1 1 ****************************************************** 2 BEFORE THE 3 4 TEXAS LOTTERY COMMISSION 5 6 AUSTIN, TEXAS 7 8 JUNE 14, 2000 9 ****************************************************** 10 11 BE IT REMEMBERED that the above-entitled matter 12 came on for hearing on the 14th day of June, 2000, 13 beginning at 8:32 a.m., and ending at 1:04 p.m., at 14 the TEXAS LOTTERY COMMISSION, 611 East Sixth Street, 15 Austin, Texas, and the following proceedings were 16 stenographically reported by MARY SCOPAS, RPR, CSR for 17 the State of Texas. 18 19 APPEARANCES 20 CHAIR C. TOM CLOWE, JR. 21 COMMISSIONER ANTHONY J. SADBERRY 22 COMMISSIONER ELIZABETH D. WHITAKER 23 MS. KIMBERLY L. KIPLIN, GENERAL COUNSEL 24 MS. LINDA CLOUD, EXECUTIVE DIRECTOR 25 MR. BILLY ATKINS, CHARITABLE BINGO OPERATIONS DIRECTOR WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 2 1 CHAIRMAN CLOWE: Good morning. I'd 2 like to call to order the meeting of the Texas Lottery 3 Commission for June the 14th, 2000. It is 8:32 a.m. 4 My name is C. Tom Clowe, Jr. and Commissioners 5 Sadberry and Whitaker are here. We're ready to enter 6 into the agenda for today as published. 7 The first item on the agenda is the 8 report and possible discussion and/or action on 9 lottery sales and trends. Toni Smith, will you come 10 forward and make your report, please? 11 MS. SMITH: Good morning, 12 Commissioners. For the record, I'm Toni Smith, 13 marketing director of the Texas Lottery Commission. 14 To give you a brief summary of year-to-date total 15 sales, week ending June the 10th, total sales for 16 fiscal year 2000 are $2,062,071,559.5. This is up 17 1.12 percent of FY '99 total sales to date of 18 $2,039,149,892, which puts us at a weekly average for 19 fiscal year 2000 of $50,294,428.28. This also 20 reflects the one percent increase over last year. And 21 so that finally puts us above where we were last year. 22 We finally crossed that mark. 23 And to then just briefly look at where 24 we are with our two biggest parts of our market share 25 with sales, the instant product FY 2000 compared to WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 3 1 FY '99 was $1,292,747,351 compared to FY '99 of 2 $1,102,946,743. So instants are up 17.21 percent. 3 Lotto Texas for FY 2000 is at $446,647,686, compared 4 to $574,054,645. And it is down 22 percent. And of 5 course, as always, lotto is directly tied to where we 6 are with our jackpots for the year. But I think the 7 good news is that we finally crossed that line and are 8 up from where we were last year. 9 CHAIRMAN CLOWE: Any questions? 10 COMMISSIONER WHITAKER: Just one 11 question, Toni. On the week ending June 3rd, the 12 instants were down from the week before. 13 MS. SMITH: Yes, ma'am. 14 COMMISSIONER WHITAKER: And is that 15 just a seasonal fluctuation, or is there any 16 significance to that? 17 MS. SMITH: It's not anything of any 18 concern to us. Sometimes it depends on whether a new 19 game was introduced. Other seasonal things that are 20 going on. Typically summer months as we go into the 21 summer do tend to slow down. People spend money on 22 their summer vacations and things. But we are happy 23 with the direction Instants going. 24 COMMISSIONER WHITAKER: Okay. 25 CHAIRMAN CLOWE: Thank you, Toni. And WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 4 1 I think you have the next item on the agenda. 2 MS. SMITH: And actually, sir, I have 3 no new news to report on that item. 4 MS. KIPLIN: It's lottery advertising 5 and promotions. 6 CHAIRMAN CLOWE: I have a question in 7 regard to the advertising that you have planned for 8 the change in the matrix of Lotto Texas. 9 MS. SMITH: Yes, sir. 10 CHAIRMAN CLOWE: Would you cover that? 11 MS. SMITH: We met yesterday with 12 Fogarty/Kleine, Monroe, our general marketing 13 advertising agency, to hold the preproduction for two 14 spots that we will air telling our players about the 15 changes in the Lotto game. These spots will begin 16 airing on Monday the -- July 17th. The first day of 17 sales for the game are planned on Sunday, the 16th. 18 And the first draw will be on Wednesday, the 19th. 19 These two spots are kind of a fun way 20 of letting players know about the addition of the four 21 numbers by use of talent in -- dressed up in costumes 22 such as Lotto balls. And they'll walk through the 23 introduction of the four new numbers. And we think 24 that will be a fun way. 25 And we'll also have radio that WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 5 1 complements that. 2 And then our usual "How to Play" 3 brochures and put them at a retail level to let 4 players know about the changes. 5 CHAIRMAN CLOWE: Now, that's going to 6 go out prior to the publication of the media work, 7 isn't it? To the retailers? 8 MS. SMITH: We try to get that 9 information out before we -- you know, a game start 10 changes or an implement or whatever is new to the 11 retailers every two-week cycle prior to that. So 12 we're trying to get that information out to the 13 districts because it takes the sales reps two weeks to 14 get it to them in time. So we're in that process now 15 producing those materials. 16 CHAIRMAN CLOWE: The point I want to 17 make here is that it is very important to get this 18 information out to the players in a timely way. Not 19 too early, but in a timely way so that as many players 20 as possible are aware of what they're going to face 21 when the matrix changes are 50 to 54 balls. 22 MS. SMITH: And we're on track with it. 23 CHAIRMAN CLOWE: We're very close to 24 that. And I think we all understand it. But I think 25 many of our players may be surprised when they see 54 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 6 1 instead of 50 balls. 2 MS. SMITH: Right. 3 CHAIRMAN CLOWE: We need to be there 4 ready to explain that to them and help them understand 5 that so they can play and make their choices. 6 MS. SMITH: And we do have the "How to 7 Play" brochures. I'll bring some samples down before 8 you leave today. 9 CHAIRMAN CLOWE: All right. Good. 10 MS. CLOUD: Commissioners, we do 11 have -- the commercials will be aired the day after we 12 actually start the game. And the reason -- normally 13 on a new game or on a rework of a game, we have 14 commercials ready to go prior to the game. But based 15 on the rule change and the 20-day waiting period, we 16 were not able to start these commercials until after 17 it was approved. So that's postponed us being able to 18 get the commercials on the air. But actually, they're 19 doing a really pretty good job of getting -- 20 timing-wise to get it on the air the day after it 21 starts, the 17th. 22 Right, Toni, for the first commercial? 23 MS. SMITH: Yes, ma'am. 24 MS. CLOUD: And the game first -- when 25 the game starts will be the 15th -- the 16th. So it WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 7 1 will be the day after we start the game, which is 2 unfortunate that they don't see this because this 3 commercial is really cute. And it's going to -- it's 4 going to introduce those balls. And it's going to be 5 fun to watch. 6 COMMISSIONER SADBERRY: Mr. Chairman. 7 Toni, I caught the -- a radio spot this morning, which 8 is a very nice ad about the reminder to play twice a 9 week. And I know that I believe when Florida changed, 10 some of their play time changes changed. We are not 11 doing that. And one of the consultants who came and 12 talked to us last meeting gave us compliments -- gave 13 your staff compliments on the emphasis on playing 14 twice a week with the numbers you're playing. So I'm 15 asking whether you have any ideas on whether you will 16 keep the emphasis on that as well as the four balls? 17 Are you going to shift? What are you going to do in 18 that regard? 19 MS. SMITH: We'll shift to the 20 introduction of the four balls. But we felt like it 21 was a good strategy, in our hopes that these changes 22 would be adopted, that people would have heard enough 23 about playing on Wednesdays and Saturdays that that 24 would still be in their minds. So we'll continue to 25 run that campaign up until we actually start the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 8 1 changes. And then we'll leave those out there, you 2 know, the rest of the fiscal year to make sure people 3 are aware of the change. 4 CHAIRMAN CLOWE: Okay. Just real 5 important to tell everybody and tell them again and 6 then tell them again, you know, about what the change 7 means. And then the jackpot size will speak for 8 itself. 9 MS. SMITH: Yes, sir. And we hope that 10 happens quickly for us. 11 CHAIRMAN CLOWE: Very good. 12 MS. SMITH: Thank you. 13 CHAIRMAN CLOWE: Thank you. 14 The next item on the agenda is status 15 report on possible -- and possible discussion and/or 16 action on the lottery operator audit procurement. 17 Linda, please. 18 MS. CLOUD: Commissioners, we're still 19 waiting for word on two items pertaining to this audit 20 from the State auditors office. We don't have 21 anything new to report today. 22 CHAIRMAN CLOWE: Any questions on that? 23 Next item is consideration of and 24 possible discussion and/or action on State audit 25 reports relating to the Texas Lottery Commission. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 9 1 Debra McLeod, good morning. 2 MS. MCLEOD: Good morning, 3 Commissioners. How are you this morning? 4 CHAIRMAN CLOWE: Fine, thank you. 5 MS. MCLEOD: We have management and 6 internal auditors worked very hard on these comments 7 and developing a spreadsheet for marketing to help 8 identify all of the print media subvendors that are 9 out there. All the cost that has been spent through 10 to the advertiser, then to these print media vendors. 11 Exactly how we're spending our money. And we hope 12 this will be of some use to the marketing. And they 13 seem to indicate that it has been. In addition, we 14 are looking at the rule. I believe it's on the agenda 15 today. 16 Is that correct, Kim? For the 17 procurement, rule procurement? 18 MS. KIPLIN: Yes. 19 MS. MCLEOD: Okay. And so that's 20 before commissioner approval today. 21 Then the other thing to make you 22 mindful of is, the State auditors are no longer 23 requiring biannual reports on the status of their 24 recommendations. They're asking now only for a report 25 once a year. And that's pretty much it this report. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 10 1 CHAIRMAN CLOWE: Very good. Any 2 questions? Thank you, Debra. 3 The next item on the agenda, number 4 six, is consideration of and possible discussion 5 and/or action on the agency's strategic plan for 6 fiscal years 2001 through 2005. Patsy Henry. 7 MS. HENRY: Good morning, Mr. Chairman 8 and Commission members. My name is Patsy Henry. I am 9 the Deputy Executive Director of The Lottery 10 Commission. You have before you a packet of changes, 11 mostly form, not content. I'd say about 99 percent of 12 it is form rather than content, to the strategic plan. 13 There are a couple of items that I want to draw your 14 attention to, and they are attached in that packet, 15 Attachment A and Attachment B. 16 Attachment A is changes to the Lotto 17 Texas section of the strategic plan to update that to 18 reflect the changes that you adopted at your last 19 meeting and which went into effect on June 2nd. We 20 did not include that in the first version because the 21 changes were not official at the time. They are now. 22 And so we'd like to include those changes. 23 This particular change will have a 24 ripple effect on the remaining sections. It will 25 alter the pagination. We're not sure exactly how much WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 11 1 it will alter the pagination, and therefore, the table 2 of contents. So we don't have a specific item listed 3 in the change list to reflect that. That's kind of an 4 unknown for us. 5 Attachment B reflects changes to our 6 turnover rate. And that is in the human resources 7 section of the strategic plan. We modified the 8 numbers in there to correspond with the auditor's 9 formula for determining turnover rate. And so that 10 gave us a different number. It gave us 19.33 percent 11 turnover rate, as opposed to the initial 17.3. And 12 then there was one other substantive error on the next 13 page, which -- or it's not really very substantive. 14 But it's the ratio of 1 to 335 for our training. So 15 the five just got left off of there. But those are 16 the two main substantive changes, Attachment A and B, 17 to the strategic plan. 18 The remainder of them you see on these 19 about two and a third pages are going to be of the 20 nature of alignments of the format, alignments of 21 heading, typographical errors, and that sort of thing. 