1 1 ****************************************************** 2 BEFORE THE 3 4 TEXAS LOTTERY COMMISSION 5 6 AUSTIN, TEXAS 7 8 October 26, 1999 9 10 ****************************************************** 11 BE IT REMEMBERED that the above-entitled matter 12 came on for hearing on the 26TH day of OCTOBER, 1999, 13 beginning at 8:31 a.m., and ending at 3:15 p.m., at 14 the TEXAS LOTTERY COMMISSION, 611 East Sixth Street, 15 Austin, Texas, and the following proceedings were 16 stenographically reported by Leslie P. Boerger, CSR 17 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. It's my 2 pleasure to call the October 26th, 1999, Texas Lottery 3 Commission meeting to order at this time, and we are 4 ready to proceed. 5 Our first item is: The review, 6 possible discussion, and/or action on lottery sales 7 and trends, including new game concepts. I am 8 aware -- have seen some of our advertisements on 9 television, so we know those are up and running. So 10 they've been out since October 16th? Is that right? 11 MS. CLOUD: That's correct. 12 MS. SMITH: The 15th. Yes, ma'am. 13 CHAIR MIERS: 15th? So are we seeing 14 any impact from those? 15 MS. SMITH: We've gotten some pretty 16 positive feedback about those spots. And instant 17 sales last week were at, I believe, 26 million -- 18 26.5, which was up from the week before. We have gone 19 back and looked at comparisons to past years, and 20 we're actually selling more tickets; it's they're the 21 $1 tickets. So with our game strategy now, to 22 introduce the multiple higher price point tickets, we 23 hope as that kicks in then we'll see more of an 24 increase. 25 CHAIR MIERS: And when does that occur, 3 1 Toni? 2 MS. SMITH: Well, I've included in your 3 packets, Commissioner -- it's actually the last page 4 before the sample tickets -- our tentative schedule 5 for the rest of the calendar year, and you can see 6 that we've been pretty aggressive. These games on 7 this sheet are all at the higher prize payout, at 60 8 and 65 percent -- I'm sorry. It's what's attached to 9 your sales. 10 CHAIR MIERS: Okay. 11 MS. SMITH: So from the Bingo game that 12 was introduced on June 16th all the way through 13 December, we started out with $1 games. And then 14 beginning with Cash Vault that started in September, 15 then we're pretty aggressive on the $2. And then 16 we're also working on a $5 holiday game. 17 CHAIR MIERS: Okay. And I assume we 18 saw a positive impact from the higher jackpot? 19 MS. SMITH: Yes, ma'am, we did. Last 20 week total sales were 59,488,150, and that was up 21 22 percent from the previous week. So that was a good 22 boost and pretty much a result of the Lotto jackpot. 23 MS. CLOUD: It proves the point that 24 when the jackpot is rolling and when it's bigger, more 25 players get excited about playing and come into the 4 1 game. It was exciting. Keith and I, both, were at 2 the studio Saturday night and watching the draw and 3 then sitting there in anticipation as to whether to 4 let -- find out from GTECH whether we got a winner or 5 not, and we did. So he was in tune with the 6 television stations, and all, on the spot. So it was 7 pretty exciting. 8 CHAIR MIERS: Okay. Anything else of 9 note, Commissioners or Toni or Linda? 10 MS. SMITH: I just wanted to comment 11 that we have also included, along with the usual memos 12 that I submit at Commission meetings, the daily sales 13 report that Linda had asked us to put together, and 14 there's a copy of it there. So it's just another way 15 to look at those numbers and comparing -- even though 16 it's daily, we did shift down a day so that you can 17 compare the same day with the same day because of 18 the -- the jackpots have such an impact on sales. 19 MS. CLOUD: We ran it both ways, and 20 the only way that it made any sense was to have the 21 days come up when the draws took place so that the 22 day -- the drawing days match. So it's the day of the 23 week that we're matching up, not actually the date of 24 the month. So we're one day off only because of last 25 year, September 1st was on a different day. 5 1 MR. CLOWE: And what correlation did 2 you find in that, if any? 3 MS. CLOUD: Well, I'm -- right now I'm 4 using this particular spreadsheet as more of a 5 tracking -- a really good tracking document that's 6 going to keep us informed on a daily basis as to what 7 is happening. And we are seeing a gradual increase in 8 our instant games, very slow, but then when you have a 9 jackpot, like we had within the past week, that shows 10 exactly what Lotto sales does. So this is just going 11 to confirm where we are so that we know -- you know, 12 can keep on track and monitor it very closely. 13 CHAIR MIERS: Okay. And is the 12 14 Ways -- I know we always have a holiday game that 15 seems to have some success. Is that the 12 Ways to 16 Celebrate? 17 MS. CLOUD: This is -- yes. That is 18 our Christmas game, and that is a 70 percent payout we 19 put into this game. We only ordered 20 million 20 tickets. But this is the highest payout we've ever 21 put into a game, and the Christmas game will have that 22 this year. That did not alter our percentage points. 23 I mean, we were so slow to start with coming into this 24 that we are within our percentage of payout that we 25 should be, in putting this game out. 6 1 CHAIR MIERS: Okay. Questions? 2 CHAIR MIERS: All right. Anything 3 else, Linda or Tony, on items one -- or, we also 4 covered the report, possible discussion, and/or action 5 on Lottery advertising and promotions. Any other 6 issues there? 7 MS. CLOUD: I just want to add to what 8 Toni said about ticket sales. We have sold 9 18.4 million tickets per week in instant games -- and 10 that's tickets, not dollar value -- and that's the 11 highest ticket sales since the summer of '98. So 12 there, again, is a measure of us bringing ourselves 13 back. Like we said, the $1 game has an impact on the 14 dollar sales, and the $1 games are, of course, the 15 first ones we could put out. It was the quickest to 16 get out there. 17 CHAIR MIERS: Could you explain that to 18 me, Linda, why the $1 game was quicker to put out? 19 MS. CLOUD: It takes -- well, Toni 20 probably can explain that better. It takes more time 21 in production to produce the $2 tickets. Toni, do you 22 want to... 23 MS. SMITH: That's basically it. It 24 literally takes twice as long to print a four by four 25 ticket as it does a two by four ticket. And our 7 1 strategy was we wanted to fill up those dispensers 2 that were out there with the higher prize payout games 3 and to start out with a $1 game so that we could 4 pretty much flood the market as quickly as we could, 5 and then introduce the $2 ones until we got the 6 inventory built up. And I think that's reflected in 7 the introduction schedule that I showed you. You can 8 see how we worked our way into that. And this has 9 been a very aggressive schedule, as far introductions, 10 for any state to do and get produced by one vendor. 11 CHAIR MIERS: Okay. Item number 12 three -- or, four. Pardon me. Status report, 13 possible discussion, and/or action on the Lottery 14 operator audit procurement. Good morning, Ridgely. 15 MR. BENNETT: Good morning, 16 Commissioners. For the record my name is 17 Ridgely Bennett. I'm the Deputy General Counsel. 18 We are moving forward with the 19 reissuance of the RFP for audit of the Lottery 20 operator. Currently the staff at the State Auditor's 21 Office has agreed to review the RFP and provide 22 comments and suggestions, and we're working forward -- 23 moving forward on reissuing that RFP. 24 MS. CLOUD: We even suggested that they 25 may want to do the audit, and they said they would 8 1 think about it. 2 CHAIR MIERS: Okay. 3 MR. BENNETT: I would be happy to 4 answer any questions. 5 MR. SADBERRY: Ridgely, it appears that 6 some of the response that you received as feedback 7 from the potential proposers had to -- at least 8 addressed the issue of indemnification or some type of 9 hold harmless. Are you finding that to be a major 10 issue, or is that just discussion in passing? 11 MR. BENNETT: I think that has been a 12 major issue with some of the audit firms that we were 13 dealing with. However, the -- there are a number of 14 audit firms out there, and I've received a lot of 15 feedback recently from other audit firms that seem 16 more willing to do such a project. 17 MR. SADBERRY: So it's pretty clear 18 from where you stand as far as the parameters and 19 restrictions on what can, and more importantly what 20 cannot, be done in that respect. 21 MR. BENNETT: Correct. There's a 22 constitutional provision that prevents us from 23 indemnifying and holding harmless vendors. 24 CHAIR MIERS: Ridgely, those audit 25 firms that are recommending or saying that they would 9 1 be willing to precede, are these different firms than 2 we had talked to before or... 3 MR. BENNETT: They are different firms. 4 As you're probably aware, there was a newspaper 5 article about the RFP, and that prompted a number of 6 phone calls and a number of e-mails and a number of 7 letters from different audit firms expressing 8 interest. 9 CHAIR MIERS: Okay. Anything else? If 10 not, we'll moved to item five: Status report, 11 possible discussion, and/or action on minority market 12 advertising services procurement. 13 MR. BENNETT: And, of course, with that 14 RFP, proposals are in and they are currently 15 reviewed -- being reviewed by the evaluation team. 16 CHAIR MIERS: Okay. I think that's all 17 for you, Ridgely, unless you have any other matters we 18 could take up at this time. 19 MR. BENNETT: I have nothing further 20 today. 21 CHAIR MIERS: Okay. Then why don't we 22 move to item six: Report, possible discussion, and/or 23 action on the State audit reports relating to the 24 Texas Lottery Commission. Ms. McLeod. 25 MS. MCLEOD: Good morning, 10 1 Commissioners. 2 CHAIR MIERS: Good morning. 3 MR. SADBERRY: Good morning. 4 MS. MCLEOD: I've provided for you some 5 information. According to management's implementation 6 of recommendations on the State Auditor's report, we 7 have one finding left on the management control audit. 8 It will be implementing in February, if not sooner, on 9 the Security case tracking system. 10 Findings six and seven have been -- are 11 being addressed. Our plan, continuancy planning item, 12 has been under review. We're making some final 13 changes to that this week. 14 Finding seven, with the prize reserve 15 fund, that should be implemented effective with the 16 issuance, November 20th, of the financial statements. 17 And then under the latest SAO report, 18 procurement practices, progress is moving along nicely 19 in the finding of two with requiring the advertising 20 vendor to verify the subcontractors' publication 21 circulation. And we've got target dates, January 22 31st, the year 2000, and then the last one is the rule 23 making under finding one with the April 31st (sic), 24 2000. 25 CHAIR MIERS: Okay. Questions for 11 1 Debra? 2 MR. CLOWE: No. 3 CHAIR MIERS: Okay. Thank you, Debra. 4 Report, possible discussion, and/or 5 action on the implementation of legislation relating 6 to the Texas Lottery Commission. Nelda Treviņo. 