1 1 ****************************************************** 2 BEFORE THE 3 4 TEXAS LOTTERY COMMISSION 5 6 AUSTIN, TEXAS 7 8 September 28, 1999 9 10 ****************************************************** 11 BE IT REMEMBERED that the above-entitled matter 12 came on for hearing on the 28TH day of SEPTEMBER, 13 1999, beginning at 8:34 a.m., and ending at 3:03 p.m., 14 at the TEXAS LOTTERY COMMISSION, 611 East Sixth 15 Street, Austin, Texas, and the following proceedings 16 were stenographically reported by Leslie P. Boerger, 17 CSR for the State of Texas. 18 APPEARANCES 19 CHAIR HARRIET E. MIERS 20 COMMISSIONER C. TOM CLOWE, JR. 21 COMMISSIONER ANTHONY J. SADBERRY 22 MS. KIMBERLY L. KIPLIN, GENERAL COUNSEL 23 MS. LINDA CLOUD, EXECUTIVE DIRECTOR 24 MR. BILLY ATKINS, CHARITABLE BINGO 25 OPERATIONS DIRECTOR 2 1 CHAIR MIERS: Good morning. I would 08:34 2 like to call the Texas Lottery Commission meeting for 08:34 3 September 28, 1999, to order. We will be meeting a 08:34 4 full day today, hopefully adjourning around 3:00 08:34 5 o'clock, for people's information. 08:34 6 I would like to begin by calling on -- 08:34 7 we have a change in the ruling -- rules that govern 08:34 8 the conduct of open records and open meetings that was 08:34 9 part of the legislative actions, and, in fact, those 08:34 10 rules became effective September 1st, unless I am 08:35 11 mistaken. So we had asked for a report on the extent 08:35 12 to which any changes during the legislature impacted 08:35 13 the operation of the Texas Lottery so we would be 08:35 14 aware of those changes. Ms. Kiplin. 08:35 15 MS. KIPLIN: Diane Morris is the 08:35 16 attorney that's assigned to this matter. She's coming 08:35 17 down, expected momentarily, and until she gets here I 08:35 18 would like to direct your -- we're taking up this item 08:35 19 now. 08:35 20 I would like to direct your attention 08:35 21 to the tab that's tabbed "Open Meetings Act." In 08:35 22 that tab you'll find a bill that's called House Bill 08:35 23 156. The purpose of this bill was to -- or, the 08:35 24 language in the bill is to make clear that what was 08:35 25 typically considered to be a briefing matter, or 08:36 3 1 briefing item, is now going to be considered part of a 08:36 2 meeting. And what this meant was that at the time 08:36 3 that certain commissions, or governmental bodies, 08:36 4 gathered together in a quorum, these governmental 08:36 5 bodies would have a staff employee brief the 08:36 6 governmental body on matters that were within the 08:36 7 public business of the governmental body. Now, to the 08:36 8 extent -- and this has been interpreted by many 08:36 9 Attorney General opinions. To the extent it was just 08:36 10 a briefing where the governmental body was receiving 08:36 11 information from the staff employee, but not 08:36 12 deliberating amongst themselves, that was not 08:36 13 considered to be a meeting under the definition of the 08:36 14 Open Meetings Act. This bill makes clear that now -- 08:36 15 that briefing exception is now considered to be a part 08:36 16 of the Open Meetings Act and will be considered a 08:36 17 meeting for purposes of the Open Meetings Law. 08:37 18 This governmental body has never relied 08:37 19 on the briefing exception when it meets in a quorum; 08:37 20 for example, in Executive Session. And I think the 08:37 21 issue was: How does this impact this particular 08:37 22 governmental body? 08:37 23 It's my opinion, and I wanted Diane to 08:37 24 be here -- Mr. Bennett, do you know if Diane Morris is 08:37 25 on her way? Can you please check? 08:37 4 1 MR. BENNETT: Certainly. 2 MS. KIPLIN: Let her know we're on her 08:37 3 item right now. 08:37 4 Since we have never relied on it, this 08:37 5 is really for informational purposes. We have gone in 08:37 6 Executive Session under those items that are 08:37 7 specifically excepted under the Open Meetings Act, and 08:37 8 we have stayed within the scope of those exceptions. 08:37 9 So I guess it's my position that while this may impact 08:37 10 other governmental bodies, it does not impact this 08:37 11 agency because of the way the agency has conducted its 08:37 12 business in the past. 08:37 13 CHAIR MIERS: Okay. So this -- we 08:38 14 would at least be on notice that this has changed; 08:38 15 that were we to consider using it, it is no longer 08:38 16 available. 08:38 17 MS. KIPLIN: Right. 08:38 18 CHAIR MIERS: And that's the only 08:38 19 change that you have. 08:38 20 MS. KIPLIN: And Ms. Morris may have 21 some comments. Diane, we're on the Open Meetings Act 08:38 22 item. 08:38 23 CHAIR MIERS: Good morning, Diane. 24 MS. KIPLIN: And just to kind of 08:38 25 reiterate what's -- what I've laid out is House Bill 08:38 5 1 156, which has that briefing exception, and emphasized 08:38 2 the fact that this agency, as a matter of practice, 08:38 3 has never relied on the briefing exception. We've 08:38 4 always relied on the enumerated exceptions that are 5 set out in the Open Meetings Act. 08:38 6 So that it's my opinion that while this 08:38 7 may impact other agencies, it doesn't impact the way 08:38 8 that this agency does its business. You may have 08:38 9 additional comments in terms of -- not admonishments, 08:38 10 but things to keep in mind as we take up our business 08:38 11 under these specific exceptions to the Open Meetings 08:38 12 Act in Executive Session, and I certainly didn't want 08:38 13 to cut you off from that. 08:39 14 MS. MORRIS: I'm sorry I was late. My 08:39 15 name is Diane Morris, and I'm an Assistant General 08:39 16 Counsel. I work with Kim Kiplin. I agree. 08:39 17 Now, I have made copies of legal 08:39 18 papers, if you will, that explain in more laymen's 08:39 19 language the differences in the laws, and I'll be 08:39 20 happy to hand that to y'all for your reading. I know 08:39 21 that it's always interesting to y'all what are the 08:39 22 requirements of the Open Meetings Act, the Open 08:39 23 Records Act, the ethics laws. And so I have these. 08:39 24 These are from the Advanced 08:39 25 Administrative Law seminar. They had made some 08:39 6 1 papers, and these are basically what we call 08:39 2 continuing education credits. These are articles. 08:39 3 They're very readable, though, and I thought if that 08:39 4 would be of interest to you to read later, we, you 08:39 5 know -- I made those your copies. 08:39 6 I agree completely with the General 08:39 7 Counsel. The briefing exception is something that we 08:39 8 have not relied upon. We were aware of the proposals 08:39 9 to the changes of the law. 08:40 10 As a matter of history, it's always 08:40 11 been something batted around in the open meetings 08:40 12 circles. It's been on the, if you will, the 08:40 13 legislative agenda for at least the last two sessions. 08:40 14 It's the matter of many open record -- or, open 08:40 15 meeting opinions from the AG's office. It's a matter 08:40 16 of a couple cases where agent -- they had made changes 08:40 17 to the word "deliberation" and then "convening" and 08:40 18 "conferencing," and the words of the Open Meetings Act 08:40 19 would change over the years. And some governmental 08:40 20 bodies, that relied upon the briefing exception, they 08:40 21 tried to always find a little escape hatch to have 08:40 22 briefing sessions and to elaborate -- and have good, 08:40 23 long briefing sessions and not subject to the Open 08:40 24 Meetings Act. 08:40 25 The point of this is this agency has 08:40 7 1 not even relied upon this exception. It had been on 08:40 2 the books. It was available to us. We just have 08:40 3 historically, you know, posted our meetings and posted 08:40 4 our exceptions. 08:40 5 CHAIR MIERS: Okay. I appreciate it, 08:40 6 and we would appreciate those papers, I'm sure. And 08:40 7 we appreciate the report from Ms. Morris and 08:41 8 Ms. Kiplin. 08:41 9 We'll now move to item number two: 08:41 10 Report, possible discussion, and/or action on lottery 08:41 11 sales and trends, including new game concepts. 08:41 12 Ms. Cloud and Ms. Smith. 08:41 13 MS. SMITH: Good morning, 08:41 14 Commissioners. For the record my name is Toni Smith, 08:41 15 Marketing Director. 08:41 16 I would like to review the sales as of 08:41 17 week ending 9-18, which you have in your Commissioner 08:41 18 binders. We're still working on the 9-25 report. We 08:41 19 had some credits to some promotions that we need to 08:41 20 back out, so I can include that information in 08:41 21 Thursday's packet. Along with that I would also like 08:41 22 to send to you the year-end information for FY '99 and 08:41 23 some comparisons over the biennium. So that will be 08:42 24 in your Thursday's report. 08:42 25 To look back, week ending 9-18 total 08:42 8 1 FY 2000 sales to date are 118,112,869. This is down 08:42 2 12.63 percent from FY '99 total sales of 08:42 3 135,185,090.5. The year 2000 weekly sales average is 08:42 4 39,370,956.33. This also, then, reflects a 12.63 08:42 5 percent decrease from FY '99 weekly sales average of 08:42 6 45,061,696.83. And then you see the breakdown by the 08:42 7 product. 08:42 8 MS. CLOUD: Commissioners, one of the 08:43 9 things that I have requested marketing to do -- this 08:43 10 particular report reflects sales at the end of each 08:43 11 week, and part of the first week's sales had to do 08:43 12 with several days in August. So what I've asked them 08:43 13 to do is give us a sales comparison by day so that we 08:43 14 have an actual, exact comparison to sales of -- to 08:43 15 this year to last year. 08:43 16 So I think that this is -- the 08:43 17 information on this report is minus one day, one 08:43 18 reflects 18 days, the other 19 days, and that makes 08:43 19 about $6 million difference in the sales. So we want 08:43 20 to make sure we're looking at the same number of days 08:43 21 of sales, and by giving you a daily accountability you 08:43 22 will be looking at that. 08:43 23 CHAIR MIERS: Okay. Let me see if I 08:43 24 understand that. This down 12.63 percent may 08:43 25 represent a different number of days than that same 08:44 9 1 period for the last year because this year there were 08:44 2 more days in August than last year. 08:44 3 MS. CLOUD: Right. 08:44 4 CHAIR MIERS: And the August sales 08:44 5 would be not included. 08:44 6 MS. CLOUD: That's right. And that 08:44 7 would -- but it is included in this number you have 08:44 8 here, which makes it appear that 2000 sales are less 08:44 9 than they really are by -- if you were looking at the 08:44 10 number of days equal to the number of days in this 08:44 11 year. 08:44 12 We had 19 days in '99, in this 08:44 13 reflection, and we had 18 days in 2000. So one day's 08:44 14 sales means around $6 million. So that would make us 08:44 15 very close to the same -- about the same amount. We 08:44 16 would be about seven percent less versus 12 percent 08:44 17 less on the sales total if we looked at that 08:45 18 percentage. 08:45 19 CHAIR MIERS: Well, I appreciate, 08:45 20 Linda, your delving into that and getting more 08:45 21 accurate information. It is important that we 08:45 22 understand what we're dealing with. And even with 08:45 23 that correction, however, we are still experiencing 08:45 24 not the increase, particularly in instant sales, that 08:45 25 we had hoped we would see. 08:45 10 1 MS. CLOUD: No. We're not seeing the 08:45 2 increase that we want to see, yet, because we still 08:45 3 are striving to get the games on the street. 08:45 4 And we've just put out a $2 game that 08:45 5 we -- the estimates of that first week's sales of that 08:45 6 game -- we sold quite a few. It was considerably 08:45 7 higher than what we estimated. 08:45 8 But what we're seeing is the players 08:45 9 are purchasing the new games as soon as they come out, 08:45 10 and they're not purchasing some of the other games, 08:46 11 which sales were down in some of the other games and 08:46 12 up in the brand new game more than what we thought it 08:46 13 would be. So until we balance out the games that 08:46 14 we've got out there, this thing is not going to be 08:46 15 something that we can predict, as well as we think we 08:46 16 can, because we didn't -- this is not the norm, to see 08:46 17 the pattern and the trend that we're seeing. 