22 But we wanted to get it as perfect as we could before 23 we sent a new version, updated version to the 24 oversight agencies for distribution to anyone else who 25 requests it. And we would be pleased if you would WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 12 1 consider these and hopefully adopt the version that 2 you received on the 30th of May with these changes. 3 And I guess in way of explanation for 4 why there are so many small changes to be made in 5 addition to the two substantive ones, this is really 6 the first time that we have ever produced a document 7 of this nature, of this complexity. We utilized some 8 different desktop publishing software. Our staff is 9 very capable and competent in -- and used to doing 10 lots of marketing and sales and advertising types of 11 documents and brochures. But this is a more technical 12 document and was different than anything really that 13 we had produced before. So not to make excuses. But 14 as an explanation, I think you have a more refined 15 product than we've ever put out before. It's a larger 16 document than we've ever produced for the strategic 17 planning process. And so I'll just -- I'll leave it 18 at that. If you have any questions about it, I'll be 19 glad to try to answer those. 20 COMMISSIONER SADBERRY: Mr. Chairman, 21 if I may. Thank you, Patsy. I appreciate that. And 22 on that point, I believe this has already gone in. 23 But with the proviso that we would have -- probably 24 have a changed document that would go into the 25 oversight -- WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 13 1 MS. HENRY: Correct. 2 COMMISSIONER SADBERRY: -- agencies. 3 And do I recall, Kim, correctly that 4 the request I made to have the minutes that reflected 5 the previous activity on this were, in fact, provided 6 to the commissioners? 7 MS. KIPLIN: Yes, they should have 8 been. We -- 9 COMMISSIONER SADBERRY: I think I 10 received mine. 11 MS. KIPLIN: You should have each 12 received a copy before I went on vacation. My very 13 capable secretary garnered all of that together and 14 put it in one document for you. 15 COMMISSIONER SADBERRY: Because you're 16 correct. This is a significant step forward. And I'm 17 pleased to see, given the history I've had on The 18 Commission, because those of us who are here know we 19 were -- have been constantly, if I may use the word, 20 encouraged to pay -- give appropriate attention to 21 this document and not just treat it as a proforma type 22 of submission. And I think that's what has occurred 23 here, and I appreciate that. 24 And if I may, while I have the floor, I 25 just have a few questions on the minority development WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 14 1 materials. Patsy, I again appreciate the fact that 2 you came in and covered some gaps for us and at a very 3 critical time, not only on this document, but also on 4 our minority participation report. We know we live 5 with issues of how the GSC compared to our statute 6 reports certain participation. We know we've had 7 historical developments like the GSC and the contract 8 and other things. We've sat through this. And we 9 know it. And we've had the history. And yet, we know 10 when these numbers hit -- and I, for one, speaking 11 only for myself, I prefer the numbers to be what they 12 are. And I like the fact that we reported numbers to 13 be what they are. And we can address why and other 14 issues. 15 But we do know there is going to be 16 attention given to the actual realizations of 1999 17 numbers. And I wanted to say I know we'll be able to 18 address that. And I think we should address it. And 19 I think we'll be called on to address it. 20 I guess my only question is, is there 21 anything to indicate that we have any part to play in 22 not realizing our goals? I mean, are we at the wheel? 23 Were we paying attention to it when we go over what we 24 needed to do? And are these things that have happened 25 as a result of these lower numbers than anticipated, WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 15 1 things that were just out of our control? Can we say 2 that? 3 MS. HENRY: Yes, sir, I believe we can. 4 They are a direct result of changes made by our 5 contractors, our primary vendors, and the entities 6 that they subcontracted with. So it had a ripple 7 effect on our data. And Bart Sanchez, our director of 8 financial administration, can give you more detail on 9 that. 10 COMMISSIONER SADBERRY: And one of 11 those is GSD&M, that -- because they weren't going to 12 rebid, they sort of didn't keep the contracts and the 13 subcontracts. Well, what did happen with the GSD&M? 14 MR. SANCHEZ: On the GSD&M, the 15 contract was going to end August 31st. So some of 16 their, I guess, activity slowed down. And they 17 were -- they played a major part in providing us some 18 good minority numbers. I guess do you remember 19 another big vendor that had an effect was the instant 20 ticket manufacturer. 21 COMMISSIONER SADBERRY: Yeah. The -- 22 because we handled that appeal. That rule we're going 23 to deal with today addresses that to some extent. I 24 know there is another rule on minority procurement 25 that's going to go out. But that's another issue, WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 16 1 because it passed through, brokerage arrangement, and 2 all that in a good faith performance commitment as 3 opposed to actual performance commitment. However, 4 you report the numbers, pass through, and what have 5 you. All those things are real things that happened 6 that were outside our agency. 7 What we can do. I want it to be 8 reflected what we've done and our commitment and that 9 these numbers are not a reflection of backing away 10 from those commitments or in any way being lax in our 11 emphasis. And I believe I can say that. I just want 12 to make sure the staff concurs. 13 MR. SANCHEZ: Yes, we do. And I think 14 we're moving in a direction that we can try to improve 15 the numbers as best we can by putting the director 16 level in the minority development services division. 17 I think that's going to be a good improvement. And I 18 guess with the Senate Bill 178, there is a lot of 19 activity we need to -- we need to do to work on. 20 COMMISSIONER SADBERRY: Has that been 21 filled, that position? 22 MS. HENRY: No, sir. We are very close 23 to making a selection. We are finishing our 24 interviewing this week. 25 COMMISSIONER SADBERRY: And if anyone WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 17 1 has expressed an interest or inquiry, are you 2 satisfied that those inquiries have been addressed? 3 MS. CLOUD: Yes, sir. I personally 4 have addressed them. 5 COMMISSIONER SADBERRY: Thank you. 6 COMMISSIONER WHITAKER: I just have 7 one. 8 CHAIRMAN CLOWE: Yes, ma'am. 9 COMMISSIONER WHITAKER: Okay. Yes, I 10 have some questions. Under emerging issues on 11 page 10, I would like us to consider including as an 12 emerging issue Internet sales and the impact that that 13 has on very -- on a number of issues that involve the 14 lottery. From what I understand from talking to 15 staff, that is a significant issue. And I think it 16 ought to be included there. 17 MS. CLOUD: Okay. 18 COMMISSIONER WHITAKER: The other 19 thought I have -- and I don't know if this is in the 20 nature of a suggestion. It's probably more of a 21 question. Under compulsive gambling on page 9, we 22 talk about the measures that the lottery takes to 23 provide counseling and other services to protect the 24 public who might be subject to compulsive gambling. A 25 separate issue is what we do to protect people who WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 18 1 have received prize money with the transition of that, 2 the impact of that transition on their lives. There 3 is different evidence of how different people will 4 react to that. And I know we do things. And I think 5 we ought to include that. 6 MS. CLOUD: Okay. 7 COMMISSIONER WHITAKER: And then the 8 final comment is, Patsy, on Attachment A, in the new 9 language where it says, Statistically the addition of 10 four balls, it's somewhat of a nit-pickie point. But 11 I would prefer that it would say, the addition of four 12 balls is statistically forecasted to result. I think 13 that's a more accurate use of statistics. Thank you. 14 No more questions. 15 MS. HENRY: Okay. Sounds like we need 16 to do a little bit more drafting to incorporate some 17 of those concepts that The Commission has consensus to 18 and sensor to on those issues. 19 CHAIRMAN CLOWE: I certainly concur on 20 those points. And I wanted to ask for some additional 21 comments from you. You gave a fast "yes" to 22 Commissioner Whitaker's first comment about naming 23 interstate -- or Internet gambling. And how do you 24 see that comment? I'd like some expansion on that 25 "yes". WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 19 1 MS. HENRY: Well, that's a real good 2 question. I think that that is an issue that probably 3 deserves a lot more than a couple of sentences of 4 description. It perhaps deserves a paper on its own. 5 But I think we're still trying to define the impact of 6 Internet gaming sales. We have some experience. And 7 we think that we have some indicators of how that has 8 impacted, for example, bingo and how we think it's 9 going to impact lottery. But I'm not sure that we 10 have any tangible data at this point in time to come 11 to any firm conclusions. We can do some 12 prognosticating based on information that we have from 13 some of the experts in the field. I'm not sure 14 exactly what else we could add. 15 CHAIRMAN CLOWE: Let me give you a 16 personal opinion, Patsy, that might help in the way of 17 guidance. My concern would be that you would try to 18 quantify where this is going. I would suggest that 19 you approach it with the idea that it is going to have 20 an impact. And it's probably going to be a changing 21 impact that will result in a negative conclusion. But 22 to try to quantify in a precise way is probably beyond 23 our skill and our level of ability at this time. It's 24 similar to trying to quantify what the impact of sales 25 tax reduction is going to be as a result of Internet WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 20 1 sales to governments throughout the state and the 2 United States. I think Commissioner Whitaker wanted 3 the issue raised and identified rather than a final 4 answering. But I think it's a very important point to 5 bring up. And I know that all of you are aware of it 6 from meetings that I have attended and the issues that 7 are addressed. And I think we do need to raise it for 8 those who are going to be viewing this strategic plan 9 as Commissioner Whitaker suggested. But I don't think 10 you can go do a final answer. That would be my 11 comment to your comment. 12 MS. CLOUD: Commissioners, we have -- 13 this has been real high on our priority list. It is 14 going to impact the lottery. And there are a couple 15 of bills in congress that concerns us greatly that we 16 have been requested to provide information on from 17 where we sit. Colin has had contact within the last 18 couple of days with the office of a congressman who 19 has requested information from us. And he could 20 report on that for you. We are gathering information. 21 We are providing as much as we know to the legislative 22 branches. We're talking about it in our briefings as 23 to what the industry feels like it's going to have, 24 what impact it's going to have on the industry. The 25 concerns that -- and the steps the industry is trying WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 21 1 to take to protect the boundaries of the states. But 2 a lot of it -- it depends on the bills in congress 3 right now and whether or not they recognize the 4 states' rights or not. And so it's kind of -- we're 5 kind of in limbo. But at this point, we're trying to 6 stay on top of everything that's happening. I get 7 things almost on a daily basis concerning the Internet 8 bills and the Internet gaming sites that are on the 9 Internet at this time. So we will continue to do 10 that. But I think we can do a synopsis of some kind 11 to go with this document to make it -- to make people 12 know that they can be aware of what's happening. 13 COMMISSIONER WHITAKER: Chairman, could 14 we hear from Colin? Not necessarily right now, but at 15 some point? 16 CHAIRMAN CLOWE: Certainly. I think 17 now would be a good time while we're in on this 18 subject. 19 MS. KIPLIN: Commissioners, I will say 20 that I know there is a desire to have this document 21 approved in its final form. But it is The 22 Commission's document. And with regard to language 23 that we're discussing somewhat in the abstract, I 24 guess as a lawyer, my recommendation would be that we 25 work on that language and bring it back to a WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 22 1 subsequent commission meeting for you to review and 2 make sure you're comfortable with the tenor and the 3 tone of that language. 