7 MS. TREVIŅO: Commissioners, as of our 8 last meeting there's really nothing new to report. 9 I'm happy to answer any questions, but, really, we've 10 covered a couple of issues at our last meeting. We 11 did send you some information. One thing I will 12 mention, we did send you some information on a 13 legislative briefing that we held earlier this month, 14 on October the 7th, and we did provide -- in addition 15 to some other information, we did provide an update on 16 implementation of legislation at that briefing. So, 17 again, nothing new to report, and I'm happy to answer 18 any questions. 19 MR. SADBERRY: How frequently will 20 those briefings occur, or is that something that you 21 decide as you go? 22 MS. TREVIŅO: I think we'll probably 23 decide as we go. One of the things that we did was 24 distribute a survey to those that attended our 25 briefing. And some of the -- and I think we gave you 12 1 copies of that also. And some of the feedback that we 2 did get -- I think one person indicated that these -- 3 I think everybody found them to be very informative. 4 And as far as how often we conduct them, I think one 5 person indicated that maybe once every six months, and 6 I don't know that we would want to wait that long. I 7 think as issues develop here or -- again, I think 8 we'll just kind of play it by ear. 9 CHAIR MIERS: Well, as remarkable as it 10 may sound, though, I think we are to a point where we 11 probably should be thinking about the next session -- 12 MS. TREVIŅO: Uh-huh. 13 CHAIR MIERS: -- and what our 14 priorities are in Bingo and Lottery matters. So I 15 would hope, Nelda, you'll start giving some thought. 16 You probably already have. 17 MS. TREVIŅO: We have, Commissioners. 18 Actually, the directors -- we had an agency planning 19 meeting last month where we talked about priorities 20 for this next fiscal year, and kind of some long-term 21 priorities, and obviously the legislative session is 22 always something that is an ongoing process. And so 23 we're going to begin probably next month, at least, 24 with an action plan on a legislative package for the 25 next legislative session. 13 1 CHAIR MIERS: Is there, on the drawing 2 boards, any interim committees that we anticipate will 3 specifically impact us, or is it too early to know 4 that? 5 MS. TREVIŅO: The Senate interim 6 committees have already been appointed, and they have 7 already begun meeting. The Senate Finance Committee 8 had their first interim committee last week, and the 9 Senate State Affairs interim committee will be meeting 10 this week. None of the interim charges for either of 11 those two committees -- and those two committees on 12 the Senate side really have oversight over this 13 agency -- don't have any specific charges related to 14 the agency. The House has not appointed the interim 15 committees as of this date, and I think the Speaker is 16 anticipating making those interim charges during the 17 month of November. 18 CHAIR MIERS: Okay. And do we monitor 19 or attend those interim committee hearings? 20 MS. TREVIŅO: Yes, we do. We 21 attended -- Colin attended the Senate Finance 22 Committee hearing last week and will be attending the 23 Senate State Affairs Committee this week. 24 CHAIR MIERS: Questions for Nelda? 25 MR. SADBERRY: That was my question. 14 1 CHAIR MIERS: Okay. Thank you very 2 much. 3 Item number eight: Consideration of 4 and possible action, including the proposal on a new 5 Lottery rule 16 TAC 401.312 relating to the conversion 6 of Lottery prizes. Ms. Morris. 7 MS. MORRIS: My name is Diane Morris. 8 I'm an Assistant General Counsel. 9 Commissioners, I don't know if your 10 pleasure is to discuss this rule right now or if you 11 would prefer to go into an Executive Session to 12 receive legal advice. I have a draft of a proposed 13 rule, and I don't know what your pleasure is. 14 CHAIR MIERS: Well, why don't we hold 15 the rule discussion until we have had an opportunity 16 to discuss it. 17 MS. MORRIS: Yes, ma'am. 18 CHAIR MIERS: I see you brought your 19 law book, so -- 20 MS. MORRIS: I -- yes. You know me. 21 CHAIR MIERS: Item number -- 22 MS. MORRIS: Thank you. 23 CHAIR MIERS: Thank you. 24 Item number nine: Report, possible 25 discussion, and/or action on the withdrawal of the 15 1 proposed amendments 16 TAC 401.305 relating to "Lotto 2 Texas" and the on-line game rule which we had under 3 consideration. 4 MR. BENNETT: Commissioners, Ms. Kiplin 5 had to step out of the room for a few minutes, so if 6 we could come back to that agenda item later. 7 CHAIR MIERS: Okay. 8 Item number ten: Report, possible 9 discussion, and/or action on conducting "town hall" 10 meetings related to the Texas Lottery activities. We 11 had scheduled, in connection with that rule making, 12 certain public hearings. Those now are going to be 13 town hall meetings at which we hope to receive the 14 benefit of comment from our players, and those are in 15 the process of being scheduled. I guess we have two 16 scheduled? Is that right? 17 MS. CLOUD: Yes. 18 CHAIR MIERS: Is that right? 19 MS. CLOUD: Yes. The first one is -- 20 will be in Irving on November 4th at the Harvey Hotel, 21 DFW Airport, 4545 West John Carpenter Freeway. Not to 22 be confused with the Harvey Suites, DFW. It's a 23 different hotel. That -- the second one, it will be 24 in Houston on Tuesday, November the 9th, at the 25 Radisson Hotel at 9100 Gulf Freeway, and we have the 16 1 agenda set up for that. It's been posted in the -- 2 will be posted this week, I think, in the Texas 3 Register. 4 CHAIR MIERS: Okay. And these are 5 fully noticed for purposes to allow the Commissioners 6 to attend and participate in, more than one at a time, 7 if that becomes possible. 8 I do think we ought to talk about the 9 agenda, Linda, because I know there is some intent to 10 have presentations to the public as well as to hear 11 comment. And I am -- I know I've expressed this to 12 you -- I remain somewhat concerned that the 13 presentations contemplated, although similar to the 14 town hall meetings for retailers, are too long and the 15 opportunity for input too short. 16 Although I understand that the amount 17 of public participation is, at this point, in doubt, 18 we -- I know we are planning to do advertisements and 19 to try and get the word out that these meetings are 20 going to be available for people to come and talk to 21 us. But I do remain concerned that, at least in terms 22 of the proposed agenda, asking people to come and sit 23 through an extended lecture, several extended 24 lectures, really is just more than we ought to ask 25 them to do. So I guess -- 17 1 MS. CLOUD: Madam Chair, we had noticed 2 these items only in -- to give us the capability to 3 discuss them. We will be prepared with a presentation 4 if the questions or comments come up, say for instant 5 games or on-line games, where it opens that door for 6 us to do that. This has not been something that we 7 have -- you know, we don't have to do this like we do 8 the town hall meetings with the retailers, and right 9 now we're just noticing it up so that we're prepared 10 to respond. 11 But we do plan to show a videotape 12 which is directed to the players and the games and 13 some of our past history. It's not going to be a very 14 long video. Keith is working on that now. Once 15 that's aired, we think that, itself, will, you know, 16 entice comment from the audience, and we'll just go 17 from there. But the only reason these agenda items 18 are laid out like they are in your agenda is just so 19 that we can be prepared to respond. 20 CHAIR MIERS: Well, and I think some 21 presentation -- I don't mean to indicate that no 22 introduction or no prepared remarks is what we want to 23 do, but I just think there's a limit on -- 24 particularly in the evening to ask someone to come and 25 sit through a 25-minute discussion of the instant 18 1 games, for example, is just more than we need for this 2 purpose. But that's just one person's view, and I 3 know there may be other views. 4 MR. SADBERRY: Well, actually, I'm glad 5 you pointed that out. I had not concentrated on that. 6 I will strongly concur in that. 7 In that regard -- I want to come back 8 to that point, but in that regard I have two 9 procedural questions and then I believe a substantive 10 question. The procedural question is: I believe we 11 had first touched on whether we could notice a meeting 12 of the Commission outside of Austin, and I think we've 13 had that discussion a long time ago. But it did come 14 up, I believe at the last meeting, and I just wanted 15 to make sure we had covered that issue. I presume you 16 would not have done so if you had not been assured, 17 Kim. 18 Secondly, since it is being noticed as 19 a Commission meeting, what -- will we have typical 20 ability to record the official record of the 21 proceeding in the same fashion as we would a 22 Commission meeting, et cetera? I'm sure you've taken 23 care of that. That's procedural. 24 Now, substantively, along the points 25 that the Chair makes, are we -- is it clear that the 19 1 purposes of the town hall meetings will still center 2 on Lotto Texas on-line game, the proposed rule that's 3 been withdrawn, what players may still have as a 4 reaction to that or what they might propose as changes 5 or new ideas along the same principal point of the 6 rule? Or is this intended to be just general meetings 7 to get public information out and public feedback in? 8 MS. CLOUD: Commissioners, I think that 9 we realized, through some of the correspondence that 10 we received, a lot of our players really don't 11 understand our games. That was part of the purpose of 12 having some discussion, or some topic, on these items, 13 to kind of help provide some education in that 14 direction. We have no intention of focusing on the 15 Lotto Texas rule. That's behind us. 16 This game -- these meetings are to find 17 out what the players really do want to see and where 18 they want -- you know, they tell us they want bigger 19 jackpots. They tell us they want bigger prizes at the 20 lower level, but when we propose that, then they 21 don't -- that's not what they want. So we want to 22 hear what they have to say about what their idea of 23 the perfect game for the state of Texas would be and 24 their ideas and suggestions as to where we can go, and 25 we want to be able to respond to some of the ideas 20 1 that they have. 2 MR. SADBERRY: Well, I think you 3 answered my question -- and maybe I was a little too 4 general -- in the latter part of your comments. I 5 guess that's my -- that is my question: Do you 6 anticipate coming out of these town hall meetings with 7 some feel for new rule proposals that might still 8 change the game but change it in a different way 9 consistent with player interest and desire? 10 MS. CLOUD: I think that is our intent. 11 I think that we are looking -- we are looking at this 12 as being a big focus testing group, and -- you know, 13 like we go out and normally focus test different 14 games, but we have concepts already designed at the 15 time that we go out for that. This is more of a, 16 "Give me your ideas. Tell me what you do want. You 17 are our playing public. We need to have the games out 18 there that interest you." So this is where we're 19 going with these. 