: Yeah. So you can look at 8 it and then Billy can say, well, look. Even though 9 we're spending this here, here is what's happening to 10 us. This is not efficient or that's -- you've got a 11 handle on what's happening. And we can utilize 12 Billy's insight a lot better. Because I believe if 13 the decision of this committee is to do it and we 14 really make a concerted effort, we can make it happen, 15 because there is enough time between now and next 16 session to really put pressure on the right people. 17 MS. BRACKETT: Okay. 18 CHAIR NEINAST: Further discussion? 19 Now the chair will call the question. All in favor 20 aye. Opposite no. The motion carried. Okay. I will 21 appoint the subcommittee, then. Virginia, I would 22 like for you to head that up as the chairman of the 23 subcommittee. Suzanne, because of your length of 24 service on the committee as a whole, I would like for 25 you to be a member. I think -- making some notes to WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 81 1 myself here. Just a minute. And Bud, could you serve 2 on that committee also? 3 MR. SPEED: Sure. 4 CHAIR NEINAST: And David, if you would 5 serve on that one. Would you? Okay. So it's 6 Virginia, Suzanne, Lexford, and David, if you would 7 work with Billy and among yourselves to come up with a 8 proposal or a -- not a proposal, but information that 9 we could consider for our next meeting. 10 Okay. The next item on the agenda is 11 number nine -- okay. Let's take a five-minute break. 12 We'll reconvene at a quarter till 12:00. 13 (RECESS.) 14 CHAIR NEINAST: It is now 11 minutes 15 till 12:00. Before we take up the next item, I would 16 like to, just as an administrative matter, in the 17 past, for some time now, the committee has continued 18 to meet right through lunch for several reasons. One 19 of them was that the -- by the time we got to the noon 20 hour, we were pretty close to being through and some 21 also had short times to get to the airport. We don't 22 face either of those situations today. We still have 23 quite a bit to go on the agenda, some that could 24 involve a lot of discussion. What does the committee 25 desire as to whether to take a 30 or 45-minute break WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 82 1 for lunch or just continue to through? 2 MR. TAWIL: Continue to go. 3 CHAIR NEINAST: The consensus is that 4 we will continue and not take a lunch break. 5 The next item on the agenda is number 6 nine, report by the Charitable Bingo Operations 7 Director, possible discussion and/or action on 8 training of licensees. 9 Billy, you're carrying the ball. 10 MR. ATKINS: Thank you, Mr. Chairman, 11 members. This presentation is being made at the 12 suggestion of Tom Clowe, the chairman of the Lottery 13 Commission. He and the other Commissioners found this 14 presentation, when it was made to them in, I believe, 15 last December, to be very informative and beneficial 16 and they thought that you would find it informative, 17 also. It's a result of the fact that it seemed like 18 for a period of time, we were going through a number 19 of administrative hearings where the primary defense 20 of organizations was basically, we didn't know. We 21 didn't know we had to pay taxes. We didn't know that 22 we couldn't play bingo without a license, et cetera, 23 et cetera. And one of them actually went so far as to 24 come before the commission and say that they received 25 no instruction on the requirements of the Bingo WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 83 1 Enabling Act or the rules. So in response to that, 2 the Commissioners asked us to put this program 3 together and outline exactly what information was 4 provided to licensees and what format, et cetera. 5 So what this program today will cover 6 is the entire, what we call, our training cycle, in 7 that we don't just have the bingo operator training 8 program. An organization's experience with us starts 9 off with the prelicensing interview. And this is a 10 one-on-one meeting between the applicant and the 11 Charitable Bingo Division that occurs before the 12 license is ever issued. Next, we perform what we call 13 the books and records inspection. And that is a 14 follow-up visit that the organization -- I'm sorry, 15 that the Charitable Bingo Division makes to the 16 organization about six months after they have been 17 licensed. And then, finally, as you know, we have our 18 operator training program, which is our ongoing 19 educational effort. With me today and I would like to 20 introduce, is Roy Gabrillo. Roy, you all know, is the 21 senior audit manager, and since Roy's section is 22 primarily responsible for most of these activities, 23 I've asked him to conduct the majority of the 24 presentation today. 25 MR. GABRILLO: Thank you, Billy. As WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 84 1 Billy just mentioned, before any license is issued and 2 before any game is conducted and the first bingo ball 3 is drawn, we meet with the applicant face to face to 4 discuss in detail the licensing and record keeping 5 requirements. Contact is made by an auditor to 6 arrange a date and time to conduct the prelicensing 7 interview. And at the prelicensing interview, we 8 provide copies of the Bingo Enabling Act, the 9 Charitable Bingo administrative rules, the audit forms 10 manual and the licensing forms manual. 11 During the prelicensing interview, the 12 licensing requirements are discussed in detail, which 13 include displaying of the license, amending the 14 license, changing playing days or times, increased 15 license fees or bond, adding, deleting officers, 16 directors, workers and operators, renewal of the 17 license, and we -- we stress to the auditors to 18 emphasize this, renewal of the license as far as 19 filing it timely. We have had instances where 20 organizations failed to file the renewal in a timely 21 manner. Also discussed are the operator's 22 responsibilities, authorized representative, changes 23 in the lease agreements, license -- a license 24 distributors list is also provided, temporary 25 suspension or administrative hold of the license, WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 85 1 surrender of the license, temporary licenses, and the 2 operator training program. There is 12 different 3 elements that re -- that relate to the licensing 4 procedures, and these items are documented on a form 5 that is signed by the individual representing the 6 organization, and that -- what that amounts to is the 7 person acknowledges that these have been explained to 8 them and that the representative understands all 9 these -- all of these requirements. If they -- the 10 representative has any questions at that time, the 11 auditor will answer them. If the auditor can't answer 12 that question, the -- he'll -- he or she will get the 13 answer, get back to them, or refer them to the person 14 who can give them the answer to the question that they 15 have. And, again, all of this takes place before the 16 license is issued, a face-to-face meeting with the 17 applicant. 18 After discussing the licensing 19 requirements, the record keeping requirements are 20 discussed in detail, also. That consists of the bingo 21 funds information, which that includes a discussion of 22 the checking -- bingo checking account and savings 23 account, prior approval of loans to the bingo account, 24 and prize fees withheld. 25 Next is bookkeeping requirements. That WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 86 1 covers an explanation of the forms recommended for 2 accurate accounting of all bingo activity, and the 3 forms that we recommend that they use include the 4 daily cash report -- and this is instructions on how 5 to fill those forms out. Daily cash report, 6 disposable card sale summary, daily schedule of 7 prizes, daily floor sales by usher, cash register 8 tapes, sales journal and cash disbursements journal, 9 instant bingo purchase log, lessor receipts journal, 10 if it's applicable. Also, making of a complete 11 invoice file and retaining all records for a period of 12 four years. 13 Other information and requirements that 14 are discussed are the 35 percent charitable 15 distribution, the charitable purposes or the 16 charitable uses of those funds, bingo operator and 17 lessor quarterly reports, which includes the due dates 18 of the reports, prize fees that are due, and the 19 rental receipts taxes, advertising restrictions, prize 20 limits of bingo games, prohibition of games of chance, 21 card minding devices, instant bingo dispensers, books 22 and records inspection, audits and general 23 restrictions on bingo games. 24 There is 26 different elements of the 25 Bingo Enabling Act and the administrative rules that WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 87 1 are covered in detail relating to record keeping 2 requirements. And, again, these are also documented 3 on the form, which the person, the applicant signs 4 that they understand that these items have been -- 5 acknowledging that these items have been discussed. 6 And again, I emphasize that all of this takes place 7 before the license is even issued. 8 After the organization gets their 9 license and begins conducting bingo, we follow up with 10 them shortly thereafter with a books and records 11 inspection to see how they're doing. And these are 12 normally conducted within 90 -- 180 days from the 13 issue date of the original license. During that 14 period, again, we -- you know, the auditor has left a 15 business card with the applicant at the time of the 16 prelicensing interview, so they do have contact with 17 an auditor or someone in a regional office or even 18 here in Austin if they have any questions concerning 19 bingo. 20 The primary operator is notified by 21 mail, and if that letter -- after the letter is 22 mailed, seven to ten days after the letter is mailed, 23 the auditor will make contact with the primary 24 operator. At that time, the auditor will let the 25 operator know exactly what records are needed and what WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 88 1 period is to be covered. And the inspection is 2 normally conducted with the primary operator or an 3 alternate operator, but we also request that if 4 they're not familiar with the record keeping, that 5 they have a person that's knowledgeable, usually the 6 bookkeeper or accountant, present at the -- at the 7 inspection. 8 During the books and records 9 inspection, the required books and records are 10 reviewed by the auditor, and the auditor will note any 11 discrepancies with the records and the -- they'll 12 discuss them in detail with the -- with the operator 13 and bookkeeper. Also, they'll make recommendations as 14 to how -- what corrective measures to take. Now, if 15 the auditor feels that the discrepancies are of a 16 serious or material enough nature, the auditor can 17 recommend that a follow-up inspection be conducted, 18 normally, 90 days or a full calendar quarter after 19 the -- this inspection has taken place. And again, 20 there is 15 different items that relate to the books 21 and records inspection. Again, the auditor will leave 22 a business card, if any questions arise during the -- 23 during the books and records inspection. And again, 24 the -- the items that -- there is a form that, again, 25 they're documented on the form, the operator signs the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 89 1 form. If there are any discrepancies or violations, 2 that's also put on a form and then signed by the 3 operator, acknowledging that these discrepancies have 4 been pointed out and they understand what they are. 5 Again, to summarize, training is 6 available and provided to every licensee from the very 7 beginning. The prelicensing interview is the very 8 first -- first contact that we have with them, which 9 covers licensing and record keeping requirements, then 10 it's followed up by a books and records inspection, 11 which is a review of compliance with the Bingo 12 Enabling Act and the administrative rules, and this 13 takes us to the operator training program. And the 14 operator training program is intended to be ongoing in 15 nature. The first class was held here in Austin on 16 March 1st -- 17 CHAIR NEINAST: Let me interrupt just a 18 minute for a question. Now, all of this that you have 19 given us up to this points are things that you have 20 done all along. 21 MR. GABRILLO: Yes. 22 CHAIR NEINAST: It was not a result of 23 the requirement to have the operator training program. 24 Is that correct? 25 MR. GABRILLO: That's correct. We've WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 90 1 always done these. 2 25 classes were held in 19 cities 3 throughout the state from March 1st of 2000 to August 4 26th of 2000. 20 classes were held in 14 cities 5 throughout the state from October of 2000 to December 6 2nd of 2000. Seven classes were held in six cities 7 throughout the state from January 19th of this year to 8 March 31st. Ten classes were held in nine cities 9 throughout the state from April 6th to July 14th of 10 this year. And the classes are held in the -- in the 11 Odessa, Dallas, Houston, San Antonio and Austin 12 regions. And pursuant to the administrative rule 13 402.550, the program consists of eight hours of 14 training, three of which are self study. The attendee 15 or the student has to read the Bingo Enabling Act and 16 the rules prior to attending the class. The other 17 five hours consist of classroom style instruction. 18 The contents of the operator training 19 program is, there is an introduction and general 20 information, and that covers a brief history of bingo 21 in Texas, an overview of the Charitable Bingo 22 Operations Division, the scope of bingo in Texas, 23 information that's available from the Charitable Bingo 24 Operations Division. 25 The next section is, conducting a bingo WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 91 1 game, which covers who, when, and where bingo can be 2 conducted, the bingo bank account, bingo personnel, 3 the operator's responsibilities, frequency and times 4 of games, and restrictions on conducting bingo games. 5 And the record keeping requirements are also covered, 6 and that includes -- or that covers all -- the 7 preparation of all recommended forms and the 8 accounting of all funds for the conduct of bingo and 9 the preparation of the quarterly report. 10 Administration and operation of the bingo game covers 11 rent and rent relationships, affiliated organizations, 12 common mistakes on license applications, charitable 13 distribution requirements and how to maximize 14 charitable distributions, inventory controls, bingo 15 expenses, and records retention. Promoting a bingo 16 game covers ideas for increasing attendance and 17 attracting new players, which includes ideas on where 18 and how to advertise bingo games, door prizes, hall 19 themes, and marketing their bingo hall. The Bingo 20 Advisory Committee is also included in this section. 21 And then the training program is concluded with a 22 question and answer session. 