4 CHAIRMAN CLOWE: Let me make certain 5 that I understand where we are on this. We have 6 submitted a draft document timely, with the 7 understanding that a final document approved by The 8 Commission will follow. And there is a desire on our 9 part to do that as promptly as possible. But in the 10 case of a weight issue or a significant issue, you're 11 expressing the idea that we should do it so that we're 12 satisfied, and that's most important -- 13 MS. KIPLIN: Yes, sir, I am. 14 CHAIRMAN CLOWE: -- at this point in 15 time? 16 MS. KIPLIN: Yes, sir, I am. 17 CHAIRMAN CLOWE: Am I understanding 18 that correctly? 19 MS. KIPLIN: Yes, you are. 20 CHAIRMAN CLOWE: Okay. 21 MR. HAZA: Good morning, Mr. Chairman 22 and commissioners. I'm Colin Haza, governmental 23 affairs liaison. In the -- what's page 35 in the 24 current edition of the plan, under the impact of 25 federal statutory changes, we did make some reference WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 23 1 to some Internet gaming bills. Because of the lead 2 time necessary in the preparation of the document and 3 because of the fact that the bills were moving though 4 the legislative process in congress, we were unable to 5 provide a lot of detail within this document. 6 Subsequent to the preparation of the 7 strategic plan, a couple of the bills have moved 8 forward. In particular, HR 3125 has passed the house 9 committee on the judiciary and is scheduled to be 10 heard again tomorrow morning at 10:00 o'clock central 11 time before the telecommunications subcommittee of the 12 house commerce committee. I was contacted yesterday 13 by a representative of the Texas congressional office 14 asking for some information so that his member could 15 offer comment at that hearing tomorrow. This bill 16 started out -- in fact, it's titled the Internet 17 Gambling Prohibition Act of 1999. It's picked up some 18 amendments along the way, as often happens. And what 19 began as an Internet gambling prohibition bill has 20 essentially turned into a bill -- a permissive bill 21 permitting Internet gambling on -- for such activities 22 as horse racing, dog racing, jai alai, and some other 23 gaming activities, all of which, of course, will 24 compete with discretionary dollars available for 25 lottery tickets or charitable bingo or other forms of WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 24 1 gaming. Adverse to states' rights is an explicit 2 amendment that explicitly prohibits the use of the 3 Internet for the purchase or sale of state lottery 4 tickets. There are some members of Congress who, as 5 you might imagine, obviously have the votes to move it 6 out of the judiciary committee in that form. We are 7 told that there will be opposition to this amendment 8 tomorrow in the telecommunications subcommittee. But 9 we'll be monitoring that hearing, at least the audio 10 of that hearing, tomorrow morning. 11 CHAIRMAN CLOWE: My sense is that we're 12 not asking for a final comment on pending federal 13 legislation in this document, but an acknowledgment 14 and an awareness of what's happened? 15 COMMISSIONER WHITAKER: Exactly. 16 That's it. 17 CHAIRMAN CLOWE: So then I think you 18 made a request for approval, Patsy. Do you want to 19 make a different request at this point in time? 20 MS. HENRY: I'm not sure what to ask 21 for. 22 MS. KIPLIN: May I? 23 CHAIRMAN CLOWE: Maybe your general 24 counsel can help you. 25 MS. KIPLIN: I'll be glad to offer WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 25 1 assistance. 2 Commissioners, I think the staff would 3 request that this item pass until the next commission 4 meeting, where it can be brought to -- as an item 5 before you-all for final consideration with all the 6 provisions I think that have been before you 7 incorporated in the final document, along with the 8 requested additions. 9 COMMISSIONER WHITAKER: And I take it 10 there is no down side to waiting a month. Is that 11 correct? 12 MS. HENRY: I don't think so. 13 COMMISSIONER SADBERRY: Well, that was 14 what I was going to ask, because I was very pleased to 15 hear the Chair's comment timely sufficient and hope 16 that that amendment does not in any way change that 17 nor the timing of the amendment. So as long as we 18 remain timely is my concern. 19 MS. HENRY: And we are. And I think we 20 all have to remember that a strategic plan is a living 21 document and should be subject to modification. So I 22 think periodic amendment is probably to be expected of 23 a document of this nature. And there are no time 24 restrictions on any sort of subsequent amendments. 25 COMMISSIONER SADBERRY: I will note and WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 26 1 I'm sure it will be picked up that I expired long ago. 2 I suppose that -- 3 CHAIRMAN CLOWE: Not really. 4 MS. KIPLIN: There really is no true 5 vacancy unless you die. 6 CHAIRMAN CLOWE: Before we pass on this 7 until the next meeting, I want to make a comment that 8 I'd like to always be kept in mind that this is a 9 living document. And to you and Linda, you know, when 10 this is approved by The Commission, we don't put it 11 away and forget about it. We want this to be thought 12 about, talked about in the agency, and used in staff 13 meetings. And these goals and objectives are real. 14 And we should constantly be referring to them and 15 working towards achieving this strategic plan. It is 16 extremely important. 17 With that, if there is nothing more, 18 we'll pass this until the next meeting. Thank you, 19 Patsy, and thank all of you who have worked on this. 20 Next item is consideration of and 21 possible discussion and/or action on the 22 legislative's -- on the agency's legislative 23 appropriations request. Nelda Trevino. Good morning, 24 Nelda. 25 MS. TREVINO: Good morning, WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 27 1 Chairman Clowe and Commissioners. With me is Bart 2 Sanchez, our financial administration director. And 3 we primarily wanted to put this item on the agenda 4 today mainly to just make you aware that we are in the 5 process of putting our legislative appropriations 6 request together, commonly referred to as the LAR. 7 And this pretty much follows up the strategic planning 8 process. Agencies are required to submit every two 9 years a request for funding for the next biennium. 10 And we forwarded over to you a copy of the 11 instructions that have been provided to agencies from 12 the legislative budget board of the governor's office 13 of budget and planning. And again, just to keep you 14 informed, that we have begun the process of putting 15 the document together. This is another document that 16 will require The Commission's approval. There is a 17 schedule at the back of the instructions that list 18 when agencies are due to submit their LAR. And we are 19 noted to submit ours on August the 25th. So we'll be 20 bringing you a product to hopefully approve and get 21 submitted to the appropriate oversight offices. 22 CHAIRMAN CLOWE: And we would have, I 23 would assume, two more meetings prior to that 24 deadline? 25 MS. TREVINO: Assuming that we stay on WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 28 1 the schedule of having monthly meetings, yes, sir. 2 And we hope that the August meeting will take place 3 prior to August 25th in order to meet the deadline to 4 submit the LAR. 5 CHAIRMAN CLOWE: And I think we should 6 be mindful of these deadlines and conform with them. 7 So let's make every effort. 8 MS. KIPLIN: Commissioners, just from 9 the scheduling perspective, I would recommend that we 10 have that meeting probably early August to give them 11 an opportunity to -- for any changes and print it and 12 so forth. There is that logistical issue. 13 CHAIRMAN CLOWE: I think we're on a 14 schedule now of meeting early in the month. So that's 15 not, in my view, a problem. It's dependent on the 16 commissioners' schedules, of course. 17 COMMISSIONER SADBERRY: That is never a 18 problem. I would just say I agree with that on the 19 timing. We want to meet all the deadlines. And I 20 know the Chair has mentioned this several times. And 21 I know Mr. Hawkins. And I think he's been here. And 22 I just think it's a good thing that we enter active -- 23 we're being proactive. We're getting input and help 24 and guidance ahead of the game. I think that's 25 hopefully the result of some sensible things in this WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 29 1 product and all of our other products. 2 MS. TREVINO: Absolutely. In fact, we 3 just recently had a meeting with staff from the LBB 4 and the governor's budget office in regards to some of 5 our performance measures, which all ties in to the 6 strategic plan and into the legislative appropriations 7 request. So we've been very grateful that they've 8 cooperated with us in providing input. 9 CHAIRMAN CLOWE: Very good. Thank you, 10 Nelda -- 11 MS. TREVINO: Thank you. 12 CHAIRMAN CLOWE: -- and Bart. 13 Next item on the agenda is 14 consideration of and possible discussion and/or 15 action, including adoption, on amendments to 16 TAC 16 401.101 relating to lottery procurement procedures. 17 Ridgely Bennett. Good morning, Ridgely. 18 MR. BENNETT: Good morning, 19 Commissioners. For the record, my name is Ridgely 20 Bennett. I'm the deputy general counsel of the Texas 21 Lottery Commission. If I may, I'd like to pass out 22 some documents to you. 23 COMMISSIONER SADBERRY: Is this what 24 was faxed yesterday? 25 MR. BENNETT: What I attempted to fax WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 30 1 yesterday. And I apologize for it not getting to you. 2 COMMISSIONER SADBERRY: Well, I did 3 receive it. 4 MR. BENNETT: Did you? Because I have 5 a document -- 6 COMMISSIONER SADBERRY: I got it twice. 7 I have somebody's in my folder. I just wanted to make 8 sure there are no changes in what you're handing 9 out -- 10 MR. BENNETT: There is no changes -- 11 COMMISSIONER SADBERRY: -- and what you 12 sent yesterday. 13 MR. BENNETT: You have what was faxed 14 to you yesterday. Staff is recommending that The 15 Commission adopt the amendments to 16 TAC 16 Section 401.101 relating to lottery procurements as 17 published in the April 28th, 2000 issue of the Texas 18 Register. The adoption would be without change to how 19 it was originally published. 20 COMMISSIONER SADBERRY: We're on the 21 third reading? Is that -- 22 MR. BENNETT: This would be the third 23 time that this is before you. That's correct. The 24 rules were originally published in -- on 25 December 31st, 1999, and subsequently republished with WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 31 1 changes. 2 COMMISSIONER SADBERRY: May I? 3 Ridgely, I noted there were comments 4 that staff addressed the comments. And I thought the 5 comments were fair. And I thought the way the staff 6 addressed them was fair. We had a lot of these issues 7 before us in the appeal. 8 MR. BENNETT: Correct. 9 COMMISSIONER SADBERRY: I notice you're 10 saying that the procurement protest procedures may be 11 the subject of another rule. Is it already in a rule? 12 Are we thinking about doing that? What exactly does 13 that mean? 14 MR. BENNETT: Those would be 15 Sections 401.102 and 401.103 that are on The 16 Commission meeting agenda for adoption today. 17 COMMISSIONER SADBERRY: Okay. So we 18 just split it out? 19 MR. BENNETT: We split it out. It was 20 all in one rule prior. And cleaned it up a little 21 bit. 22 COMMISSIONER SADBERRY: Now, we're 23 giving the executive director discretion, that seems 24 to be a first-time thing, to basically disregard a low 25 bid to do something else that's in the best interest WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 32 1 of the State. Right so far? 2 MR. BENNETT: We're clarifying that he 3 has the ability to do that. 4 COMMISSIONER SADBERRY: And we are not 5 embracing the concept necessarily of economic impact 6 of the State being part of the criteria? 7 MR. BENNETT: We have not included 8 that. 9 COMMISSIONER SADBERRY: But it is 10 something that may be considered? 11 MR. BENNETT: I think when looking at 12 bids that come in, especially as part of a request for 13 proposals, then pursuant to Chapter 2160 -- 2159 of 14 the Government Code, there are certain criteria that 15 we have to look at, including the price to obtain the 16 goods and services. 