08:46 18 CHAIR MIERS: Are all of the games that 08:46 19 are instant and on the street now, they're not all, 08:46 20 yet, with the higher payout? 08:46 21 MS. CLOUD: No. 22 CHAIR MIERS: Is that correct? 08:46 23 MS. CLOUD: No. 24 CHAIR MIERS: When will that be the 08:46 25 case? 08:46 11 1 MS. CLOUD: It will probably be the end 08:46 2 of November before all the games -- what we're waiting 08:46 3 on is press times and getting the -- our vendors are 08:46 4 printing -- Scientific Games is printing as fast as we 08:46 5 can get them on the press. And to expedite that any 08:46 6 faster it would be a charge to us, which I have 08:47 7 avoided, you know, trying to do, if we can just get 08:47 8 them out there by the end of November and December. 08:47 9 CHAIR MIERS: Okay. Other questions, 08:47 10 Linda or Toni? 08:47 11 MS. CLOUD: No. 08:47 12 MR. CLOWE: I think that you had your 08:47 13 first public meeting yesterday in regard to the 08:47 14 proposed rule changes for Lotto Texas, and I believe 08:47 15 you have -- is it an additional five meetings 08:47 16 scheduled? 08:47 17 MS. CLOUD: Yes, sir. 08:47 18 MR. CLOWE: Would you comment on the 08:47 19 attendance yesterday? And for our information and for 08:47 20 the record, say when and where those additional five 08:47 21 meetings will be so we can continue to get notice out 08:47 22 to the public. 08:47 23 MS. CLOUD: Okay. 24 MS. KIPLIN: This, of course, is under 08:47 25 the item lottery sales and trends; in other words, 08:47 12 1 changes to the Lotto Texas rule enhancing sales. 08:47 2 MR. CLOWE: This encompasses my 08:47 3 question, doesn't it? 08:48 4 MS. KIPLIN: I think so. I think what 08:48 5 your concern is, is the amendments and whether it will 08:48 6 enhance Lotto -- the lottery sales. 08:48 7 MR. CLOWE: That's correct. 8 CHAIR MIERS: Well, it's also under the 08:48 9 Executive Director's report, unless I'm mistaken, so 08:48 10 this is clearly within what we need to talk about 08:48 11 today. So why don't we turn there and emphasize the 08:48 12 dates that Commissioner Clowe is asking about. 08:48 13 MS. CLOUD: The first hearing was held 08:48 14 yesterday here. We had four public comments -- or, 08:48 15 public testimonies. The next hearing will be in 08:48 16 Dallas on October the 20th; El Paso on October the 08:48 17 21st; Abilene on October the 26th; and Houston on 08:48 18 October the 27th; San Antonio on October the 28th. 08:48 19 And, Commissioners, these hearings are 08:49 20 to expand our comment period a little bit. Rather 08:49 21 than have our players only write in for comments, they 08:49 22 have the option of coming in publicly and speaking to 08:49 23 Ms. Kiplin and Pam Udall, who is making a presentation 08:49 24 prior to the hearing starting to just make sure that 08:49 25 there's a clear understanding about the rule, and 08:49 13 1 that's exactly what it's for. 08:49 2 And if this turns out that we have more 08:49 3 negative response to this, then we take a serious look 08:49 4 at that. And I appreciate the comments that have been 08:49 5 received. A good many of them have been negative, but 08:49 6 we do have positive comments as well. And we are -- 08:49 7 we want to make sure that we let the general public 08:49 8 know that that's what this hearing is all about. 08:50 9 And the Texas public has an opportunity 08:50 10 to do this kind of thing where other states don't do 08:50 11 this. They don't post rule changes and they don't 08:50 12 have public hearings, they just change the games. So 08:50 13 our players do have that opportunity. 08:50 14 MR. CLOWE: And I know you had a press 08:50 15 release. I saw that in the package. But what other 08:50 16 methods are we employing to get this word out to the 08:50 17 players and to the public? 08:50 18 MS. CLOUD: We have the locations, I 08:50 19 believe, on our web site of the hearings and the 08:50 20 dates. We have -- GTECH sales reps are making sure 08:50 21 retailers in the area of the hearing is taking place, 08:50 22 they're posting notices in the retailer locations as 08:50 23 well as, you know, making sure the retailers know 08:50 24 where the hearings are, and putting it in the 08:50 25 newspapers. And that's what we've done to try to make 08:51 14 1 sure the public knows that these public hearings are 08:51 2 taking place. 08:51 3 CHAIR MIERS: So we are running public 08:51 4 ads in the media around the cities where we're holding 08:51 5 these hearings -- 08:51 6 MS. CLOUD: We haven't put it in the 08:51 7 newspaper as an ad. We have posted it in -- well, the 08:51 8 newspapers have picked it up in their stories, in 08:51 9 their media reports, that it's going to be in their 08:51 10 towns at a certain date, but as far as -- we haven't 08:51 11 gone to the expense of advertisement as far as a 08:51 12 public notice. We can do that. 08:51 13 CHAIR MIERS: Well, I think you ought 08:51 14 to look at it -- 08:51 15 MS. CLOUD: Okay. 16 CHAIR MIERS: -- because it is good 08:51 17 public relations to let our players know we care what 08:51 18 they think. And part of the input that, at least I'm 08:51 19 getting and certainly the tenor of some of these 08:51 20 comments, is that we don't really care what the player 08:51 21 thinks, and we know better. 08:52 22 MS. CLOUD: No. Yeah. We do know 08:52 23 better. 08:52 24 CHAIR MIERS: So what I think would be 08:52 25 at least beneficial to consider is whether publicizing 08:52 15 1 that we do care and we are going to listen to their 08:52 2 comments would be a good idea. 08:52 3 MS. CLOUD: Okay. We can sure look at 08:52 4 that. 08:52 5 MR. SADBERRY: Linda, I know that with 08:52 6 the written comments you actually have a record of 08:52 7 that by the document itself. What type of record is 08:52 8 being made as far as the comments addressed in these 08:52 9 public hearings? Are we recording there or what? 08:52 10 MS. KIPLIN: If I could, let me address 08:52 11 that. We have a court reporter that recorded the 08:52 12 hearing yesterday here in Austin, and we are also 08:52 13 getting -- obtaining court reporting services for each 08:52 14 of the hearings that will be in the other cities so 08:52 15 that we will have an accurate transcript of the 08:52 16 comments that are received. 08:52 17 One correction: The Dallas hearing is 08:52 18 October 19th. 10:00 a.m. October 19th, not the 20th. 08:52 19 CHAIR MIERS: Well, that's what the 08:53 20 newspaper says. That's not what Linda's material 08:53 21 says. And there is confusion about that, and I would 08:53 22 have thought that those dates would have been clear to 08:53 23 the Commissioners in the area, and so I sure hope it's 08:53 24 October the 20th. That's what's in the materials. 08:53 25 MS. KIPLIN: It is not. It is October 08:53 16 1 the 19th. We had a representation from the hotel in 08:53 2 Dallas that the date, October 20th, was available, 08:53 3 relied on that -- marketing people replied on that in 08:53 4 giving the media information, and the very next day, 08:53 5 after the media advisory was released, they retracted 08:53 6 that and do have it available October 19th. We put 08:53 7 out a corrected media advisory immediate correcting 08:53 8 the date; October the 19th. 08:53 9 CHAIR MIERS: Well, we may need to put 08:53 10 out another one. 08:53 11 MS. KIPLIN: Okay. 12 CHAIR MIERS: Because this Commissioner 08:53 13 wants to certainly attend in my hometown, and the date 08:53 14 is not clear with me. And I certainly want to hear 08:53 15 what hardships that creates, but I want to be present 08:54 16 if I can, and I can't be on the 19th. 08:54 17 MS. KIPLIN: Okay. 08:54 18 CHAIR MIERS: But our books, which we 08:54 19 got just a few days ago, still say the 20th. 08:54 20 MS. CLOUD: They do. That's what I was 08:54 21 reading from. 08:54 22 MS. KIPLIN: Okay. 08:54 23 CHAIR MIERS: So what has been 08:54 24 published that says the 19th? 08:54 25 MS. KIPLIN: Well, the actual Notice of 08:54 17 1 Hearing, that's required to be filed with the Texas 08:54 2 Register, does have the October 19th date, and it's my 08:54 3 understanding there was a corrected media advisory 08:54 4 that went out immediately upon discovering this 08:54 5 information correcting the date to October 19th. 08:54 6 CHAIR MIERS: And when did it go into 08:54 7 the Texas Register? 08:54 8 MS. KIPLIN: It was filed, if I'm not 08:54 9 mistaken, last week, and it'll be published, 08:54 10 hopefully, this Friday. 08:54 11 CHAIR MIERS: Can that be changed? 08:54 12 MS. KIPLIN: I will check with the 08:54 13 Register and see if that can be changed. 14 CHAIR MIERS: Could you have someone do 08:54 15 that? 08:54 16 MS. KIPLIN: Yes. 17 CHAIR MIERS: Okay. And in terms of 08:54 18 location, I assume we could find somewhere in Dallas 08:54 19 where we could conduct this hearing that would be 08:54 20 available. 08:54 21 MS. KIPLIN: We could. We tried to 08:55 22 stay with State-contracted hotels in the area, but we 08:55 23 certainly can look. And there are obviously hotels in 08:55 24 Dallas other that this one. 08:55 25 MS. CLOUD: The other thing -- the 08:55 18 1 other criteria for the hotel was we were looking for 08:55 2 at least a meeting room that would hold 200 people, 08:55 3 expecting that we would have a big turnout for the 08:55 4 hearings. Well, having only four people here 08:55 5 yesterday, we might could find a place that would have 08:55 6 fewer, that would be available where we were -- 200 -- 08:55 7 a meeting room with 200 people was -- just so many 08:55 8 hotels we had to choose from. 08:55 9 CHAIR MIERS: Well, even the same hotel 08:55 10 may have ones -- a room that's smaller if we were 08:55 11 asking for 200 and we don't reasonably anticipate 08:55 12 we'll have 200. 08:55 13 MS. CLOUD: We will -- 14 CHAIR MIERS: I would really appreciate 08:55 15 that because I definitely would like to attend if 08:55 16 there's a hearing in Dallas. 08:55 17 MS. CLOUD: Okay. 08:55 18 MR. CLOWE: In that regard, this is a 08:55 19 procedural question, Kim. I attended the meeting here 08:56 20 yesterday and I would like to attend other meetings. 08:56 21 Can two Commissioners attend a meeting such as that? 08:56 22 What's the rule there? 08:56 23 CHAIR MIERS: I'm sure we can attend if 08:56 24 we don't talk. Correct? 08:56 25 MS. KIPLIN: Well, it is a matter of 08:56 19 1 public business, and probably, in abundance of 08:56 2 caution, I would just go ahead and notice up an open 08:56 3 meeting on it so that if a quorum wanted to be 08:56 4 there -- 08:56 5 CHAIR MIERS: I'm not -- I didn't think 08:56 6 we could notice public meetings outside of Austin. 08:56 7 MS. KIPLIN: I'm not aware of a 08:56 8 prohibition on that. I will check with that, though. 08:56 9 MR. CLOWE: Just let us know -- 08:56 10 MS. KIPLIN: I will. 11 MR. CLOWE: -- so that we don't bump 08:56 12 into each other and do something that's not correct. 08:56 13 MS. KIPLIN: That's right. 14 MR. CLOWE: Just let us know if we can 08:56 15 attend. Certainly as long as we don't talk to each 08:56 16 other or sit together or -- advise us on that. Would 08:56 17 you please? 08:56 18 MS. KIPLIN: I will. 08:56 19 MR. SADBERRY: And in that regard, 08:56 20 would your advice include whether, to the extent 08:56 21 questions are posed to a Commissioner, or one or more 08:56 22 Commissioners, and a response is requested, whether 08:57 23 that can occur? Whether one or more Commissioners can 08:57 24 give responses to questions raised by the public if 08:57 25 any were to occur? 08:57 20 1 MS. KIPLIN: Well, that's my -- I guess 08:57 2 my concern is at that point that you have got one 08:57 3 Commissioner listening to the deliberations of another 08:57 4 Commissioner. I'm also -- in the back of my mind is 08:57 5 the backdrop with regard to the change in the Open 08:57 6 Meetings Law insofar as the briefing exception -- the 08:57 7 briefing exception is concerned, so I would want to 08:57 8 take a look at that. The more conservative approach 08:57 9 would be just to put another notice in the Texas 08:57 10 Register, and I would make it clear that there 08:57 11 might -- there may be a quorum attending, but they 08:57 12 would not be conducting the rule making hearing. 