23 Operator training program notification, 24 the bingo bulletin is the most commonly used. We 25 include dates and locations of upcoming classes that WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 92 1 have been already scheduled, we do mailouts to 2 licensees that includes, again, dates and locations 3 of -- of the operator training program. We post any 4 classes again on the website. Also, they can -- 5 people -- if persons have access to the website, to 6 the Internet, they can register on-line for the 7 training program. And we do mailouts, and back in 8 September we did a mailout of upcoming classes and we 9 also sent a copy of the adopted rule, and in March of 10 this year, we sent a letter and a schedule of upcoming 11 classes. The letter included a reminder of the 12 deadline of September 1st that all organizations -- 13 and that letter was -- was sent to organizations that 14 had not sent a representative to the training program. 15 And it included a copy of upcoming classes and, also, 16 we -- when renewals go out, renewal applications go 17 out, we include a copy of upcoming classes for -- that 18 have already been scheduled. 19 CHAIR NEINAST: What is that adopted 20 rule that have you, is that the one requiring the -- 21 what is the adopted rule? 22 MR. GABRILLO: That was the one we sent 23 out in September for -- covering the operator training 24 program, which is 402.550. 25 MR. ATKINS: There are a number of WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 93 1 supplemental actions that we take on a continuous 2 basis to assist organizations. Also, in addition to 3 the scheduled training that Roy just described, the 4 first, of course, is our bingo bulletin, which is our 5 regular publication containing useful information 6 relating to licensing, audit and accounting services. 7 We also take part in a number of seminars and 8 presentations throughout the year. Our staff is 9 available to any organization requesting the 10 presentation, regardless of size or location. We 11 routinely put updated information on our website of 12 interest to our licensees. We have started what we 13 call assessment and assistant inspections, and that is 14 the effort on behalf of the staff to make sure that we 15 visit at least every location once a year. So one of 16 our auditors is in a hall at least once a year, and 17 available to answer any -- any questions that the 18 licensee may have. 19 CHAIR NEINAST: Do you give prior 20 notice of those? 21 MR. GABRILLO: Normally, we don't. 22 What we do do -- what the auditors do is they call 23 ahead to make sure that a game will be conducted at 24 the hour that they're scheduled at, because it has 25 happened on instances where -- especially in the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 94 1 smaller towns, where they fall -- where the schedule 2 says they play on Tuesday, Wednesday or Thursday, and 3 then they go out and they decide -- you know, they get 4 out there and the hall is closed. But normally, we 5 don't give any prior notice. 6 CHAIR NEINAST: And how far in advance 7 is that call made? 8 MR. GABRILLO: Sometimes they'll call 9 as much as a week in advance, just to verify that 10 they're actually playing on that particular night. 11 CHAIR NEINAST: Well, why I asked the 12 question is, I think if -- particularly on that one, 13 if it's an assistance inspection, if you did formally 14 or normally give advanced notice of, say, a week, so 15 that this would give the operator an opportunity to 16 think about or have any questions answered that he may 17 have. If the first time he knows it's going on is 18 when the auditor appears, he may be so shook up he 19 doesn't think of something he wanted to ask. You may 20 want to consider giving advance notice for that 21 reason. 22 MR. GABRILLO: Okay. 23 MR. ATKINS: That's a good point. 24 We have a toll free numbers, not just 25 here in Austin, but to all of our regional offices so WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 95 1 the Bingo Division is never really more than a phone 2 call away. And finally, there are a number of 3 compliance notifications that we send out regularly, 4 including renewal notices, 35 percent charitable 5 distribution notices, quarterly report forms, et 6 cetera. This is an issue that we discussed earlier, 7 and it relates to the costs that the Bingo Division 8 has incurred in implementing this program. Since the 9 first program was held in March, we have spent just 10 under 60,000 dollars in man hours, travel costs, 11 equipment, et cetera. And the conducting the program 12 has represented about 1800 man hours. And those two 13 figures, again, keep in mind, are just for the program 14 itself. They don't take into consideration any of the 15 costs associated with the development of it. And as 16 you know, the Bingo Division received no appropriation 17 or any additional staff to carry out these 18 responsibilities. 19 Some of our plans that we're working on 20 implementing in the future include holding joint 21 training programs. And what we mean by this, is 22 conducting our operator training program in 23 conjunction with other regularly-scheduled programs 24 that organizations hold. For example, the American 25 Legion and the VFW hold regular annual conferences and WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 96 1 we thought it would be mutually beneficial for the 2 organizations, as well as ourselves, to offer the 3 training program at the same time that they're here 4 for their annual officers program. And as a matter of 5 fact, in January of this year, the VFW took us up and 6 at their mid winter conference here in Austin, we 7 offered our operator training program at the same 8 time. We also have under consideration the creation 9 of practice exams. I think in a previous commission 10 meeting, Saleem had discussed the possibility. We 11 referred to it as CLEP'ing out. But I guess kind of 12 benchmarking exams to get, you know, an idea of the 13 level of understanding, if there is a -- you know, an 14 area that we need to concentrate more in. We're 15 looking at creating what we call specialized training 16 courses. These would be shorter, more intensive 17 courses, dealing with just specific areas. So, you 18 know, we might put one together dealing with just 19 books and records that would only be an hour or two, 20 contain a lot of information, kind of go in, get the 21 information out and get out. 22 And then, of course, we would like to 23 make use of technology and be able at some point in 24 time to offer the training course either through 25 teleconference or through the Internet. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 97 1 Finally, we do at the end of each 2 training program, ask for comments from the -- from 3 the participants. 98 percent of those surveyed, and 4 this is, I believe, Roy, a total figure for -- for all 5 of them. 98 percent of them had found that the 6 program was presented in a manner that was easy to 7 understand and follow. 83 percent of them identified 8 that there was something that they took out of the 9 program, something that they learned from it. And 10 finally, 98 percent of them indicate that they do 11 believe the operator training program is worthwhile. 12 So again, members, as you can tell, 13 there is a number of things that the division does in 14 addition to just the operator training program in 15 order to provide information to the licensees 16 regarding their requirements under the Act. And as 17 Roy mentioned, we've been conducting the books and 18 records inspections since 1994. And we have found 19 them to be very beneficial and we've gotten very 20 positive feedback from the organizations. 21 So we would be happy to at this time 22 answer any questions that you may have. 23 CHAIR NEINAST: I have two. I -- you 24 may have shown it up there and I missed it or have 25 forgotten it. How many -- what percentage of WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 98 1 operators have completed the training now as of your 2 latest figures? 3 MR. ATKINS: I believe it's 86. 4 CHAIR NEINAST: That hadn't gone up 5 much from the last meeting. So you've still got 14 6 percent out there, roughly, that haven't completed. 7 MR. ATKINS: That's correct. 8 CHAIR NEINAST: The other question is, 9 you indicated that you've spent 1800 man hours on this 10 without a single FTE. Has that impacted adversely on 11 any of your other operations or quantifiable? 12 MR. ATKINS: I'm going to have to have 13 Mr. Sanderson discuss specifically on those, since 14 the -- well, since these programs are conducted by our 15 audit staff, I know our number of audits have been 16 reduced. And I don't know -- 17 MR. SANDERSON: That's primarily. 18 CHAIR NEINAST: That's been the primary 19 impact, of reducing your audits? 20 MR. ATKINS: Uh-huh. 21 CHAIR NEINAST: Okay. Any other 22 questions? I can -- I can see that this will lead to 23 an agenda item for the next meeting is to address the 24 question that we had previously of the cost and/or 25 manpower requirements of it, and we will certainly put WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 99 1 that on the agenda for our next meeting. 2 Anything else? 3 Thank you, Roy. Thank you, Billy. 4 The next item on the agenda is number 5 ten, consideration of and possible discussion and/or 6 action on reducing license fees. 7 I am listed as the member responsible 8 for that, and I really have nothing to offer. I would 9 like to ask someone else to carry the burden on that 10 one. 11 MR. TAWIL: I'll be glad to. I think, 12 in light of the fact that we're looking at what it's 13 going to cost to make it a separate division, that we 14 ought to table any discussion on changing the fees, 15 because I think indirectly, from what I read from Roy 16 and Billy, I may be wrong, but my perceptions are they 17 need money because they're spending extra money on 18 this training program and not recovering it. So with 19 all due respect, if we -- I don't know how that -- how 20 the other committee members feel, but I feel I'm just 21 going to defer any lowering of any fees at this point. 22 CHAIR NEINAST: So are you making a 23 motion that that item be tabled? 24 MR. TAWIL: No, sir, I'm just helping 25 you out. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 100 1 CHAIR NEINAST: Well, you could help me 2 out by making a motion to table it, Saleem. 3 MR. TAWIL: I make a motion that we 4 table it, if it doesn't offend anybody. 5 MR. RINEHART: Second. 6 CHAIR NEINAST: Any further discussion? 7 Call the question. All in favor of tabling action on 8 item number ten, aye. Opposed, no. The motion 9 carried unanimously. 10 The number 11 is consideration of and 11 possible discussion and/or action on the use of debit 12 cards in connection with the conduct of bingo. 13 Suzanne, thank you. 14 MS. TAYLOR: Well, because I haven't 15 gone out and put anything more together on this. I 16 really was hoping that (inaudible) was going to bring 17 in the information. He had some clients that he could 18 get the information of his clients. But he is not 19 here, so I'll contact him and have the information and 20 we'll put it on the agenda for next time. I'll have 21 the information and so that it doesn't -- unless the 22 staff found any additional information. 23 MR. ATKINS: We don't have any at this 24 time, but we are working on some. And we're generally 25 looking into a lot of those issues that was discussed WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 101 1 at the previous meeting. 2 CHAIR NEINAST: Is there a motion to 3 table action on item number 11? 4 MS. TAYLOR: I'll make that motion. 5 CHAIR NEINAST: Is there a second? 6 MR. SPEED: Second. 7 CHAIR NEINAST: Further discussion? 8 All in favor of the motion to table 9 item number 11, aye. Opposed, no. The motion carried 10 unanimously. 11 Number 12, report by the bingo advisory 12 subcommittee appointed at the May 9th, Bingo Advisory 13 Committee meeting to gather information relating to 14 bingo occasions, possible discussion and/or action on 15 the subcommittee's activities. 16 Virginia Brackett has that one, and I 17 think there is an item in the -- your notebook on a 18 survey of other states and the number of occasions 19 played. Virginia? 20 MS. BRACKETT: The only -- this 21 committee met immediately following the last Bingo 22 Advisory Committee meeting. And at that point in 23 time, the only thing that we recalled -- I don't know 24 if we should have broken for lunch and we were not 25 thinking very well, but the only thing that we WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 102 1 discussed was the due date of quarterly reports, 2 extending that. We did not discuss these other items. 3 And that's probably okay, because we didn't have this 4 information that's provided in the booklet here. So 5 can I address just that one thing that we discussed? 6 CHAIR NEINAST: Yes. 7 MS. BRACKETT: Or do you want -- okay. 8 CHAIR NEINAST: Yes. 9 MS. BRACKETT: And I put some minutes 10 around. Did you get a copy? I think maybe there is 11 one over there on that side of the room. And I listed 12 Bud Speed as attending. I don't know if you were in 13 the room or if -- anyway, he was not a member of the 14 committee, so consider it a correct of the minutes 15 there. 16 CHAIR NEINAST: Taking who off? 17 MS. BRACKETT: Bud Speed there. But 18 what we very readily agreed to, and I think probably a 19 lot of us had been thinking about it for a while, was 20 a 30-day extension. I mean, that -- that's not right. 21 That the due date be 30 days -- well, I've written it 22 down right. I just can't read it. The due date of 23 quarterly reports be changed to the 30th day of the 24 month following the end of the quarter. 25 MR. ATKINS: So there would be an WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 103 1 extension of 15 days from its current due date? 2 MS. BRACKETT: Correct. 3 CHAIR NEINAST: And that would require 4 a rule change. 5 MS. BRACKETT: Correct. 6 MR. ATKINS: No. 7 CHAIR NEINAST: It would not -- 8 MR. ATKINS: That would require a 9 change to the statute, not to the rules. 10 MS. BRACKETT: So it's going to be even 11 harder than what we thought. But what do we want to 12 do at this point? Discuss it a little bit? 13 CHAIR NEINAST: Well, I think an 14 appropriate way might be for you or someone to make a 15 motion that the committee recommend to the Commission 16 that they seek legislation to accomplish this. 17 MR. ATKINS: Could I, Mr. Chairman, 18 before you do that, could I comment on the record that 19 the research done by the staff, if you will look in 20 your notebook, it references due dates for charitable 21 bingo reports. There are another jurisdiction -- a 22 number of jurisdictions that do require reports to be 23 filed 30 days after the end of the quarter. So this 24 recommendation would not be inconsistent with other 25 jurisdictions. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 104 1 MS. BRACKETT: I appreciate that 2 comment, because when I got this, I was real pleased 3 that we were thinking like other agencies -- other 4 states. 5 MR. ATKINS: And again, I mentioned it 6 last time, I think Bob commented on it at the last 7 meeting, on the most details. This is a matter that 8 we hear about all the time, either at training -- 9 particularly at our presentations. Several 10 organizations have mentioned essentially the same 11 thing that you brought up, it's difficult to get all 12 of their records together as well as their financial 13 records from the bank, et cetera, in time to get the 14 report together. 