17 COMMISSIONER SADBERRY: That's to 18 define the cost. But if we -- let's say 19 hypothetically if we receive a protest as 20 commissioners, based upon the executive director's 21 decision to take action contrary to -- just relying on 22 the rule and reviewing the criteria, would we be in 23 all probability acting in a review on a policy basis, 24 or would we be in essence second in a position of 25 rethinking the issue of what's in the best interest of WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 33 1 the State of Texas? 2 MR. BENNETT: I think statutorily if 3 you're looking at -- there again, we're kind of going 4 back to the protest that was filed by -- filed by 5 Oberthur Gaming Technologies. When you look at what 6 you can take into account, if there -- if cost and 7 other factors are equal, then you can give the 8 advantage to the -- to the State entity. That's set 9 up by statute. So I don't think you can necessarily 10 give them an additional advantage beyond that. 11 COMMISSIONER SADBERRY: There are 12 comments in here that I know will be seen again about 13 whether this is competitive, anticompetitive, giving 14 advantage to in state. And I'm comfortable with this. 15 And you're well within statute to do this? 16 MR. BENNETT: I'm comfortable that we 17 are. 18 COMMISSIONER SADBERRY: And we'll be 19 prepared to call upon the legislative session to 20 address both the appellate process as well as what 21 this rule is aimed to do. 22 MR. BENNETT: Yes. 23 MS. KIPLIN: Commissioner Sadberry, 24 just to go back to the issue about the preference to 25 the state resident or the Texas resident, that's also WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 34 1 contemplated in the appropriations act. There is a 2 provision in Article 9, and it pretty much mirrors the 3 language that's in the State Lottery Act, and that is 4 that if cost and quality are equal, then there is the 5 ability to give a preference to the Texas resident. 6 But it goes no further than that in the appropriations 7 act. 8 COMMISSIONER SADBERRY: And where we 9 got -- I agree. I agree. And where we got off was, 10 what is the definition of cost? 11 MS. KIPLIN: Correct. 12 COMMISSIONER SADBERRY: Which at the 13 time of the appeal, we didn't have a rule that defined 14 cost. The economic impact of the state is what was 15 proposed in some instances as what means cost. 16 MR. BENNETT: The rule in front of you 17 does have a definition of the term cost. And it's the 18 same as price. 19 MS. KIPLIN: Which I think is 20 consistent with the advice you received at the time 21 that you considered the appeal on the procurement 22 protest. 23 COMMISSIONER SADBERRY: Without any 24 basis for it other than the rationale for research. 25 MS. KIPLIN: Correct. And research of WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 35 1 legislative history on the particular statute that was 2 before us at the time that was an issue. 3 CHAIRMAN CLOWE: Thank you for asking 4 those questions. I think that was clarification 5 that's very beneficial. Commissioner Whitaker? 6 You're requesting The Commission 7 approve this at this time, Ridgely? 8 MR. BENNETT: Approve the adoption of 9 the rule. That's -- 10 MS. KIPLIN: Commissioners, what I 11 would say is, if you want -- sorry to interject. But 12 I know that there was some question by Commissioner 13 Sadberry regarding the other rules that are before you 14 for consideration. If you wish, you can take those up 15 and make sure that you're comfortable with them in its 16 entirety rather than piecemeal it. 17 CHAIRMAN CLOWE: I think that's an 18 excellent idea. 19 MS. KIPLIN: Go to the next item on the 20 agenda. 21 CHAIRMAN CLOWE: We'll then consider at 22 the same time consideration of the next item, which is 23 consideration of and possible discussion and/or 24 action, including adoption, on agency procurement 25 rules 16 TAC Number 401.102 and/or 401.103. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 36 1 MR. BENNETT: Thank you, Commissioners. 2 Once again, staff has recommended the adoption of 3 an -- or excuse me, the adoption of new title 16 TAC 4 401.102 relating to protests of the terms of the 5 formal competitive solicitation. And the adoption of 6 new 16 TAC 401.103 relating to protest the contract 7 award as were published in the April 28th issue of the 8 Texas Register. And we're asking for those to be 9 adopted without changes to how they were published. 10 CHAIRMAN CLOWE: Questions or comments? 11 COMMISSIONER WHITAKER: I know that no 12 comments were received for either one. What do you 13 attribute that to? 14 MR. BENNETT: There was really nothing 15 controversial in the proposed amendments, the proposed 16 new rules. Prior to splitting the rules out, the 17 protest procedure was all contained in 401.101. And 18 it was kind of a mixed bag. There were two things 19 that you could protest. You could protest the 20 issuances of a procurement document or the terms of 21 the contract award. And we simply split out into 22 separate rules how you protest the terms of the 23 issuance of a procurement document and how you protest 24 the terms of a contract award. I think it simply 25 clarifies the process. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 37 1 COMMISSIONER WHITAKER: No further 2 questions. 3 CHAIRMAN CLOWE: Is there a motion? 4 COMMISSIONER WHITAKER: I move to adopt 5 these three rules. 6 MS. KIPLIN: So you would be making a 7 motion to adopt the amendments to 16 Texas 8 Administrative Code Section 401.101 and to adopt new 9 rules 16 Texas Administrative Code Section 401.102 and 10 401.103? 11 COMMISSIONER WHITAKER: That's exactly 12 what I meant. 13 COMMISSIONER SADBERRY: I thought 14 that -- I thought that was what you meant. I was 15 about to second what I thought you meant. And I now 16 will do that. I second it. 17 CHAIRMAN CLOWE: And Commissioner 18 Sadberry seconds that motion. All in favor, say aye. 19 Opposed, say no. 20 The vote is three-zero for approval. 21 MR. BENNETT: Commissioners, I have 22 some orders for you to sign. 23 CHAIRMAN CLOWE: Next item on the 24 agenda is consideration and possible discussion and/or 25 action, including proposal, on new rules relating to WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 38 1 HUB and/or minority businesses. Kim, I believe this 2 is your item. 3 MS. KIPLIN: It is, Commissioners. And 4 we would request -- respectfully request at this time 5 that you pass this item. The proposed rule has been 6 drafted. But it's referring to other documents that, 7 in my view, really need to be before you. And those 8 are the General Service Commission rules. And so what 9 we'd like to do is go ahead and pass this until the 10 next commission meeting. There is nothing that is, in 11 my view, a sense of urgency that would require you to 12 consider the publication today. And simply what we 13 would be asking you to do is consider the publication. 14 But I want to make sure you-all have those documents 15 in front of you. 16 Ridgely, is there anything you'd like 17 to add? 18 MR. BENNETT: There's nothing further. 19 The statute requires The Commission to adopt certain 20 rules relating to -- certain GSC rules relating to the 21 HUB -- the HUB program. And we would prefer to have 22 the GSC rules in front of you when you adopt the 23 rules. 24 CHAIRMAN CLOWE: Hearing no objection, 25 this item will be passed to the next meeting. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 39 1 The next item is consideration and 2 possible discussion and/or action on appointments to 3 the Bingo Advisory Committee. Billy Atkins. Good 4 morning, Billy. 5 MR. ATKINS: Good morning, 6 Commissioners. The general appointments to the Bingo 7 Advisory Committee that were made by the commission 8 were done in 1998. The division mailed out in January 9 of this year approximately 13,000 nomination forms to 10 individuals listed on the charitable bingo system. 11 And we requested a submission deadline for nominations 12 of March 31st of this year. By that deadline, we 13 received 48 nominations. And we received one that 14 came in substantially after the deadline. Based on 15 those nominations, I met with Commissioner Sadberry on 16 Monday of this week. And we reviewed the nominations 17 and made the following recommendations to The 18 Commission, keeping in mind the interest The 19 Commission has expressed in the past in making sure 20 that the advisory committee represent the broadest 21 possible diversification in terms of organizations on 22 the advisory committee, geographic representation of 23 the advisory committee, and other representative 24 factors that we've all taken into consideration. And 25 you know, proud to submit these individuals to you for WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 40 1 your consideration. 2 COMMISSIONER SADBERRY: And that 3 meeting was with general counsel. 4 MR. ATKINS: That's -- yes, sir, that's 5 correct. 6 CHAIRMAN CLOWE: Comments? 7 COMMISSIONER SADBERRY: My colleagues, 8 fellow commissioners, I endorse these recommendations. 9 As you probably know, we've come a long way in the 10 process of composing the advisory committee. And I 11 believe that given the background information that is 12 known or available to us, these individuals, as well 13 as would-be new appointees, as well as the service 14 history of the current members who would continue if 15 this is approved. And keeping in mind the priorities 16 of regional diversity, ethnic and gender diversity 17 which has been pointed out to us on more than one 18 occasion by the legislature. The purpose for the 19 committee that is to serve actively and constructively 20 in assisting this commission in understanding the 21 needs and objectives of the bingo industry. I think 22 we accomplished those things with this proposal. I 23 would recommend it for your consideration for 24 adoption. 25 CHAIRMAN CLOWE: May I consider that a WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 41 1 motion? 2 COMMISSIONER SADBERRY: I make a 3 motion. 4 COMMISSIONER WHITAKER: I second. 5 MS. KIPLIN: Make the motion to appoint 6 these -- 7 COMMISSIONER SADBERRY: Exactly what 8 Kim said. I made that motion. 9 COMMISSIONER WHITAKER: I second. 10 CHAIRMAN CLOWE: All in favor of the 11 motion, say aye. 12 Opposed, no. 13 The motion is approved by a vote of 14 three to zero. 15 MR. ATKINS: Commissioners, on your 16 behalf, I will notify these individuals of their 17 appointment, as well as the individuals that they are 18 replacing. We have a certificate that we will prepare 19 for the outgoing members that expresses our 20 appreciation for their service. We will provide all 21 of that to those individuals. 22 CHAIRMAN CLOWE: Thank you, Billy. And 23 I'd like to second Commissioner Sadberry's comments 24 about the value and the viability of the activities of 25 this committee. And I think you had a meeting WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 42 1 yesterday which you intend to report on later in the 2 agenda. And I would like to urge you to continue to 3 do everything you can, as I know you have in the past, 4 to make this committee viable and participating in 5 supporting and making the commissioners more aware of 6 that segment of the industry. 7 MS. KIPLIN: If I could just have the 8 names of these individuals written to the record. 9 Billy, can you -- 10 MR. ATKINS: Sure. 11 MS. KIPLIN: Can we just go ahead and 12 put that on the record -- 13 MR. ATKINS: Sure. 14 MS. KIPLIN: -- so we've got that 15 specific? 16 MR. ATKINS: In the position as a 17 charity representative, the appointees are Louie, 18 L-o-u-i-e, George, Texarkana. And David Castillo, 19 C-a-s-t-i-l-l-o, of Kingsville. In the position of 20 conductor lessor, the appointee is Robert Rinehart, 21 R-i-n-e-h-a-r-t, of Amarillo. And in the position of 22 commercial lessor, the appointee is Lexford, 23 L-e-x-f-o-r-d, Speed, S-p-e-e-d, of Plano. 24 CHAIRMAN CLOWE: Thank you, Billy. 25 Next item on the agenda is WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 43 1 consideration and possible discussion and/or possible 2 action, including issuance of a procurement, on 3 minority marketing market advertising services 4 contract. Ridgely Bennett. Ridgely. 5 MR. BENNETT: Commissioners, I believe 6 that you-all missed item Number 12 on the agenda. If 7 you would like to take that up first. 8 CHAIRMAN CLOWE: Sorry about that. 9 Billy, we passed over you. Let's go back to that. 10 Consideration and possible discussion 11 and/or action on a matter involving the Garland 12 Chamber of Commerce. 