08:57 13 MR. SADBERRY: Further, in that regard, 08:57 14 one -- at least one article that I read, I forget now 08:57 15 what paper it was in, made the point that no 08:57 16 Commissioner planned to attend. I don't know if that 08:57 17 was because of the media advisory or the substance of 08:58 18 it or just something that was asked. 08:58 19 But I certainly would like to attend 08:58 20 the Houston meeting. I am scheduled for trial that 08:58 21 week, but lawyers realize that doesn't always mean you 08:58 22 will be in trial. So if I'm not in trial, I would 08:58 23 plan to be at the Houston meeting. 08:58 24 MS. KIPLIN: Okay. 08:58 25 CHAIR MIERS: Thanks. So you'll let us 08:58 21 1 know through the course of the day. 08:58 2 And could we ask a question about 08:58 3 location? Because I thought that had come up 08:58 4 previously, and we had thought, at least, there was 08:58 5 some problem with conducting Commission meetings in 08:58 6 other places. 08:58 7 MS. KIPLIN: The issue that I recall 08:58 8 wasn't necessarily conducting -- wasn't necessarily 08:58 9 that it was a violation of the Open Meetings Act to 08:58 10 conduct a meeting at another location outside of 08:58 11 Austin. The issue had to do with telephone 08:58 12 conferencing and being able to telephone conference in 08:59 13 another Commissioner. And based on the language, the 08:59 14 then language, in the Open Meetings Law -- 08:59 15 CHAIR MIERS: Yeah. I know. I'm aware 08:59 16 we couldn't do a Commission -- I really have in mind 08:59 17 something else, and I may just be confused about it. 08:59 18 But we do need some verification we could post a 08:59 19 meeting, because if we're going to do a posting, then 08:59 20 we should post it so that there could be deliberation. 08:59 21 MS. KIPLIN: I think the issue that was 08:59 22 surrounding having the Commission meeting at a 08:59 23 location outside of Austin had to do with budget 08:59 24 considerations and staffing considerations. 08:59 25 CHAIR MIERS: That may be -- you may 08:59 22 1 well be correct, because I do remember information 08:59 2 that it would be very expensive to move the staff on 08:59 3 those, so that that outweighed the benefit of moving 08:59 4 the Commission meetings around. So if you could just 08:59 5 clarify there is no legal prohibition, that would be 09:00 6 great. And I understand you're telling me you don't 09:00 7 think there is. 09:00 8 MS. KIPLIN: Correct. 09:00 9 CHAIR MIERS: Okay. Do you have 09:00 10 anything else, Toni, with respect to item number two? 09:00 11 If not, we'll move to item number three which is 09:00 12 report, possible discussion, and/or action on lottery 09:00 13 advertising and promotions. 09:00 14 MS. SMITH: Just to make the 09:00 15 Commissioners aware, we are filming the first of our 09:00 16 TV commercials with our new advertising agency, 09:00 17 Fogarty, Kleine & Partners, this Friday and Saturday 09:00 18 for scratch-off tickets. And we'll make sure that you 09:00 19 get dubs of those tapes as soon as possible, and we'll 09:00 20 get them on the air as soon as possible. 09:00 21 And, then, also we do -- the State Fair 09:00 22 had started this past Friday. We do again have a 09:00 23 presence, as we have in the past, at the State Fair. 09:00 24 This year, though, we have a new retailer to work with 09:00 25 us. Albertson's grocery store chain is actually 09:00 23 1 selling at the State Fair, alongside our promotional 09:00 2 trailer, and we're very excited about that and excited 09:01 3 about their being a part of that with us, and hope to 09:01 4 have good sales and some good exposure at the State 09:01 5 Fair. 09:01 6 CHAIR MIERS: Well, I had an anecdotal 09:01 7 report that the traffic was significantly greater this 09:01 8 year. 09:01 9 MS. SMITH: Well, I was there the first 09:01 10 weekend, you know, this past weekend. And when it -- 11 the first weekend is typically slow, but there was a 09:01 12 good turnout. We were excited about the turnout that 09:01 13 we had. And then I can do sales reports when 09:01 14 everything is completed and let you know how 09:01 15 Albertson's came out on their sales, also. 09:01 16 CHAIR MIERS: Anything else on item 09:01 17 number three? Questions, Commissioners? 09:01 18 MR. SADBERRY: I would like to ask a 09:01 19 question. Toni, I know from time to time we have had 09:01 20 presentations to the legislature, made at their 09:01 21 request, and suggestions as to our advertising 09:01 22 profile. I know that we came out of the legislature, 09:01 23 I think, very well this particular term. 09:01 24 Is there any requirement that you're 09:02 25 aware of, or do we have any plans to make reports to 09:02 24 1 any of the committees or particular legislators, with 09:02 2 respect to advertising and promotions, as we go 09:02 3 forward? 09:02 4 MS. SMITH: We can definitely do that, 09:02 5 and we always keep our governmental affairs staff 09:02 6 aware of where we are with some of those issues. One 09:02 7 of the -- I guess the biggest steps we made this year 09:02 8 was splitting our advertising services contracts into 09:02 9 a primary services contract and a minority marketing 09:02 10 advertising contract, and that sort of came out of 09:02 11 some of the comments made by our legislators. And 09:02 12 we'll definitely make sure that Nelda has that 09:02 13 information as things go on, and the award of those 09:02 14 contracts, that she can forward to the legislators. 09:02 15 MS. CLOUD: We had hoped that when we 09:02 16 have our October status meeting with the legislative 09:02 17 staff that we would have the commercial completed so 09:02 18 that we could air it -- we could show it to them. I 09:02 19 don't think the finished product is going to be ready 09:02 20 by that time, but that was intended, that we would 09:03 21 share that commercial even before it was aired, with 09:03 22 the staff. 09:03 23 MR. SADBERRY: I just think that may be 09:03 24 something you want to keep in mind -- 09:03 25 MS. SMITH: Yes, sir. 25 1 MS. CLOUD: Yeah. 2 MR. SADBERRY: -- as we move forward. 09:03 3 CHAIR MIERS: We get lots of 09:03 4 publications, and I was interested in one that just 09:03 5 went through and highlighted various features of the 09:03 6 different lotteries around the country. And it would 09:03 7 appear, as least, that we are still ranked, where, 09:03 8 among lotteries in this nation? 09:03 9 MS. CLOUD: Number three; New York, 09:03 10 Massachusetts, and Texas. 09:03 11 CHAIR MIERS: Okay. So although we 09:04 12 focus sometimes on what we consider to be lower sales, 09:04 13 our performance, nationally, is still in the top 09:04 14 ranks. 09:04 15 MS. CLOUD: That's correct. 09:04 16 CHAIR MIERS: And Massachusetts is an 09:04 17 amazing circumstance, and if I understand the data -- 09:04 18 (Interruption) 19 the sales of the Massachusetts State Lottery are 09:04 20 three billion, almost 400 million, but they do have 09:04 21 Keno. They have other -- a pretty wide range of 09:04 22 games. What do they do right to at least sell 09:04 23 tickets? 09:05 24 MS. CLOUD: Massachusetts has a 70 09:05 25 percent prize payout across the board, their on-line 09:05 26 1 games and their instant games, so they get a lot of 09:05 2 player interest with that. And they only have a 09:05 3 six million population, so -- I mean, it's incredible 09:05 4 that they outsell the Texas Lottery as much as they do 09:05 5 because our population is so much greater. But it -- 09:05 6 we all think it has an awful lot to do with their 09:05 7 prize payout. 09:05 8 CHAIR MIERS: And how do they do the -- 09:05 9 what enables them to be able to have that high a prize 09:05 10 payout? 09:05 11 MS. CLOUD: I'm not sure I can answer 09:05 12 that. I think they have a legislative approval to 09:05 13 have that kind of payout. 09:05 14 CHAIR MIERS: And... 09:05 15 MS. CLOUD: They don't have -- by the 09:05 16 way, they don't have an advertising budget. The 09:05 17 payout is the advertising. 09:05 18 CHAIR MIERS: And refresh my 09:05 19 recollection: They sell -- operate? Is that correct? 09:05 20 Or have they -- they do have a vendor. 09:06 21 MS. CLOUD: Yes. They have a vendor. 09:06 22 CHAIR MIERS: And who is their vendor? 09:06 23 MS. CLOUD: Their vendor is GTECH. 09:06 24 CHAIR MIERS: Okay. And then New York, 09:06 25 of course, to whom we come very -- that state has Keno 09:06 27 1 which is, we think, the major difference there? 09:06 2 MS. CLOUD: I think -- yes. New York 09:06 3 has a number of games, a lot more games than we do, 09:06 4 too, but they have -- they do have Keno. So does 09:06 5 Massachusetts. 09:06 6 CHAIR MIERS: We almost reach New York, 09:06 7 however. We're very close to New York. 09:06 8 MS. CLOUD: In the -- yeah. Yes, 09:06 9 ma'am. In the sales that we've had this year, yeah. 09:06 10 CHAIR MIERS: Okay. 09:06 11 MS. CLOUD: They're -- but they had 09:06 12 Keno taken away from them for a few months. The 09:06 13 legislature did remove that game from the -- at the 09:06 14 beginning of the session, and then I think they had a 09:06 15 loss of 50 or $60 million in that length of time, and 09:06 16 they turned around and gave it back to them at the end 09:06 17 of the budget -- at the end of the year -- at the end 18 of the session. 09:07 19 CHAIR MIERS: Is there any other 09:07 20 comparison we make to New York that is instructive to 09:07 21 us in terms of increasing sales? 09:07 22 MS. CLOUD: Well, New York's on-line 09:07 23 game is kind -- is similar to what we're proposing for 09:07 24 Texas. However, there -- I'm not sure that that is -- 09:07 25 the Lotto game in New York has not been the strongest 09:07 28 1 game for them, so I'm not sure that there's any 09:07 2 specific thing that we can point our fingers to with 09:07 3 New York. It's the difference in their sales and 09:07 4 ours. They just -- they have a much older lottery, 09:07 5 and the players are a lot more adapted to their 09:07 6 gaming -- the games that they have out there, and they 09:07 7 are very much on-line educated as far as playing the 09:07 8 on-line games, the Pick 3 games, and the numbers 09:07 9 games. 09:08 10 CHAIR MIERS: Well, then, we're looking 09:08 11 at these other states, I take it. And part of your 09:08 12 attendance at NASPL is to make yourself aware of what 09:08 13 other lotteries are doing. Is that accurate? 09:08 14 MS. CLOUD: Yes. And I did bring 09:08 15 back -- one of the breakout sessions had to do with 09:08 16 different lotteries that they took and gave examples 09:08 17 of what they're doing and how they're doing it. And I 09:08 18 brought all that back to share with the directors and 09:08 19 for to us consider. Oregon, Georgia, and Wisconsin, I 09:08 20 think, were the three lotteries that were being used 09:08 21 as an example. 09:08 22 CHAIR MIERS: Okay. Anything else, 09:08 23 Toni or Linda? 09:08 24 MS. CLOUD: (Moving head side to side) 25 CHAIR MIERS: Okay. Item number four: 09:08 29 1 Status report, possible discussion, and/or action on 09:09 2 the lottery operator audit procurement. 09:09 3 MR. BENNETT: Good morning. For the 09:09 4 record my name is Ridgely Bennett. I'm the Deputy 09:09 5 General Counsel. 09:09 6 In regard to the request for proposals 09:09 7 for audit of the lottery operator, the Commission 09:09 8 received no responses; no proposals and response to 09:09 9 the RFP. What staff would like to do is to regroup, 09:09 10 perhaps talk to some of the firms about why they felt 09:09 11 that they could not submit a proposal, and come back 09:09 12 to the next Commission meeting with possible 09:09 13 alternatives. 09:09 14 CHAIR MIERS: We certainly went to a 09:09 15 broader range of potential bidders. Is that correct? 09:09 16 MR. BENNETT: We did. We've received 09:09 17 one letter of intent, and we just did not receive a 09:09 18 warm response from the CPA firms. 