15 MS. BRACKETT: So Mr. Chairman, you're 16 wanting this committee to now recommend that we pursue 17 this -- 18 CHAIR NEINAST: Make a motion that the 19 committee recommend to the Lottery Commission 20 legislation be sought authorizing a change in the 21 reporting date to the 30th day following the end of 22 the quarter. 23 MS. BRACKETT: Okay. 24 CHAIR NEINAST: Do you so move? 25 MS. BRACKETT: I so move. This WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 105 1 committee presents this and we would like to see it 2 become a change in the statute. 3 MR. RINEHART: I would second that. 4 CHAIR NEINAST: Further discussion? 5 None. Call the question. All in favor of the motion, 6 aye. Opposed, no. The motion carried unanimously. 7 Thank you, Virginia. 8 MS. BRACKETT: So some -- 9 CHAIR NEINAST: And we will add this 10 other item that -- for an agenda item for next month, 11 next meeting. 12 Number 13, consideration of and 13 possible discussion and/or action on types of pull 14 tabs available for use in Texas. 15 This is one we've had several 16 presentations on previously, and we discussed it 17 previously and Suzanne mentioned it earlier. Again, 18 our delay in getting to this point, and I take full 19 responsibility for it. I just let it drop through the 20 cracks. I've asked Fabian to propose a revision to 21 the definition of the pull tabs in the rules to allow 22 a wider variety of pull tabs and bingo games. So 23 Fabian. 24 MR. HOFFNER: Mr. Chairman, Fabian 25 Hoffner. I have included, in the packet, the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 106 1 materials that Mary Magnuson and I drafted for the 2 (inaudible) conference in Biloxi, Mississippi in May. 3 By the way, if you will notice, it's the same day as 4 this report. That's why I was absent at the last 5 meeting. I don't know exactly what more can be added. 6 I think we've had -- I think, as you, Mr. Chairman, 7 have said, a couple of presentations on these issues. 8 All that Ms. Magnuson and I have done is put together 9 all of the materials in -- in one place and have 10 drafted up some suggested language relating to the new 11 manner of pull tabs that can be played. And the thing 12 that I wanted to stress is that we as an organization, 13 NAFTM as an organization, really feel strongly that 14 the bingo event ticket is a very viable alternative 15 for the way instant bingo is played in Texas, and we 16 urge the committee to give that a real consideration. 17 And if anyone has any questions, I could take those, 18 too. 19 CHAIR NEINAST: Well, I am stepping 20 into an area really where I don't know that much about 21 it, so I'll let my stupidity show. But your 22 description in the draft, Fabian, seems to be -- to be 23 more restrictive than it needs to be. We had 24 discussed previously a booklet I think you provided, 25 and I don't have it with me. I don't think I do. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 107 1 From your organization, that has a definition -- it 2 starts off with a definition of pull tab -- I don't 3 know why I called them pool tabs -- pull tabs that, if 4 my memory serves me correctly, is much broader, in my 5 opinion, than this description of the bingo event 6 tickets. Am I wrong? 7 MR. HOFFNER: No. Mr. Chairman, what 8 you, I think, are speaking about is the draft NAGR 9 language, and that is not my organization. We did 10 have something to do with those drafts. NAGR is the 11 National Association of Gaming Regulators. We did 12 have a lot to do with drafting those regulations, but 13 they're not our regulations. We also have some 14 standards that we have put together. 15 My understanding of the -- of the 16 charge from this committee is to come up with some 17 alternatives that could be used in Texas now that 18 could -- that could increase the play of pull tabs 19 directly. And if I am wrong on that, let me know 20 quickly. 21 CHAIR NEINAST: No. You're 100 percent 22 correct in that. 23 MR. HOFFNER: So what I did was, I went 24 around to the members of NAFTM, my organization, and 25 tried to find out, of all the games that we WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 108 1 manufacture, what would be the most quick and dirty, I 2 guess is the way, the quickest way that we could get 3 these games into Texas to give it a boost now. And 4 what I found out, to my surprise, that I hadn't been 5 familiar with bingo event tickets before this. And it 6 seems to us that the bingo event ticket is really a -- 7 it would be an easy -- I think it would be an easy 8 change here in Texas, and it wouldn't cause any sort 9 of upheaval in the manner of which instant bingo is 10 played right now. Because they're played during a 11 bingo occasion. You know, they're just -- they just 12 increase the excitement of the -- of the game. And I 13 don't know if -- if you all remember the presentation 14 that -- that Douglas Press made, Susan Schultz of 15 Douglas Press. She gave us copies of those games. 16 And so as it relates to the statutory language that 17 you, Mr. Chairman, are referring to, we're not opposed 18 to that either. But what I was trying to do is come 19 up with specific recommendations for this committee to 20 take a look at. And that's what I've done here. 21 CHAIR NEINAST: Well, if I remember, 22 that presentation that you mentioned, was that the one 23 where we had the presentation on, I think they were 24 called seal tabs? 25 MR. HOFFNER: That's a different WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 109 1 presentation. That was a presentation, I guess, two 2 meetings before that. She came, I guess, not the last 3 meeting, but the meeting right before the last, and 4 talked about bingo event tickets. And those are the 5 tickets that you sell them all out before you actually 6 use them in bingo balls to draw the winner. Do you 7 recall that? 8 CHAIR NEINAST: On the seal tab? 9 MR. HOFFNER: Yes. The seal tab. 10 CHAIR NEINAST: Well, that was -- my 11 question is, I remember her presentation. My question 12 was, would the seal tab game, as an example that was 13 presented to us, be covered by this definition or 14 description of bingo event tickets? I don't think it 15 would. 16 MR. HOFFNER: Well, I want to make 17 sure -- I want to make sure that we're not mistaking 18 the progressive pull tab game from the bingo event 19 ticket, because they're two separate games, as you can 20 see from the descriptions here. The progressive -- 21 the bingo event ticket is played just like a regular 22 pull tab game. You know, I don't know if you've -- 23 have you had a chances to review the materials here? 24 CHAIR NEINAST: Well, I read it through 25 hurriedly last night. But my feeling -- this is my WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 110 1 reaction to that, is that the description so-called or 2 let's call it the definition of a bingo event ticket 3 is much more restrictive than I think this committee 4 intended. I think the committee wanted to have some 5 type of definition that would make it -- open it up a 6 lot wider to different types of pull tab games. And 7 maybe I'm reading this wrong, but this seems like this 8 restricts it considerably where there would be, again, 9 a kind of a limited type of game that would be 10 available. But what's the view of the other committee 11 members? 12 MS. TAYLOR: Has the staff -- I know 13 that at one point they were working on a broader 14 definition of pull tabs to include as many as would be 15 possible. Has it -- has anything -- is there anything 16 yet? 17 MR. ATKINS: There is nothing final 18 yet, but it's -- the staff is working on it. 19 MS. TAYLOR: So I mean, is that 20 something that we would be able to use or that -- what 21 Bill is asking Fabian to go back and come with the 22 NAGR definition or whatever. 23 MR. HOFFNER: No, no. We have -- 24 Mr. Chairman, we have NAGR definitions. We also have 25 NAFTM draft legislation definitions. We have all that WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 111 1 and Mr. Atkins and I think your General Counsel has 2 all that material now and are taking that into 3 consideration in what to draft. What I did here is 4 provide possibilities and legislative language for 5 some new kind of games that could be brought in now. 6 Is that accurate? 7 MR. ATKINS: If I can, Mr. Chairman. 8 What I understand Fabian was trying to do was to bring 9 additional information before the committee apart from 10 the work that's currently being done on the rule. I 11 don't -- it's my guess that these type of tickets 12 right here would require a statutory change to the 13 Bingo Enabling Act. So I don't know that these type 14 of pull tab games could be played without changes to 15 the rule being made. Now, there has come before the 16 committee other types of pull tab games that we think 17 could be authorized through a rule. That is what -- 18 that is what we're working on now. But I think what 19 Fabian was trying to do was open it up even more, that 20 there is additional types of games that should be 21 under -- since there is other changes to legislation 22 that the committee is looking at now, this might as 23 well be one of them. 24 MR. HOFFNER: Correct. 25 MR. SPEED: I think this would be WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 112 1 dynamite here, Billy. 2 MR. ATKINS: The bingo event, 3 progressive? 4 MR. SPEED: Yeah, I really do. I don't 5 know what change -- and I was afraid you was going to 6 say statutory, but I think it would really be a boost 7 to pull tabs, done this way. 8 MR. HOFFNER: Though I must say that 9 I'm not a hundred -- from my reading of the statute. 10 And, of course, Billy probably would be better at this 11 than I am. I'm not a hundred percent sure that the 12 bingo event ticket would have to have a statutory 13 change. I know for sure it would have to have a rule 14 change, but I still haven't figured out the statutory. 15 And I could talk to -- I could talk to Billy about 16 that later if we want to. I haven't figured out where 17 the statutory problem is, but that's probably just 18 because I'm missing it. 19 MR. SPEED: The problem is it's pull 20 tabs tied into direct bingo. 21 MR. HOFFNER: Well, that's -- that's 22 what I'm thinking. It's a more generalized problem 23 than it is a specific. 24 MR. ATKINS: Bud is exactly right. And 25 it says here that the pull tab has to be separate from WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 113 1 the session or occasion, and they're not. So... 2 CHAIR NEINAST: Well, there was, I 3 think, a breakdown in communication between you and 4 me, Fabian, when we talked on the telephone. I was 5 thinking about your coming in with -- and I thought 6 that's what we were working on, that just the revision 7 of the definition of the rule of pulls tabs and -- 8 MR. HOFFNER: That's -- 9 CHAIR NEINAST: -- the staff was 10 working on that. And that -- 11 MR. HOFFNER: I'm sorry. 12 CHAIR NEINAST: So this is something 13 over and above what we have discussed and had 14 presentations on before? 15 MR. HOFFNER: Well, yes and no. I 16 mean, the first is that -- the first is that what 17 you're asking, and what I didn't hear correctly, has 18 already been done a while ago. And, you know, that 19 information, I think, has been given to -- to Billy 20 about that, the definition of pull tabs. This is over 21 and above, except to the extent that the bingo event 22 tickets was part of the presentation that Douglas 23 Press made two meetings ago. 24 CHAIR NEINAST: I was trying to get 25 movement on, and I would still like to get movement WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 114 1 on, changing that definition of the rule so that we 2 could use already-available pull tabs. And I think -- 3 so this is a different issue, and we'll have to 4 address the -- the pull tab definition again at our 5 next meeting. Okay. 6 MR. HOFFNER: Well, it's my 7 understanding that -- that there is going to be some 8 sort of a presentation made. Is that -- about the 9 pull tab issues, or the definitions of pull tabs? Or 10 changes in the rules. 11 MR. ATKINS: Yeah. A change in the 12 rules, yeah. 13 MR. HOFFNER: And so I was under the 14 impression that that -- 15 CHAIR NEINAST: What we need, and 16 hopefully by the next meeting, Billy, would be a draft 17 rule change that we could recommend to the Lottery 18 Commission. 19 MR. ATKINS: I'm -- you know, Mr. 20 Chairman, I'll tell you. We'll do everything we can, 21 but I'm not going to guarantee you that we'll have 22 that rule by the next meeting. 23 CHAIR NEINAST: Okay. But it is 24 something that we do need to move on because we talked 25 about it at least the last -- WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 115 1 MS. TAYLOR: Since the November 2 meeting. It's in the minutes. 3 CHAIR NEINAST: So we're coming close 4 to a year. So let's try to -- we'll take that up when 5 we get to number 18 down there. But anyway, let's go 6 back to the -- to the issue at hand right now, which 7 is the draft of the bingo event tickets. And if I 8 understand the exchange between Fabian and Billy, it's 9 not clear whether this would require legislation or 10 could be done -- 11 MR. HOFFNER: Well, I take that back. 12 I think -- I missed something, and I think it probably 13 is going to take legislation. I was missing a portion 14 of it. 15 CHAIR NEINAST: Okay. So the issue 16 then before the committee is whether it desires to 17 recommend to the Lottery Commission that legislation 18 be sought authorizing a game called bingo event 19 tickets. Is that a proper statement of the -- of the 20 question? 21 MR. HOFFNER: Yes. 22 CHAIR NEINAST: Is there further 23 discussion? 24 MR. ATKINS: I'm sorry, Mr. Chairman. 25 Before you go on. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 116 1 Fabian, are you including progressive 2 pull tab tickets -- 3 MR. HOFFNER: No. 4 MR. ATKINS: -- for each bingo event? 5 MR. HOFFNER: No. Just bingo event 6 tickets for now. 7 MR. ATKINS: Okay. Sorry. 8 CHAIR NEINAST: And did you want to 9 discuss progressive pull tab games as a separate item 10 or subheading under -- 11 MR. HOFFNER: Yeah. If there is an 12 interest. See, what I'm trying to do here, 13 Mr. Chairman, is provide information on some games 14 that possibly could be used in Texas. And what I'm -- 15 I'm trying to figure out whether or not there is any 16 interest. I think for sure it sounds like from what 17 Mr. Speed said that there is a real interest in the 18 bingo event tickets, and we can talk about them 19 separately. And I don't want it to look like I'm 20 pushing the issue here. You know, I present this just 21 as information. I think it would work here. 22 MR. SPEED: I think it would be 23 dynamite if you could get it through. I really do. 24 Pull tabs need a boost big time. 25 CHAIR NEINAST: So we really now are -- WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 117 1 have on our plate the possibility of three different 2 things: This bingo event ticket, the broadening of 3 the definition of pull tabs, and the progressive -- 4 what is it called? 5 MR. HOFFNER: Progressive pull tab 6 game. 7 CHAIR NEINAST: Pull tab games. So 8 let's -- on bingo event tickets, what is the desire of 9 the committee? 10 MR. SPEED: Billy, are you pretty sure 11 that it would require a rule change? 12 MR. ATKINS: You mean, a law change? 13 I'm -- well, I'm pretty sure, but, you know, I'm like 14 you, Bud, I'm not a lawyer, you know. 15 MR. SPEED: I think it would be worth 16 checking out to see if, to change that, you're looking 17 at a long time. 18 MR. BAKER: I didn't sign up to speak. 