13 MR. ATKINS: Thank you, Mr. Chairman 14 and Commissioners. The Garland Chamber of Commerce 15 became aware of a warrant hold in place on their 16 account by the Charitable Bingo Division. And very 17 briefly, the facts specific to this case are as 18 follows: The Garland Chamber of Commerce -- that 19 goes -- yeah. The Garland Chamber of Commerce 20 conducted bingo from September of 1992 to September of 21 1994. The Garland Chamber of Commerce filed a 22 quarterly report in October of 1994 after their 23 license had expired showing price fee due to the state 24 of some $5,200. They submitted with that quarterly 25 report payment of $1,800, leaving the balance due of WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 44 1 approximately $3,400. Because the license expired 2 prior to the quarterly report being filed, the agency 3 had no jurisdiction to take any sort of disciplinary 4 action against the organization. However, the 5 organization was identified as delinquent to the 6 comptroller's office and placed on warrant hold. 7 Additionally, the organization over this period of 8 time has been assessed a penalty of approximately $696 9 and accrued interest totaling almost $1900. After 10 becoming aware of the liability, the Garland Chamber 11 of Commerce paid the remaining principle amount of 12 $3,481 on May 26th of this year. 13 There are other organizations that are 14 no longer licensed by the agency that have outstanding 15 liabilities. Those liabilities could be price fees, 16 gross rental tax, or gross receipts tax. All of these 17 organizations have been placed on pay hold with the 18 comptroller's office. 19 Now, by way of history, when bingo 20 transferred over to The Lottery Commission, there were 21 a number of organizations with outstanding liability 22 that were being allowed by the Texas Alcoholic 23 Beverage Commission to renew their license and 24 continue to conduct bingo. It was at the time and has 25 remained the policy of the Texas Lottery Commission to WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 45 1 require all liabilities to be paid and all 2 organizations to be current in their payments to the 3 State. 4 In June of 1994, The Lottery Commission 5 authorized the executive director to enter into 6 partial payments agreements with active licensees to 7 pay off their outstanding liabilities. The PTA 8 required that the licensee pay their outstanding 9 liabilities and also remain current with all payments 10 to the State. The item -- and that's just for 11 historical information. 12 The item that's on the agenda today for 13 your consideration is inactive organizations or 14 organizations that are no longer licensed by the 15 agency. So what I would like to propose is the 16 following process for the bingo division to follow in 17 regards to inactive licensees. 18 First of all, we'll notify all inactive 19 licensees at the address we have available of the 20 outstanding liability. We'll notify the organization 21 that they've been placed on warrant hold with the 22 comptroller's office and explain exactly the 23 consequences of being on warrant hold. We'll notify 24 the organization that liabilities to the State are 25 subject to collection by the Attorney General's WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 46 1 Office. We'll offer the organization the opportunity 2 to pay the liability, either in a lump sum or through 3 some sort of payment plan negotiated with the 4 division. Based on each individual case and the facts 5 specific to each of those cases, the division would 6 like to consider waiving penalty and interest for 7 those organizations who exercise reasonable diligence 8 in paying off the liability. And currently we would 9 plan on providing this notification to all of the 10 affected organizations either annually, or notify them 11 annually as well as at the time of the status change 12 to their license. 13 MS. KIPLIN: And Commissioners, with 14 regard to the -- I'll paraphrase it -- the, quote, 15 delegation authority issue, in my mind, I've been 16 trying to decide whether it would be better to do it 17 by order or by direction. And I'd like to have some 18 time to kind of mull that over, because I think it's 19 an important issue. It may affect other areas. In 20 other words, they may challenge his authority and say 21 that he didn't specifically delegate it. So with that 22 part, I'd like to think about it and come back with 23 you-all at the next commission meeting. 24 With regard to this particular entity, 25 I think we're prepared to make a recommendation and WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 47 1 prepared to have you-all direct your bingo director 2 about how you best wish to proceed. And frankly, 3 under his duties, how best to proceed with these other 4 organizations in connection with what he has just laid 5 out before you. 6 COMMISSIONER SADBERRY: And if I may, 7 Mr. Chairman? 8 CHAIRMAN CLOWE: Sure. 9 COMMISSIONER SADBERRY: Thank you, 10 Billy, and thank you, Kim. Actually, I requested that 11 this be placed on the agenda in order to be in 12 position that The Commission is to receive this 13 information in the form of a meeting and assess the 14 extent to which, if at all, it is considered a matter 15 of policy. In my mind, would be the only way in which 16 it would involve us, or if it needed direction from 17 us. I think initially, there was some concern that to 18 do anything other than adhere in strict conformity 19 with what occurred in 1994 would be in violation, or 20 certainly contrary, to what occurred in 1994. I think 21 we now know that not to be the case. We also, in 22 fact, know there is statutory authority that would 23 support any action of this nature. And I think Billy 24 made the point of distinction between an active 25 licensee who -- all of whom were the subject of this WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 48 1 1994 rule, as opposed to an inactive licensee over 2 which the agency does not continue to have 3 administrative regulatory authority, but still has 4 some tangential involvement. Because of us, the 5 warrant hold exists. And because what we might do in 6 terms of waiving penalty and interest might, in fact, 7 affect whether or not the warrant hold is there. So 8 you're talking about rights involved here to receive 9 payment in other areas that don't involve us that we 10 are affecting. 11 Now, that having been said, given the 12 wise and consistent counsel of our general counsel 13 throughout these years, and as you all know, we can't 14 talk about that as commissioners unless we are in a 15 meeting. And so to get too far downstream in doing 16 anything without the commissioners' involvement poses 17 a potential problem. 18 But by the same taken, you have people 19 who are interested in their money. And their 20 representatives are interested in their rights who 21 want action. And you have to be able to do something 22 in the meantime. 23 And I want to compliment you both in 24 what I understand as how you've handled this that 25 accomplishes all those goals and keep your arms around WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 49 1 the whole issue, but at the same time take care of 2 business. And I think, from what I know, you did a 3 good job on that, and I appreciate that. And give my 4 colleagues a chance to know the history in a formal 5 proceeding, and yet gives you a chance to function as 6 you need to do so in your office. 7 COMMISSIONER WHITAKER: I have a couple 8 of questions. What is going to be the communication 9 of the AG's Office concerning this? 10 MR. ATKINS: It's my understanding, 11 Commissioner Whitaker, we're still doing some research 12 in that area. But the Attorney General's Office does 13 have rules in place regarding the reporting by 14 agencies of delinquent accounts. I think Kim has some 15 additional information. 16 MS. KIPLIN: As I recall -- and I was 17 trying to hunt down the statute today. But as I 18 recall, there is a requirement -- I think it used to 19 be in the appropriations act. But a bunch of the 20 riders in Article 9 got moved into general law. Any 21 uncollected debt needs to be -- is required to be 22 reported to the Attorney General's Office. Those 23 referrals generally will be assigned to the 24 collection -- bankruptcy and collection division. 25 They handle the business of the entire state. As a WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 50 1 result, based on their available resources, they do 2 set threshold amounts upon which they will attempt to 3 allocate resources, mainly attorney time, to collect 4 those debts. It's my -- as I recall, it's my 5 recollection and my understanding that the debts that 6 are being accumulated in the bingo division are pretty 7 small in the great scheme of the work that the 8 collection division has to do. So my sense is that 9 they probably would not be given an aggressive 10 attention by that division. I would like to be able 11 to visit with their division chief and see what his 12 feel is on it. And I'm really going more on 13 background on the Lottery side of the house as 14 somewhat of the foundation for what I'm telling you 15 today. I think the bingo division does intend to 16 apply the statute reports and refer these over. And 17 it's going to be up to the AG's Office to decide how 18 best to handle all the business of the State that they 19 must take on. Does that answer your question? 20 COMMISSIONER WHITAKER: Yes, it does. 21 And another question I have is, what 22 percentage of people or the organizations we're 23 talking about have current addresses, to your 24 knowledge? 25 MR. ATKINS: I don't know, Commissioner WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 51 1 Whitaker, because we haven't -- 2 COMMISSIONER WHITAKER: Been in 3 communication? 4 MR. ATKINS: We haven't been in 5 communication. 6 COMMISSIONER WHITAKER: Would there be 7 an effort to issue more than one notice? 8 MR. ATKINS: Again, being, you know, 9 very early in the process of developing our procedure, 10 I think there would. We do -- and I'm just, you know, 11 again kind of talking off the cuff. But we would do 12 notification to the last address of record we had. If 13 that came back, you know, as undeliverable, we might 14 look to the IRS 501(c) exemption file, see if they had 15 a different address. There are some different places 16 that we could look if things came back. But we would, 17 you know, make several attempts to get in contact with 18 the organization. My guess is, a lot of the 19 organizations will, in essence, no longer exist. 20 COMMISSIONER WHITAKER: Because my 21 concern would simply be that we have a system in place 22 that is fair and evenhanded. So understand that's the 23 gist behind this. 24 MS. KIPLIN: I will -- once again, the 25 difference is that this entity is no longer licensed WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 52 1 by this agency. Those entities that hold a current 2 license, both on the Lottery side and the bingo side, 3 are required, either by statute or by a combination of 4 statute and rule, to notify us of any sort of material 5 changes in their application within ten days of the 6 date of that change. One material change, of course, 7 is an address change. Even with their own body of 8 licensees, we find that we don't receive timely 9 notice. And these folks are even further removed and 10 not under that umbrella because they no longer hold a 11 license with the agency. 12 COMMISSIONER SADBERRY: And if I may. 13 Commissioner, you raised a good point, the fairness 14 and evenhanded thing. And I just want to drive this 15 nail home. I think it's already there. If The 16 Commission -- which can change the rule of policy any 17 time it wants to. But if it adheres to the 1994 18 policy, current licensees, according to what we did 19 then and cause to exist, which have them pay all 20 penalty and interest. And it is only a nonlicensed 21 entity that would be -- if we were to do something 22 like this, receive consideration of a waiver of 23 penalty and interest. And we don't see any fairness 24 issues, unequal treatment issues in that, I guess. 