09:09 19 CHAIR MIERS: Okay. I thinking it 09:09 20 would be instructive to know why the choice was made 09:09 21 not to bid. I don't know. This is something that has 09:09 22 been pending a long time, Ridgely, so I don't know how 09:10 23 we can expedite the process. 09:10 24 MR. BENNETT: I can make it a high 09:10 25 priority for me and work diligently on it and have a 09:10 30 1 report for you at the next Commission meeting, if not 09:10 2 sooner, if you would like. 09:10 3 CHAIR MIERS: I guess my question is: 09:10 4 Is there some way to not delay it to the next 09:10 5 Commission meeting? I mean, if you get some 09:10 6 instruction on what the reasons were, would it -- do 09:10 7 you need another Commission meeting to go ahead and 09:10 8 reissue a request for proposal? That's really the 09:10 9 nature of my question. 09:10 10 MR. BENNETT: No. We do not need 09:10 11 direction from the Commission to do that. If we can 09:10 12 determine issues about why the CPA firms felt they 09:10 13 could not bid on it and put out a good RFP, of course 09:10 14 we could do that before the next Commission meeting. 09:10 15 CHAIR MIERS: Well, I don't see any 09:10 16 reason to delay it if you're able to revise the 09:10 17 request in a way that you think will draw some 09:11 18 responses. 09:11 19 MR. BENNETT: Certainly. 09:11 20 CHAIR MIERS: Questions for Ridgely? 09:11 21 Okay. Thank you very much. 09:11 22 You have the next item too, Ridgely: 09:11 23 The status report, possible discussion, and/or action 09:11 24 on the lottery minority marketing advertising services 09:11 25 procurement. 09:11 31 1 MR. BENNETT: That's correct. 09:11 2 Proposals were due on Friday, and we received a number 09:11 3 of proposals. They're currently being reviewed, and 09:11 4 they're going to be distributed to the evaluation 09:11 5 committee for review, and the evaluation committee, 09:11 6 after reviewing all proposals, will make a 09:11 7 recommendation to the Executive Director. 09:11 8 CHAIR MIERS: Okay. Anything we need 09:11 9 to know about that process? 09:11 10 MR. BENNETT: Not unless you have 09:11 11 questions for me. 09:11 12 CHAIR MIERS: All right. I don't hear 09:11 13 any questions, so we can move to item number six -- 09:11 14 thank you very much, Ridgely -- report, possible 09:11 15 discussion, and/or action on State audit reports 09:12 16 relating to the Texas Lottery. Debra McLeod. 09:12 17 MS. MCLEOD: Good morning, 09:12 18 Commissioners. My name is Debra McLeod. 09:12 19 I provided in your notebooks a copy of 09:12 20 a memorandum. We have, since or last meeting, 09:12 21 received a State Auditor's report on the procurement 09:12 22 practice of the Lottery Commission, and from that 09:12 23 report they gave us two recommendations. I included 09:12 24 in the memo the text of the recommendation, the 09:12 25 actions that management had responded to in that 09:12 32 1 report, and then at this juncture an internal audit 09:12 2 suggestion that perhaps we need to discuss the first 09:12 3 recommendation. And then on the back page the second 09:12 4 recommendation, what staff has done in the RFP and 09:12 5 contract, and then comments regarding what management 09:12 6 has done to implement the action that the State 09:13 7 auditors had recommended. 09:13 8 Then given a follow-up on management 09:13 9 controls of the Lottery Commission, we've got two 09:13 10 findings that are due; one in October and one in 09:13 11 November, and I believe we will meet those target 09:13 12 dates. And from what I understand from IT and 09:13 13 Security, they're very close to bringing the Security 09:13 14 Case Tracking System in. So they will certainly meet 09:13 15 the February deadline. 09:13 16 CHAIR MIERS: Okay. On the first item 09:13 17 I think, if I've understood the issue presented there 09:13 18 in the past, the State auditors found the failure of 09:13 19 our lottery operator procurement to take into 09:13 20 consideration issues other than absolute cost as 09:13 21 inconsistent with the best interest of the State and 09:13 22 did not want to see that happen again. Is that the 09:14 23 essence of that? 09:14 24 MS. MCLEOD: Yes, Madam Chair. That's 09:14 25 correct. 33 1 CHAIR MIERS: And so what is the 09:14 2 status, or is it necessary, Kim, that we have rule 09:14 3 making on that issue. 09:14 4 MS. KIPLIN: Yeah. I think we ought to 09:14 5 be doing rule making. We are looking at the 09:14 6 procurement rule. There are other reasons that we 09:14 7 want to amend that rule, and I have had a dialogue 09:14 8 with Ms. Reed of the State Auditor's office, and she's 09:14 9 going to be keeping in pretty close contact with us on 09:14 10 the particular rule making provision; not only the one 09:14 11 that they recommended, but also help on the global 09:14 12 procurement rule. 09:14 13 CHAIR MIERS: What is the timing of 09:14 14 that? 09:14 15 MS. KIPLIN: Well, I would like to do 09:14 16 it just about as soon as we can. I know that -- 09:14 17 CHAIR MIERS: Well, what does that 09:14 18 mean? When would we be doing that? 09:14 19 MS. KIPLIN: I would like to think that 09:14 20 we could bring the proposed rule before you at the 09:14 21 next Commission meeting; if not the next Commission 09:14 22 meeting, the one after that. I do see this as a 09:14 23 pretty significant rule making, this particular rule 09:15 24 and the amendments there to that rule, so I want to 09:15 25 make sure that we're putting sufficient thought into 09:15 34 1 that rule at the time that it's published. But that's 09:15 2 the time frame I'm looking at. 09:15 3 CHAIR MIERS: Okay. On the advertising 09:15 4 issues, if I'm understanding what has taken place 09:15 5 there, the Lottery has not been willing to place 09:15 6 advertising unless an advertiser could, in fact, 09:15 7 demonstrate confirmation of publication data? Is that 09:15 8 correct? 09:15 9 MS. KIPLIN: Yes. That is correct. 09:15 10 That has been a change that the Executive Director 09:15 11 imposed that goes back to probably February of '99, 09:15 12 February or March of '99, and the direction to our 09:16 13 former advertising vendor. That direction continues 09:16 14 with the current advertising vendor. 09:16 15 With regard to the print media 09:16 16 category, we want to see your -- an audit currently 09:16 17 ongoing or audit report to verify circulation and 09:16 18 distribution -- or, print volume, pardon me, and 09:16 19 circulation. 09:16 20 CHAIR MIERS: Debra, does that address, 09:16 21 in your mind, the issue raised in that recommendation? 09:16 22 MS. MCLEOD: Yes. And I just want to 09:16 23 make it perfectly clear: What we're talking about 09:16 24 here is that the advertising vendor is the one that 09:16 25 has the subcontract with these print media. It is not 09:16 35 1 the Lottery Commission ourselves; otherwise, of 09:16 2 course, we would write a contract where we would have 09:16 3 this audit ability and write in those certain 09:16 4 criteria. 09:16 5 What they've done on the RFP is to 09:17 6 outline what they want from an audit perspective, the 09:17 7 affidavits, the tear sheets, and any other 09:17 8 documentation including to what Ms. Kiplin referred to 09:17 9 as the circulation information. I believe that 09:17 10 information is what the State auditors had asked us to 09:17 11 do as a result of going through and looking at the two 09:17 12 different types of print circulations, and gave us a 09:17 13 recommendation as to which one they thought would be 09:17 14 beneficial to this agency. And I think that's what 09:17 15 the Commission has done in writing the language into 09:17 16 the RFP. 09:17 17 MS. CLOUD: But we also have committed 09:17 18 to do periodic random audits of our own, by using our 09:17 19 claim center staff, on collect -- on just verifying 09:17 20 some of the information. 09:17 21 CHAIR MIERS: Okay. That sounds very 09:17 22 good. Anthony? 09:17 23 MR. SADBERRY: Well, I think Debra 09:17 24 answered it, my question I was going to ask. I wanted 09:17 25 you to explain, Debra, who the "they" is that you 09:17 36 1 identified. You said what "they" have done. And 09:18 2 "they" are -- you're talking about the Marketing 3 Division RFP to the advertising vendor. 09:18 4 MS. MCLEOD: Correct. 5 MR. SADBERRY: And that will require 09:18 6 the advertising vendor to carry forward, with its 09:18 7 subcontractors, those requirements I take it. 09:18 8 MS. CLOUD: That's correct. 9 MS. MCLEOD: That's exactly correct. 09:18 10 MR. SADBERRY: And have us in position 09:18 11 to audit on that level if necessary and if desired. 09:18 12 MS. CLOUD: Right. 09:18 13 MS. MCLEOD: Right. 09:18 14 CHAIR MIERS: Anything else, Debra? 09:18 15 MS. MCLEOD: No. Not at this time. 09:18 16 CHAIR MIERS: Thank you very much. 09:18 17 Item number seven: Report, possible 09:18 18 discussion, and/or action on implementation of 19 legislation arising from the 76th Legislature relating 20 to the Texas Lottery Commission. Good morning, Nelda. 09:18 21 MS. TREVIÑO: Good morning, 09:18 22 Commissioners. I have a very brief report today. 09:18 23 As I stated in the memo that's in your 09:18 24 notebook, we did have an implementation task force 09:18 25 project that did consist of 49 different task forces 09:18 37 1 with over 60 agency staff people participating in this 09:19 2 project, so I would first like to thank those 09:19 3 individuals that did participate in this agency-wide 09:19 4 project. Those task forces were responsible for 09:19 5 identifying implementation issues and then notifying 09:19 6 the appropriate divisions for any sort of action that 09:19 7 needed to be taken. 09:19 8 There are a couple of issues that -- 09:19 9 implementation issues that we wanted to bring to your 09:19 10 attention. One has already been addressed with the 09:19 11 Open Meetings Act, House Bill 156. The other is in 09:19 12 regards to the provision in Senate Bill 178 regarding 09:19 13 agency minutes, and that's also a separate agenda item 09:19 14 for this meeting. 09:19 15 I really don't have anything else to 09:19 16 report. I'm happy to answer any questions that you 09:19 17 might have. 09:19 18 MR. SADBERRY: Well, I'll ask you the 09:19 19 same question, Nelda, I asked previously. 09:19 20 MS. TREVIÑO: Okay. 21 MR. SADBERRY: Is there either a 09:19 22 requirement or an intent to advise any component of 09:19 23 the legislature, or any other governmental body, of 09:20 24 our compliance in this regard? 09:20 25 MS. TREVIÑO: I'm not aware of any sort 09:20 38 1 of requirement, but -- and as Linda mentioned, what we 09:20 2 are planning to do during the interim is to hold 09:20 3 periodic legislative briefings, and we are having our 09:20 4 first one next month. So our plan is to, one, inform 09:20 5 them, at this particular briefing, that we're going to 09:20 6 be having -- give them a summary of where we are with 09:20 7 the implementation of legislation, particularly those 09:20 8 bills that directly impact this agency. And we do 09:20 9 plan, again, to hold these throughout the interim, and 09:20 10 hopefully keep them updated on various issues 09:20 11 including, I think, Commissioner, what you mentioned 09:20 12 earlier, some of our advertising and other issues that 09:20 13 may be -- current issues that are going on in our 09:20 14 agency. 09:20 15 MR. SADBERRY: I think that's good. 09:20 16 CHAIR MIERS: Okay. Any other 09:21 17 questions about item number seven? If not, we can 09:21 18 move to item number eight: Consideration of and 09:21 19 possible action, include proposal, on new lottery rule 09:21 20 16 401.312, relating to the conversion of lottery 09:21 21 prizes. 09:21 22 MS. KIPLIN: Commissioners, this matter 09:21 23 is not ready for you-all's consideration today. We've 09:21 24 been working on it in Legal in terms of -- this is the 09:21 25 rule, just by way of background, that was proposed and 09:21 39 1 then withdrawn, and I do expect that it will be before 09:21 2 you at your next Commission meeting. So with that, I 09:21 3 would like to request to pass this item. 09:21 4 CHAIR MIERS: Okay. Item number nine: 09:21 5 Consideration and possible action, including adoption, 09:21 6 on the agency's rule review of 16 403.101. 