19 Sure, thank you. Just for a second. I'm Ronnie 20 Baker, sales manager with Texas Bingo Supply, and I 21 was here with Douglas Press when the presentation was 22 made on seal tabs. Day in and day out since November 23 we've dealt with -- I deal with 400 nonprofits. If 24 you're talking about a ticket that is going to require 25 a statutory change, and legislative change, it's going WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 118 1 to be too late for the tabs. Tabs are dying in most 2 of my bingo halls. The seal tab was a quick fix. 3 Billy had indicated that that might not require any 4 statutory change. The reason I came today, along with 5 Jane, was to see what verbiage and what had done, 6 because there is a great deal of interest from all of 7 my halls, and I go from Brownsville to Sherman, Texas, 8 and I can give you any number of halls, if you ride 9 with me, where the tabs are dead. And that's a major 10 money maker in my halls. It's great to talk about a 11 bingo event ticket, but it's something that, if we're 12 going to have to wait to change, we can't wait. It's 13 something that Billy's group in the near future can 14 come up with some verbiage that will allow us to 15 change the rules, Mr. Chairman, that will help sell 16 more tabs in the halls, that's what my people -- 17 that's what I'm hearing. And I'm sorry because I 18 really thought that we had moved further along, and I 19 know Billy is working on it, and I thought Fabian and 20 the gist of this was to try to move the seal tab and 21 the related tickets that didn't require a statutory 22 change along so we could get something out there for 23 the charities to sell. And that's -- I just -- you 24 know, maybe I came expecting more, but the event 25 ticket, you know, if we're talking about waiting for WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 119 1 the next legislature to convene to make a statutory 2 change when we have something that's within our grasp 3 right now, which is the seal tab, which you were here 4 and you had -- because when I made my presentation you 5 were here and this committee was here. But you know, 6 I don't know what else we can say or do. I just think 7 it's something that Billy is working on, and the 8 quicker that we expedite that, the better for the 9 nonprofits. 10 MR. ATKINS: Ronnie, can I just say, 11 they're not -- I mean, it's almost like they're 12 mutually exclusive. You know, we're working -- the 13 rule is going forward. 14 MR. BAKER: Sure. And I know that. 15 But I wasn't prepared for the bingo event ticket. I 16 don't even know what that is. 17 MR. ATKINS: I see what you're saying. 18 MR. BAKER: Because I'm telling people 19 that you guys are working on the seal tab and related 20 tickets that don't require us going back to the state 21 legislature with. And that's all I'm saying. If it's 22 something that the committee can move along, it's 23 something that's within our grasp before we have to 24 meet two years from now. 25 MR. HOFFNER: And by the way, I don't WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 120 1 want anyone to think that I'm opposed to the 2 progressive pull tab game. We're absolutely for that. 3 And, you know, what I'm trying to do is provide some 4 additional information for the committee to -- 5 CHAIR NEINAST: I understand and I 6 appreciate what you -- it was a misunderstanding on my 7 part, I think, that -- because what I was looking for 8 is exactly what you're talking about. And we'll put 9 that on -- and that could move along pretty quickly. 10 But assuming that the bingo event tickets will require 11 legislation, I don't think that your comments should 12 mean that we shouldn't consider it. 13 MR. BAKER: No, no. By all means, I 14 think we should be looking two years, five years, ten 15 years down the way for things that will help bingo 16 here in Texas. I mean, we can't be so focused, but by 17 the same token, stuff that's within our grasp, stuff 18 that Billy, you know, is working on that we can 19 actually bring to fruition and get done, that's what 20 we need to be working towards as well. That's all I'm 21 saying. 22 CHAIR NEINAST: I agree with you. 23 MR. SPEED: Let me, Billy, ask a 24 question. Where it says the game must contain 75 25 bingo numbered holes. Can you change that to say WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 121 1 something similar to a door prize or a raffle? They 2 draw for a number instead of calling it as a bingo 3 number? Would that make it legal without legislative 4 action? Where you kept it away from the bingo? Drew 5 the number? 6 CHAIR NEINAST: Where are you reading 7 from? 8 MR. SPEED: Under manufacturing 9 guidelines, number two. 70 -- contain 75 numbered 10 hole combinations. 11 MR. ATKINS: Well, Bud, I think that's 12 an entirely different topic. I mean, a door prize 13 versus a pull tab ticket. I don't -- 14 MR. SPEED: Yes, it is. But the 15 administration of it, in other words, the way you go 16 about getting there or determining a winner, you take 17 it out of your actual bingo caller's hands and you put 18 it in some other form where you accomplish the same 19 thing. 20 MR. ATKINS: But you're talking about 21 something that essentially still looks like a pull 22 tab. 23 MR. SPEED: Sure. Oh, yeah. 24 MR. ATKINS: I don't know the answer to 25 that. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 122 1 MR. SPEED: Just a different way of 2 administering it as far as determining the winner. 3 You take it away from the actual bingo numbers being 4 called, is the only thing that I see that is a problem 5 on it. 6 MR. ATKINS: Well, I'm still not sure I 7 understand. 8 MR. SPEED: Have I lost you there? 9 MR. HOFFNER: Yeah, I'm missing 10 something. 11 MR. SPEED: Maybe I'm missing 12 something. 13 MS. TAYLOR: Let me see if I understand 14 what you're saying. What he's saying is that right 15 now you're saying that it has to be separate from the 16 bingo game and in calling the bingo balls when they 17 can be part of the bingo game. So he's saying, 18 instead of calling the bingo balls, pull a number like 19 you would pull a number for a door prize, so now 20 you're not making it part of your bingo game. So 21 would that work, keeping it separate from your bingo 22 game so that it would get rid of that problem. 23 MR. SPEED: That's exactly what I'm 24 saying. Yeah. 25 MR. ATKINS: Well, my question would WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 123 1 then be, is it pull tab or is it a raffle? And if 2 it's a raffle, are the organizations going to receive 3 the same benefit through charitable distributions, et 4 cetera, as they would from a pull tab? 5 MR. HOFFNER: Let me answer that. From 6 what I understand about how these games are played, 7 the reason that I'm a little bit confused about 8 whether or not it's going to take a big change is 9 because an argument could be made that this isn't part 10 of a bingo game. That this is just a pull tab. The 11 only difference is that -- that the winner is 12 determined by drawing a bingo ball. And that drawing 13 of the bingo ball is not part of the regular bingo 14 playing event. This is a separate thing. And so 15 that's why I'm a little bit confused as to how it's 16 part of the bingo game, but like I said, maybe I am 17 missing something. 18 MR. ATKINS: Well, and I think part of 19 the confusion, and it's something that stems from the 20 Act, Fabian, is that the Act says, bingo can be played 21 with a pull tab. 22 MR. HOFFNER: Bingo can be played. 23 Right, exactly. And that's why I think that this is 24 the more appropriate way to go. This along with the 25 progressive game, you know. I don't know. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 124 1 MR. ATKINS: I don't either. 2 MR. HOFFNER: I guess the issue is 3 whether or not you can -- whether or not you consider 4 this pull tab game to be part of the regular bingo 5 game that you're playing currently, or whether it's a 6 pull tab in the same sense that the statute -- that 7 the way that the agency is interpreting the statute 8 now. But that's not my business to -- 9 CHAIR NEINAST: Well, if -- it's my 10 view that if the committee thinks this is something 11 that should be pursued, we can pursue it without 12 regard to whether it would require a legislative or a 13 rule change and leave that up to the general counsel's 14 office to come up with the appropriate procedure. 15 Either say, it needs legislation or we can do it by 16 rule change and initiate whatever action is necessary 17 under either one of those. 18 MR. HOFFNER: Well, it seems to me we 19 have, Mr. Chairman, the information. We need now to 20 make a decision. So I'm going to move that this group 21 recommend to the -- 22 CHAIR NEINAST: Lottery Commission. 23 MR. HOFFNER: Well, no. To the Lottery 24 Commission that we proceed -- or that we recommend 25 that the agency proceed -- that we recommend that the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 125 1 progressive pull tab game and the bingo event tickets. 2 CHAIR NEINAST: Take necessary action 3 to authorize. 4 MR. HOFFNER: Yeah. I'm trying to 5 think of the words that you -- 6 CHAIR NEINAST: Both the bingo event 7 ticket and the progressive. 8 MR. HOFFNER: Yeah, that makes sense. 9 I'm just trying to fit in with what the -- 10 CHAIR NEINAST: Let's see if we can 11 state the motion that the Bingo Advisory Committee 12 recommends to the Lottery Commission that necessary 13 action be taken to authorize the use of bingo event 14 tickets and the progressive pull tab game. 15 MR. HOFFNER: That's my motion. 16 CHAIR NEINAST: Is there a second? 17 MR. SPEED: I second. 18 CHAIR NEINAST: Seconded by Mr. Speed. 19 Further discussion? Call the question. All in favor, 20 aye. Opposed, no. Was that a yawn or a yes or a no? 21 MR. TAWIL: I'm for it. 22 CHAIR NEINAST: Motion carried 23 unanimously. 24 Mr. Baker, if you would fill out one of 25 the witness affirmation forms. Thank you. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 126 1 MS. TAYLOR: Before we move on, I want 2 to know. Is it going to be on the agenda again that 3 the expanded definition is going to be revisited at 4 the next meeting? 5 CHAIR NEINAST: That will be an agenda 6 item. I have it down here on the -- on the item. 7 Number 14 is consideration of and 8 possible discussion and/or action, including 9 recommendations to the Texas Lottery Commission on a 10 proposed rule, on the use of gift certificates and/or 11 coupons in connection with the conduct of bingo. 12 And there is a draft rule in your 13 notebook. Billy, you have the item. 14 MR. ATKINS: I do. Mr. Chairman, 15 members, I'm going to call forward Phil Sanderson, 16 Assistant Director for the Charitable Bingo Division, 17 and Roy Gabrillo, the Senior Audit Manager for the 18 division. They've been the ones primarily responsible 19 for the development of this rule and will be able to 20 answer any specific questions you may have regarding 21 the language in the rule. Specifically, what the rule 22 is proposed to do is authorize organizations a way 23 that they can sell gift certificates to individuals 24 that can later be utilized for the purchase of bingo 25 paper, card minding devices, or pull tabs. And the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 127 1 goal for the rule is to create a way that additional 2 interest can be generated for the play of bingo. For 3 example, people may want to purchase these gift 4 certificates, you know, for friends or family members 5 who enjoy playing bingo. And, of course, the rule 6 contains requirements for the gift certificates 7 themselves as well as requirements for the 8 organizations involved in the sale or utilization of 9 the gift certificates, and the requirements for the 10 accounting and record keeping as it relates to the use 11 of gift certificates. 12 And we would like at this time to 13 receive any questions or comments or suggestions that 14 the advisory committee may have about the rule, and we 15 would like to take it forward to the Commission for 16 publication and public comment. 17 CHAIR NEINAST: Phil or Roy, do either 18 of you have an additional presentation, or do you 19 primarily want to answer any questions we may have? 20 MR. SANDERSON: We're just here to 21 answer any questions you may have about the rule. 22 CHAIR NEINAST: I have a question or a 23 comment. On the first page of the draft, under E-3, I 24 think I know what you mean. As a matter of fact, I'm 25 pretty sure I know what you mean, but I just wonder if WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 128 1 that statement or definition might not be as clearly 2 stated as it could be. And I'm sorry, I don't have 3 a -- a suggestion of how it might be clarified. But I 4 think someone just reading through it hurriedly, when 5 they look at it, if they read, licensed authorized 6 organization's bingo premises, I think what you mean 7 is that if there are three charities using a bingo 8 hall, that a gift certificate sold by one of those 9 charities is redeemable at any of the other charities 10 using that hall. Is that -- is that the intent of 11 this -- 12 MR. SANDERSON: Yes. That is the 13 intent, to allow the organizations to redeem other 14 organizations' gift certificates at that one location 15 only. 16 MS. BRACKETT: Well, you have to redeem 17 it at the bingo hall where you purchased it. Is that 18 what you're trying to say? Is there anything wrong 19 with saying it that way? 20 CHAIR NEINAST: Because the way I first 21 read this, I had to go back and look at it. I thought 22 that the authorized organization was the hall owner. 23 MR. SANDERSON: No. The authorized 24 organization is the one that conducts bingo. 25 CHAIR NEINAST: But I mean, when you WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 129 1 have that bingo premises on there, when you combine 2 the words, a licensed authorized organization's bingo 3 premises, it has an implication in my mind that the 4 operator must own the premises. 5 MR. SANDERSON: It's the reference to 6 the Act, in Section 2001.402, that bingo can be 7 conducted -- or may not be conducted at more than one 8 premises on property that is owned by leased by an 9 authorized organization. And since the bingo 10 equipment is sold at the premise where the licensed 11 authorized organization is conducting bingo, then, the 12 coupon must be redeemed at that same location. And it 13 does not necessarily have to be redeemed by that 14 organization, but by one of the other organizations 15 that is conducting at that location. 16 CHAIR NEINAST: So taking up on what 17 Virginia said, what would be wrong with saying, redeem 18 a bingo gift certificate only upon the premises at 19 which it was sold? Make it a little bit shorter, but 20 it's this licensed authorized organization that gives 21 me a little concern. 22 MR. SANDERSON: And I think a lot of 23 that is because the Act has a specific definition for 24 licensed authorized organization, and there is a 25 definition for authorized organization. And there WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 130 1 is -- is a difference between the two. One actually 2 has a license to conduct bingo, the other is an 3 organization that may be qualified to conduct bingo, 4 but is not licensed. And it's a term that is used 5 consistent throughout this rule and the Act and other 6 rules, when it's referring to organizations that are 7 conducting bingo and are licensed, and the bingo 8 premises is also a defined definition. And that's 9 primarily the reason why it's laid out in that 10 context. 