25 MS. KIPLIN: I think you've raised it WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 53 1 to the use of the word policy. And I think what would 2 be maybe a better statement, for lack of a better 3 word, would be that bingo division is going to be 4 looking at these on an individual basis and looking at 5 the phrase reasonable diligence and determining 6 whether an entity has exercised reasonable diligence 7 in terms of paying off their debt. And you know, may 8 or may not apply to current licensees. It would be a 9 phrase of reasonable diligence. I will say that if 10 it's in the form of a contested case proceeding, it 11 will come before you and you'll have that. 12 COMMISSIONER SADBERRY: Well, I just 13 wanted to raise it. I wanted to say it the best way 14 it can be said. But what we don't want, it seems, is 15 if we start, you know, too much in this area, we're 16 going to have issues of fairness if the current 17 licensees got any consideration. And we saw what was 18 at the heart of the 1994 TABC. Not to raise that 19 issue. But the way they had operated it was not 20 requiring, in all instances, payment. And at that 21 point in time, issues of waiver of taxes and 22 entitlements of the State came into play. It doesn't 23 seem like those come into play now because penalty and 24 interest has been explained to me are not of that 25 degree of property of the State to do that. But you WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 54 1 also have to look at fairness and application and how 2 much discretion and what factor of discretion is 3 exercised, particularly as to current licensees. I 4 just throw that out there because I know it's going to 5 be done right. It will come to us. And it will be 6 enough of an issue of the people, of rights and 7 process and all that. 8 MS. KIPLIN: Sure. And I guess one 9 thing that The Commission could consider -- and 10 certainly we'll notice this up for another Commission 11 meeting if that's the desire of The Commission -- is 12 possibly directing the staff to promulgate a rule that 13 would be generally applicable that would set out some 14 sort of framework mechanism on what we're discussing 15 today and its applicability to licensees and, of 16 course, nonlicensees who owe a debt. Just a thought. 17 COMMISSIONER WHITAKER: Yeah. I would 18 like that, because one of the key distinctions between 19 existing and prior licensees would have been the 20 notice issue, you know. And the ongoing nature of 21 getting notices if they're existing. And the fact 22 that there was some concern that if they were no 23 longer a licensee, that they didn't know, for example. 24 And so to me, that's a key distinction. But I'd like 25 us to have just a consistent framework. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 55 1 CHAIRMAN CLOWE: Billy? 2 MR. ATKINS: I was just -- 3 Mr. Chairman, one -- the one final thing I wanted to 4 point out, this warrant hold has existed for this 5 organization since '94, and it's just come up. And it 6 was the first time that I recall it coming up. I was 7 reminded by my staff that there had been one other 8 occasion approximately two years ago when this came 9 up. And the organization, you know, immediately paid 10 everything. So that kind of goes back to, I don't 11 know how many of these organizations still exist 12 because it's not a common problem. But I do believe 13 it's prudent on our behalf to at least provide the 14 notification and take those steps. 15 And to kind of follow up with what Kim 16 was saying, in the case of the specific organization 17 that's noticed on the agenda today, Garland Chamber of 18 Commerce, it is my opinion, at least, that they did 19 exercise reasonable diligence in paying off the 20 principal amount as they became aware of it. So if 21 it's The Commission's pleasure, I would like to 22 recommend that we at least in that case be able to 23 move forward and close this account and get them off 24 warrant hold. 25 CHAIRMAN CLOWE: My reaction is that WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 56 1 this has been an excellent discussion. And I think 2 it's been meaningful and helpful to -- certainly to 3 myself and Commissioner Whitaker. I don't think the 4 notice covers any action other than action on the 5 Garland Chamber of Commerce. We need to have posting 6 that it would be broad enough to cover any action that 7 would come as a result of this discussion. But you 8 only asked now for action in regard to the Garland 9 Chamber of Commerce? 10 MR. ATKINS: Yes, sir. 11 CHAIRMAN CLOWE: Is there a motion? 12 COMMISSIONER SADBERRY: What is the 13 proposal? Have I missed that? 14 MS. KIPLIN: Well, I think what the -- 15 what the bingo division would like would be to have 16 you-all consider the resolution that's been before you 17 on the Garland Chamber of Commerce. And that 18 resolution is that they pay all the principal. And 19 because you've got an opinion from your bingo director 20 that they have exercised reasonable diligence, waive 21 the penalty and interest, call it a day, and enter 22 into some sort of understanding with them. And I'm 23 using very generic language on this. Some sort of 24 understanding because of the formal agreement. I 25 certainly would like that language to be reviewed by WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 57 1 the collections division for whatever presidential 2 value it might have on other cases. Or just by way of 3 notification in a letter. So some sort of document 4 with this particular entity. 5 And then on the other item that 6 Chair Clowe brought up with regard to actions on the 7 bigger picture, I'd be glad to bring that back and 8 notice it up. And probably throw in possibly a 9 proposed rule. I'm talking pretty fast. And I want 10 to give Billy an opportunity to tell me later if he 11 wants to go a different direction or whatever. But I 12 think where we are now is, there is a consideration 13 that if we were to come before The Commission on each 14 one of these matters, and you have this entity on a 15 warrant hold, there is a delay, even though in this -- 16 for example, this case, they went ahead and paid. And 17 so they've got a payment that's been received, 18 accepted, deposited in the general revenue fund. And 19 they're waiting to be taken off of warrant hold. So I 20 throw that in at the end as kind of an up for 21 directions for bingo director to go forth and handle 22 these matters consistent with the direction of The 23 Commission. 24 COMMISSIONER SADBERRY: I'm going to 25 take a fraction of what Kim said. And I'm going to WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 58 1 move the adoption of the proposed resolution of the 2 bingo division with respect to the Garland Chamber of 3 Commerce. 4 COMMISSIONER WHITAKER: Second. 5 CHAIRMAN CLOWE: All in favor, say aye. 6 Opposed, no. 7 The vote is three to zero in favor. 8 Thank you, Billy. 9 MR. ATKINS: I'll move forward. 10 CHAIRMAN CLOWE: Now, Ridgely, we're to 11 you on the item consideration and possible discussion 12 and/or possible action, including issuance of a 13 procurement, on the minority market advertising 14 services contract. 15 MR. BENNETT: Thank you, Commissioners. 16 This item is on your agenda for direction from The 17 Commission. By way of background, for the first time 18 since the Lottery's inception last year, The 19 Commission split out from the general marketing, 20 general advertising services minority marketing 21 advertising services. We entered into a contract with 22 the King Group that will expire October 31st, 2000. 23 We do have two options to renew at the sole discretion 24 of the Lottery. However, I think that it's staff's 25 point of view that if we reissue the RFP since it was WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 59 1 our first attempt -- and the King Group has done an 2 excellent job. I think everybody has been very 3 satisfied with the creative work that they have done. 4 However, I think we can find a way to better explain 5 the services that the minority marketing advertising 6 services vendor is supposed to do and perhaps find a 7 way to make it a more economically viable contract for 8 the -- for the vendor. Mr. King has indicated to 9 staff that he is either losing money on the contract 10 or not making money on the contract. And of course, 11 it's never our intention to more or less kill off one 12 of our vendors if we -- if we don't necessarily have 13 to. So at this time, staff -- this does not 14 necessarily require a Commission action. But we would 15 like Commission direction on whether or not a new RFP 16 should be issued. And I'd be happy to answer any 17 questions at this time. 18 COMMISSIONER SADBERRY: Ridgely, you 19 might recall at the time you announced this contract, 20 I asked you if there was backup. And I believe you 21 said there was not. And I had a reason for that. And 22 I think it's kind of playing up. And I think I'm 23 speaking as one person here. I think you do what you 24 have to do to consider all factors. And as the bigger 25 picture, even the King Group in this particular WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 60 1 contract, and that is your media relations matters. 2 And Mr. -- I don't recall his name right now, the 3 African-American newspaper in Houston. 4 MS. CLOUD: Yes. Malonson. 5 COMMISSIONER SADBERRY: Malonson. I'm 6 sorry. And the meeting you had. And whatever issues 7 that are continuing -- and it seems like you have 8 addressed them in their satisfaction and accord, all I 9 know. And if this is consistent with what you need to 10 accomplish and is a departure from what we've ever 11 done before. And that perhaps can account for the 12 need to have some starting and stopping as long as we 13 don't sacrifice State money and efficiency of our 14 agency to accomplish these things, as I see it. One 15 person here talking. Because I'm not sure we either 16 guarantee profit or loss when a person -- when any 17 entity contracts and bids. That's kind of the way it 18 goes. And I'm for one rule that fits all. But I also 19 understand exigent circumstances that might require 20 administrative discretion with the appropriate 21 policy -- well, actually, not policy. But the 22 appropriate administrative reason to do so if that is 23 clear that's why we're doing it. Other than we're 24 somehow tacitly de facto making some guarantee of 25 results. Those are just my views. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 61 1 MR. BENNETT: And commissioner, I think 2 it's clear that we can't guarantee results. And we 3 expect the best value that we can for the State 4 dollar. However, we've had very long and detailed 5 conversations with both Mr. and Mrs. King on the 6 services that are required under the contract. And 7 through those conversations, I think we've found a 8 number of ways to make it a better contract for all 9 parties involved. 10 COMMISSIONER SADBERRY: Including the 11 State? 12 MR. BENNETT: Including the State 13 stuff. 14 COMMISSIONER WHITAKER: Can you give us 15 an example of a couple of those? 16 MR. BENNETT: Certainly. I think, as 17 was pointed out by Commissioner Sadberry, there has 18 been a lot of conversations with minority newspapers 19 about what type of documentation is going to be 20 required before -- or regarding how many papers they 21 put out or publications they put out before the 22 Lottery will do business with us. That has been a 23 very time-consuming process for our vendor. And quite 24 frankly, something that he said he did not anticipate, 25 I think when we put out a new RFP, we can make it WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 62 1 perfectly clear to all vendors involved that this is a 2 detailed and complex process and that it will indeed 3 take a good deal of staff time in order to achieve. 4 So I think in one circumstance, we can be better and 5 clarify more what is going to be expected of the 6 vendor. 7 MS. CLOUD: But I would like to add to 8 what Ridgely is saying there. During their -- when 9 they came in to demonstrate their products and present 10 to us, I personally made it real clear to each and 11 every one of them the problems that we'd had in the 12 past and what it was going to require the vendor to do 13 in order to monitor what was going on with 14 subcontractors. And they did not know firsthand how 15 much effort that was going to take. But they were 16 more than willing to have the contract and do what we 17 were requesting at the time. So we did advise them 18 that this was going to be the burden of the -- of the 19 advertising agency to keep -- you know, to monitor 20 this. And any time that we found out that an 21 advertisement didn't take place when we paid for it, 22 that it would be the responsibility of the vendor -- 23 you know, we put that load back on the vendor. 24 COMMISSIONER SADBERRY: I think, 25 though, there has been some slippage, Linda, though WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 63 1 with -- not -- now, I'm not talking about you and your 2 performance. I'm just saying with your interaction 3 with the auditor's office on your lack of faith in 4 some of these audit companies and whether that 5 compounded -- not anything you had any control over. 6 That someone could come back and say that no one could 7 have anticipated that we'd have where the State people 8 were having problems with the confidence with what 9 they were requiring to be done. I'm not defending 10 them. I'm not justifying at all. Because I come back 11 to my statement. A deal is a deal. But I understand 12 there may be reasons that you can justify doing it 13 over again. 