09:21 7 MS. KIPLIN: Commissioners, this is an 09:21 8 item, if you'll recall, that's part of the overall 09:21 9 agency rule review. It is a requirement that was out 09:22 10 of the 1997 legislative session. It was part of the 09:22 11 General Appropriations Act. It has been continued 09:22 12 through the 1999 session and has been codified into a 09:22 13 statute in the Government Code. Consistent with that 09:22 14 requirement we have begun our rule review. 09:22 15 The first rule that was before you was 09:22 16 the Open Records Rule, and that's the one that you 09:22 17 just announced, Chair Miers. This rule is ripe today 09:22 18 for adopting, and what that means is that this rule 09:22 19 will continue to be in existence. We did not receive 09:22 20 any comments on this particular rule. 09:22 21 What this rule really does is adopt, by 09:22 22 reference, the Open Records Rule of the General 09:22 23 Services Commission. The General Services Commission 09:22 24 is the agency that is really charged with the overall 09:22 25 responsibility of oversight on, I guess more than 09:22 40 1 anything, establishing charges for information that's 09:22 2 available to the public. 09:23 3 CHAIR MIERS: Has this changed, or 09:23 4 arguably change, anything we have been doing? 09:23 5 MS. KIPLIN: No. It does not. What it 09:23 6 does is recognize that there is a need to continue 09:23 7 this rule in existence. 09:23 8 CHAIR MIERS: Okay. 09:23 9 MS. KIPLIN: That it's reasonable to 09:23 10 continue this rule; that it is necessary to accomplish 09:23 11 the agency's legitimate objective of providing the 09:23 12 public with a statement of the Commission's policies 09:23 13 regarding open records requests. It does not change 09:23 14 the rule. 09:23 15 Part of what might come from an agency 09:23 16 rule review of rules is a recognized need to do rule 09:23 17 making on particular rules within that chapter, or a 09:23 18 recognition that there are some rules that have become 09:23 19 obsolete because they're just not necessary as a 09:23 20 result of where the agency is in its practice at that 09:23 21 particular time. 09:23 22 CHAIR MIERS: And the requested action 09:23 23 from the Commission is to approve this rule as 09:23 24 presented? 09:23 25 MS. KIPLIN: Yes. It's to readopt the 09:23 41 1 rule. So at this time I am recommending, and would 09:23 2 respectfully request, that you-all vote to readopt 09:24 3 this rule. 09:24 4 CHAIR MIERS: Is there a -- Diane, do 09:24 5 you have anything to add? 09:24 6 MS. MORRIS: No, ma'am. 09:24 7 CHAIR MIERS: Is there a motion? 09:24 8 MR. CLOWE: Move the adoption. 09:24 9 MR. SADBERRY: Second. 09:24 10 CHAIR MIERS: All those in favor say, 09:24 11 aye. 09:24 12 MR. SADBERRY: Aye. 13 MR. CLOWE: Aye. 14 CHAIR MIERS: Aye. Any opposed? No? 09:24 15 MS. KIPLIN: I do have an order I would 09:24 16 like to present to y'all. 09:24 17 CHAIR MIERS: All right. The rule will 09:24 18 be readopted as proposed. 09:24 19 Item number ten: Consideration of and 09:24 20 possible action, including proposal, on the agency's 09:24 21 rule review of 16 Chapter 401. Now, is the proposal 09:24 22 under eight, would that be part of what will 09:24 23 eventually be embodied in Chapter 401? 09:24 24 MS. KIPLIN: What -- these are current 09:24 25 rules. Chapter 16 -- Title 16 Texas Administrative 09:24 42 1 Code Chapter 401 are current rules. They're current 09:24 2 lottery rules on the lottery side of the house. 09:24 3 CHAIR MIERS: Right. 09:24 4 MS. KIPLIN: This begins -- if you vote 09:25 5 to propose the rule review on this chapter today, this 09:25 6 will begin the process of the agency's rule review on 09:25 7 this chapter and all the rules that are contained 09:25 8 within this chapter. It will be published in the 09:25 9 Texas Register, provide the public notice that we are 09:25 10 undergoing a rule review of this chapter, and to 09:25 11 invite public comment. 09:25 12 CHAIR MIERS: What relation does it 09:25 13 have to item eight, if any? 09:25 14 MS. KIPLIN: None, except that it's the 09:25 15 first step in a rule making -- a rule review process 09:25 16 and item eight was the last step. This is the first 09:25 17 step and that's the last step. There are two 09:25 18 different categories of rules. Did I answer your 09:25 19 question? Is that responsive? 09:25 20 Oh, I'm sorry; eight. This has nothing 09:25 21 to do with item eight. I was thinking of 403.101. 09:25 22 This has nothing to do with item eight whatsoever. 09:26 23 MR. SADBERRY: That's what I thought 09:26 24 the answer should be. I was respectfully trying to 09:26 25 understand. 09:26 43 1 MS. KIPLIN: No. I'm completely wrong. 09:26 2 CHAIR MIERS: Well, will item eight, if 09:26 3 and when considered, become part of what we will be 09:26 4 reviewing? 09:26 5 MS. KIPLIN: Item eight is a -- would 09:26 6 be a new proposal. It is not an existing rule. It 09:26 7 has nothing to do with the agency rule review at this 09:26 8 time. 09:26 9 There is an additional requirement that 09:26 10 rules that are adopted after the identified date, back 09:26 11 in 1997, must be reviewed by an agency on an ongoing 09:26 12 matter, and that's within four years of the date of 09:26 13 the adoption. So for item eight, for the rule, the 09:26 14 conversion rule, should the Commission propose that 09:26 15 rule at a date in the future, and should the 09:26 16 Commission, after the public comment period has 09:26 17 lapsed, decide to adopt that rule, then from the date 09:26 18 of adoption the agency would be required to undertake 09:26 19 a rule review of that rule within four years. But it 09:26 20 has absolutely nothing to do with the topic that we're 09:26 21 discussing at this point. 09:26 22 MR. SADBERRY: Well, let me ask a 09:27 23 question, then, on ten. On ten would we be proposing 09:27 24 to review all rules under Chapter 16 or only those 09:27 25 rules that are four years are eligible for review? 09:27 44 1 Because we have enacted and adopted some rules 09:27 2 recently into that chapter which would not, if I 09:27 3 understand correctly, be subject to this review that 09:27 4 would be proposed under ten, if I'm right. 09:27 5 MS. KIPLIN: I understand what you're 09:27 6 saying, and the one that comes to mind, right off the 09:27 7 bat, is the Texas Million Rule. For example, this 09:27 8 rule review is actually undertaking an umbrella of 09:27 9 looking at all rules, even those that may have been 09:27 10 adopted within the last year, two-year, or three-year 09:27 11 period. We can obviously change that if that's the 09:27 12 Commission's desire, but it is an effort by the agency 09:27 13 to undertake a rule review of all rules contained 09:27 14 within Chapter 401. 09:27 15 MR. SADBERRY: Which we have to do as 09:27 16 to certain rules. 09:27 17 MS. KIPLIN: Yes. We have to do as to, 09:27 18 I would say, 99 percent of the rules. 09:28 19 MR. SADBERRY: And we may do as to 09:28 20 others -- 09:28 21 MS. KIPLIN: Yes. 22 MR. SADBERRY: -- if we choose. Now, 09:28 23 going back to eight. If we were, at the next meeting 09:28 24 as an example, to propose a rule under -- on the item 09:28 25 eight as it currently stands, it's going to be running 09:28 45 1 a parallel course to reviewing other rules, if I 09:28 2 understand correctly, but it's not a rule yet. 09:28 3 MS. KIPLIN: It's not a rule yet, and 09:28 4 it would not be subject -- it would not be ripe for 09:28 5 agency rule review until it was adopted, and then 09:28 6 sometime within a four-year period of the date of 09:28 7 adoption, because it is a rule that came into creation 09:28 8 subsequent to September 1, 1997. 09:28 9 CHAIR MIERS: And there's no part of 09:28 10 401 with which it will be inconsistent. 09:28 11 MS. KIPLIN: Not that I'm aware of that 09:28 12 would be part of what you would undertake in terms of 09:28 13 an agency rule review and also rule making. 09:28 14 CHAIR MIERS: Okay. I think I 09:28 15 understand the process. Any other questions for 09:28 16 Diane, or I do hear a motion? 09:28 17 MR. CLOWE: Move the adoption. 09:29 18 MR. SADBERRY: Second. 09:29 19 MS. KIPLIN: It would be moving the 09:29 20 proposal of the agency rule review of Title 16 Texas 09:29 21 Administrative Code Chapter 401 to be able to publish 09:29 22 it in the Texas Register for the minimum 30-day public 09:29 23 comment. 09:29 24 CHAIR MIERS: Is that your motion? 09:29 25 MR. CLOWE: So moved. 09:29 46 1 MR. SADBERRY: Second. 09:29 2 CHAIR MIERS: All those in favor say, 09:29 3 aye. 09:29 4 MR. SADBERRY: Aye. 5 MR. CLOWE: Aye. 6 CHAIR MIERS: Aye. The vote will be 09:29 7 three to zero. Thank you, Diane. 09:29 8 Item number 12: Consideration of and 09:29 9 possible action on agency minutes, which has been 09:29 10 referred to previously. Our -- if I understand the 09:29 11 issue here, Kim, our process has been to have a court 09:29 12 reporter and have a verbatim transcript of our 09:29 13 meetings, which we intend to continue. But the 09:29 14 question here is: Do we have to post those -- that 09:29 15 transcript on the Internet? And have we had a chance 09:30 16 to understand whether that is an expensive 09:30 17 proposition? 09:30 18 MS. KIPLIN: It's my impression, from 09:30 19 the discussions I've had with the Executive Director 09:30 20 and also the Web Site Chair located here in the 09:30 21 agency, that it would be an expensive proposition. It 09:30 22 was explained to me that it's -- basically we're 09:30 23 charged as if we had water running through a pipe, and 09:30 24 the more information that goes through that pipe the 09:30 25 more the charge is to the agency. 09:30 47 1 I didn't get a -- I have not received 09:30 2 some sort of quantifiable number about what that 09:30 3 charge is. I do know that the person in question in 09:30 4 the Marketing Division did indicate to me that there 09:30 5 was going to be an additional dialogue with the 09:30 6 Executive Director in terms of information to put on 09:30 7 the web site, so it may be that there's another 09:30 8 method. 9 I guess my -- a personal issue is that 09:30 10 at some point we did do minutes, I guess more for the 09:31 11 benefit of Commissioner Clowe. We did do minutes, and 09:31 12 we also recorded the Commission meetings. And, 09:31 13 really, to draft the minutes and make sure that they 09:31 14 were an accurate summary of the Commission meeting, we 09:31 15 would go to the transcript and summarize the 09:31 16 transcript, and it just seemed to be an inefficient 09:31 17 use of staff time -- 09:31 18 CHAIR MIERS: Inefficient and less 09:31 19 accurate. Is Mr. Bell still here? Robert, could you 09:31 20 come forward? Good morning. 09:31 21 MR. BELL: Good morning. For the 09:31 22 record my name is Robert Bell. I'm the Information 09:31 23 Technology Director. 09:31 24 CHAIR MIERS: Robert, have you had a 09:31 25 chance to think about how, in fact, we might be able 09:31 48 1 to accomplish posting the transcript as opposed to 09:31 2 some other form of complying with posting minutes? 09:31 3 MR. BELL: I haven't really looked into 09:32 4 it in depth, but are you talking about posting the 09:32 5 written transcript, or are you talking about an actual 09:32 6 voice transcript? 09:32 7 CHAIR MIERS: No. 09:32 8 MR. BELL: Just the written transcript. 09:32 9 CHAIR MIERS: Correct. Just the text. 09:32 10 Now, most reporters give us that, I assume, in disk 09:32 11 format as well as the printed version. Is there some 09:32 12 way to have that, for the most part, off-line but able 09:32 13 to be accessed if someone chooses to do so by some 09:32 14 sort of connection? 09:32 15 MR. BELL: Well, you really need to 09:32 16 build a page if you're going to use the web, say, to 09:32 17 get that. You would build a web page that has that 09:32 18 particular information in it, and that's, I believe, 09:32 19 what we're talking about. As far as the maintenance 09:32 20 is concerned, that gets to be a relatively expensive 09:33 21 process if you're constantly feeding this type of 09:33 22 information in. The only other thing -- 09:33 23 CHAIR MIERS: Well, explain that to me. 09:33 24 MR. BELL: Okay. 25 CHAIR MIERS: What is involved in... 09:33 49 1 MR. BELL: We have an outsourced web 09:33 2 page, and any maintenance that we do, any pages that 09:33 3 we build or modifications that we make, it's on a per- 09:33 4 cost basis or, you know, like a per-hour basis, cost 09:33 5 of materials type cost. And -- 09:33 6 CHAIR MIERS: So if you had a 09:33 7 transcript that was on a disk, available in some sort 09:33 8 of readable form, and you changed it once a month, how 09:33 9 expensive would that be? 09:33 10 MR. BELL: I'm not sure. We would have 09:33 11 to send that to the vendor and get an actual price. 