11 CHAIR NEINAST: Okay. Well, on your 12 copy there, just line through the words, licensed 13 authorized organization's bingo, and read it with 14 those words omitted. Would that change it in some way 15 that would make it -- 16 MR. SANDERSON: We can look at it. The 17 paragraph right before that references the same, 18 licensed authorized organization's bingo premises. So 19 it may be that the flow of the rule, we could 20 eliminate those three words and it still have the 21 legal requirements that it needs. And, you know, 22 there again, we could take that back to legal counsel 23 and have them look at it. 24 CHAIR NEINAST: Am I the only one 25 that's reading a problem with it? I might be reading WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 131 1 a problem that's not there. 2 MR. SPEED: I think if you offered this 3 to your various halls and organizations, I think they 4 would throw it in the trash, because there is more 5 bookkeeping to this than any profits made on a gift 6 certificate. I don't understand why you go through 7 all of this on something that you wouldn't make a 8 profit on. 9 MR. ATKINS: I would like to comment, 10 Mr. Chairman. 11 MR. SPEED: I would like to finish. 12 Now, I don't know that all of these -- maybe the 13 regulations are necessary, but I bet you wouldn't find 14 five percent of your operators out here that would go 15 through the paperwork to sell them as prescribed in 16 here with the taxpayer numbers, et cetera, et cetera, 17 on there. So that's my thinking. 18 MR. ATKINS: And I think those are good 19 comments, Bud. And if you have specific 20 recommendations on how these gift certificates can be 21 sold, redeemed, and accounted for in a way that isn't 22 going to give those two guys who are auditors 23 heartburn, that's what we need to know. 24 MR. SPEED: Well, I would say that -- 25 MR. ATKINS: But, you know, just to WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 132 1 come out and say, this -- you know, I find very 2 counter productive. 3 MR. SPEED: Well, counter productive. 4 I'm just trying to be realistic, not counter 5 productive. I would say this, and it would vary in 6 different places, that you designate one charity to 7 sell gift certificates and they would reimburse the 8 other charities. Or the other charities would 9 reimburse them, et cetera. You would eliminate a lot 10 of your bookkeeping in it, because there is not -- 11 there is not any profit in it. There is nobody making 12 a profit. It's -- you sell them at face value. And 13 you let a charity sell them. And for that matter, two 14 of them, and you do your bookkeeping on a -- on a -- 15 narrow your bookkeeping down. 16 MS. TAYLOR: The problem with that 17 would be is that people would only purchase gift 18 certificates at a very limited number of occasions. 19 MR. SPEED: And gift certificates in 20 bingo, unless I'm wrong, is real, real minor. Just 21 not that many sold. 22 CHAIR NEINAST: Suzanne? 23 MS. TAYLOR: Is there a way -- looking 24 at this, is there a way, instead of each individual 25 organization having to have its own, that they could WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 133 1 be responsible for the numbered gift certificates as a 2 whole as a hall? 3 MR. SANDERSON: We have spent a 4 considerable amount of time on this rule to try to 5 come up with something that would not conflict with 6 the Bingo Enabling Act. And what we have come up -- 7 an easiest definition or response to that question is, 8 each organization is responsible for their own funds. 9 And each organization is responsible for the conduct 10 of their games and the promotion of their games. 11 MS. TAYLOR: Are not they allowed to 12 utilize the same petty cash fund? Is there not 13 something in there? I know it used to be that the 14 organization could have a joint petty cash fund up to 15 2500 dollars. 16 MR. SANDERSON: There is nothing that 17 addresses the petty cash fund. Petty cash is not 18 necessarily a bingo -- 19 MS. TAYLOR: Well, it's from their 20 bingo -- from their bingo account, it would be bingo 21 proceeds. 22 MR. SANDERSON: They're accountable for 23 whatever funds they have in the petty cash. 24 MR. SPEED: Handle it that way. 25 MS. TAYLOR: I think -- I mean, because WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 134 1 I know a lot of -- I understand that probably some of 2 this is written to try and get rid of the gift 3 certificates that are being given for different games, 4 and whatever, and I understand why it needs to be 5 written. But I understand what Bud is saying here is 6 that -- and it's not something that we've looked at to 7 try and see if we have got a better idea. And I would 8 really like to have the opportunity, and I hate to 9 say, wait another meeting, but to see if there was 10 anything that we could come up and just get back to 11 you, you know, during the course of this to -- I would 12 hate to say, let's propose it and just go along with 13 it. 14 MR. SANDERSON: Like I said, I would 15 welcome anything that you might have that would 16 address the issues of the gift certificate, allowing 17 for them, as long as they don't conflict with what the 18 Bingo Enabling Act sets out. 19 MS. TAYLOR: Because what if you 20 deposited this fund -- I mean, one thing that I'm 21 looking at right now is, what if you deposited the 22 funds into your bingo account, the quarter comes and 23 goes that it has not been redeemed, you don't show 24 this as an expense, but ultimately you're showing it 25 as an income, because you're depositing the funds from WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 135 1 this gift certificate into your bingo account in the 2 second quarter. Now, in the third quarter, the gift 3 certificate is redeemed and another charity comes to 4 you and says, you need to give me the money for this. 5 If it's not an expense, how are you showing that on 6 your quarterly report? You just finished showing it 7 as income. Now you need to reimburse the charity who 8 actually took that gift certificate, but it's in a 9 different quarter. 10 MR. SANDERSON: Well, at the end of 11 each -- based on the rule, I think it's at the end of 12 each month or -- 13 MS. TAYLOR: But what if it was not 14 redeemed during that month? 15 MR. SANDERSON: If it's not redeemed, 16 it's still out there, and you've still got the funds 17 in your account for it. 18 MS. TAYLOR: So in the following 19 quarter, now, you're going to reimburse the 20 organization that redeemed that gift certificate. It 21 has been counted as income in your account. It has to 22 be accounted somewhere -- 23 MR. SANDERSON: It has not been 24 accounted as income, no. 25 MS. TAYLOR: So how do you make your WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 136 1 petty cash, your savings and your checking account 2 turn up right? You're going to have extra money -- 3 MR. SANDERSON: Your calculation for 4 your undistributed proceeds is what you're talking 5 about, to make sure it balances? To balance your 6 quarterly report? 7 MS. TAYLOR: Right. Correct. 8 MR. SANDERSON: Today, in today's 9 business, your undistributed proceeds is your bingo 10 bank account reconciled balance -- 11 MS. TAYLOR: Which this would be part 12 of that. Correct? 13 MR. SANDERSON: Plus your petty cash, 14 plus any savings account that's bingo. Right? The 15 only thing that you would add to that or adjust to 16 that would be outstanding gift certificates, the value 17 of the outstanding. 18 MS. TAYLOR: Would that show as income, 19 then? 20 MR. SANDERSON: It wouldn't show 21 anywhere. It would be in your bank account -- 22 MS. TAYLOR: So you would be 23 subtracting that out of your bank account? 24 MR. SANDERSON: You would subtract it 25 from the reconciled balance as outstanding gift WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 137 1 certificates -- 2 MS. TAYLOR: Okay. That's my question, 3 because otherwise you've got to show it as an expense 4 this next quarter -- 5 MR. SANDERSON: It's just a paperwork 6 for balance, to balance that number so you have it 7 accounted for. 8 MS. TAYLOR: Okay. 9 CHAIR NEINAST: Suzanne, if I remember 10 correctly, this is one of the items that you initially 11 proposed, is it not? 12 MS. TAYLOR: The initial gift 13 certificate rule was slightly difference than this, 14 the one that we had looked at before, I believe. I 15 don't think it was quite as many pages long. But I 16 would like to have a chance to look at it and 17 understand it better, because I mean, there is things 18 on here that aren't -- for instance, subtracting the 19 gift certificates that you deposit into your account 20 from the balance of your account, you know, to make 21 your books come out. You know, that's the kind of 22 stuff that I would like to understand better before I 23 say, I think this is a great idea, or I don't think 24 this is a great idea. I think gift certificates are a 25 thing that some people hope to use. At Christmas time WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 138 1 we sold a lot of gift certificates, Mother's Day we 2 sold a lot of gift certificates. 3 CHAIR NEINAST: But am I correct, 4 you're the member who originally -- 5 MS. TAYLOR: Yeah. I did ask for it to 6 be brought back, because we had approved a proposed 7 rule one time from some other state, and it somehow 8 got -- it slipped through the cracks. And I did ask 9 that it be brought back up again for this committee. 10 CHAIR NEINAST: Okay. So what -- are 11 you making a motion that this item be tabled today 12 for -- 13 MS. TAYLOR: How about, could we have a 14 motion that this is another item that the subcommittee 15 that's getting together to work on the other item 16 could maybe pursue this also at the same time? 17 Virginia? 18 CHAIR NEINAST: Let me see if that's 19 going to -- 20 MS. BRACKETT: What all do we have on 21 there? 22 CHAIR NEINAST: What item was that 23 under that I appointed to the subcommittee? 24 MR. ATKINS: Number eight. 25 MS. BRACKETT: Oh, the separate, yeah. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 139 1 CHAIR NEINAST: I don't know. I think 2 that would be mixing too many apples and oranges. 3 MS. TAYLOR: Otherwise, if nothing 4 else, I would like to have the opportunity to read 5 through it and understand it a little bit better with 6 you. 7 MR. SANDERSON: That would be fine. 8 MS. BRACKETT: I have a question. Did 9 you specify it be purchased from a distributor, that 10 gift certificates be purchased from a distributor, so 11 they can't be counterfeited? 12 MR. SANDERSON: It's accountability and 13 invoicing and that's -- 14 MS. BRACKETT: The paper trail. 15 MR. SANDERSON: That and the 16 definitions of bingo equipment and supplies and so 17 forth, and making it an authorized expense. 18 MS. BRACKETT: How much is it going to 19 cost? 20 MR. SANDERSON: I don't know what it 21 costs to print. I wouldn't envision it being that 22 expensive. I know, for example, movie theaters where 23 I live utilize this type of certificate all the time. 24 They're in like books of ten, and you go in there and 25 you buy five books of it and you can use it in the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 140 1 snack bar or for a ticket at a dollar at a time. 2 MS. BRACKETT: So is that what you're 3 thinking of? Like you come in and you have ten 4 dollars worth of stuff -- ten dollars to spend? 5 MR. SANDERSON: If you buy a ten-dollar 6 book, yeah. Yes, ma'am. But it would be on bingo 7 equipment, bingo supplies. 8 MS. BRACKETT: I had not pictured it 9 that way. But then when you used the example of the 10 movie things, then -- you know... 11 MR. SANDERSON: And the reason to a 12 certain extent is, I know one of the concerns from the 13 last draft of the gift certificate rule that was 14 presented was cash, cash back. And, you know, only 15 using part of it to buy paper and the rest of it to 16 buy pull tabs. If they're printed in one-dollar 17 increments, it basically eliminates the need to cash 18 them in. 19 MS. BRACKETT: Okay. 20 CHAIR NEINAST: Further discussion? 21 What's the desire of the committee? 22 MS. BRACKETT: I agree it would be nice 23 to look over this again, especially with the 24 additional information we've gotten, and then put it 25 off. Talk about it next time. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 141 1 CHAIR NEINAST: So are you making a 2 motion to table action on item number 14, Virginia? 3 MS. BRACKETT: I suppose -- had Suzanne 4 already made that motion? 5 CHAIR NEINAST: No. 6 MS. BRACKETT: I'll do that, then. 7 CHAIR NEINAST: So then, is there a 8 second on the motion to table number 14? 9 MS. TAYLOR: I second it. 10 CHAIR NEINAST: That motion has been 11 made and seconded. Further discussion. 12 MR. ATKINS: If I can just make a 13 comment before you take a vote, Mr. Chairman. There 14 is a process in place through the rule making 15 procedure for public comment to be made on rules. And 16 I guess -- I guess the way I'm going is that without 17 the publication of this rule, there is not really any 18 way for the agency -- any way to receive broad 19 comment. Now, if it's the desire of the committee, 20 and if it is, that's okay. I don't have a dog and a 21 fight one way or another for, you know, just the 22 committee or the committee's contacts, whatever, to 23 provide input on this rule, and then subsequent input 24 from the public be received during the public comment 25 period, that's fine. But I just -- I just want to WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 142 1 make sure everybody knows that as far as getting the 2 broadest amount of public comment possible, the best 3 way to do that is through the rule making process 4 where you can even go so far as to have a public 5 hearing on the rule. And you know, much like this, it 6 would be noticed up and individuals would have the 7 opportunity to come in and make those specific 8 comments or recommendations as they relate to the 9 rule. 10 CHAIR NEINAST: I appreciate what you 11 have said, Billy, but I think before this committee 12 would be comfortable with going out and seeking that 13 public input, it would want to be satisfied in its own 14 mind that it is putting the best foot forward. 15 Recognizing that with the comment later in the -- 16 following the rule making procedure may result in a 17 change. But we wouldn't want to put something out for 18 comment when we're not satisfied with it. 19 MR. ATKINS: And, again, that's fine. 20 It's the committee's decision. It just -- I think 21 this takes us all the way back, you know, to step one 22 when there was frustration on people's part with how 23 long it takes. And, again, Phil and Roy and other 24 staff have spent a lot of time on this and, you 25 know -- WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 143 1 CHAIR NEINAST: And to lay it further, 2 if you look at our next committee meeting, unless we 3 call a special one is -- is going to be the 10th of 4 October, so there is no way within the rule making 5 process to get it completed and published before the 6 Christmas gift buying season for this year. 7 MR. ATKINS: Well, and I hadn't planned 8 on doing it now, but because there are another -- a 9 number of other rules in process, when it came to the 10 appropriate time, the staff was going to recommend 11 that there be another meeting next month. So... 12 CHAIR NEINAST: Now, having heard all 13 of that, are we prepared to vote on the motion? I 14 would like the record to show that Mr. Tawil is absent 15 and will not be voting on this motion. So the chair 16 will call the question. All in favor of the motion to 17 table number 14, aye. Opposed, no. I think we have 18 one aye. I don't think that will quite carry the -- 19 MS. TAYLOR: Let me go back through. 