20 CHAIR MIERS: Okay. 21 MR. CLOWE: Let me make a comment, if I 22 may. 23 CHAIR MIERS: Sure. 24 MR. CLOWE: I think that these meetings 25 coming up are of great importance, and I'm very 21 1 concerned about the numbers. And Toni gave us the 2 latest this morning that show we're down 19 percent 3 from the prior fiscal year period overall, and Lotto 4 Texas is down 39 percent. We're getting a clear 5 signal here that these games, for some reason, are not 6 as popular as they've been in the past. People ask me 7 why are the games down, and I don't know. I have some 8 ideas and I hear some answers, but frankly, I really 9 don't know. 10 I think these meetings are an excellent 11 idea, and I'm glad you're going forward with them, and 12 I'm happy that they're posted so that the 13 Commissioners can attend. I, for one, don't want to 14 have a part on the program. I think the staff should 15 be the presenters and I want to be there to listen, 16 but I really think that we ought to listen and we 17 should not go into these meetings with answers. 18 I echo what the Chair said about her 19 concerns for listening time, and as I examine your 20 proposed agenda I got more comfortable with it in that 21 each person is scheduled for 25 minutes. But the 22 presentations are really for ten minutes, and you've 23 left time for listening and then you've left 30 24 minutes at the end. 25 I would like to ask you and Pam and 22 1 Toni and Ron to discipline yourselves, that means 2 practicing, so that you only take ten minutes. That's 3 not the case in the retailer meetings that I've 4 attended. The presentations go on beyond what is the 5 allotted time and the feedback time is reduced. Let's 6 discipline ourselves so that we really get responses 7 and have time for that. 8 I think your comment is correct. In 9 many cases the players don't understand some of the 10 nuances of the games, and we need to clear that up, 11 and you may need to go back over that in the 12 question-and- 13 answer period. An informed comment is of more value 14 than one where there's a misconception, and some 15 information can be exchanged in these meetings that 16 can be helpful. But we really want to hear from the 17 players what it is they want. It's a perfect time now 18 because there's no rule proposed. There's no issue 19 for change before the Commission. 20 I'm going to try to attend as many of 21 these as possible, and I think if we can get the word 22 out to as many people and get the public response and 23 have them come and tell us what they have on their 24 minds about the game, you know, this may be an 25 opportunity for us to respond to the playing public. 23 1 So I consider it very, very important, and would urge 2 you to prepare for these and to be ready to listen and 3 then try to take some action that would help us. 4 We've got a lottery that is not coming 5 back around like it should, like we want it to in my 6 opinion. It's too early, really, I guess, to tell, 7 but we did give some projections that showed we were 8 going to come back, and I'm not getting a comfort, at 9 this point in time, about the return, and I think 10 these town hall meetings can help us focus on what we 11 need to do in the future. 12 MS. CLOUD: Okay. 13 MR. SADBERRY: And if I may, quite 14 frankly, dovetail in on that point: I don't know if 15 this is from a research base possible or feasible, but 16 there was a concern, or at least a question raised as 17 I recall when the rule was first being discussed for 18 initial proposal, as to whether the timing of that had 19 been carefully considered. I don't want to look back, 20 but we can always learn, of course, from history. I 21 think you should keep an open ear to see if that, in 22 itself, had any impact in the degree to which the 23 comeback has or has not been experienced as projected; 24 as to whether the proposed rule in itself raised some 25 effect in that regard. At least listen to that, 24 1 because if you're open to what the players say, I 2 would want to know if that's a reaction. 3 And one minor point: I agree with 4 Commissioner Clowe. I'm going to try to attend as 5 well as. So under the proposed agenda where 6 participants are listed, you might want to list all 7 three Commissioners as at least potential participants 8 on the programs. 9 MS. CLOUD: Okay. 10 CHAIR MIERS: Well, just from a common- 11 sense standpoint, I think there's no question that the 12 coverage that we got with respect to the proposed 13 rule, and some of the reactions that exaggerated that 14 proposal's impact, certainly was not helpful to us as 15 we all experienced just, as we were saying the last 16 time, walking around. It wasn't hard to discern that 17 people misunderstood and were reacting negatively to 18 it. 19 However, I remember the enthusiasm of 20 the presentation when it was made, and certainly there 21 is no question that the effort that was made was to 22 try to respond to some pretty consistent input that we 23 had. I much prefer our current status, and I think it 24 will be instructional to be out in these various areas 25 listening to input. 25 1 The question I have is that the 2 validity and usefulness of these town halls will, in 3 large measure, depend on whether we get anybody to 4 come, and that's going to, in large measure, depend on 5 the promotion of them in the various areas. And so I 6 really do hope that, for example, on the November 4th 7 and the November 9th dates that we do what we can to 8 make sure that there is publicity associated with the 9 events and that we do everything we can to try and 10 make people aware of the existence of those town halls 11 so we get an appropriate turnout. If we don't get a 12 turnout, then the meetings are going to have marginal 13 value. So I do hope we are focused with Keith and 14 Marketing and Linda on how we make sure that we get a 15 good turnout. 16 MS. CLOUD: We are. We're look at that 17 and Keith is putting out press releases and Marketing 18 is placing advertisements. So -- and GTECH is going 19 to put out fliers at the retailers for the players to 20 see as well, so we're covering the bases as best that 21 I think is -- as we can. 22 These two meetings have been posted, 23 and I didn't go any further until we do see what kind 24 of turnout we have. And it was our experience, with 25 the town hall meetings, we did the first one wrong, 26 1 and we needed to change the way we were doing it. And 2 we -- then from that point on we did change, and it 3 became very successful. So these two are more of a 4 trial to see if the -- if this is the way the public 5 wants to conduct these meetings and if they're going 6 to be successful and whether we go on from here. 7 CHAIR MIERS: Well, and we are 8 responding -- I'm a little worried about the time, 9 Linda, for the posting, because in responding to the 10 complaint that we had that people who work and would 11 like to attend these have to have after-hour meetings, 12 I'm equally concerned that we're going to get some 13 input that evening meetings interrupt or interfere 14 with other commitments that people have. So there are 15 no perfect solutions to any of these questions, but I 16 think we're going to try it with the 7:00 to 9:00 17 format and see how that works and then go from there. 18 MS. CLOUD: That's what happened in the 19 town hall meetings. The first one we had in the 20 middle of the day and we had no retailers show up, and 21 then the retailers that did show up -- 20-some-odd 22 retailers out of 6,000 in Houston -- wasn't a very 23 good turnout. But listening to the ones that were 24 there, they told us that the time was wrong for them; 25 that their day usually ended around 3:30, 4:00 27 1 o'clock, and that that's when we needed to have the 2 meeting. So that's when we changed it to 4:00 o'clock 3 to 7:00, and that has worked out very well all over 4 the state. 5 CHAIR MIERS: Okay. All right. 6 Anything else on the town hall meetings? 7 MS. KIPLIN: Well, just to clean up the 8 record: These meetings have not been posted with the 9 Secretary of State's Office as of yet; the one in 10 Irving and the one in Houston. They'll be done -- the 11 one for Irving will be filed tomorrow, but they have 12 not been posted yet. 13 CHAIR MIERS: Okay. All right. 14 Consideration and possible action on the appeal of the 15 determination by the Executive Director of a protest 16 of contract awards, such contracts relating to the 17 procurement of instant tickets and services, and I'll 18 ask Anthony to take care of this particular item. 19 MR. SADBERRY: Thank you, Madam Chair. 20 Kim, would you relate the status of the agenda item as 21 far as today's meeting and future possible 22 consideration. 23 MS. KIPLIN: Yes, I would be happy to. 24 The appeal -- the Executive Director made a 25 determination on Oberthur's protest. Oberthur timely 28 1 filed an appeal to that protest to the -- pardon me -- 2 the determination. The matter was noticed for today's 3 Commission meeting for the Commission's consideration. 4 As a courtesy I contacted each of the 5 outside counsels for the parties that are involved, 6 Oberthur, Scientific Games, and Pollard Banknote. The 7 outside counsel for Oberthur indicated that there was 8 a potential conflict with the date of this Commission 9 meeting in that his clients would not be back from 10 being out of the country until late Sunday, which 11 would give them very little time to prepare a 12 complete, yet succinct, presentation for the 13 Commission's consideration. He did file -- outside 14 counsel did file a request that this matter be 15 postponed until -- in his letter he said the November 16 Commission meeting. 17 Based on that request I did send a 18 letter passing this item until the next Commission 19 meeting after the October 26 Commission meeting, 20 because at this point there is no November Commission 21 meeting set. And so this -- and I -- and the letter 22 did go to all outside counsel for the parties that are 23 involved. Each of you should have received, by copy 24 of that letter, a copy of that letter. 25 MR. SADBERRY: Now, let me -- thank 29 1 you, Kim. Let me complete the record, if I may. 2 First, as has been stated in previous 3 meetings when this item has been discussed, the Chair 4 has recused herself in previous meetings and 5 apparently continues to recuse herself from any 6 participation in this item. Am I correct? 7 MS. KIPLIN: Yes. 8 MR. SADBERRY: Now, with respect to the 9 request for postponement, I take it there's no 10 particular time frame within which we must act as 11 being jeopardized by that. 12 MS. KIPLIN: No. There is not. And 13 the Executive Director's determination on the protest 14 was to continue with the contracts that had been 15 awarded to Scientific Games and Pollard Banknote, so 16 it -- I guess, from my perspective, the party that 17 stood to suffer from delay -- the most to suffer from 18 the delay in the consideration of appeal was the party 19 requesting the postponement. 20 MR. SADBERRY: And the contract you 21 reference is an emergency procurement contract. 