09:33 12 And this is what we do now with any modifications that 09:33 13 we make to the web page. We send a proposal for what 09:33 14 we would like to do, and they give us a price on that. 09:33 15 I do not know what the exact price of that. 09:34 16 But you could do it that way. You 09:34 17 could have just, like, a space out there, and you fill 09:34 18 that space with the -- whatever material you want to 09:34 19 fill it with, and then overlay that with the next 09:34 20 time. If you keep it in historical context of one 09:34 21 transcript, another transcript, another transcript, 09:34 22 then it does get to be a storage problem then. 09:34 23 CHAIR MIERS: Well, I don't -- or, let 09:34 24 me ask Kim. What is -- two questions about this 09:34 25 requirement: By when do we have to accomplish this, 09:34 50 1 and is posting contemporaneous minutes sufficient or 09:34 2 do you have to keep a library? 09:34 3 MS. KIPLIN: By when we have to -- 09:34 4 well, let me take the first question. Historically 09:34 5 what we have done -- because we're also right now 09:34 6 required to file minutes with the Legislative 09:34 7 Reference Library, when we receive the transcript we 09:34 8 send it. 09:35 9 CHAIR MIERS: Right. 09:35 10 MS. KIPLIN: So it would be -- when we 09:35 11 receive the transcript, we would begin to undertake to 09:35 12 put it on the web site. 09:35 13 And the next question was: Do we have 09:35 14 to keep it up or can we take it down and replace it 09:35 15 with the most current meeting? It seems to me that 09:35 16 that would be appropriate, although I will tell you 09:35 17 that the bill is silent on that. 09:35 18 The filing with the Legislative 09:35 19 Reference Library is a storage, and they maintain 09:35 20 those minutes -- since we've adopted the transcript as 09:35 21 our minutes, they store those there. So if the intent 09:35 22 is to have this be a storage, an archive or storage, 09:35 23 then my suspicion is that they're going to want to see 09:35 24 those on the web site. It seems to me that we won't 09:35 25 be the only agency in the situation of having, for 09:35 51 1 lack of a better phrase, obsolete information on its 09:35 2 web site in that what I've been told about web sites 09:35 3 is that -- the most important thing about a web site 09:36 4 is to keep the information current. So it would be a 09:36 5 question that possibly we could get some direction 09:36 6 from, you know, maybe the sponsor person at the 09:36 7 legislature. I don't know, Nelda, if you have any 09:36 8 suggestions on how to go about doing that. 09:36 9 I will just tell you that the bill 09:36 10 itself, and the language itself, is silent as to that. 09:36 11 It just says it shall make reports required by law and 09:36 12 the minutes available. It really doesn't talk to the 09:36 13 members or the legislature, but when you go to the 09:36 14 language that came out of the legislative council's 09:36 15 recommendation and you look at the bullet under Senate 09:36 16 Bill 178, the second bullet, its recommendation is 09:36 17 that an agency should place the minutes of the meeting 09:36 18 on the agency's web site, and if you don't have one 09:36 19 where you can post the minutes. 09:36 20 So I guess, maybe, that an alternative 09:36 21 is that we post it -- well, we do have a web site, so 09:36 22 I guess that wouldn't be an alternative, just thinking 09:36 23 out loud, because we do have a web site. And the last 09:36 24 paragraph under Senate Bill 178 really goes to 09:36 25 agencies that don't have a web site. 09:37 52 1 CHAIR MIERS: Well, could we look into 09:37 2 whether posting, for a month, the current minutes is 09:37 3 adequate under the law; and whether we could set up a 09:37 4 box, as Robert described it, that would be filled each 09:37 5 month with our currents minutes; and whether that 09:37 6 would satisfy this requirement? 09:37 7 MS. KIPLIN: Yes. 09:37 8 CHAIR MIERS: Okay. Any other 09:37 9 questions? Thank you, Robert. Would you take 09:37 10 whatever action you need to take to determine how 09:37 11 expensive that process would be, which I think entails 09:37 12 learning from the court reporter what formats are 09:37 13 available for the transcript as well as the cost that 09:37 14 would be required from the web site vendor? 09:37 15 MR. BELL: I certainly will. 09:38 16 CHAIR MIERS: Thank you. 17 MS. KIPLIN: One thing I would like to 09:38 18 clarify is I did not have communications with Robert 09:38 19 Bell; I had them with the Web Site Committee Chair. 09:38 20 So I wanted to make sure that people were aware of 09:38 21 that. I appreciate his coming forward and providing 09:38 22 information, but... 09:38 23 CHAIR MIERS: Who is the Web Site 09:38 24 Committee Chair? 09:38 25 MS. KIPLIN: It's a gentleman by the 09:38 53 1 name of Ron Wilcox who's located here within the 09:38 2 agency in Marketing. 3 MS. CLOUD: He's our Customer Service 09:38 4 Manager, and he has been appointed as oversight for 09:38 5 the web -- in making sure everything gets updated on a 09:38 6 daily basis to the web site. 09:38 7 CHAIR MIERS: Well, maybe Mr. Wilcox 09:38 8 and Mr. Bell could work together from a marketing as 09:38 9 well as a technical standpoint. It would -- some sort 09:38 10 of link to the transcript would make sense, to me, as 09:38 11 opposed to the minutes being on the web site, because 09:39 12 I am uncertain what that would do, from a marketing 09:39 13 standpoint, to have a lengthy transcript as part of 09:39 14 the web site. But whether there's an effective way to 09:39 15 use a link, I don't know technically. 09:39 16 MS. CLOUD: Okay. 09:39 17 CHAIR MIERS: Okay. Item number 13: 09:39 18 Report by the Bingo Advisory Committee Chair and 09:39 19 possible discussion, and/or action, regarding the 09:39 20 committee's activities. Mr. Atkins. 09:39 21 MR. ATKINS: Commissioners, 09:39 22 Mr. Neinast, the BAC Chair, was not able to be here 09:39 23 today, and he sends his regrets. You have in your 09:39 24 notebook the Vice Chair's summary of the meeting that 09:39 25 was held on August 31st. It's a very brief summary. 09:39 54 1 It was a very brief meeting, and they met for just 09:40 2 over an hour and basically just received updated 09:40 3 information from the staff. 09:40 4 CHAIR MIERS: How is Mr. Neinast doing? 09:40 5 MR. ATKINS: He's better. He is, I 09:40 6 guess, more mobile. He's apparently still not 100 09:40 7 percent yet. 09:40 8 The committee tentatively scheduled 09:40 9 their next meeting for November 29th or 30th. 09:40 10 CHAIR MIERS: Okay. Thank you. 09:40 11 MR. ATKINS: Commissioners, before we 09:40 12 leave that one item, I do want to let you know I did 09:40 13 receive, yesterday afternoon, a resignation letter 09:40 14 from Jim MacPhearson who is the manufacturer/ 09:40 15 distributor representative on the advisory committee. 09:40 16 So at a future Commission meeting we will need to come 09:40 17 back to you for a replacement for Mr. MacPhearson. If 09:40 18 we look at the nominations that we received last time, 09:40 19 there are, I believe, two individuals left who are 09:41 20 still active in the industry that could be considered, 09:41 21 or we could do a mail-out to manufacturer/distributor 09:41 22 licensees and ask for new nominations. 09:41 23 CHAIR MIERS: When is your next Bingo 09:41 24 Bulletin? 09:41 25 MR. ATKINS: It's scheduled for 09:41 55 1 October/November, so it will go out sometime in 09:41 2 November. 09:41 3 CHAIR MIERS: So that would probably be 09:41 4 longer than we would want to wait, if we put a notice 09:41 5 in there? 09:41 6 MR. ATKINS: But if we were -- it 09:41 7 wouldn't be difficult for the staff just to contact, 09:41 8 through the mail, manufacturer/distributor 09:41 9 licensees -- 09:41 10 CHAIR MIERS: Okay. Well, why -- 11 MR. ATKINS: -- because they only 09:41 12 represent approximately 30 licensees. 09:41 13 CHAIR MIERS: Okay. Why don't -- it 09:41 14 sounds like that does make sense to go ahead and ask 09:41 15 for fresh nominations, that the other nominations were 09:41 16 stale. 09:42 17 Item 14: Report, possible discussion, 09:42 18 and/or action on Bingo licensee compliance with 09:42 19 applicable laws and agency rules. Mr. Atkins. 09:42 20 MR. ATKINS: Commissioners, at the 09:42 21 August 11th, '99, meeting there were some questions 09:42 22 raised regarding actions taken by the Commission and, 09:42 23 I guess, how they would affect the Commission's 09:42 24 enforcement goal. And I think the goal of the 09:42 25 Commission is to get organizations, one, not just to 09:42 56 1 come into compliance with the act and the rules, but 09:42 2 to keep organizations in compliance with the act and 09:42 3 the rules. And the situation that we have been facing 09:42 4 is organizations who go through the hearing process 09:42 5 and don't come into compliance with the violations 09:42 6 until after the hearing, until after a PFD has been 09:43 7 issued with the recommendation that some kind of 09:43 8 adverse action be taken against their license, 09:43 9 organizations were then coming into compliance -- 09:43 10 coming before the Commission and asking for, I guess, 09:43 11 leniency of some sort of special dispensation. 09:43 12 An additional thing that the staff has 09:43 13 been looking at is that there are also organizations 09:43 14 who quarter after quarter violate the act, however, 09:43 15 they come into compliance just prior to the hearing. 09:43 16 So it's the staff's opinion that that is defeating the 09:43 17 agency's intent to achieve voluntary compliance with 09:43 18 the act and the rules. And, you know, I want to make 09:43 19 sure that the Commission understands that all this is, 09:43 20 is staff's attempt to apply the literal language of 09:43 21 the act and to properly enforce the statute. 09:44 22 Staff recognizes that from time to time 09:44 23 there are going to be unique circumstances that will 09:44 24 cause either the staff or the Commission to reconsider 09:44 25 an ALJ's recommendation. But, again, we believe that 09:44 57 1 those are unique situations and should not just be an 09:44 2 organization coming before the Commission saying, you 09:44 3 know, "We're sorry. It's someone else's fault." You 09:44 4 know, "It'll never happen again." 09:44 5 CHAIR MIERS: Well, we have one of 09:44 6 those today, if I'm not mistaken. And, Billy, I think 09:44 7 what our concern would be and what -- at least this 09:44 8 Commissioner's view would be that if we have any 09:44 9 licensee who has any sort of repeated history of 09:44 10 behavior, or behavior that is counterproductive to the 09:44 11 good faith that we expect from our licensees and the 09:45 12 good faith we try to exercise in making exceptions for 09:45 13 circumstances that were truly beyond someone's 09:45 14 control, we would like to know about that, and we 09:45 15 would not expect that type of behavior to be 09:45 16 tolerated. So to the extent that you have somebody 09:45 17 that is repeatedly in violation and then cures right 09:45 18 before a hearing, if it's a repeated instance for that 09:45 19 particular licensee, then what remedy do we have with 09:45 20 that sort of abuse? 09:45 21 MS. KIPLIN: Well, what I'm hearing you 09:45 22 say, I think, is that each case comes to you on its 09:45 23 own merits, and it really -- what you're really 09:45 24 looking at are the merits of that particular case in 09:45 25 terms of aggravating or mitigating circumstances. And 09:45 58 1 that through y'all's decision making, you are, one, 09:46 2 taking action on an individual contested case 09:46 3 proceeding, but you're also establishing the ad hoc 09:46 4 rule making about where you, as a Commission with this 09:46 5 composition, stand in terms of mitigating or 09:46 6 aggravating circumstances. 