20 Could we amend the motion to approve the rule with 21 reservations? No? Okay, then. I understand, because 22 I really hate the frustration of this stuff going on 23 month after month after month, but at the same time, 24 if we are putting this out for publication and saying 25 that we're approving it, then we're saying as a whole WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 144 1 that we agree with it and think it's something that we 2 like. If we don't like it, I hate putting that out 3 for public comment as something BAC agrees with. 4 MR. ATKINS: And if I -- and I agree, 5 Suzanne. If the committee has trouble with it, I do 6 not want the committee to move forward on it. You 7 know, again, I just don't want anybody on the 8 committee to think that once the language gets to 9 where they like it and it does go forward on public 10 comment, that it's -- you know, that it's not going to 11 be changed there. But I mean, I agree a hundred 12 percent, if this committee wants to make further 13 comment on it, they should have the opportunity to do 14 so. 15 MS. BRACKETT: Well, I feel like that 16 we all want gift certificates, we want everything 17 that -- all the bookkeeping and everything to be in 18 order and everything described for it. I do feel as 19 though we might have a few questions on it. I think a 20 lot of it comes too that we just get this almost 21 immediately before we walk into the room to discuss 22 it, so our questions are not even formed, so to speak. 23 So anyway... 24 CHAIR NEINAST: And looking over your 25 shoulder, Virginia, I see some notes on your draft. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 145 1 Do you have additional concerns that you may want to 2 bring up now, even though we may delay final action? 3 MS. BRACKETT: No. Not really. They 4 were just things I was circling when I was reading it. 5 But I tell you, the whole thing is, I didn't know it 6 had to be so hard. That's my deal. I didn't know it 7 had to be so hard. I thought we could just do a 8 little gift certificate and put it in a cute little 9 envelope and that would be that. So -- but the movie 10 type thing is appealing, to be able to give people a 11 book of ten or 20 one-dollar coupons that they can use 12 as they see fit is a neat deal. 13 MR. HOFFNER: Mr. Chairman, if it's 14 possible, if the committee is not ready to go ahead 15 today, can we bring it back at this special meeting 16 that you're thinking about? 17 MR. ATKINS: Oh, yeah. Sure. And not 18 only that, but I would strongly suggest, if anyone has 19 specific recommendations other than, this is just too 20 difficult or, you know, something like that, specific 21 recommendations, to submit them, you know, to the 22 staff, and we'll do what we can to incorporate. But, 23 you know, Virginia, let me echo your comment. We 24 didn't know it was going to be that hard either. But 25 the problem is that if the children's shelter are WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 146 1 selling these pull tabs and the children -- gift 2 certificates, and the children's shelter has to 3 account for them. However, we were thinking it would 4 be better if an individual could go in and use those 5 gift certificates at that hall, but with another 6 organization. But they've got to be accounted for. 7 MS. BRACKETT: And I agree with that. 8 MR. ATKINS: So if there is another way 9 to do it, bring it on. 10 MS. BRACKETT: There are other ways, 11 but I doubt -- I think your two men right there would 12 have a big reaction. 13 MR. SANDERSON: I don't know if it 14 would be the two men as much as also legal and some 15 other people. 16 CHAIR NEINAST: Well, I don't know 17 whether this is in keeping with specific rules of 18 parliamentary procedure, but I think we do still have 19 a motion on the floor that was not carried, and I'll 20 call the question again. Those in favor of tabling 21 item number 14, let it be known by saying aye. 22 Opposed, no. We've got a vote that time unanimously 23 carried, Ms. Wright. 24 Number 15, consideration of and 25 possible discussion and/or action, including WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 147 1 recommendations to the Texas Lottery Commission, on 2 proposed rules relating to licensing, taxes and fees, 3 and audits and on proposed amendments to -- there are 4 a whole bunch of rules there. I'm not going to read 5 the numbers. And Billy, that's your -- and I don't 6 recall seeing these changes in the -- 7 MR. ATKINS: Mr. Chairman, members, the 8 item number 15 was drafted in broadest terms possible 9 because at the time that the notice for the meeting 10 was being filed, we didn't know exactly what all rules 11 we would have. Consequently, subject to the notice 12 being drafted, we do not have any amendments to any 13 existing rules at this time. What we have come 14 forward with are new rules as they relate to taxes and 15 fees, and audits. So in order -- and I'm sorry 16 there -- we didn't really put them together that well 17 in your notebook. It's the last item in your notebook 18 and it starts with the rule labeled, bingo reports. 19 And that rule goes through one, two -- three pages. 20 The fourth page starts off, A, interest on delinquent 21 tax. That is another separate rule. And it's a 22 one-page rule. The next page is another separate rule 23 labeled, waiver of penalty, settlement of prize fees, 24 rental tax penalty and/or interest, and that is a 25 separate rule. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 148 1 So what I would like to do, 2 Mr. Chairman, if I could, call forward Terry Schenkel, 3 who is the manager of the accounting services section, 4 to provide any information you may have on those first 5 three rules, bingo reports, interest on delinquent 6 tax, the waiver of penalty, settlement of prize fees, 7 rental tax penalty and/or interest. And to -- I guess 8 my first question, Mr. Chairman, is, how do you want 9 to do this? Do you want to do this a rule at a time? 10 CHAIR NEINAST: Will this include 11 general -- 12 MR. ATKINS: No. That's a separate. 13 Separate. 14 CHAIR NEINAST: I think we can handle 15 all three of them. Are there three? 16 MR. ATKINS: There are three dealing 17 with accounting services in Terry's section. 18 CHAIR NEINAST: I think we can think 19 through all three of them together. 20 MR. ATKINS: Okay. The first rule, 21 bingo reports, members, deals with the quarterly 22 reports that all organizations licensed to conduct 23 charitable bingo are required to file with the Lottery 24 Commission under the Bingo Enabling Act. The rule 25 lays out the due date, it makes exceptions for due WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 149 1 dates that fall on a Saturday, Sunday, or legal 2 holiday. It sets forth the postmark or shipping date, 3 indicating the date of mailing. The rule provides 4 that the report may be filed in an electronic format 5 prescribed by the Commission. It requires that a copy 6 of each quarterly report be available to every officer 7 and director of a licensed authorized organization. 8 Again, usually when we go before an administrative 9 hearing, members of an organization come forward and 10 claim that they never received any of the information 11 relating to the bingo organization. 12 On the second page -- the first page 13 deals with reports filed by conductors, as well as 14 lessors. At the end of the first page, it starts to 15 discuss reports filed by manufacturers and 16 distributors. I would like to call your attention to 17 F, at the top of the second page. The division often 18 gets reports filed by manufacturers and distributors 19 who have incorrectly listed the license number of the 20 organizations that they're selling to. So the rule 21 sets forward a provision that if six or more taxpayer 22 numbers are found to be incorrect on a report, the 23 report will be returned to the manufacturer or 24 distributor. If five -- if five or more are found to 25 be incorrect, we will continue with the -- with the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 150 1 filing of the report, but we'll notify the 2 organization in the future that they're to be, 3 essentially, more careful with the completing of their 4 forms. 5 The same requirement relating to the 6 taxpayer numbers being listed incorrectly as applied 7 to the system service provider. The rule states that 8 it is the responsibility of the organization to file 9 their quarterly tax return. Additionally, there is a 10 provision in the rule, it's K, that we receive a 11 number, I don't know if Terry can give us an estimate 12 of how many, where the calculations on the quarterly 13 report are incorrect. Consequently, the staff goes 14 in, makes the correct calculations, they notify the 15 organization of the changes that have been made to 16 their report. If the organization disagrees with the 17 changes, they have the right to -- to bring that 18 disagreements forward. And there are provisions in 19 the rule to allow for organizations to request an 20 extension for their filing. As a result of natural 21 disasters or for reasons other than natural disasters. 22 Those extensions, I believe, are fairly consistent 23 with the requirements that the Comptroller of Public 24 Accounts uses in the filing of their different 25 business tax forms. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 151 1 The next rule, interest on delinquent tax, sets 2 forth -- 3 CHAIR NEINAST: Before we get to that, 4 Billy, may I ask two questions. 5 MR. ATKINS: Sure. 6 CHAIR NEINAST: I'm looking through 7 this, really skimming it. You said that electronic 8 filing was authorized. I do not see that. 9 MR. ATKINS: If you look on the first 10 page, C-1, it reads, an authorized organization 11 holding an annual license, temporary license, or a 12 temporary authorization to conduct bingo must file on 13 a form prescribed by the Commission or in an 14 electronic format prescribed by the Commission. 15 CHAIR NEINAST: How do you, on those, 16 establish that it was filed under oath? 17 MR. ATKINS: When the division is in a 18 position to move forward with electronic filing, that 19 will be part of it. But this is -- that language is 20 looking towards the future. We're not ready to do it 21 now, but it's looking towards the future and when 22 we'll be able to accept those over -- essentially, 23 over the Internet. 24 CHAIR NEINAST: So I assume there is a 25 procedure, I've never done it, that you can file WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 152 1 something under oath? 2 MR. ATKINS: I believe the Act requires 3 that the forms be filed under oath. 4 CHAIR NEINAST: And that's my question. 5 How do you do it if you're doing it on line? How do 6 you show that the oath has been administered and taken 7 by a notary or a someone authorized to administer the 8 oath? That's my question -- 9 MR. ATKINS: But the reports don't have 10 to be notarized. But you can include a provision in 11 the electronic format that when the organization goes 12 to file it, you know, when they click send or 13 whatever, some sort of box will come up and say, you 14 know, click here if you certify that this report is 15 true and correct. 16 CHAIR NEINAST: And the other is just 17 out of raw curiosity. On correcting the taxpayer 18 numbers on the manufacturer distributor report. Why 19 would you correct five but not six? Just tell us. 20 Idle curiosity. 21 UNIDENTIFIED SPEAKER: We just deemed 22 that to be the cutoff number. There is not -- we 23 spend approximately, on some reports, four hours of 24 data entry. And it was just a reasonable number that 25 we would send back six or more and we would go ahead WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 153 1 and correct five or less. 2 CHAIR NEINAST: So it's just an 3 arbitrary number? 4 UNIDENTIFIED SPEAKER: Yes, sir. 5 CHAIR NEINAST: Give me an idea of, on 6 a report, where you have errors, how many hours are we 7 talking about in the numbers? 8 UNIDENTIFIED SPEAKER: On some, 9 considerable. There are 13 lines to a page of -- on a 10 manufacturers and distributor reports and sometimes we 11 have as many as five on the first page that are 12 incorrect. And so what it deals with is a stopping 13 and going and looking up that taxpayer number, if we 14 can even identify who the organization is, because 15 they may list it just as Redman or M-bets (phonetic). 16 So it's a considerable amount of time that is spent in 17 looking up the incorrect taxpayers numbers or to 18 validate the numbers. 19 MR. HOFFNER: Can I add something? It 20 seems to me, I have been skimming through this, too, 21 there are some matters in here that -- that could be 22 done without a rule. I mean, sort of like -- I have 23 always -- I have always advised agencies not to do 24 things in rule that they could just do by themselves. 25 Like, for example, number J. You know, if a licensee WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 154 1 fails to file a quarterly report, and you say what the 2 agency is going to do. Well, the agency could just 3 send the report back. I mean, there is no -- if you 4 put it in rule, then it seems to suggest that it's 5 requiring the agency to send it back, and I'm not 6 certain if that's exactly what the rule wants to do. 7 Or if that's what the agency wants to do is to tie its 8 own hands in a rule when it already has -- I mean, if 9 somebody sends in a report and it's not correct, the 10 agency can just send it back and say, this isn't 11 correct. I'm not sure if it's up to the agency to 12 tell the licensee what is wrong with it or to fix 13 their problems. 14 MR. ATKINS: I think I may disagree on 15 two points. One, I think our legal counsel advises us 16 the exact opposite. It is best to have it in rule. 17 And also I think, to a degree, it is fair to put a 18 certain expectation on the agency. And, you know, 19 I -- I do think it's appropriate that our licensees, 20 you know, know what is going to be expected of us as 21 we go through this process. 22 MR. HOFFNER: I don't disagree with 23 that necessarily. I'm just saying that that would be 24 a different way of looking at it. And then if you 25 were to do that, then maybe you should use shall WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 155 1 rather than just will on some of those descriptions. 2 CHAIR NEINAST: I would go along with 3 making will, change it to shall, which is recognized 4 in legislative interpretation as being mandatory. But 5 I think that on that particular one, Fabian, J, in 6 view of the second sentence there, I think it's 7 essential to have it in a rule, because it carries the 8 possibility of penalties, being -- have we lost a 9 quorum? Has Bud -- 10 MR. ATKINS: You have a quorum -- 11 MR. HOFFNER: We still do. 12 CHAIR NEINAST: Is Bud going to be 13 back? 14 MS. TAYLOR: He left his book, so I 15 think he will. 16 CHAIR NEINAST: Virginia had to leave 17 to catch a plane. 