14 MS. CLOUD: And that's the -- that is 15 one of the primary reasons that we wanted to consider 16 that. Because if we -- just being in the venture for 17 us as well as the minority advertising agency who was 18 going to take over this contract, then we could look 19 at where the burdens have seemed to come and try to 20 modify that the best way we can in the best interest 21 of the State. 22 MR. BENNETT: And if I could clarify 23 one thing the executive director said. The contract 24 is not necessarily set aside for a minority 25 advertising agency. What we're looking for is WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 64 1 somebody who has knowledge and ability in dealing with 2 minority media markets. 3 COMMISSIONER SADBERRY: And I took it 4 that way. 5 MR. BENNETT: Okay. 6 CHAIRMAN CLOWE: Is Mr. King in 7 attendance at the meeting? 8 MS. CLOUD: No, sir. 9 CHAIRMAN CLOWE: Was he notified? 10 MS. CLOUD: He -- we talked to Mr. King 11 yesterday. Yes. 12 COMMISSIONER SADBERRY: Did he indicate 13 whether he planned to attend? 14 MS. CLOUD: Well, he talked like 15 that -- at one time that he would attend. And then by 16 the end of the conversation, we didn't really know for 17 sure. 18 COMMISSIONER SADBERRY: I believe my 19 recollection is, he has attended at least two 20 meetings. 21 MS. CLOUD: Yes, he has. 22 COMMISSIONER WHITAKER: Linda, do you 23 support the idea of thinking this through and the idea 24 of reissuing an RFP? 25 MS. CLOUD: Yes, I do. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 65 1 COMMISSIONER WHITAKER: And your 2 reasons for it are? 3 MS. CLOUD: Well, it's certainly not 4 our desire to have our first vendor that holds this 5 contract to have financial burdens because of the 6 contract. And if that's the -- and that's the -- kind 7 of the message we're getting. So in order to relieve 8 that burden -- he can also bid the second time around, 9 you know. There is nothing to prevent that. And we 10 have been very pleased, I will tell you that, with 11 everything he's produced for us, that company. I 12 mean, they have done a very good job. But rather than 13 to hold them to a contract and extend a contract if 14 they're not -- if they're in a financial burden, then 15 I think it's in the best interest of everybody for us 16 to rebid the contract. 17 MR. BENNETT: And Commissioners, I 18 think there's also an interaction that occurs between 19 the general market advertising agency and the minority 20 market advertising agency and how the services are 21 split out and who's going to do what for the 22 Commission. I think we've gone through a learning 23 process on ways that those could be split out and how 24 those two entities would have to interact. And I 25 think that would be clarified in a new RFP. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 66 1 COMMISSIONER SADBERRY: I don't mean to 2 interrupt Commissioner Whitaker. Who pays his travel 3 when he comes? 4 MS. CLOUD: He does. 5 COMMISSIONER SADBERRY: Out of his 6 contract? 7 MS. CLOUD: Yes. Well, he pays for it. 8 We don't know how it -- where it comes from. But 9 he -- it's a seven million dollar contract. 10 COMMISSIONER SADBERRY: Is this 11 something that the minority marketing division, 12 whatever its proper name is, does to assist in 13 situations like this where people who are 14 entrepreneurs may not be as familiar with the bidding 15 process as perhaps other vendors who have participated 16 in the majority market and some history and experience 17 there, that they would receive some type of -- in 18 addition to what you say, this is what's involved, 19 have you sat down with them and gone over -- assisting 20 with the bidding process? Is that even something 21 that's appropriate? 22 MS. CLOUD: The minority coordinator 23 has -- that's not been part of their responsibility 24 for this particular project since this is a new 25 project. However, Brenda Flores has -- this is her WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 67 1 oversight. She -- this is her job responsibility. 2 She's been to their location. She sat down with them 3 on how to fill out their bills. How to turn in their 4 invoices so they could get paid. She has been working 5 with them almost on a daily basis. So as far as them 6 getting the instructions and the assistance, I don't 7 have any doubt in my mind they have gotten everything 8 we could provide them with. 9 MR. BENNETT: And Commissioners, there 10 was a prebid, preproposal conference the last time we 11 put out the RFP. And Loretta Hawkins was part of the 12 team that presented information to prospective 13 proposers, including information about the bidding 14 process. 15 COMMISSIONER SADBERRY: As I said, I 16 kind of jumped in here because I thought Commissioner 17 Whitaker's question was extremely on point. And I 18 don't think it had been asked before directly. And 19 that was a pretty direct question. I can feel running 20 around in my mind some reasons for doing this. But I 21 will just say it certainly would make a more complete 22 record if Mr. King could have been able to attend. 23 And if you just told him yesterday, I don't know what 24 his commitments are, in fairness to him. If that's 25 when he first knew. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 68 1 MS. CLOUD: We've had meetings. We've 2 had several meetings with Mr. King before yesterday. 3 COMMISSIONER SADBERRY: It would 4 certainly be -- it could certainly be helpful to know 5 if this is also his desire, after careful reflection 6 and consideration, that this be done. You can have a 7 thought, and then you can have an after thought once 8 you hear an airing of views and factors to think about 9 if he were on record. So we would be clear that 10 that's his -- that we are interpreting his desire 11 because, you know, it is his contract now, win or 12 lose, like it or not. 13 MR. BENNETT: Commissioners, if I may 14 make a suggestion. You could direct staff to begin 15 preparation work on a new RFP and allow Mr. King to 16 come to the next commission meeting to make a 17 presentation, depending on the timing. Because of 18 course, in order to go through the process, we do need 19 some time to issue an RFP. But if there is a 20 commission meeting early next month, we could hold off 21 on issuing a new RFP or, in fact, pull down an already 22 issued RFP should you -- should you determine that you 23 would prefer not to go through with the process. 24 COMMISSIONER SADBERRY: Well, didn't I 25 hear you say August 2000? WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 69 1 MR. BENNETT: August 31st, 2000. 2 That's correct. 3 COMMISSIONER SADBERRY: Aren't we going 4 to run out of time anyway? 5 MR. BENNETT: We will. We need to get 6 the RFP on the street early next month. 7 COMMISSIONER SADBERRY: So you're 8 looking at a new contract? 9 MR. BENNETT: I'm looking at a new 10 contract. 11 COMMISSIONER SADBERRY: So that might 12 be yet another reason to go ahead. This one -- this 13 one is history, it seems like. It started -- 14 MS. KIPLIN: Well, the contract that's 15 currently in existence does have an opportunity to 16 renew. You could do that. Or what -- I think what 17 I'm hearing Ridgely say is, let's get moving on 18 getting an RFP. We could even issue it. We always 19 have a provision that's boilerplate language in all of 20 our RFPs. And I believe our invitations forbid that 21 we can pull down those RFPs. So it would be just 22 simply doing that if you decided you wanted to stay 23 where you were and renew. 24 COMMISSIONER SADBERRY: For those of us 25 who have -- for those of us who have had the pleasure WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 70 1 of being invited to respond to inquiry through the 2 course of time and have from time to time every two 3 years or so on why we do what we do know the 4 importance of having a clear record. Because we can 5 get some rather pointed questions, particularly those 6 of us who are in certain positions, that may not 7 realize what we do now affects possibly how we are 8 perceived. And I'd just like a clear record. I'd 9 like a clear understanding. And then we can make a 10 decision and do the best we can to achieve all these 11 good objectives. And I'm hearing good reasons for 12 doing this. But I'm not hearing a clear record, 13 certainly from the person who owns the contract. 14 MS. CLOUD: And I'd like to just add 15 and remind the commissioners this was my project 16 originally to split this contract out so that we had a 17 better assurance that minority subcontractors or 18 contractors were getting Lottery dollars. And it was 19 a way that we had to add to our minority spending 20 budget, which is what I wanted to see happen. And I 21 wanted to see a good proportion of the advertising 22 dollars going in that direction. And I'm -- the last 23 thing I wanted to do is to put anybody in a position, 24 because they bid on something and they wanted it so 25 bad, that they bid maybe too low, and it's putting WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 71 1 them in a -- in a financial bind that we continue or 2 force them to stay within the contract. So I -- 3 this -- we'd be more than happy to -- I would be happy 4 to move this forward if we have an early meeting and 5 let Mr. King come and tell you his side of the story. 6 COMMISSIONER SADBERRY: No. I wanted 7 to hear that. I think the record is clear. I think 8 you just reach a point where you've got to move 9 forward. I don't want to impose on Mr. King. I don't 10 have any indication of whether he's here or not. I 11 think that is a factor. But you have to do what you 12 have to do. You have the input that he's provided to 13 you. You've considered all factors. I'm presuming 14 you've been in contact with the appropriate officials 15 who might have an interest in the result. Certainly a 16 good -- a good objective, one to be lauded. Probably 17 a leadership position among the State agencies. So I 18 mean, you can't do anything but praise that. But 19 you've got to take care of business. And if that's 20 what you're seeing you need to do, I don't -- I don't 21 see any reason to delay if that's the sense of the 22 committee. So to the extent I've interjected -- and 23 I'm not proposing to delay it. I just want clarity. 24 COMMISSIONER WHITAKER: Yeah. I'd just 25 make a couple of comments, that the fact that it is WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 72 1 coming up to its natural end is, I think, a 2 significant thing. And also that you stated that this 3 is a new contract. And that everybody is in the 4 process of learning how it works in actuality. And 5 that there are benefits to be gained by The Lottery 6 Commission as well as the vendor in thinking it 7 through again. And based on that, I think it makes 8 sense to move forward and to draft such an RFP for 9 us -- our consideration next time. 10 MS. KIPLIN: Commissioners, if I could 11 just add one more thought. You know, it has been -- 12 and this is by way of background. It has been the 13 general direction of The Commission to not remove 14 contracts, not to exercise the option, and to issue 15 RFPs. I think one thought, one area of thinking on 16 that was to ensure that the State really was receiving 17 the best value for the money it was paying for the 18 services. And the way to do that was competitive 19 procurement. So going out to bid, even though there 20 are renewal options that are available, is not 21 inconsistent with the general direction The Commission 22 has given in the past. 23 CHAIRMAN CLOWE: Ridgely, question. If 24 this process is operating and the deadline comes, can 25 the contract lapse, short term, month to month, or is WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 73 1 it automatically renewed on some longer term? 2 MR. BENNETT: The contract as currently 3 written allows The Commission at its sole option to 4 renew the contract for one-year periods. The contract 5 can be amended so that you could amend the renewal 6 period. But that would take both parties to agree to 7 that. So we could not impose on the King Group our 8 desire to extend the contract for an additional three 9 or four months. That is something that would have to 10 be negotiated. 11 CHAIRMAN CLOWE: But if there was 12 mutual agreement, that could be accomplished? 13 MR. BENNETT: That's correct. 14 CHAIRMAN CLOWE: Other than a one-year 15 renewal? 16 MR. BENNETT: That's correct. 17 COMMISSIONER SADBERRY: And could you 18 also amend the compensation terms or whatever the 19 issues concerning the profit? Could that be amended, 20 or just the term of the contract? 21 MR. BENNETT: There are State laws 22 regarding the ability of State agencies to add 23 additional -- to give out additional funds or 24 compensation to vendors without receiving additional 25 services. So we would be extremely limited in that WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 74 1 regard. 