09:46 7 I think the staff is looking at the 09:46 8 enforcement of the act and the rules. And I know that 09:46 9 Billy and I have spoken, and we do intend to make sure 09:46 10 that what is before the Commission is a true and 09:46 11 accurate picture of the history and the current status 09:46 12 of the particular licensee that's within the record as 09:46 13 part of that contested case proceeding that will come 09:46 14 before you. 09:46 15 CHAIR MIERS: Without any regard to any 09:46 16 particular case, I would say that if part of the 09:46 17 record, as the case came before the Commission, was a 09:46 18 repeated violation, then I would find it surprising if 09:47 19 the Commission had any interest, whatsoever, in 09:47 20 exercising leniency or discretion to not fully 09:47 21 implement our rules. 09:47 22 MS. KIPLIN: But I'm sure that you'll 09:47 23 be looking at the individual case at the time it's 09:47 24 ripe for your consideration. 09:47 25 CHAIR MIERS: Certainly. 09:47 59 1 MR. ATKINS: Commissioner, if I could, 09:47 2 the staff has already moved forward with hearings with 09:47 3 organizations such as you've described, and those 09:47 4 organizations will be coming before you eventually. 09:47 5 And what I was going to suggest is what the staff 09:47 6 could do, in order to give the Commissioners maybe 09:47 7 more of a global picture, is include in your notebook 09:47 8 any compliance history, if there is, on that 09:47 9 organization. 09:48 10 MS. KIPLIN: And that compliance 09:48 11 history will not be outside of the record. When it 09:48 12 comes to your attention, what you'll see, as part of 09:48 13 the compliance history, will be part of what was 09:48 14 presented to us and the Office of Administrative 09:48 15 Hearings Administrative Law Judge. 16 CHAIR MIERS: I understand. 17 MS. KIPLIN: I want to make sure that 09:48 18 the record is clear today that we're not asking you to 09:48 19 consider facts that are outside the contested case or 09:48 20 proceeding record. 09:48 21 CHAIR MIERS: I understand that. Okay? 09:48 22 Anything else on that item, Billy? 09:48 23 MR. ATKINS: No, ma'am. 09:48 24 CHAIR MIERS: Okay. Our next item, in 09:48 25 fact, is our contested docket, and we will take that 09:48 60 1 up at this time. It's item number 17. Other than 09:48 2 this item we have the report of the Executive Director 09:48 3 and Charitable Bingo Operations Director remaining and 09:48 4 our Executive Session. 09:48 5 The contested case docket, Kaye, are 09:48 6 you going to help us with that? 09:49 7 MS. SCHULTZ: For the record my name is 09:49 8 Kaye Schultz, Assistant General Counsel. 9 I don't believe all of these cases are 09:49 10 mine, but I'll be happy to address any questions that 09:49 11 you have. 09:49 12 CHAIR MIERS: Well, initially, we have 09:49 13 several that appear to be the circumstance of accounts 09:49 14 swept and no funds. 09:49 15 MS. SCHULTZ: Yes. I believe the 09:49 16 Monaville Grocery and the Foodtown are insufficient 09:49 17 funds. The Kings Corner is one that was a 09:49 18 conviction -- 09:49 19 CHAIR MIERS: Yes. 09:49 20 MS. SCHULTZ: -- of crimes of moral 09:49 21 turpitude, and Friendly Food Mart involved failure to 09:49 22 notice of a change in business of going out of 09:49 23 business. 09:49 24 CHAIR MIERS: Are there any -- is there 09:50 25 a motion in connection with these cases? 09:50 61 1 MR. SADBERRY: As to those cases Madam 09:50 2 Chair enumerated and described by counsel, I would 09:50 3 move to accept the proposed decision of the ALJ. 09:50 4 MR. CLOWE: And what cases are we 09:50 5 speaking of individually now? 09:50 6 MR. SADBERRY: They are all but, I 09:50 7 believe, the -- 09:50 8 CHAIR MIERS: LULAC. 9 MR. SADBERRY: -- the LULAC. 09:50 10 MR. CLOWE: LULAC? 11 MR. SADBERRY: I believe they're all 09:50 12 but LULAC. 09:50 13 CHAIR MIERS: Monaville Grocery, 09:50 14 Foodtown Grocery, Kings Corner, and Friendly Food 09:50 15 Mart. 09:50 16 MR. CLOWE: Second. 09:50 17 CHAIR MIERS: All those in favor of 09:50 18 accepting the recommendation say, aye. 09:50 19 MR. SADBERRY: Aye. 20 MR. CLOWE: Aye. 21 CHAIR MIERS: Aye. The vote will be 09:50 22 three to zero on those cases, and we'll move to LULAC 09:50 23 Council 4516. 09:50 24 MR. BENNETT: Once again, 09:50 25 Commissioners, my name is Ridgely Bennett. 09:50 62 1 This case is a Bingo case where the 09:50 2 Administrative Law Judge recommended revocation of the 09:51 3 license. The facts in the case, as found by the 09:51 4 Administrative Law Judge, was that the licensee failed 09:51 5 to make a required charitable distribution in 09:51 6 accordance with Section 19A(K) of the Bingo Enabling 09:51 7 Act for the quarter ending December -- excuse me, 09:51 8 December 31st, 1998, in the amount of $3,417.48, and 09:51 9 staff would request that you sign the order adopting 09:51 10 the proposal for decision. 09:51 11 CHAIR MIERS: I think I have a speaker 09:51 12 on this particular item. Henry Rodriguez? 09:51 13 MR. RODRIGUEZ: Thank you. 09:51 14 Commissioners, my name is Henry Rodriguez, and I am 09:51 15 the newly elected District Director for District 15 09:52 16 out of San Antonio and Bexar County, and I'm here on 09:52 17 behalf of Council 4516. 09:52 18 If I may say, I went to the -- to that 09:52 19 particular hearing, but I was there for another one, 09:52 20 and by sheer coincidence that one came up and I 09:52 21 remember that council very well. And I can appreciate 09:52 22 the work that Mr. Bill Atkins is doing and 09:52 23 Ms. Kimberly Kiplin and -- in, you know, wanting for 09:52 24 compliance to take place. 09:52 25 We -- as a District Director I would 09:52 63 1 not be here if I did not believe that this particular 09:52 2 council has made every, every effort to comply and to, 09:52 3 you know, come forth very clean. The new president of 09:52 4 this council is Eddie Garcia, Jr., and if anybody knew 09:53 5 the rules back then it was his late father, Eddie 6 Garcia, Sr. Eddie, Jr., is the new president of this 09:53 7 council. 09:53 8 The people that were there, for 09:53 9 whatever reasons, never made any attempt to defend the 09:53 10 position of the council, and they no longer belong to 09:53 11 our organization. We have made every effort to put 09:53 12 people -- if they're going to be playing Bingo. 09:53 13 We have some kind of understanding 09:53 14 about the situations as far as Bingo is concerned. 09:53 15 We've been before this Commission many a time, and in 09:53 16 this particular case the new order, the new officers, 09:53 17 have taken every step to comply. And we ask this 09:53 18 Commission to please consider that, and the fact that 09:53 19 we have cleaned house, and we can only tell you that 09:53 20 we promise that we'll stay on top of things. 09:54 21 As the new Director for LULAC, I 09:54 22 understand the importance, because the people that are 09:54 23 on the receiving end of this charitable contributions, 09:54 24 they are the ones that make up -- that really wind up 09:54 25 losing if a council should be denied its Bingo 09:54 64 1 license. They have paid their 35 percent charitable, 09:54 2 and we are here just to -- we are at your mercy, yes. 09:54 3 And, again, we appreciate the work that 09:54 4 everybody in this Bingo organization is doing -- what 09:54 5 they're doing, but our position is that we ask that 09:54 6 you really consider this -- it's a unique circumstance 09:54 7 like -- and every case should go on its own merits. 09:54 8 But, again, we have made every effort, 09:54 9 and we promise we -- and it's -- I know you've heard 09:54 10 this before, but I have to be responsible for all of 09:54 11 them as the Director, and if they have to go down the 09:55 12 road, well, so be it. But this is the first time, I 09:55 13 think, they committed this kind of violation, so we 09:55 14 ask that you reconsider, please. 09:55 15 CHAIR MIERS: Counsel has emphasized 09:55 16 that what is important to us is what is before us in 09:55 17 the record. 09:55 18 And one question, Billy, that routinely 09:55 19 comes up in all these matters is the notice that was 09:55 20 provided in terms of whether the council had adequate 09:55 21 notice of the hearing and an opportunity to come and 09:55 22 correct whatever deficiency existed. And do we have 09:55 23 any information as to where that particular notice 09:55 24 went? Because I know we were trying to do better in 09:55 25 ensuring that the notice arrived on someone's desk 09:55 65 1 that knew what to do with it. 09:56 2 MR. BENNETT: And, Commissioner, I 09:56 3 might be able to answer that question for you. Both 09:56 4 the Notice of the Opportunity to Show Compliance with 09:56 5 the law and the Notice of Hearing went to Ms. Danielle 09:56 6 M. Marshall, and we do have a green card indicating 09:56 7 that the notices were received. 09:56 8 CHAIR MIERS: Okay. And do we know who 09:56 9 that is -- 09:56 10 MR. RODRIGUEZ: Those people are no 09:56 11 longer -- not even in our organization of LULAC, 09:56 12 ma'am. They -- it seemed to me -- well, it's very 09:56 13 obvious that they had no intentions, I guess, of 09:56 14 complying, and they -- I guess they just didn't know 09:56 15 the importance of it all. But, no, I know who 09:56 16 Danielle is. Yes. I would not even know where that 09:56 17 person is at today. 09:56 18 MR. CLOWE: What was her position at 09:56 19 that time? 20 MR. RODRIGUEZ: My position? 09:56 21 MR. CLOWE: No. Her position. 09:56 22 CHAIR MIERS: No. Her position. 09:56 23 MR. RODRIGUEZ: Oh, her position? A 09:56 24 member of the council. And I think Ms. Tammy -- I 09:56 25 forget her last name -- was president. But for 09:57 66 1 whatever reason they just didn't seem to have any 09:57 2 intentions of complying, I guess, and today we are 09:57 3 here to tell you that things can be different. 09:57 4 CHAIR MIERS: Well, one thing: It said 09:57 5 that Respondent was present, or I understood the 09:57 6 Respondent was present, at the hearing? 09:57 7 MR. RODRIGUEZ: That was me that was 09:57 8 there. But I was there -- 9 CHAIR MIERS: Really that was, you're 09:57 10 telling us, by happenstance. 09:57 11 MR. RODRIGUEZ: By sheer coincidence. 09:57 12 Yes. I went on another one, and that one, for us, has 09:57 13 been denied. And I guess it's not -- we're not going 09:57 14 to contest that one. But 4516 does have a staff there 09:57 15 and officers, and they are doing real well, and we 09:57 16 would hope that you would reconsider. 09:57 17 CHAIR MIERS: Is the organization, at 09:57 18 the present time, in compliance? 09:57 19 MR. ATKINS: Yes, ma'am. And, 09:57 20 Commissioners, if I could respond to a couple of 09:57 21 things. I appreciate Mr. Rodriguez's comments and the 09:58 22 efforts that he has made on behalf of all of the LULAC 09:58 23 organizations, but there are two things that I feel 09:58 24 like it's incumbent upon me to inform the Commission 09:58 25 of. 09:58 67 1 The first is that, to the best of my 09:58 2 knowledge, I have still not been contacted by anyone 09:58 3 with 4516. I know that Mr., you know, Rodriguez has 09:58 4 written on behalf of the organization and he's here 09:58 5 today, but I've had no calls from Mr. Garcia or anyone 09:58 6 else representing themselves to be with the 09:58 7 organization. It's always someone else that seems to 09:58 8 be interested in this organization's license. 09:58 9 And I do just want to make sure the 09:58 10 Commission knows that this is not the first time that 09:58 11 4516 has had a problem with their 35 percent 09:58 12 distribution. It's been a while back. It was the 09:59 13 first quarter of 1997. They did come into compliance 09:59 14 before a hearing was held, but there is that one other 09:59 15 past compliance issue that I would just put before 09:59 16 you. 09:59 17 CHAIR MIERS: Well, if I'm hearing our 09:59 18 lawyer's counsel, that's the kind of information 09:59 19 that's not in the record at the present time, but it 09:59 20 would be intended to be in the record the next time. 09:59 21 MR. ATKINS: Yes, ma'am. 09:59 22 CHAIR MIERS: And with respect to the 09:59 23 council, they currently, through somebody though, are 09:59 24 in compliance? 