22 MS. KIPLIN: No. The contracts that I 23 reference are the contracts that were awarded based on 24 the issuance of the RFP back in -- I want to say 25 December of '98. That RFP, as you know, was issued, 30 1 proposals came in and were evaluated, and had a first 2 protest. 3 The matter did go to the Commission for 4 consideration in the form of an appeal by all parties. 5 All parties took the position that they were aggrieved 6 by the Executive Director's determination. The 7 Commission entered into a remand order remanding the 8 matter back to the Executive Director for the 9 evaluation committee to consider certain items that 10 were part of the protest and appeal documents. The 11 evaluation committee did do that. 12 It was sent to the Executive Director 13 who made a decision based on the evaluation 14 committee's work and recommendation. That notice went 15 to the parties. The contracts that had been voided 16 were -- well, continue to be voided, but new contracts 17 were entered into with Scientific Games and Pollard; 18 that is, the contracts that were -- that action of the 19 Executive Director is the protest filed by Oberthur. 20 MR. SADBERRY: I'm with you. 21 MS. KIPLIN: Okay. 22 MR. SADBERRY: For the record, Oberthur 23 is who we -- 24 MS. KIPLIN: BABN. 25 MR. SADBERRY: -- traditionally refer 31 1 to as BABN. And you have received no objection from 2 the parties' notice of the postponement of this item 3 from any of those parties. 4 MS. KIPLIN: No, I did not. 5 MR. SADBERRY: Commissioner Clowe, do 6 you have any... 7 MR. CLOWE: I think we're in good 8 process here. I'm glad that you put in your letter 9 that the matter will be considered at the next 10 Commission meeting. In my opinion this matter has 11 been in process for some time and I would like to see 12 the Commission deal with it. And I assume that you're 13 indicating to the parties that we would like to hear 14 from them at that meeting? 15 MS. KIPLIN: As soon as I have a date 16 for a Commission meeting, I intend to issue another 17 letter to the parties, that will be a similar letter 18 to that which was issued with regard to the first 19 appeal inviting them to come to that Commission 20 meeting, and offering them the opportunity to make 21 oral presentations to the Commission at that time. 22 MR. CLOWE: Good. 23 MS. KIPLIN: And limiting the time -- I 24 believe we limited the time, the last time, to 20 25 minutes, which is consistent with previous appeals to 32 1 the Commission. 2 MR. CLOWE: Good. 3 MR. SADBERRY: And in that regard, of 4 course, we have pretty much, by practice, held monthly 5 meetings since fairly -- consistently done so, and I 6 imagine will attempt to do so in this instance. But 7 so that there is no confusion, there is no requirement 8 for a monthly meeting under our statute -- 9 MS. KIPLIN: No. The only -- 10 MR. SADBERRY: -- even though I'm sure 11 we hope to have one. 12 MS. KIPLIN: The only requirement is 13 that you meet six times a year, and I think you 14 have -- you generally fulfill that by June. 15 MR. SADBERRY: And beyond that point, 16 obviously we've had a lot of interest expressed from 17 our legislators and others on this matter. I take it 18 we will take steps to advise parties who have 19 expressed an interest of the status of this matter and 20 what the Commission's express intent -- Nelda is 21 shaking her head affirmatively. I presume that to be 22 the case, but I wanted to be sure it's on the record 23 that we are interested even though there may be 24 matters that they present that are outside of the 25 record. At least for them to know that -- where we 33 1 are in this matter. 2 I also think it's a good point to make 3 that while this item on the agenda -- has been on the 4 agenda a number of times, even those times when we 5 reasonably understood we were not in a position to 6 take action yet attorneys or other representatives of 7 the parties may have attended in the event we did take 8 it up -- that we are striving to understand their -- 9 the efficiency of their moneys; that we don't schedule 10 items on the agenda or go forward with them when we 11 understand that from a practical standpoint we are not 12 in a position to take action, in all likelihood, and 13 so notify those parties so that they will not send 14 people here with perhaps a misconception. I think 15 that's appropriate to do even though we have the right 16 and privilege to place them on the agenda at any 17 meeting whether or not we take action. I appreciate 18 your doing that and working cooperatively with the 19 representatives. 20 And like Commissioner Clowe, we -- I 21 would look at the full complement of responses and 22 input from these parties, or any other interested 23 party, wishing to express themselves on this topic. 24 It's very important, and hope to be in a position to 25 deal with it at the next meeting if at all possible. 34 1 MR. CLOWE: And we do work on Saturday. 2 MR. SADBERRY: Yes. As the record will 3 show. 4 MR. CLOWE: You just might, you know, 5 put that up so that it might not come as a surprise to 6 the parties that it might need to be on a Saturday. 7 MS. KIPLIN: Yes, sir. 8 CHAIR MIERS: Okay. Thank you, 9 Commissioner Sadberry. 10 I will now move to item number 14: The 11 consideration of the status and possible entry of 12 orders in certain contested matters, and I would like 13 to turn to item D. Do we have a representative of 14 General Counsel's office to deal with these? 15 MS. SCHULTZ: Yes. Kaye Schultz, 16 Assistant General Counsel. I'll be happy to answer 17 any questions. 18 CHAIR MIERS: Well, with respect to 19 items D through H -- 20 MS. KIPLIN: I'm sorry. Is that B as 21 in boy? 22 MR. SADBERRY: D. 23 CHAIR MIERS: D as in dog. 24 MS. KIPLIN: D. Okay. 25 MS. SCHULTZ: Those are all 35 1 insufficient funds. 2 CHAIR MIERS: On sweeps. 3 MS. SCHULTZ: On sweeps. Yes. 4 CHAIR MIERS: And so -- 5 MS. SCHULTZ: With respect to item C, 6 we -- 7 CHAIR MIERS: Well, let's -- let me 8 deal with -- 9 MS. SCHULTZ: I'm sorry. 10 CHAIR MIERS: -- D through H, Kaye, if 11 I could, because those did appear to be routine 12 decisions, unless you have comment on them. 13 MS. SCHULTZ: No, ma'am. I have no 14 comment on D through H. 15 CHAIR MIERS: I would move approval of 16 the recommendation for decision and the proposed order 17 in connection with 14D, E, F, G, and H. 18 MR. SADBERRY: Second. 19 CHAIR MIERS: All those in favor, aye. 20 MR. SADBERRY: Aye. 21 MR. CLOWE: Aye. 22 CHAIR MIERS: Any opposed? The vote 23 will be three to zero on those three items. Then you 24 were going to start with item number C? 25 MS. SCHULTZ: Yes. Improved Order of 36 1 Red Men, we received notice from the applicant that 2 they are withdrawing their application, and so as a 3 result the Commission no longer has jurisdiction over 4 this case. 5 CHAIR MIERS: Okay. So we'll strike C. 6 And how about item A; 14A? 7 MS. KIPLIN: If I could, let me go 8 ahead and address that. That's the LULAC Council 9 number 4516. 10 If you'll recall, Commissioners, at the 11 last Commission meeting you had representatives from 12 the licensee come before you, and you did reject the 13 Administrative Law Judge's order, and you asked me to 14 draft an order that would be consistent with the vote 15 that you made that day. That order -- I did prepare 16 that order, and did send it to you by fax. I believe 17 it was late last week. I believe that that order is 18 consistent with the vote that the Commission made, and 19 the discussion prior to that vote, and is a proper 20 order pursuance to the provisions of the 21 Administrative Procedure Act, which does restrict 22 governing bodies, or decision makers, from modifying 23 certain aspects of an Administrative Law Judge's order 24 unless they meet the elements that are set out in the 25 Administrative Procedure Act, and I believe this order 37 1 does do that. 2 MR. SADBERRY: Kim, I have a question, 3 if I may. 4 MS. KIPLIN: Yes. 5 MR. SADBERRY: I certainly agree, and I 6 think I made the motion if I recall correctly. Am I 7 correct? I believe I did, on policy grounds, and the 8 policy grounds that I had in mind had to do with when 9 extenuating circumstances show a reason for rejection 10 of a proposed finding of fact or conclusion that 11 impacts, adversely, the license holder where we have 12 been persuaded that the so-called informal ad-hoc rule 13 for allowing compliance to occur after the fact of a 14 notice of hearing, et cetera, has taken place; that we 15 might disagree with and therefore reject, on policy 16 grounds, that proposal. That's what I had in mind. 17 This order tends to challenge the 18 authority -- 19 MS. KIPLIN: Yes. 20 MR. SADBERRY: -- of the Administrative 21 Law Judge to make a conclusion of law that affects the 22 licensure. I don't -- I may be wrong, and I'm not 23 sure I've treaded that closely before, but I don't 24 recall seeing that in an order before, and I didn't 25 know that that was the ground upon which we were 38 1 acting. Can you enlighten me on that? 2 MS. KIPLIN: Sure. Let me -- 3 CHAIR MIERS: And, Kim, while you're 4 doing that, if I could just ask you to explain, in 5 addition -- because I had the same concern, but also 6 with respect to referring to the reasons contained in 7 the notice of hearing. 8 MR. SADBERRY: Yeah. I have that the 9 same as well. 10 CHAIR MIERS: I didn't understand that 11 either. 12 MS. KIPLIN: I would be glad to. 13 CHAIR MIERS: So if you could, explain 14 both those. 15 MS. KIPLIN: Okay. First of all, 16 the -- to encompass the desire of the Commission, 17 you-all didn't take issue with the finding that there 18 was noncompliance at the time that this matter went to 19 hearing. What -- my question is what you took issue 20 with was the sanction that was imposed, in other words 21 the revocation, and that based on the information that 22 was presented to you-all, which was part of the 23 record, you did not believe that that revocation was 24 an appropriate sanction for this entity. You believed 25 that allowing them to continue with holding a license 39 1 was the appropriate disposition of this case. Okay? 2 So that was the first analysis that I undertook. 3 In each one of the State Office of 4 Administrative Hearings' proposed orders that they 5 distribute, the last conclusion of law is the 6 disposition of the case. That is not the State -- and 7 we have, by the way, had that same language contained 8 in prior orders. One in particular was the KNB Sales 9 case versus Texas Lottery Commission that actuality 10 did go to trial, and there were other orders that -- 11 subsequent to the KNB Sales that contained the same 12 kind of language. 13 What this order says is that they don't 14 have the authority -- the State Office of 15 Administrative Hearings does not have the authority to 16 make, as a conclusion of law, a conclusion of -- as to 17 the disposition of the case. If they want to contain 18 it as a recommendation, then that's fine. But the 19 only entity that has the authority to revoke or 20 suspend a Bingo license is the Commission itself by 21 the provisions of the Bingo Enabling Act. 22 The Administrative Procedure Act is a 23 procedural body of law that does not provide that 24 authority to the State Office of Administrative 25 Hearings, and nothing in the Bingo Enabling Act 40 1 delegates that authority. That's because it is 2 something that is within the discretion of the agency 3 and, as a matter of policy, where the agency wants to 4 come down based on the specific facts of that record. 