2 COMMISSIONER SADBERRY: That might 3 affect the willingness of the mutual -- 4 MR. BENNETT: That may -- and it also 5 may be affected by the type of work that we give to 6 them to do. There are some things that they do that 7 are more profitable than other things that they do. 8 CHAIRMAN CLOWE: You would be, in fact, 9 changing the contract? 10 MR. BENNETT: We would be, in fact, 11 changing the term of the contract, not necessarily the 12 services that they're rendering thereunder. 13 CHAIRMAN CLOWE: Well, you're saying to 14 Commissioner Sadberry, you can't change the services. 15 You can -- you can change the terms -- 16 MR. BENNETT: Correct. 17 CHAIRMAN CLOWE: -- with mutual 18 agreement. But not -- 19 MR. BENNETT: You can -- you can change 20 the services. What I was trying to point out is that 21 the King Group may or may not be more willing to 22 extend the contract if they have an understanding 23 about the types of jobs that we would give them to do, 24 simply because it's our option what we give them to 25 do. There are a number of things that they could do WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 75 1 for us. There are some things that they do where 2 apparently they're losing money on. There are some 3 things that they do where they could actually make 4 some money. So depending on what we're giving them to 5 do and what we need for them to do may be a 6 significant factor in extending the contract. 7 COMMISSIONER SADBERRY: What you're 8 saying is, if I'm reading you correctly, if you were 9 to get into that discussion, you're not in the frame 10 of mind to want to negotiate on that level without the 11 procurement process? 12 MR. BENNETT: Correct. That's correct. 13 CHAIRMAN CLOWE: I'm getting a sense 14 this train is leaving the station now. And I want to 15 make a comment before any action takes place. I think 16 this has been an excellent discussion this morning. 17 And I'm very much in favor of these kinds of records 18 being made. I think this process has been very 19 beneficial to The Commission and to the people of the 20 state of Texas. Linda, it was an excellent project. 21 And I think it has achieved benefits for us. We've 22 had public appearances on behalf of a number of 23 individuals about this contract, the work that is 24 ongoing. And I think it is improving The Commission's 25 ability to see that its choices are implemented in a WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 76 1 positive and correct way. So I'm very much in favor 2 of what's gone on here this morning and the process. 3 And would there be a motion? 4 COMMISSIONER SADBERRY: I would move, 5 if it's appropriate -- is this an action item? 6 MS. KIPLIN: Yes. 7 MR. BENNETT: This is an action item. 8 COMMISSIONER SADBERRY: I would move to 9 proceed with the procurement process, which would 10 include the issuance of a RFP. If it's appropriate to 11 have a compound motion, define that with keeping all 12 options open with respect to the current contract that 13 would be appropriate as deemed by the staff to do so. 14 MS. KIPLIN: It is appropriate. 15 COMMISSIONER WHITAKER: Second. 16 CHAIRMAN CLOWE: Motion is made and 17 seconded. 18 All in favor, say aye. 19 Opposed, say no. 20 The vote is three to zero in favor. 21 MR. BENNETT: Thank you, Commissioners. 22 CHAIRMAN CLOWE: Thank you, Ridgely. 23 At this time, I move the Texas Lottery 24 Commission go into executive session to deliberate the 25 duties and evaluation of the executive director, WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 77 1 internal auditor, and charitable bingo operations 2 director pursuant to Code 551.074 of the Texas 3 Government Code. 4 To deliberate the duties of the general 5 counsel and security director pursuant to Section 6 551.074 of the Texas Government Code. 7 To receive legal advice regarding 8 pending or contemplated litigation and/or legal advice 9 pursuant to Section 551.071(A) or (B) of the Texas 10 Government Code and/or to receive legal advice 11 pursuant to section 551.071 (2) of the Texas 12 Government Code, including but not limited to 13 T&T Interest, Inc. versus Texas Lottery Commission, 14 et al. 15 Thomas Araiza, A-r-a-i-z-a, Jr. versus 16 Carole Keeton Rylander, Comptroller of Public 17 Accounts, and the Texas Lottery Commission. 18 Matter involving the Department of 19 Justice pursuit of a complaint regarding the Americans 20 with Disabilities Act. 21 Matter involving request for open 22 records decision and Attorney General Open Records 23 file Number 119718-98 relating to request for 24 information in connection with the lottery operator. 25 Audit matter involving open records. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 78 1 Matter involving Wild Card Cash instant 2 game. 3 Matter involving employee complaint. 4 Matter involving agency purchases. 5 Matter involving brokerage arrangements 6 insofar as HUB/minority business participation is 7 concerned. 8 Employment law, personnel law, 9 procurement law, and general government law. 10 Is there a second? 11 COMMISSIONER WHITAKER: Second. 12 CHAIRMAN CLOWE: Motion is made and 13 seconded. 14 All in favor, say aye. 15 Opposed, no. 16 The vote is three to zero in favor. 17 The Texas Lottery Commission will go 18 into executive session. The time is 10:09 a.m. The 19 day is June 14th, 2000. 20 MS. KIPLIN: The only, I guess, 21 clarification I would like to make is the citation on 22 the legal advice was Section 551.071 (1) and then (A) 23 or (B) of the Texas Government Code. 24 CHAIRMAN CLOWE: I am going to keep 25 doing it until I get it right. WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 79 1 We are now moved into executive 2 session. 3 MS. KIPLIN: And the date is -- 4 (EXECUTIVE SESSION) 5 CHAIRMAN CLOWE: The Texas Lottery 6 Commission is out of executive session. The time is 7 12:53 p.m. 8 Is there any action to be taken as a 9 result of the executive session? 10 If not, let's move on to the next item 11 on the agenda, which I believe is item 16. We have 12 six dockets. Kim, the staff is going to handle those 13 with us? 14 MS. KIPLIN: Yes. I'll be glad to lay 15 those out. 16 Commissioners, what you have before you 17 is one bingo case. The remaining are lottery cases. 18 Lottery cases are routine. They are as a result of 19 insufficient funds. They are all the orders, proposed 20 orders, recommend revocation of a license. The bingo 21 case was a contested case where we were requesting a 22 bond be imposed for failure in the past by this 23 organization to pay a prize fee. The ALJ, we 24 wanted -- we wanted the revocation because the 25 organization would not post the bond. ALJ gave the WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 80 1 organization an opportunity to go ahead and post the 2 bond. In the meantime, the organization did not renew 3 its license. Therefore, the proposal for decision in 4 the format that it came from the State Office of 5 Administrative Hearings is moved. You no longer have 6 a license to take any action, including compelling a 7 bond be posted. We filed a motion to dismiss for 8 mootness. And there is a pending order that will 9 dismiss this case for mootness. We recommend that you 10 sign all the orders that we've just referenced. 11 CHAIRMAN CLOWE: Kim, can The 12 Commission deal with all these cases in one motion? 13 MS. KIPLIN: Yes, I believe so. Just 14 adopt my recommendation. The recommendation would be 15 on the lottery cases to adopt the ALJ's recommendation 16 to revoke the licenses. And on the bingo case, to 17 adopt my recommendation that you sign the order 18 dismissing the case for mootness. 19 CHAIRMAN CLOWE: So moved. 20 COMMISSIONER SADBERRY: Second. 21 CHAIRMAN CLOWE: Moved and seconded. 22 All in favor, say aye. 23 Opposed, no. 24 The vote is three-zero approved. 25 The next item on the agenda is a report WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 81 1 by the executive director and/or possible discussion 2 and/or action on the agency's financial and 3 operational status of and/or minority status, FTE 4 status, the Lottery conferences, and retailer forms. 5 Linda. 6 MS. CLOUD: Commissioners, we 7 transferred on May of 2000 $68,190,866, making a total 8 transfer for the Foundation School Fund for FY 2000 of 9 $689,993,109, along with $19,090,000 we've transferred 10 to the multi-category called teaching -- of our 11 unclaimed prize money. 12 The FTE status. We have 293 active 13 AT -- FTEs at this time. We have three in the 14 acceptance pending. We have 23 in recruiting, 15 screening, and interviewing process. We have one in 16 the posting. And we have seven with no current 17 activity going on in that chart. 18 There is nothing to report on 19 conferences, except that we're still moving forward on 20 the national conference. And our staff is doing a 21 very good job of proceeding with making that 22 conference happen in September. 23 As far as lottery town hall meetings, 24 our next town hall meeting will be in Beaumont on June 25 the 22nd. And it will be the first meeting that I've WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 82 1 missed. This will be during the time that I'm on 2 vacation. And Patsy will be standing in for me at 3 that meeting. And that's my report. 4 CHAIRMAN CLOWE: Very good. Any 5 questions, comments? 6 Next item on the agenda is the report 7 by the charitable bingo operations director and 8 possible discussion and/or action on the charitable 9 bingo operations divisions activities. Billy. 10 MR. ATKINS: Thank you, Mr. Chairman. 11 As you can tell from the report on the staffing, we 12 still have vacant audit positions in Dallas that we're 13 working upon getting filled. We've done two seminars 14 in Austin and Odessa and two more scheduled for the 15 month of July. We made allocations for the first 16 quarter of 2000. And a memo is attached in your 17 binder. 18 Also provided you with an update on the 19 status of the charitable bingo system redesign. And I 20 will include from now on until its completion regular 21 updates in this report for you. 22 I have also started to include 23 information on the operator training program. We have 24 held so far sessions in the Austin, San Antonio, and 25 Houston regions. We have scheduled for the remainder WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 83 1 of June, July, and August sessions in the Dallas and 2 Odessa regions. And we have had so far a total of 3 approximately 35 percent of the organizations attend 4 the training. And the general comments that we're 5 getting back, the quality of the program, as well as 6 the quality of the information that's being provided 7 is being ranked anywhere from 80 to 90 percent as 8 being good to excellent. So we're happy with the 9 response that we've been getting from the licensees. 10 The one last thing I wanted to report 11 on that's not in your notebook, Bill Neinast, the 12 chair, asked me to give you a brief update on the 13 meeting yesterday. He'll be providing a more formal 14 presentation at the next commission meeting. There 15 was discussion regarding an issue that had been 16 brought to The Commission previously about 17 recommending the legislative change to allow persons 18 16 or older to work at bingo occasions. Currently, 19 the law limits those to 18. There was considerable 20 discussion yesterday. And they do plan on approaching 21 The Commission again on that issue. 22 Also, we took before them the proposed 23 rule dealing with the training program. There was one 24 suggestion for a technical change, a good suggestion 25 that we incorporated. And at a subsequent commission WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 TEXAS LOTTERY COMMISSION MEETING, 6-14-00 84 1 meeting, we'll be bringing that to The Commission. 2 And that's all I have. 3 CHAIRMAN CLOWE: Very good. Any 4 questions or comments? 5 We're now to item 19 on the agenda, 6 public comment. Are there any members of the public 7 who would like to comment to The Commission? 8 Seeing and hearing none, we will 9 adjourn this meeting of the Texas Lottery Commission 10 at 1:04 p.m. Thank you all very much. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 85 1 REPORTER'S CERTIFICATION 2 3 STATE OF TEXAS ) 4 COUNTY OF TRAVIS ) 5 6 I, MARY SCOPAS, 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 TEXAS LOTTERY COMMISSION 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 26th day of 17 June, 2000. 18 19 20 21 MARY SCOPAS, RPR, Texas CSR No. 5313 22 Expiration Date: 12-31-00 1609 Shoal Creek Boulevard, Suite 202 23 Austin, Texas 78701 (512) 474-4363 24 25 JOB NO. 000614MSH WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363