18 MR. HOFFNER: And Mr. Chairman, I'm 19 going to have to leave in about 15 minutes to catch my 20 plane, too. If it's a quorum -- 21 CHAIR NEINAST: In view of that, if we 22 may pass action on this for a moment, because we do 23 have a member of the general public who is here on two 24 items, and I feel it imperative that we take action on 25 those while we have a quorum. So let's defer further WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 156 1 action on this, Mr. Chairman -- 2 MR. ATKINS: No. Billy. You're 3 Mr. Chairman. 4 CHAIR NEINAST: Let's go to number 16 5 and 17, consideration of and possible discussion 6 and/or action on establishing a minimum price for card 7 faces. 8 This was an item suggested by Chris 9 Keller and Mr. Keller is here from San Antonio. He -- 10 in addition, it was suggested to me in telephone 11 conversations that a -- an additional item be put on, 12 and through some miscommunication between Mr. Keller 13 and me and Billy, it's not on there, but we will take 14 it up in the form of public comment and get 15 Mr. Keller's input on it and, if necessary, put it on 16 as an item at our next meeting. And that second item, 17 which I'll ask Mr. Keller to address also, is the 18 practice of some electronic providers not collecting 19 and continuing to provide services past the 30-day 20 limitation. So Mr. Keller, this is your first 21 appearance, I understand. You've seen how we operate 22 and it's quite informal. If you would address first 23 the possibility of having a minimum price established 24 for card faces. 25 MR. KELLER: My name is Chris Keller, WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 157 1 for the record. Actually, the setting the price of a 2 face for bingo cards was actually a solution, in our 3 mind, to my first issue that didn't get put on the 4 agenda to address the issue about electronic suppliers 5 allowing bingo charities to continue to get service 6 after they've gone past their 30-day rule without 7 paying them. But the charities that I represent feel 8 like if the Lottery Commission, which we understand 9 they already have the -- the capability of doing, 10 would set the minimum price that a bingo face could be 11 sold for, it would eliminate a lot of the problems 12 that we are faced with in my area, San Antonio, where 13 naturally, there is a price war going on. And one 14 thing that allows the price war to continue is the 15 fact that games are not paying their bill, so they 16 don't have to charge the price that the games that are 17 paying their bills have to charge. And I would like 18 to ask every member of this committee to help me word 19 what I wanted to get on the agenda, so that I can get 20 it on the next meeting's agenda. What I had written 21 and faxed to Mr. Atkins, I said, I want to address the 22 issue of computer companies allowing bingo charities 23 to go past 30 days on their computer bill and 24 continuing to give them service without collecting any 25 money. If someone can help me reword this to where WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 158 1 it's more understandable, I guess I'm asking for your 2 help to where I want this on the agenda for the next 3 meeting, because if -- like I told William, our games 4 cannot survive, paying our bill, when our competitor 5 does not pay their bill, and they're allowed to stay 6 in operation. 7 And I just noticed something while I 8 was here. It says -- y'all are probably aware of 9 this, but the Texas Lottery Commission will maximize 10 revenues to licensed bingo charities by insuring the 11 fairness and integrity of the bingo industry. That's 12 their mission statement. How can it be fair to let 13 computer companies continue to service people that do 14 not pay their bill? This is -- there just has to be 15 something done to stop it. And I want to ask a 16 question, too. Is it -- I guess this is for Billy 17 mostly. Because we've asked this question and gotten 18 two different answers, but is it a rule that bingo 19 charities have to pay their electronic bill within the 20 30-day period like we do our paper bill? 21 CHAIR NEINAST: Let me back up just a 22 minute. Do you think that these two issues, as you 23 have raised them, are inextricably tied together? 24 That we cannot act on one without acting on the other? 25 MR. KELLER: No. I think we can act on WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 159 1 them independently. 2 CHAIR NEINAST: So unless -- if you 3 don't mind, let's take the one that is on the agenda 4 which we can take action on. 5 MR. KELLER: Okay. 6 CHAIR NEINAST: Specific action, and 7 that is, establishing a minimum price for card faces. 8 MR. KELLER: Okay. 9 CHAIR NEINAST: And you've stated your 10 views on that, that the larger charities are pricing 11 the smaller charities out of the game, if I might 12 summarize. Is that correct? By pricing, I mean 13 they're under charging? 14 MR. KELLER: Well -- 15 CHAIR NEINAST: Have I stated your 16 position correctly? I don't want to put words in your 17 mouth, but -- 18 MR. KELLER: Somewhat. The main 19 problem is charities that do not pay their bill but 20 are allowed to continue. 21 CHAIR NEINAST: That's getting back 22 over into this other issue. Let's just stay on the 23 issue of -- 24 MS. TAYLOR: Excuse me. Could I just 25 make one comment? What I think he's talking about is WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 160 1 that the reason these charities are able to under 2 price the competition is because they are not paying 3 their bills. So that's why they're so interrelated, 4 because if they paid their bills, they would not be 5 able to have their prices down that low. Is that -- 6 MR. KELLER: That is correct. 7 MS. TAYLOR: Six years ago, the reason 8 that I became interested in the Bingo Advisory 9 Committee is because I came to the Advisory Committee 10 asking the Lottery Commission to set a minimum price 11 on books. At that time, the Lottery Commission, the 12 Commissioners came to Corpus Christi and had a meeting 13 with all the charities from Nueces County. After 14 putting in many, many hours of work getting everybody 15 there and the room was packed, it was a room larger 16 than this, and it was packed, Nelda was at that 17 meeting if you would like to reference her back to 18 that meeting. After everybody was in the room, what 19 the Lottery Commission told us is that it would be 20 illegal to set a price on books and that even in the 21 individual bingo halls, that if you talked to your -- 22 the -- the other charities participating in bingo at 23 that location, that that was price fixing and that was 24 illegal. So I understand completely where you're 25 coming from, because I know it was either in the rules WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 161 1 or the administration -- either in the rules or the 2 Bingo Enabling Act that there is an area there that 3 the Lottery Commission has the authority to set prices 4 by areas or something. I can't remember it anymore, 5 but I knew it by heart back then because that's why I 6 originally came here, because of the price wars that 7 we were having in Corpus Christi. So -- 8 MR. ATKINS: I can, for everybody's 9 benefit, read it verbatim. It's Section 2001.056(c), 10 the Commission may set the price or adopt a schedule 11 of prices for the sale or provision of bingo cards by 12 a licensed authorized organization. 13 MS. TAYLOR: But I understand what he 14 is saying is that he might not be asking for this if 15 everybody was current with their bills. If he was 16 bringing this to -- I mean, they do have a pay the 17 electronics bills the same as paper bills. Is that 18 correct? 19 MR. ATKINS: There is no 20 differentiation in the Act between paper, pull tabs, 21 electronic or whatever. 22 MS. TAYLOR: Okay. So if security is 23 notified about this, then security would look into the 24 halls that are not paying their electronic bills? 25 MR. ATKINS: I don't even think it WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 162 1 would be security. I think that would be referred to 2 audit. 3 MS. TAYLOR: So have you filed a 4 complaint? 5 MR. KELLER: Yes, we have. 6 CHAIR NEINAST: Let me interrupt just a 7 minute, administratively. It looks like we might be 8 close to losing a quorum. How long -- when do you 9 have to leave, Fabian? 10 MR. HOFFNER: Pretty soon. 11 CHAIR NEINAST: And Bob, what time -- 12 MR. RINEHART: About 15 or so minutes. 13 CHAIR NEINAST: So about 15 more 14 minutes. So I do -- I don't want to rush action on 15 this. And I want to say, we're under a time 16 constraint to act on it, but Mr. Keller is -- has been 17 here all day, and I certainly want to give him a full 18 hearing. So since this issue had come up previously, 19 Suzanne, was it due, in your opinion at that time, to 20 the electronic companies not -- so there was a problem 21 of a price war without regard to paying bills. So 22 it's an issue separate and apart, or it was then. 23 MS. TAYLOR: Correct. 24 CHAIR NEINAST: Okay. So I think the 25 issue right now is, does the committee feel that it WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 163 1 should or feel comfortable in recommending a price 2 cap? Not a price cap, but a price floor to the 3 Lottery Commission? 4 MR. HOFFNER: Mr. Chairman, I don't 5 think I know enough about the issue to -- do other 6 members of the committee know enough about the issue 7 right now to be able to make that kind of a 8 recommendation? 9 MR. SPEED: I don't see it happening. 10 You know, this is a problem that we've had for years, 11 and I don't see them setting pricing. And I -- now 12 the bill paying, I think, is a different story, or -- 13 MR. KELLER: I don't want the Lottery 14 Commission to set a price. I want a minimum price. 15 I'm not saying that -- we have halls that sell the 16 paper -- 17 MR. ATKINS: Is that not what we're 18 discussing, on establishing a minimum price? 19 MR. KELLER: A minimum price. Correct. 20 Not a fixed price. 21 CHAIR NEINAST: That's the way it is -- 22 and I said, set a floor, which is a minimum. 23 So Bud, your one comment, as I stated 24 at the beginning of the meeting today, the fact that 25 if something looks that it would be impossible to WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 164 1 accomplish or might not accomplish, I don't think 2 should affect what we recommend. If we think it is 3 something that should be recommended, either for 4 legislation or to action of the committee, just as 5 we're going back and fighting the windmill on the 6 having meetings, I think we need to give to the 7 Lottery Commission our best views on the particular 8 issue. And if they don't buy it, well, that's another 9 issue. But I'm like you. I don't know that much 10 about the -- the effect of one charity charging more 11 or less than others, what effect it may have. But 12 Suzanne is on the committee as a result of a problem 13 that existed years ago, and it still exists by the 14 fact that Mr. Keller is here. So it appears to me 15 that there is a problem. Could it be addressed, could 16 it be fixed by the setting a minimum price? I don't 17 know. I would defer to people like Suzanne and 18 Mr. Keller. 19 MS. TAYLOR: We tried to -- I mean, at 20 that time, I think that there was a consensus of, if 21 there was 50 charities in that room, 48 of them were 22 all for the Lottery Commission setting a minimum 23 price. It was not setting a price. It was to the 24 same thing you're talking about, requesting the 25 Lottery Commission to set a minimum price. Kim Kiplin WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 165 1 was at that meeting, also. I hate to -- because let 2 me explain something. I wasn't in the room because 3 the only people that were in the room during the 4 meeting were the operators. Commercial lessors, 5 anybody that was involved outside of directly -- 6 therefore, the charities were not invited into the 7 room. So all -- I mean, I would hate to say verbatim 8 what was said. But when they came out of the room, 9 their frustration was that ultimately what they had 10 been told is that no pricing would be -- no minimum 11 pricing would be set because of the price fixing 12 problems. And Kim would be able, I'm sure, to explain 13 much better exactly what that is, but nothing 14 happened. 15 MR. KELLER: Would you like to see it 16 now, though? 17 MS. TAYLOR: I do think that price wars 18 are not what bingo is all about. I think one charity 19 trying to put the other charities out of business is 20 really sad. I was just talking to somebody about that 21 earlier today. I hate seeing the price wars, because 22 it's one charity going after another charity. And 23 bingo now is cheaper. It's cheaper to play bingo now 24 than it was 12 years ago. That's ridiculous. The 25 paper costs are up, the electricity is up, the rent is WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 166 1 up, everything is up except the price to play bingo. 2 I bet, if you go throughout the state, you can find 3 very few places in this entire state that it costs 4 more to play bingo today than it did ten years ago. 5 That's ridiculous. You know, the price of the movie 6 is up, the price of everything is up except bingo. 7 And the lower prices aren't increasing our attendance, 8 which makes it even sadder. So I do think that it 9 would not be a bad thing to look into a minimum price 10 on bingo. 11 CHAIR NEINAST: How would you -- 12 MS. TAYLOR: Whether it's set on the 13 attendance or set a floor price, what you're saying, 14 the floor. I will never say against it because that's 15 the whole reason I got involved with the committee, 16 was because the committee -- we couldn't receive any 17 action from them. And we went to the Commissioners, 18 and they did come. I mean, they came to Corpus 19 Christi and they had a meeting right there down at the 20 Omni Bayfront, and the staff was there. 21 MR. ATKINS: Was I there? 22 MS. TAYLOR: You might have been there. 23 Honestly, I don't remember, because I didn't know you 24 at the time. That's when there were other entities 25 involved. But I know that Nelda was there and Kim WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 167 1 Kiplin was there, both of them were there. Since I 2 still know them today, I know they were there. 3 MR. ATKINS: Maybe the thing to do, 4 Mr. Chairman, is at the next meeting, invite Kim and 5 Nelda, since they were the ones there, to give their 6 recollection of what was discussed and what occurred. 7 CHAIR NEINAST: Well, I have a question 8 of both Suzanne and Mr. Keller. How would you go 9 about defining or establishing a minimum or a floor 10 price? 11 MS. TAYLOR: Honestly, I don't know. 12 MR. ATKINS: I do. 13 MS. TAYLOR: It never went that far. 14 MR. KELLER: You just have a set 15 amount, say ten cents a face. If you're selling an 18 16 on, four up, it's 18 times ten times four would be the 17 minimum you could sell that for. If you sell one 18 card, ten cents is the minimum you could sell it for. 19 CHAIR NEINAST: My question is, how did 20 you or how would you arrive at ten cents? Why should 21 it not be 25 cents? 