5 Now -- and that's consistent with the restrictions 6 that are imposed on a decision making body under the 7 Administrative Procedures Act, to be allowed to change 8 a finding of fact or a conclusion of law of an 9 Administrative Law Judge. 10 As to the question Commissioner Miers 11 raised -- 12 MR. SADBERRY: Well, I raised it, too, 13 because -- that was my other concern. So go ahead. I 14 got that on the record. 15 MS. KIPLIN: Sure. I wanted to make 16 sure that this was a tight order, that you're not 17 going to revoke the license for the reasons that are 18 contained in the notice of hearing that was part of 19 this case. Who knows what the future holds with 20 regard to this licensee, and I did not want there to 21 be an order that would essentially "king's X" any sort 22 of subsequent action that may be taken against this 23 licensee for reasons that are not within this 24 particular notice of hearing. 25 MR. SADBERRY: Well, Kim, let me come 41 1 back. Let me take that one first. Perhaps the 2 statement, maybe then, should be that -- of the 3 hearing of the meeting in which the action was taken 4 because the notice of hearing -- I don't know if it 5 contained any reasons because we hadn't made a 6 determination yet. The meeting, itself, and the 7 motion to reject the findings, based on public policy 8 grounds, may be what was referencing. In that event I 9 agree with your limitation, but I think perhaps more 10 specificity might be in order to be consistent with 11 whatever other order we've done in this regard, and I 12 accept your representation on what those have said. 13 And, in like manner, I accept your 14 representation about the issue of authority of the 15 Administrative Law Judge, although I'll have to tell 16 you, I don't recall seeing it, certainly not this 17 explicitly, and I didn't know we were challenging the 18 authority of the officer as much as we are exercising 19 our authority to reject certain findings, including 20 the ultimate issue on policy grounds. And I just 21 raised it because I don't know, as you point out, what 22 might happen to this order, and I'm just wondering 23 about those things before we -- certainly the result 24 is consistent with what I think was intended, 25 certainly what I intended by my motion, but I'm 42 1 concerned about those two aspects of the order. 2 CHAIR MIERS: I'm going to make a 3 couple of suggestions that may -- I am -- I share 4 Commissioner Sadberry's concerns on both counts, and I 5 think what we're seeing is a difficult reading of the 6 proposed order embodying our ruling and would suggest 7 that if you read the Administrative Law Judge's 8 conclusion of law, it could be read as a 9 recommendation and not an exercise of authority. 10 So it might be -- and I just throw this 11 out for your consideration -- Kim, that if we said: 12 "Therefore it is determined that to the extent 13 conclusion of law number five is intended to 14 constitute something other than a recommendation, the 15 Administrative Law Judge did not" -- or, "the 16 Administrative Law Judge would not have applied or 17 interpreted Section 16 of the act and applicable 18 provisions of the Administrative Procedure Act 19 correctly." Something of that nature. Because I'm 20 not sure that the Administrative Law Judge intended 21 more than a recommendation by what is set out, and I 22 think what we're saying is if something else was 23 intended, then we reject that as appropriate. Is that 24 correct? 25 MS. KIPLIN: Well, my response is that 43 1 if it's something -- if it's not a conclusion of law 2 and it's a recommendation, then that's an improper 3 conclusion of law. A conclusion of law should not be 4 a recommendation; it should be a conclusion of law. 5 And that's the other problem with this, because it 6 invades -- let me just back up for one point and 7 say -- 8 CHAIR MIERS: Well, let me ask another 9 question, then, Kim, and that is: You don't even 10 think that the Administrative Law Judge can make a 11 recommendation? 12 MS. KIPLIN: Yes, I do. I do think 13 they can. I don't think it can be a -- it can be 14 characterized as a conclusion of law. I think it can 15 be a recommendation paragraph, and there's nothing 16 wrong with that recommendation going to the decision 17 making body. But because of the provisions of the 18 Administrative Procedure Act, to embody it as a 19 conclusion of law imposes restrictions on the decision 20 making body. 21 And if I could read -- you know, read a 22 part of the Administrative Procedure Act to you-all. 23 I think it will shed some light on why this is 24 important as to how this order is drafted, and the 25 fact that it's saying that they didn't properly apply 44 1 provisions of the Bingo Enabling Act, because the 2 Administrative Law Judge is invading into the purview 3 of the decision making body, which has the discretion 4 to impose a sanction, or not to impose a sanction, 5 based on the findings of the record. 6 Under Section 2001.058E: "A State 7 agency may change a finding of fact or conclude of law 8 made by the Administrative Law Judge, or may vacate or 9 modify an order issued by the Administrative Law 10 Judge, only if the agency determines: One, that the 11 Administrative Law Judge did not properly apply or 12 interpret applicable law, agency's rules, written 13 policies provided under subsection C" -- and that's a 14 reference and I'll get to this in a second -- "or 15 prior administrative decisions; two, that a prior 16 administrative decision on which the Administrative 17 Law Judge relied is incorrect or should be changed; 18 or, three, that a technical error in a finding of fact 19 should be changed. The agency shall state in writing 20 the specific reason and legal basis for a change made 21 under the subsection." 22 So for those particular three reasons, 23 the reason that this Commission rejected the order, to 24 the extent that it adopted all findings and 25 conclusions of law, is because the last conclusion of 45 1 law essentially was the outcome of the case. That is 2 not a proper application for provisions of the Bingo 3 Enabling Act, nor the Administrative Procedure Act, 4 because the Bingo Enabling Act does not delegate -- 5 it's a delegation of authority issue. 6 It does not delegate authority to a 7 SOAH Administrative Law Judge to include, as a 8 conclusion of law, a disposition of the case. That is 9 within the discretion of the Commission, to be able to 10 revoke or suspend a license, just as to impose a 11 monetary forfeiture of the Bingo Enabling Act gives 12 the authority to the Bingo Director, not to an 13 Administrative Law Judge. Nor does the Administrative 14 Procedure Act do that because that is a procedural 15 body of law. It is not the organic body of law. 16 And that's why this order is written 17 the way this order is. It is an improper application 18 of the Bingo Enabling Act because the decision making 19 body has the right, under the Bingo Enabling Act, 20 based on the findings of fact. And I don't think the 21 Commission took issue with the findings of fact, but 22 believed that under the particular facts of this 23 record that it was not a correct disposition of this 24 case. 25 CHAIR MIERS: Okay. So could -- would 46 1 you suggest we add to the sentence in the order that: 2 "Therefore it's determined that the Administrative Law 3 Judge did not properly apply or interpret Section 16 4 in the act, and applicable provisions of the APA, by 5 concluding its conclusion of law number five"? 6 MS. KIPLIN: By making conclusion of 7 law number five? That's fine. 8 And then I would like to address 9 Commissioner Sadberry's issue regarding the notice of 10 hearing. That notice of hearing was the notice of 11 hearing that noticed the contested case proceeding at 12 the State Office of Administrative Hearings. 13 CHAIR MIERS: I just think that's -- I 14 think, Kim, what we're having here is just a 15 misinterpretation. 16 MS. KIPLIN: Sure. 17 CHAIR MIERS: Two of us read it the 18 same way. We had the, "for the reasons contained," 19 modifying why we were deciding it -- 20 MS. KIPLIN: Right. 21 CHAIR MIERS: -- as opposed to why it 22 was originally suggested that it be revoked. 23 MS. KIPLIN: And I think -- 24 CHAIR MIERS: So can you fix that in 25 the order? 47 1 MS. KIPLIN: Yes, I can. That's an 2 easy fix, and certainly don't want any sort of 3 ambiguity or misunderstanding regarding language in 4 the order. Two fixes; one, put the date for the 5 notice of hearing and then say, "notice of hearing 6 filed," which was part of the filing at the State 7 Office of Administrative Hearing noticing the 8 contested case proceeding before the State Office of 9 Administrative Hearing. 10 MR. SADBERRY: Yeah. I have heard your 11 discussion on both points, and I find myself 12 understanding your point and in agreement with you, 13 but I do believe that is not clearly stated. If we 14 can read it that way, differently -- I just don't want 15 it up before -- in some review procedure. I don't 16 anticipate that, but you never know where there is 17 lack of absolute clarity. Because I go back to 18 conclusion five and I see the language, "should be 19 revoked," instead of, "shall and is hereby revoked," 20 because I think there's a different meaning and it 21 would have a different result if left to stand as a 22 suggestion or recommendation. 23 MS. KIPLIN: And I can see that you can 24 read it that way. 25 CHAIR MIERS: And I understand your 48 1 point -- 2 MR. SADBERRY: Yeah. I understand -- 3 CHAIR MIERS: -- but you're saying it 4 ought not to be labeled a conclusion of law because 5 that takes it a step further than it should go? 6 MS. KIPLIN: And the order that came 7 from the Administrative Law Judge is a revoke order. 8 MR. SADBERRY: Well, just so we don't 9 have our order read to us someday by an opposing 10 counsel -- 11 MS. KIPLIN: I agree. 12 MR. SADBERRY: -- what happens in the 13 instance where we have taken an action of revocation 14 and it goes before the Hearing Officer and the Hearing 15 Officer agrees with the Commission that this action is 16 appropriately taken? I do believe I've seen that 17 before, and we are happy about that, and we're not 18 challenging the office's authority to make such a 19 finding. Are we inconsistent -- are we running any 20 risk of having our order read to us? 21 THE REPORTER: Excuse me just one 22 second, please. 23 MS. KIPLIN: You know, we could have 24 boilerplate language for every single order that comes 25 through saying we're rejecting that. I will tell you 49 1 that I have sat down with the leaders of the State 2 Office of Administrative Hearings. They understand 3 this position of this agency as well as other 4 agencies. They are not going to change their 5 practice. They're just flat not going to change their 6 practice. 7 MR. SADBERRY: I understand. 