09:59 25 MR. ATKINS: That's correct. As a 09:59 68 1 matter of fact, they are currently in excess of their 09:59 2 35 percent distribution. 09:59 3 MR. CLOWE: Who is now on the list to 09:59 4 be notified for this council? 09:59 5 MR. ATKINS: I don't think I have that 09:59 6 here, Commissioner Clowe. We can get that, but it's 09:59 7 not a part of this record. This is just the hearing 10:00 8 record. 10:00 9 MR. CLOWE: I would like to know who 10:00 10 that is. And you commented that you hadn't been 10:00 11 contacted by anybody. I'm a little hazy on what the 10:00 12 situation is as to present communication. 10:00 13 You're appearing on behalf of the 10:00 14 council, but you're at a level, if I understand it, in 10:00 15 the hierarchy -- 10:00 16 MR. RODRIGUEZ: Yes, sir. 17 MR. CLOWE: -- above the councils. 18 MR. RODRIGUEZ: Yes, I am. 10:00 19 MR. CLOWE: So you're speaking for 10:00 20 them, but there's no representative of the council 10:00 21 here -- 10:00 22 MR. RODRIGUEZ: Mr. Eddie Garcia, Jr., 10:00 23 is here. He's the president of the council, and that 10:00 24 would be the person to contact, sir. 10:00 25 MR. SADBERRY: He's here? 10:00 69 1 MR. RODRIGUEZ: Yes. He's here. 10:00 2 MR. SADBERRY: Oh, okay. I thought -- 3 MR. GARCIA: I'm right here. 10:00 4 MR. SADBERRY: Oh, okay. And what's 10:00 5 his position? 10:00 6 MR. RODRIGUEZ: He's the president of 10:00 7 the council. 8 CHAIR MIERS: And he has been the 10:00 9 president since when? 10:00 10 MR. RODRIGUEZ: Well, I don't recall 10:00 11 exactly when, but when the other people went out we 10:00 12 reorganized. One of the things that I did, once I 10:00 13 became Director -- and that is to make sure that 10:01 14 everybody was even in compliance with our views; that 10:01 15 they have to pay. Because a lot of people were kind 10:01 16 of scattered off and they were not complying even with 10:01 17 the rules of LULAC, and we made it a point -- I made 10:01 18 it a point that if they are going to participate, 10:01 19 everybody is going to have to comply with also our 10:01 20 rules as well. 10:01 21 MR. ATKINS: Do you know, Henry, if 10:01 22 they've submitted a supplement with Eddie? 10:01 23 MR. RODRIGUEZ: What's that? 10:01 24 MR. ATKINS: Do you know if they've 25 already submitted a supplement with Eddie and the 10:01 70 1 other officers? 2 MR. RODRIGUEZ: No. I do not know 3 that. 4 MR. ATKINS: Okay. Do you know, Eddie? 5 MR. GARCIA: Yes, we did. 10:01 6 MR. ATKINS: They did? 7 MR. GARCIA: We filed a renewal. 10:01 8 MR. RODRIGUEZ: Oh, that's right. 9 MR. ATKINS: Oh, it's with the renewal? 10:01 10 MR. RODRIGUEZ: Oh, is that what you 10:01 11 mean? Yeah. They filed a renewal. 10:01 12 MR. ATKINS: Well, not the renewal, but 10:01 13 documentation showing the new officers. 10:01 14 MR. GARCIA: Yes. 15 MR. RODRIGUEZ: Oh, yeah. 10:01 16 MR. ATKINS: Okay. 17 MR. RODRIGUEZ: They would have had to. 18 Yes. 19 MR. ATKINS: Okay. 20 MR. RODRIGUEZ: I didn't get -- I 10:01 21 didn't understand your questions, sir. 10:01 22 MR. ATKINS: Okay. It may take them a 10:01 23 while to find that information, Commissioner Clowe, 10:01 24 but we can get it. 10:01 25 CHAIR MIERS: Commissioner Sadberry, I 10:02 71 1 know you have special responsibilities in this area. 10:02 2 MR. SADBERRY: We have had a very 10:02 3 extensive history with Bingo since taking over some 10:02 4 years ago. I want to acknowledge and recognize your 10:02 5 efforts in coming up with -- apparently we were not 10:02 6 aware that Mr. Garcia was here. I was under the 10:02 7 impression it was presumed he was not here, so he is 10:02 8 here. I think the record needs to reflect that. But 10:02 9 he was not at the hearing is what you're -- is my 10:02 10 understanding. 10:02 11 MR. RODRIGUEZ: At that time he was not 10:02 12 the president. It was Tammy Perez. 10:02 13 MR. SADBERRY: You have, obviously, 10:02 14 worked with us -- 10:02 15 MR. RODRIGUEZ: Yes. 16 MR. SADBERRY: -- over a period of time 10:02 17 and know our efforts, you know our interests, and you 10:02 18 know what we want to see happen. We want to see Bingo 10:02 19 played -- 20 MR. RODRIGUEZ: Absolutely. 21 MR. SADBERRY: -- we want to see what 10:02 22 we can do to help you with that, but we also want our 10:02 23 staff to ensure compliance and we've made significant 10:02 24 progress in that regard. 10:03 25 One of the reasons for the previous 10:03 72 1 item being placed on the agenda, whether you are aware 10:03 2 of it or not, if I recall correctly, is one or two or 10:03 3 three, maybe, meetings ago there was some concern 10:03 4 raised as to whether there was some -- the licensees 10:03 5 were taking advantage of our decision making 10:03 6 activities in giving people another chance, basically. 10:03 7 And we're not presuming that, and we're not alleging 10:03 8 that, but that's what we have to keep in mind. 10:03 9 I take it you are telling us that as a 10:03 10 ranking official within your organization, with 10:03 11 knowledge and awareness of who's out there playing 10:03 12 Bingo, conducting Bingo, that you believe that this 10:03 13 organization deserves another chance to stay in 10:03 14 compliance, as apparently they are in compliance, and 10:03 15 you're requesting us to accept your representation on 10:04 16 that point, and that you'll stand behind it and you 10:04 17 feel that we can, in good faith, rely on that. 10:04 18 MR. RODRIGUEZ: Absolutely, sir. 10:04 19 MR. SADBERRY: Madam Chair -- 10:04 20 MR. ATKINS: Commission Sadberry, if I 10:04 21 could very quickly, for the record. We do have the 10:04 22 pending renewal for 4516, and it does show 10:04 23 Eddie Garcia replacing Danielle Marshall as the 10:04 24 primary operator. 10:04 25 MR. RODRIGUEZ: Marshall. That's 10:04 73 1 right. 10:04 2 MR. SADBERRY: Madam Chair, I would be 10:04 3 comfortable with proposing to reject the proposed 10:04 4 decision of the ALJ on policy grounds based upon the 10:04 5 record and the presentation made to the Commission. 10:04 6 CHAIR MIERS: And I will second that 10:04 7 motion and call for a vote. All those in favor say, 10:04 8 aye. 9 MR. SADBERRY: Aye. 10:05 10 MR. CLOWE: Aye. 11 CHAIR MIERS: Aye. The vote is three 10:05 12 to zero, and that will be the action of the 10:05 13 Commission. 14 MS. KIPLIN: Commissioners, we'll draft 10:05 15 an order and bring it back to you, at the next 16 Commission meeting, that's consistent with your vote 10:05 17 today. 18 MR. RODRIGUEZ: I really appreciate 10:05 19 that. Thank you very much. Have a nice day. 10:05 20 CHAIR MIERS: Thank you. 10:05 21 I would move now that the Commission go 10:05 22 into Executive Session to deliberate the duties and 10:05 23 evaluation of the Executive Director, Internal 10:05 24 Auditor, and Charitable Bingo Operations Director 10:05 25 pursuant to 551.074 of the Texas Government Code; to 10:05 74 1 deliberate the duties of the General Counsel pursuant 10:05 2 to Section 551.074 of the Texas Government Code; to 10:05 3 receive legal advice regarding pending or contemplated 10:05 4 litigation and/or to receive legal advice pursuant to 10:05 5 Sections 551.071(1)(A) or (B) of the Texas Government 10:05 6 Code, and/or to receive legal advice pursuant to 10:05 7 Section 551.071(2) of the Texas Government Code, 10:05 8 including, but not limited to, the items listed under 10:06 9 item 15E in the agenda. Is there a second? 10:06 10 MR. SADBERRY: Second. 10:06 11 CHAIR MIERS: All those in favor say, 10:06 12 aye. 13 MR. SADBERRY: Aye. 14 MR. CLOWE: Aye. 15 CHAIR MIERS: We'll go into Executive 10:06 16 Session. I have every reason to believe that this 10:06 17 will be an extensive Executive Session, but we'll 10:06 18 return as soon as we can. 10:06 19 MS. KIPLIN: So today is September 10:06 20 28th, 1999. The time is 2:05. 10:06 21 CHAIR MIERS: No. 22 MS. KIPLIN: 10:05. 10:06 23 (Executive Session) 10:06 24 CHAIR MIERS: Okay. It is 2:58 and we 14:59 25 are coming out of Executive Session. Is there 14:59 75 1 anything else we need to say, Ms. Kiplin, in that 14:59 2 regard? 14:59 3 MS. KIPLIN: No. You announced the 14:59 4 time you came out, and that's all that you need to do 14:59 5 unless you're planning on taking any action as a 14:59 6 result of any matter you took up in Executive Session. 14:59 7 CHAIR MIERS: Are there any actions to 14:59 8 be taken as a result of Executive Session? None 14:59 9 appear to be necessary. 14:59 10 We have a couple of other items on the 14:59 11 agenda which are the report of the Executive Director 14:59 12 and the report of the Charitable Bingo Operations 14:59 13 Director. I know we have gone into a great deal of 14:59 14 what's behind these tabs, but why don't we start with 15:00 15 Linda and see if there's anything else she feels needs 15:00 16 to be reported on. 15:00 17 MS. CLOUD: The only thing behind the 15:00 18 tab -- that's not behind the tab, is our next retailer 15:00 19 forum. It's going to be in Amarillo on October the 15:00 20 14th. That tab didn't -- that didn't get put behind 15:00 21 the tab. 15:00 22 And just a brief record on the NASPL 15:00 23 conference. We did win one award on our advertising, 15:00 24 and that had to do -- it was a Batchy award for the 15:00 25 Rodeo scratch-off game where the bull rider was coming 15:00 76 1 out of the ticket when the scratch took place. We won 15:00 2 the award on that, and we were nominated for two other 15:00 3 awards, but we were not in the finalists on those. 15:00 4 I was appointed NASPL Region Director 15:00 5 for Region two; that is Georgia, Louisiana, Virginia, 15:01 6 West Virginia, Washington, D.C., Ohio, Florida, 15:01 7 Kentucky, and Texas. Basically all the regional 15:01 8 directors do is have a meeting once a year with the 15:01 9 region for the middle staff lottery employees in order 15:01 10 for them to participate in a conference, like this, 15:01 11 with other lotteries. And we're planning that right 15:01 12 now with New Jersey to have one meeting for Region one 15:01 13 and Region two at the same time, basically taking the 15:01 14 burden off of us because we have the NASPL conference 15:01 15 in 2000. 15:01 16 We made the presentation on the NASPL 15:01 17 2000 conference. It went over very well, and one of 15:01 18 the comments in our video was that everybody would be 15:01 19 under one roof. And everybody applauded because we 15:01 20 had four hotels and we had to walk a mile and a half 15:01 21 to get to the conference center in Canada, so 15:01 22 everybody was quite happy to be under one roof in 15:02 23 Dallas. And that -- outside of what is behind your 15:02 24 tabs, that's all I have to report. 15:02 25 CHAIR MIERS: Thank you very much. 15:02 77 1 Billy? 15:02 2 MR. ATKINS: Commissioners, the only 15:02 3 thing I had -- I wanted to update on my report is the 15:02 4 number of calls to the Bingo hall locator number, and 15:02 5 as of Sunday the 26th, there had been just under 8,200 15:02 6 calls made to that number. 15:02 7 CHAIR MIERS: Great. Anything else, 15:02 8 Commissioners, under either report, or otherwise, that 15:02 9 we need to take up today? We don't have a setting for 15:02 10 our next meeting, but I assume we will work with our 15:02 11 calendars and see what the next available date would 15:02 12 be. So anything else? 15:02 13 MR. CLOWE: No, ma'am. Move for 15:02 14 adjournment. 15:02 15 MR. SADBERRY: Second. 15:02 16 CHAIR MIERS: We'll stand in 15:02 17 adjournment. Thank you. 15:03 18 (Proceedings concluded) 19 20 21 22 23 24 25 78 1 REPORTER'S CERTIFICATION 2 3 STATE OF TEXAS ) 4 COUNTY OF TRAVIS ) 5 6 I, LESLIE P. BOERGER, Certified Court 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 4th day of 17 October, 1999. 18 19 20 _________________________________ LESLIE P. BOERGER, Texas CSR 5839 21 Expiration Date: 12/31/2000 1609 Shoal Creek Boulevard 22 Suite 201 Austin, Texas 78701 23 (512) 474-4363 24 25 JOB NO. 990928LPB