22 MR. KELLER: Well, we wouldn't want to 23 price ourselves out of the market. As much as I'm 24 opposed to electronics, if you put it at 25 cents, not 25 very many people would -- could afford the electronics WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 168 1 there. You know, there again, electronics, 66 faces 2 would be six dollars and 60 cents a game, I guess. If 3 you sold them for five games, it would be 660 times 4 five. 5 CHAIR NEINAST: Are there a lot of 6 operators out there charging less than ten cents 7 today? 8 MS. TAYLOR: Oh, yeah. I can answer 9 that. 10 MR. KELLER: Our competitor last night 11 sold his electronics for nine dollars. This happens 12 to be one of the halls that's not paying their bill. 13 You've got 250 electronics, we have 100 electronics, 14 selling them for 18. Now, what chance do my charities 15 have? None. Zero. 16 MS. TAYLOR: Initially, when the 17 electronics came into being, you could not sell the 18 electronics for less than you sold a paper face. Is 19 that not correct? 20 MR. ATKINS: That's correct. 21 MS. TAYLOR: And that rule -- I don't 22 know if it's a rule. Was it a rule? 23 MR. ATKINS: It was rule, and there was 24 such an outcry from the organizations that they didn't 25 want that, that it was subsequently repealed. They -- WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 169 1 I believe the feeling at the time is that the Lottery 2 Commission was, you know, meddling in their business, 3 that they could set the price at what they felt was -- 4 so the Commission responded to those comments. 5 CHAIR NEINAST: Well, I know that Bob 6 has to leave and that will reduce the -- we'll lose a 7 quorum. So as much as I hate to, Mr. Keller, due to 8 the hours you've spent here, I would ask -- we do 9 understand your concern and have your input. And I 10 will assure you that both of these items will be on 11 the agenda for the next meeting, which it looks like 12 now will be next month rather than October. And 13 you're certainly welcome to come back. 14 MR. KELLER: Have we gotten to number 15 17 yet on this, or are we still on number 16? 16 CHAIR NEINAST: I'm including -- well, 17 that part of your concern about the electronic 18 companies not collecting on -- within -- at the end of 19 30 days, that will be on the agenda and action will be 20 taken. Did you have something else under public 21 comment? 22 MR. KELLER: Yes. 23 CHAIR NEINAST: But before we get to 24 that point, since we still have a quorum, and we're 25 discussing number 16, which is a specific item, and in WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 170 1 view of our discussion, I would like a motion to table 2 that issue until the next meeting. 3 MS. TAYLOR: I make that motion. 4 CHAIR NEINAST: Is there a second? 5 MR. SPEED: Second. 6 CHAIR NEINAST: All in favor, aye. So 7 we -- the other items do not require formal action and 8 we can continue to take your comments under number 17, 9 which... 10 MR. KELLER: There again, this is for 11 Billy mostly. But I just -- if -- if I operated a 12 bingo game and I -- instead of giving away 2500 13 dollars, I decided to -- I'm going to give away 5,000 14 dollars every game. How long would the Lottery 15 Commission allow me to continue to do this? Before, 16 you would step in and stop the game. My point is that 17 we have -- we've been complaining since April on 18 this -- people going past that 30-day rule. Last 19 month, we put it in writing, and I think Billy has a 20 copy. I know that the head of security has a copy. 21 You can't imagine the desperateness of our groups down 22 there. We're dying. And every day that it continues, 23 it's just going further in debt. The reason I brought 24 that up about the 5,000, that's about the magnitude of 25 how long would our competitors survive if we were WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 171 1 giving away ten times the prize money that they were, 2 and allowed to continue to do it. Not very long, 3 probably. That's about how long we're going to 4 survive if this isn't stopped or -- and it's not hard 5 to find out who is not paying their computer bill or 6 which computer companies, rather. This isn't directed 7 to the charities so much. It's directed at the 8 computer companies that allow this to happen. Christ, 9 I told my charities, just stop paying your bill, but 10 they wouldn't do it. Because that's -- that's what 11 our competitor does, so that's what we feel like -- or 12 I feel like we should do to fall in line and survive. 13 So Mr. Atkins, I'm just asking you, can 14 we speed the process up on finding out which computer 15 companies have people that are past 30 days due and 16 still servicing them? 17 CHAIR NEINAST: Let me ask Phil a 18 question. Did you hear the question. Phil? 19 MR. SANDERSON: The most recent 20 question? 21 CHAIR NEINAST: Of these unpaid bills? 22 Would that show up on a report or an audit? Is there 23 any way that your auditors can pick that up from the 24 reports filed by the operators, that there is an 25 outstanding bill that is more than 30 days old? Would WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 172 1 that show up -- does that show up on a report in any 2 way? 3 MR. ATKINS: The only thing that shows 4 up is distributors are required under the Act to 5 report to us any organization that is more than 30 6 days delinquent in the payment of their bill. The 7 Bingo Division isn't going to know if a distributor or 8 organization is violating that provision, like you 9 say, unless we're out there monitoring every invoice 10 and payment that they make. 11 MR. KELLER: Excuse me. I didn't quite 12 catch that, Billy. The distributors are required to 13 notify the Lottery Commission if there is someone 14 that's 30 -- you've got to be kidding me. You mean, 15 Trent Gaming has never told you about anybody that's 16 past 30 days? 17 MR. ATKINS: I haven't looked at the 18 report, Chris. I don't know -- 19 MR. SANDERSON: I don't know. 20 UNIDENTIFIED SPEAKER: But they can 21 purchase a cash -- 22 MR. ATKINS: Yeah. They can purchase 23 for cash. 24 UNIDENTIFIED SPEAKER: They can be 25 delinquent, but they have to purchase on -- by a cash WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 173 1 basis. 2 MR. KELLER: I don't -- I mean, I'm 3 shocked that -- that the Lottery Commission can be 4 unaware of -- I know one way you can simplify it, too, 5 probably is get Trent or any -- any computer service 6 provider distributor to put it in writing that they 7 don't have anybody past 30 days due. And then 8 everybody will know, okay, they've put it -- it's 9 written here, so it must be true. But probably a 10 phone call to them would be sufficient, too, just to 11 just ask Heronamus (phonetic), do you have anybody 12 past 30 days due that you're still servicing. I'm 13 going to bet that 80 percent of their accounts are 14 probably past due. And I'll go a step further and say 15 that I don't think there is a service provider in the 16 state that doesn't have at least one account past the 17 30-day rule. 18 MR. ATKINS: Can I ask one clarifying 19 question? Chris, you've talked about computer 20 companies and service providers. Are you talking 21 about system service providers, are you talking about 22 manufacturers, or are you talking about distributors? 23 And could you specify for us, because I don't know 24 what that other term means, computer company. 25 MR. KELLER: Ronnie, what is WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 174 1 distributors? 2 MR. BAKER: He's talking about 3 distributors that distribute to the nonprofits and are 4 responsible for invoicing in a timely manner, which 5 you're supposed to be reporting to the State people 6 that are 30 days out. 7 CHAIR NEINAST: I'm sorry. Ms. Wright, 8 did you get that? That was Mr. Baker. 9 MR. BAKER: I'm sorry. Do I have my 10 note here? 11 MR. ATKINS: And I'll go back and I'll 12 answer your earlier question. There are distributors 13 that report delinquent organizations to us. I know 14 there are. We get a number of them in all the time. 15 MR. KELLER: But they continue to 16 service them? 17 MR. ATKINS: Through is nothing 18 specifically in the Act, Chris, that says -- I mean, 19 I -- I guess, technically, it's probably a question I 20 would have to raise to legal if that would be grounds 21 for administrative action. I mean, it says, show a 22 report. 23 MS. TAYLOR: And once they're overdue, 24 are they allowed to continue to offer them service 25 without collecting C.O.D.? WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 175 1 MR. ATKINS: It's supposed to be, my 2 understanding, on a cash basis. 3 MS. TAYLOR: And if it's not on a cash 4 basis, are they in violation? 5 MR. ATKINS: They would be in 6 violation, but again, the only way that we would know 7 that, Suzanne, is if we had gone in and done an audit 8 on their records. I mean, otherwise, I would have to 9 have an auditor at every organization that was put 10 on -- 11 MS. TAYLOR: And I understand that. 12 But because he has notified security and notified the 13 division in writing of, you know, a specific case, 14 what I'm wondering is, I mean, is that one of the two 15 cases that aren't taken care of? I think there was 16 two last month that weren't -- 17 MR. ATKINS: I don't know -- 18 MS. TAYLOR: Is that one of the 19 security cases or is -- 20 MR. ATKINS: We're not going to talk 21 about specific cases or investigations that may be 22 going on. But one of the things that I'll refer you 23 back to is an earlier discussion we had, and the fact 24 that one of the things that is suffering in the Bingo 25 Division is the number of audits that we're WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 176 1 completing. 2 MS. TAYLOR: So that's audits across 3 the board. You know, I immediately assumed that that 4 was just audits on organizations conducting bingo. 5 MR. ATKINS: Do what now? 6 MS. TAYLOR: When you said that one of 7 the things suffering was audits, I personally assumed 8 that to mean audits on organizations conducting bingo. 9 I didn't realize that it was audits, distributors, 10 manufacturers. 11 MR. ATKINS: Oh, yeah. 12 MS. TAYLOR: I didn't even lump them 13 into the audit -- 14 MR. ATKINS: No. It's any licensee, 15 lessors. I mean, this particular example, but it's 16 all of our audits. 17 MR. KELLER: And one other thing tied 18 to this not paying the electronic bill is, what 19 happens to the tax due to the State? A sale has been 20 made, but the bill is not paid, so the tax isn't paid. 21 So who is responsible for that? That's a question 22 that I have for, I guess, the committee also. 23 MS. TAYLOR: Are they going over the 40 24 percent rule? You said they're selling 250 a night. 25 Is that to 40 percent or is more than 40 percent? WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 177 1 MR. KELLER: Way over. Which has been 2 addressed in, I think -- you know, that's another 3 issue that I didn't even bother to put on the agenda 4 because I've already -- 5 MS. TAYLOR: I know, when they came to 6 our halls, that they went and physically counted how 7 many people were playing. 8 MR. KELLER: Ours, too. And I guess 9 they are enforcing that rule. They've told me that 10 they are going to enforce it, so I'm sure that they 11 will. But that's another issue. The longer that that 12 has continued to go on, once you've gotten popped and 13 you cannot go over your 40 percent rule any more, then 14 you're at a big disadvantage to the halls that can go 15 over until they get stopped. 16 MR. SPEED: That 40 percent rule is not 17 being enforced, is it? 18 MR. ATKINS: Uh-huh. It's been 19 being -- you know, we investigate when we get 20 complaints. And of course, you know, now we have 21 organizations all across the state that love to snitch 22 off their competition. But it's also something that 23 the auditors examine whenever they're in a hall. It's 24 a requirement of the Act. 25 MR. SPEED: I'm sure they count, but I WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 178 1 just wondered how many -- because I know in Dallas -- 2 MR. ATKINS: Bud, I mean -- I tell you 3 what we don't do, Bud. We don't go out driving around 4 saying, gosh, I wonder if we can catch them violating 5 the 40 percent rule. But, you know, again, when 6 somebody calls in and says, so-and-so is violating the 7 law, or when we're doing an audit, you know, that gets 8 added to the list. 9 MR. SPEED: Yeah. 10 MR. KELLER: What does happen to the 11 tax due to the State on the sale? 12 MR. ATKINS: The sales tax is collected 13 by the Comptroller's Office. I couldn't answer you. 14 They would be the folks to go to. We don't do sales 15 tax. 16 MR. KELLER: I guess that was it for 17 me. 18 CHAIR NEINAST: Mr. Keller, we thank 19 you and we will take up both of these again in our 20 next meeting. It will probably be next month. We 21 haven't set a date yet. 22 MR. KELLER: I still would like someone 23 to help me word this -- this one that I wanted to be 24 put on the -- so where it's more understandable and I 25 can get it on the agenda next time. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 179 1 CHAIR NEINAST: We will get it on the 2 agenda. I think that -- we understand it enough now 3 to put it on as an item. 4 MR. ATKINS: Well, I think if -- if 5 need be, I could probably talk it through with Suzanne 6 because I think she has a grasp on it. 7 CHAIR NEINAST: What the hold up was on 8 computers -- not talking about computers. Just 9 distributors. I think we could limit it to 10 distributors who do not -- who continue to provide 11 their material or services on a -- 12 MR. ATKINS: Well, I don't know that 13 it's limited to distributors. It's conductors, also. 14 CHAIR NEINAST: Okay. Anyway, we will 15 work out the wording and get it on, Mr. Keller. We 16 appreciate your coming. We appreciate your calling 17 this to -- 18 MR. KELLER: Thank you. 19 CHAIR NEINAST: And I'm sorry we didn't 20 get that one on, but as you can see, we're getting 21 down to not having a quorum to take any further action 22 anyway. 23 Bob, I know that you need to go. So I 24 will at this time entertain a motion to adjourn. 25 MS. TAYLOR: Are we going to WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 July 25, 2001 180 1 (inaudible)? 2 CHAIR NEINAST: Yes, but I think we 3 could do that administratively without being an 4 official -- after the adjournment, since we still have 5 a quorum. Is there a motion to adjourn? 6 MS. TAYLOR: I'll make it. 7 CHAIR NEINAST: Is there a second? 8 MR. SPEED: Second. 9 CHAIR NEINAST: Call the question. All 10 in favor, aye. The motion passed unanimously. 11 I would ask those members who can stay 12 to stay for some administrative items. I don't think 13 that needs to be recorded, Ms. Wright. I appreciate 14 you being here. 15 16 17 18 19 20 21 22 23 24 25 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 181 1 REPORTER'S CERTIFICATION 2 3 STATE OF TEXAS ) 4 COUNTY OF TRAVIS ) 5 6 I, BRENDA J. WRIGHT, Certified Shorthand 7 Reporter for the State of Texas, do hereby certify 8 that the above-captioned matter came on for hearing 9 before the BINGO ADVISORY COMMITTEE as hereinafter set 10 out, that I did, in shorthand, report said 11 proceedings, and that the above and foregoing 12 typewritten pages contain a full, true, and correct 13 computer-aided transcription of my shorthand notes 14 taken on said occasion. 15 16 Witness my hand on this the 13TH day of 17 AUGUST, 2001. 18 19 20 21 BRENDA J. WRIGHT, RPR, 22 Texas CSR No. 1780 Expiration Date: 12-31-02 23 1609 Shoal Creek Boulevard, Suite 202 Austin, Texas 78701 24 (512) 474-4363 25 JOB NO. 010725BJW WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363