8 MS. KIPLIN: So, you know, if you want 9 to add boilerplate language to every order, then we 10 can do that. It just becomes more of an 11 administrative burden. 12 MR. SADBERRY: Well, I'm just speaking 13 merely for posterity so that -- 14 MS. KIPLIN: I hear you. 15 MR. SADBERRY: -- it's clear that -- 16 you live by the sword, so to speak. 17 MS. KIPLIN: I think at that point, 18 because you don't disagree with the outcome in terms 19 of whatever the outcome is, then that order stands. 20 MR. SADBERRY: Okay. 21 CHAIR MIERS: I find it curious that 22 the only troublemakers are -- on the Commission are 23 the lawyers, and that Commissioner Clowe could read 24 your order and understand it just fine. 25 MR. CLOWE: This learned discussion has 50 1 made me very comfortable. 2 MS. KIPLIN: Well, I -- 3 MR. CLOWE: What discomfort I had 4 initially has been done away with. 5 MS. KIPLIN: Thank you. It's your 6 order, and certainly we want to make sure it's clear. 7 And we'll make those changes and try to get it back to 8 you before the end of this Commission meeting. 9 CHAIR MIERS: Great. 10 MS. KIPLIN: Okay. 11 CHAIR MIERS: Okay. And now we'll move 12 to item B, the Point Dallas case. Kaye. 13 MS. SCHULTZ: This is also a Bingo 14 case. 15 MS. KIPLIN: I'll -- this is Point 16 Dallas. I'll be glad to take this also. Thank you, 17 Kaye, for trying to pitch it, but let me just field it 18 back -- let me just give you a little bit of 19 background on this. And I think you do have somebody 20 in the audience who -- 21 CHAIR MIERS: I have a speaker form. 22 MS. KIPLIN: Okay. 23 CHAIR MIERS: So why don't you lay it 24 out for us. 25 MS. KIPLIN: Okay. This case went to 51 1 hearing because of -- well, there are several 2 allegations that are contained in the notice of 3 hearing. Missy Cary was the attorney that represented 4 the Bingo Division at the contested case proceeding. 5 There were several -- like I said, there were several 6 allegations that were contained in the notice of 7 hearing, but at the time of the hearing the only 8 matter that was argued as part of the staff's position 9 was playing outside of licensed times. The Bingo 10 Division believes that it is a very serious, very 11 serious violation of the Bingo Enabling Act, to play 12 outside of licensed times, because essentially you're 13 playing without a license, and that can be considered 14 to be a third-degree felony. 15 The Respondent did appear, and 16 Mr. Powers, I believe, was there at the contested case 17 proceeding and did present evidence and did ask 18 questions. The position of the licensee is that they 19 were essentially forced to play outside of their 20 licensed time by a representative of the commercial 21 lessors. The Administrative Law Judge did make a 22 finding that they did play outside of the licensed 23 time, and there were a couple of other findings that 24 the staff did take exception with. And the 25 recommendation for -- by the Administrative Law Judge 52 1 with this matter was to suspend the Bingo license for 2 one day. The staff did take exception to that and did 3 file exceptions. 4 It's my understanding that those 5 exceptions were not contained in your notebook, and I 6 did fax you those as soon as I discovered that 7 yesterday. We do have extra copies of those 8 exceptions for those of you that did not receive 9 those, and I can lay out the reasons for the -- why 10 the staff filed exceptions. At this point the 11 Administrative Law Judge has not amended the proposal 12 for decision, and because of the timing on filing this 13 I don't anticipate that he will. 14 MR. SADBERRY: Were they timely filed? 15 MS. KIPLIN: Yes, they were timely 16 filed. Yes, they were. 17 MR. SADBERRY: If I may -- and, Kim 18 before we have our speaker -- am I correct in 19 understanding that contact was made with the Lottery 20 Commission and that an investigator, or some 21 representative of the Commission, was present at the 22 times of these occurrences? 23 MS. KIPLIN: Yes. That's true, and the 24 investigator did testify at the hearing. 25 It's my understanding -- and I've read 53 1 the transcript; of course, I did not handle the 2 hearing. The contested case proceeding -- but it's my 3 understanding that it's not a question of not 4 admitting that there -- that they've played outside 5 the licensed time, but it's a question of the amount 6 of pressure that they felt that they were under at the 7 time, both from the players who were banging daubers 8 on the table saying, "Play Bingo; play Bingo," and 9 also communications -- and this is part of the 10 transcript -- from the commercial lessor's 11 representative, Melondye Green, essentially telling 12 them, "You better get started or we're going to kick 13 you out of the hall." 14 CHAIR MIERS: Have charges been brought 15 against that person? 16 MR. POWERS: No. 17 CHAIR MIERS: Or action taken against 18 that person? 19 MS. KIPLIN: No. Not at this time. 20 MR. POWERS: Never. 21 MR. SADBERRY: Again, so that I'm 22 clear, you might want to cover this: The finding that 23 these activities, which are under review here, are 24 more consistent with what's intended under the act -- 25 these are my words paraphrasing the finding -- than 54 1 others, and I note that is part of the exception. Do 2 you know what that's intended to mean by the officer's 3 findings? 4 MS. KIPLIN: The spirit of the law 5 versus -- 6 MR. SADBERRY: The spirit of the law 7 versus whatever? 8 MS. KIPLIN: No. And I -- obviously 9 the staff took exception to that. We're going by the 10 law, not the spirit of the law, and I think -- you 11 know, one can speculate what the Administrative Law 12 Judge meant by that, but I think the Administrative 13 Law Judge understood the circumstances that the 14 licensee felt that they were, in at the time, and that 15 they were trying to comply. They just didn't -- they 16 didn't comply, but that they were trying, and but for 17 the pressure that had been applied to the licensee 18 they would have complied. The staff looks at it from 19 the perspective that we've got to enforce the law. 20 The law is the law for everybody. 21 MR. SADBERRY: I thought it, maybe, was 22 addressing the volunteer aspect, and therefore the 23 increase in the available funds for charitable 24 distribution. I thought that's what it was 25 addressing. But I didn't know -- I didn't understand 55 1 the basis for that finding though. 2 MS. KIPLIN: In a reading of the 3 transcript, other than the testimony that was put on 4 the record, it doesn't reveal anything that the 5 Administrative Law Judge -- didn't reveal what his 6 decision would be at that time or what he was being 7 persuaded by. The staff took exception to finding of 8 fact 11 because it's irrelevant to whether you play 9 outside your licensed times, or not, whether you use 10 volunteers or you don't use volunteers to work at a 11 Bingo hall. 12 CHAIR MIERS: Well, I'm not saying I 13 agree with the rationale of the Administrative Law 14 Judge. However, taking his example that he used to 15 illustrate why he thought a violation had not 16 occurred, it seemed to me that he focused on intent, 17 the mental state necessary to create liability or 18 create a criminal responsibility, punitive 19 responsibility. That seemed to me to be what he was 20 zeroed in on. 21 This particular fact circumstance 22 presents an incredibly difficult circumstance to 23 consider. Is there anything else that, Kim, you or 24 Billy want to lay out before we ask our speaker to 25 speak? 56 1 MS. KIPLIN: Well, I will say that, as 2 we just discussed in the previous case, whether to 3 suspend or revoke a Bingo license is clearly within 4 the purview of the Texas Lottery Commission. The 5 Commission could decide that they don't want to revoke 6 but they might want to suspend for more than one day. 7 The Commission could decide that they don't want to 8 suspend or revoke. The Commission could decide that 9 they don't want to do that and perhaps the facts are 10 what the facts are in terms of the duress. 11 I think the staff's position is that 12 the Bingo licensee is the one that's licensed to 13 conduct Bingo and agrees to comply with all the terms 14 and provisions of the Bingo Enabling Act, regardless 15 of the kind of pressure that's imposed on them, and 16 they should play within the licensed times. 17 CHAIR MIERS: Okay. I think that issue 18 is clearly set out. We do have a speaker signed up. 19 Mr. Powers, will you state your name for the record, 20 please, and -- 21 MR. POWERS: Michael "Shorty" Powers. 22 Is there -- can I get some water? I can't even speak 23 hardly. I'm sorry. 24 CHAIR MIERS: Well, that's on its way. 25 Would you like to wait until that water is here? 57 1 MR. POWERS: No. I can talk. 2 CHAIR MIERS: Okay. It's on its -- 3 MR. POWERS: I just can't talk as good, 4 but I can talk. 5 CHAIR MIERS: All right. Well, it 6 should be here shortly. 7 MR. POWERS: Okay. I don't know 8 exactly where to start with this, other than I think 9 myself and some of the other disabled groups who have 10 been under Melondye Green and other hall owners are 11 kind of glad this all came up because it's kind of the 12 head of the -- of a lot of problems. I'm not really 13 sure -- I would like to have almost debate with the -- 14 thank you -- 15 (Interruption) 16 MR. POWERS: -- with almost anyone in 17 this room what really -- the reality of Bingo is with 18 the hall owners and the organizations. 19 Just quickly, to give you an idea of 20 what I know about Bingo, is that I was the very first 21 disabled organization, in 1984, to try get a license. 22 I was denied. I had to go back and fight for it. We 23 got it. 24 Since then we've had the tennis clubs, 25 the basketball, the variety club with the kids. 58 1 There's probably about eight of them that I've had 2 something to do with getting their license. Millions 3 of dollars of stuff. We have the number one tennis 4 in -- in the world. We have the number one basketball 5 team in the world. All this came from Bingo, and I 6 applaud Bingo for that. 7 The only reason I'm saying this to you 8 is that not only have we been in every situation that 9 a group can be in, I have personally owned two Bingo 10 halls. I own one out in Marshall, Texas, that I 11 started because Shreveport could not -- did not give 12 away as much money as we could do in Dallas. As soon 13 as I started -- it opened six months later -- 14 Shreveport changed their laws because they can do it 15 by parish. Then we had one in Dallas. We got run out 16 by bigger guys in a bigger hall. 17 I would like to educate the Bingo 18 Commission, or debate with them, what really goes on. 19 The reality. Not the bureaucracy of it, but the 20 reality of what goes on in a hall if you're in a 21 successful hall. The pressure you have. How easy it 22 is for that hall owner to get another group and throw 23 you right out. It's nothing. You are -- you are 24 so -- I mean, you talk about if a lady needed her job 25 and she had sexual pressure, you know, that's nothing 59 1 compared to Bingo pressure. I mean, you will have -- 2 If we did not comply that night and we 3 got thrown out -- we were only there on temporaries. 4 She was just using us for our temporaries anyway. We 5 were sitting there begging to get the next spot from 6 the next person she threw out so that we could come 7 in. The only reason that I was there that night is 8 because I had some temporaries to use and because -- 9 but I -- and I knew the power that we had -- that was 10 the only power that we had. 11 And I told her that we use our own 12 primary operators. And if you look through this 13 docket, or whatever it is, the hearing, you will see 14 where -- not only that Rusty, the comptroller from 15 Fort Worth, agreed with me on a lot of issues as far 16 as how the Bingo halls have their employees that say 17 that they're members of the organizations then they 18 run the game -- most times in a Bingo hall, if you're 19 an organization, you come in and you get what they 20 give you. You know, I mean, it's nice to have on the 21 piece of paper that, oh, we're going to go in there -- 22 and we get to use our own person. We get to do our 23 own accounting. We get to do our own -- we get to 24 take care of all the money that comes through. That's 25 not reality. 60 1 Reality is, is that you go into a hall, 2 she puts somebody -- I'm not just saying Melondye 3 Green but I've been through a bunch of them -- they 4 put somebody that's in the Bingo hall as one of your 5 members. That person does the cashiering -- now, in 6 the long run it saves them a lot of trouble. Sure. 7 They could scam money all day long if they wanted to, 8 and there was nothing that we would even be able to 9 know about it. 10 The only way that that could even be 11 caught was, say you're in a hall and somebody is doing 12 your cashiering and you don't have your own primary 13 operator in there. The only way you could ever figure 14 out if they were taking money is if you took the 15 sheets that y'all make us do -- and that's great -- 16 and the supplies and you try to match them up. And 17 that will just be a guesswork. 18 And then if you have half payouts and 19 you have -- which I'm sure Mr. Atkins knows about the 20 half payouts and knows the different ways, and if you 21 don't I would sure love to tell you -- but there is -- 22 there's a reality to Bingo halls and then there's a 23 bureaucracy of Bingo halls. 24 I think when this came up, I was real 25 proud that it came up, and since this has all come up 61 1 there has been four handicapped groups that were under 2 Mrs. Melondye Green, and the four or five Bingo halls 3 that she owns and bought the grandfather rights for 4 them, that have all had to quit because she took one 5 of our guys that was in a wheelchair, made him the 6 accountant, made him members of all the groups, paid 7 him whatever she paid him, and he did not pay taxes 8 for all the stuff. The organizations could not even 9 get their paperwork from him. They couldn't get their 10 accounting from him. They couldn't get -- and if they 11 even asked for it, they were out of the hall and there 12 goes the -- they may have made $200,000 in a year in 13 Bingo profits, but they may only get 40. 14 CHAIR MIERS: Now, let me see if I 15 understand what you're saying is a custom and practice 16 which you find is causing your organization, at least, 17 difficulty to -- 18 MR. POWERS: Every organization. Not 19 every organization, but I would say 80 percent of the 20 organizations. 21 And I would love to donate myself with 22 somebody from the Bingo operating to do some 23 undercover stuff. I will go in -- I will explain what 24 happened -- I will go into a Bingo hall, act like I'm 25 an organization that needs a license, wear a tape, and 62 1 you will hear what I have to do to try to get that 2 license; if you would like to do that. I don't know 3 if you even want to undercover all the stuff that I 4 know about as far as Bingo goes. 5 I am so glad that this happened. What 6 happened here is that we were going to get thrown out 7 of a hall. She told us to start at 9:30. Richard, 8 who has got cerebral palsy, in a wheelchair, one of 9 our real -- one of our members that I made her use -- 10 excuse me. 11 MS. KIPLIN: Richard Dickey? 12 MR. POWERS: Richard Dickey. I made 13 her -- I made him be there. She wanted to use her own 14 people. I made Richard be there because I wanted him 15 to be a witness to what's going on. 16 If you look, also, in the script, Rusty 17 was there that night because I called him. She was 18 making us do -- over at the Lucky Shamrock, where I 19 was at before that she threw me out because she had 20 another group come in and I was making too much 21 money -- now she's going to put me over here because I 22 had no other place to go. She's going to take my 23 temporaries -- but they were running illegal Hot 24 Balls, and I called Rusty to ask him, "What power do 25 we have as an organization?" They are making us 63 1 charge $1 per Hot Ball," which is illegal. You can 2 play Hot Ball, but you can't charge for it. 3 Well, they know who the comptrollers 4 are. They know when they're coming in. They know 5 when to charge and not charge. It's a practice that 6 goes on and on. 7 And the halls all try to get over on 8 the other hall. This hall says, "Okay. We'll play 9 Hot Ball. We'll charge. We're going to make this 10 much money. Everybody is going to love it. This hall 11 over here can't compete with us because everybody is 12 going to come to our hall. As soon as we see Rusty or 13 Mr. Powers come in, then we're going to -- we'll 14 stop." 15 You know, I mean, I would love to sit 16 down with you, Mr. Atkins, for a day and try to figure 17 out how to get the reality instead of the bureaucracy. 18 This particular evening -- and I'm sorry that I'm 19 going off in different directions. 20 But this particular evening Ms. Green 21 asked Richard Dickey to start playing at 9:30. That's 22 when they started -- that's when the other one quit. 23 He called me up because Rusty was there on my request. 24 You know, I want you to realize that. My request. 25 That's why he was there that night. And that says 64 1 here -- that's one of the reasons that the judge says 2 all this. 3 MR. SADBERRY: If I may, when you say, 4 "the judge says all this," -- 5 MR. POWERS: Right. 6 MR. SADBERRY: -- are you saying there 7 is something -- Rusty, this is the inspector? 8 MR. POWERS: Yes. 9 MR. ATKINS: Rusty is the Security 10 person. 11 MR. SADBERRY: Are you saying that's 12 something he said to the judge that confirms or 13 supports that, or are you -- what do you mean by, 14 "That's why the judge said it"? 15 MR. POWERS: Well, all right. I'll 16 read it to you. It's in the... 17 MR. SADBERRY: Yeah. I've seen the 18 judge's language. I want to know what you mean -- 19 MR. POWERS: Okay. 20 MR. SADBERRY: -- when you say because 21 Rusty was there the judge had a basis to, in your 22 understanding, to make these comments. 23 MR. POWERS: Right. The judge -- I 24 thinks -- what Rusty was upset with was the fact that 25 he was there, personally, and he was telling the Bingo 65 1 license, "Do not start this game." And Richard called 2 me up, and I said -- and I'm not sure that he told me 3 that Rusty was there, but he told me that they wanted 4 him to start the game. 5 And I said, "Well, what time does the 6 license say?" He says, "10:30." I said -- well, he 7 did tell me that Rusty was there. And I said, "Well, 8 what's Melondye going to do?" And he says, "I don't 9 know." I said, "Well" -- now, I'm figuring Rusty is 10 there -- Melondye is not about to start Bingo with the 11 comptroller sitting right there. 12 I -- it's my fault. I told Rusty -- I 13 mean, I told Richard Dickey -- because I knew that if 14 we did not do what Melondye wanted to do -- and I left 15 it up into her hands. I said, "You just do what 16 Melondye wants you to do." And -- but at first we 17 said, "No." So it went from 9:30 to 10:00 o'clock. 18 Melondye left the hall, got on her 19 cellular, called back to the hall, told them to tell 20 Richard to start the game. He started the game at 21 10:04, and he was supposed to wait until 10:30, and 22 Rusty was upset because Rusty was there and he did it 23 right in front of him. 24 What I'm saying, as far as the judge 25 said, is that the judge was going -- well, that's why 66 1 I'm really -- and the organization wasn't trying to 2 hide something and sneak around. It was a pressure 3 issue, right at that time, and the authority was 4 there. 5 CHAIR MIERS: Let me ask a question or 6 two, and then, sir, I appreciate your input and issues 7 you have raised. I want to make sure I understand 8 them, and whether there are any others, and then we 9 need to move on -- 10 MR. POWERS: I'm sorry. 11 CHAIR MIERS: -- to a discussion of the 12 issues. But if I'm understanding correctly, Rusty, 13 the investigator, was there from what time in the 14 evening until what time? If you know. 15 MR. POWERS: I don't know exactly what 16 time he came in. All I know is that he was there upon 17 my request. 18 CHAIR MIERS: Okay. 19 MR. POWERS: To come up there to find 20 out about Hot Ball. 21 CHAIR MIERS: Okay. Do you know -- 22 MR. POWERS: And what had -- oh, I'm 23 sorry. 24 CHAIR MIERS: So you don't know when he 25 got there. 67 1 MR. POWERS: No. But one of the points 2 to this is that when our license said 10:30 to 11:30, 3 it's Melondye Green who tells us when we're going to 4 play, fills out the forms, and we sign -- you know, 5 whatever the license says is what Melondye -- 6 CHAIR MIERS: Okay. I generally think 7 we understand the facts -- 8 MR. POWERS: Okay. 9 CHAIR MIERS: -- and it's been very 10 helpful. With respect to the hall operator, would I 11 be correct in assuming that is a licensed commercial 12 lessor? 13 MR. POWERS: The hall operator? What 14 do you -- 15 MR. ATKINS: No. The operator is a 16 member of the organization. The commercial -- 17 CHAIR MIERS: No. I'm using the 18 wrong... 19 MS. KIPLIN: Commercial lessor? 20 MR. ATKINS: Is the licensee. Yes. 21 CHAIR MIERS: Melondye is a -- I'm 22 sorry. I'm forgetting her last name. 23 MS. KIPLIN: Green. 24 MR. ATKINS: Green. 25 CHAIR MIERS: Melondye Green is a 68 1 licensed -- or, what license does she hold? 2 MR. ATKINS: She is a lessor. 3 CHAIR MIERS: All right. So she knows 4 what the law is. Correct, Billy? 5 MR. ATKINS: Yes, ma'am. 6 CHAIR MIERS: And was she aware of the 7 time that was reflected on your license, sir? 8 MR. POWERS: Oh, of course. She is the 9 one that set that time to start with, and we were just 10 there basically as puppets to try to make a couple of 11 hundred dollars for our organization with our 12 temporaries that we had leftover after she threw us 13 out of another hall two months earlier, that we did 14 nothing wrong. 15 CHAIR MIERS: All right. And let me 16 see it I understand. Now, you're telling us that you 17 actually had Rusty come to investigate the -- 18 MR. POWERS: Hot Ball. 19 CHAIR MIERS: -- operation of Hot Ball, 20 not because you were being forced to -- 21 MR. POWERS: No. I had no idea that 22 the licenses -- that Melondye had given us -- or, set 23 the times there and that some other game -- I mean, if 24 you really know how to run a Bingo hall -- and 25 Melondye probably wasn't paying any attention. But 69 1 let's say if you have that hour in between, you should 2 know how to use no wild number blackout and stretch 3 the games out to make these things all fit. 4 You know, I don't know what she was 5 thinking to have these games end at 9:30 and then the 6 next one is supposed to start at 10:30. Of course 7 everybody -- nobody wants to sit there for an hour. 8 Of course they're banging on their daubers and they're 9 hollering they're fixing to go to other -- to other 10 Bingo halls. 11 And we didn't -- and as far as would we 12 have not wanted to lose our customers? We were there 13 on a temporary. Those aren't our customers; those are 14 Melondye's customers. 15 CHAIR MIERS: All right. So let me 16 understand: The reason you get the temporary license 17 for the time slot that you got it was because that's 18 what you were told by the lessor -- 19 MR. POWERS: Sure. 20 CHAIR MIERS: -- would be the time slot 21 that they would make available to you. 22 MR. POWERS: Right. That that's what 23 time she wanted us; 10:30 to 11:30. 24 CHAIR MIERS: And you got that license 25 and you showed up. Now, this is -- 70 1 MR. POWERS: With a real member. A 2 real primary operator, and, you know, to -- so that 3 she could use our temporary. 4 CHAIR MIERS: Okay. Now, let me ask 5 you this just to make sure I understand what you're 6 telling this Commission: You use volunteers to 7 operate your games so that you don't have the expense 8 of an employee that otherwise would want to be paid? 9 And I really need a brief answer to this. I really 10 think -- 11 MR. POWERS: Okay. I don't know why 12 they made such a big deal out of a volunteer. I mean, 13 we could pay Richard Dickey. That's not the point. 14 The point is that he's a true member. You know, he's 15 a true guy in a wheelchair that belongs to our 16 organization. We have 3,000 members and he's a true 17 member. He's not somebody from the Bingo hall. 18 CHAIR MIERS: All right. Was there a 19 particular person that Melondye requested you to use 20 in place of Richey (sic)? 21 MR. POWERS: No. We -- because that 22 was my -- that was what I told her to start with, that 23 we will have our own -- because I know Melondye. I've 24 been -- I left her to go down to Marshall, and 25 there's -- 71 1 But all the other organizations were 2 there -- the variety club with the kids, the 3 wheelchair tennis club, and the wheelchair Texans 4 basketball -- and all of those got in trouble by the 5 IRS because the guy that she told all these 6 organizations that they had to use -- and the 7 organizations, again I say, could not get their own 8 bookkeeping. And if you want, I can give you 15 9 numbers, right now, of all the people in these 10 organizations that will tell you the same thing. And 11 if we did say, "We want these papers," we are out of 12 that hall. 13 And you go -- and I dare anyone in here 14 to try to go to a hall in Dallas that's successful -- 15 you can get into a lot of halls, and you can get into 16 slots that other people are leaving, and the reason 17 they're leaving is because they can't make any money. 18 So -- and but... 19 CHAIR MIERS: You're telling this 20 Commission that the halls that command the largest 21 audiences insist upon putting a person of their own 22 choosing in your organization to operate? 23 MR. POWERS: I'm not saying every one 24 of them. I'm saying that that's probably -- that's 25 pretty much the case in the ones that Melondye have 72 1 and a bunch of others. 2 I'm with -- I'm in a hall right now 3 that is probably run by somebody that Billy has come 4 up against many times, Bob Jones. But before -- and 5 the reason that I got what I got at that hall is 6 because I went in there and I told Bob, "Look, you 7 know, I've had 15 people tell me not to do anything 8 with you because of your past history." 9 But he has been the best guy. He 10 has -- we have had our -- he has made sure that I have 11 been able to have all my accounting, all my people 12 there, do everything that I need to do. He even made 13 a job for Richard over there, on the side, doing 14 something else. And he gives him other jobs as a 15 floor person. A guy in a wheelchair selling pull-tabs 16 at a table. 17 I mean, he's gone above and beyond. I 18 think he's trying to make up for all the -- whatever 19 people accused him of in the past, and I hope that I 20 had part to do with that. But -- 21 CHAIR MIERS: Okay. Let me ask -- I 22 appreciate your input. Let me ask Commissioner 23 Sadberry or Clowe if they have any questions before we 24 proceed. 25 MR. POWERS: Could I make one comment? 73 1 MR. SADBERRY: I do -- 2 MR. POWERS: I'm sorry. I just want to 3 make this one comment. I'm kind of upset today 4 because Rusty, the comptroller, when I said that I 5 thought we were in the right and I wanted to come to 6 court, he did everything he could and told me, person- 7 to-person, that he did not want to have to drive down 8 to Austin. Then he calls me back and he says, "Do you 9 know this is a third-degree felony and that we can -- 10 that we are going to charge Richard Dickey," who has 11 cerebral palsy in a wheelchair, "we're going to charge 12 him with a third-degree felony if you go down to 13 Austin?" And Richard was scared; did not want to come 14 to Austin. I said, "Richard, we're going down to 15 there because we're in the right." 16 And this has to be said. We came down 17 here -- we went through this. The judge gave us one 18 day suspension. When we got back to Dallas, Rusty -- 19 they -- Rusty charged Richard Dickey with a third- 20 degree felony, Richard had to go to court, they no- 21 billed it, the Court didn't even know why he was there 22 in the first place. Rusty, I don't even believe, 23 showed up at the court when Richard was sitting there 24 for two hours trying to wonder what he's even doing 25 there. 74 1 And I'm wondering why -- with all this 2 importancy riding on this case why Rusty is not here 3 today. I guarantee you I know why: He doesn't want 4 to drive down here. And I drove down here this 5 morning. I got up at 4:00 o'clock. But -- and I'm 6 just kind of upset that the comptroller that's in the 7 middle of this case, right here, is not here today. 8 CHAIR MIERS: The Commissioners may 9 have some questions about that ourselves. Questions? 10 MR. SADBERRY: What is your financial 11 arrangement with, let's say, this particular hall 12 where you had the temporary licence? They make money 13 off you. Right? 14 MR. POWERS: Right. 15 MR. SADBERRY: And how does that work? 16 MR. POWERS: Well, let's say I have -- 17 you get six temporaries a year. So she wanted ours 18 one day a week, say on a Friday evening, as a 19 temporary, and we pay her, like -- and she had 20 reasonable rents. It was like 300. She could have 21 charged us 600 if -- but she charged us $300 for that 22 rent for that one evening. And she uses us for six 23 weeks, and then, boom, we're out and she brings in 24 another organization and uses their temporaries. 25 MR. SADBERRY: Now, what -- do I 75 1 understand, correctly, the facts that your permit, 2 your license which would have started at 10:30, could 3 not be used by law until 10:30 and there was going to 4 be a one-hour gap between when the last game, or 5 activity, ended and your activity? 6 MR. POWERS: Right. 7 MR. SADBERRY: So to avoid losing money 8 that -- and possibly customers for that one-hour 9 downtime -- 10 MR. POWERS: Oh, we would have waited. 11 They would have just been mad. 12 MR. SADBERRY: -- you were pressured, 13 as you saw it, to start early. 14 MR. POWERS: Right. 15 MR. SADBERRY: And with knowledge of an 16 inspector from the Commission being present, you 17 agreed to start early to avoid your perception that 18 you would have been kicked out. 19 MR. POWERS: It was either get -- you 20 know, have the situation with Rusty when he was there 21 and we -- with him, or have the situation with 22 Melondye. At that point it did no good to even have a 23 license -- 24 MR. SADBERRY: So you made -- 25 MR. POWERS: -- if we had no hall to be 76 1 in. 2 MR. SADBERRY: You had to make a 3 decision is what -- 4 MR. POWERS: We had to make a -- well, 5 I didn't really -- I told Richard to ask Melondye 6 because I thought Melondye would do what needed to be 7 done because she was the hall owner. But see, we were 8 disposable to her, so it made no -- I shouldn't even 9 have told him to do that. I should have told him, 10 "Just, hey, wait." They could have sold pull-tabs. 11 Somebody had that session time. That other 12 organization could have sold pull-tabs. They could 13 have done other things. 14 MR. SADBERRY: Now, on Rusty, Rusty was 15 here in Austin when the hearing was -- 16 MR. POWERS: Right. 17 MR. SADBERRY: -- conducted, and it 18 sounded to me like you believe he helped your cause in 19 front of the Hearing Officer. 20 MR. POWERS: No. I had to pull it out 21 of him. I had to ask him outright. They were -- he 22 was nothing but trying to go against us, and Rusty 23 will tell you to himself I have called him four or 24 five different times. 25 I have always wanted to right the 77 1 wrong, you know, even though I get in trouble for it. 2 In fact, I got kicked out of the Lucky Shamrock 3 because I called Rusty and asked him about Hot Ball 4 over there. And I told the guy that was in the 5 wheelchair -- that Roy guy who made all these 6 organizations get sued by the IRS because he didn't do 7 their books right? And I told Roy and Roy told 8 Melondye and I was out because I called up the 9 comptroller. And all I wanted to do was keep from 10 getting in trouble. 11 MR. SADBERRY: That's all I have. 12 MR. CLOWE: I would like to know how 13 long you've been an operator. 14 MR. POWERS: I have been in every facet 15 of Bingo since 1984, and I have had -- have helped 16 raised millions of dollars for the organization. You 17 know, right now -- 18 MR. CLOWE: That's okay. That -- 19 MR. POWERS: Okay. 20 MR. CLOWE: You answered my question on 21 that. 22 MR. POWERS: Okay. I'm sorry. But 23 I -- 24 MR. CLOWE: What's your position in the 25 organization? 78 1 MR. POWERS: I'm an Executive Director 2 of an organization called Point. This is our 20-year 3 anniversary this year. In fact, our big hoop-de-do is 4 next week. 5 MR. CLOWE: And how many folks are in 6 your organization -- 7 MR. POWERS: There are over 3,000. 8 MR. CLOWE: Now, wait a minute. Let me 9 finish the question. 10 MR. POWERS: I'm sorry. I'm sorry. 11 MR. CLOWE: How many folks are in your 12 organization that are active in the management as 13 operators? How many folks do you work with? 14 MR. POWERS: Well, we only had one 15 Bingo license, so we have -- Richard, who has cerebral 16 palsy, is the main primary operator. And then he -- 17 if he's sick, or something, we have backup primary 18 operators that are also in our organization. 19 MR. CLOWE: But it's primarily you and 20 one other person? Is that right? 21 MR. POWERS: No. I'm the Executive 22 Director of the organization, so Richard is the 23 primary operator. 24 MR. CLOWE: Okay. 25 MR. POWERS: So he is to go there, and 79 1 if he is not to be there, then he'll call me and say, 2 "Look, I have to be off on this date," and then 3 we'll -- I'll call up somebody else who is on the 4 list. 5 MR. CLOWE: How many folks are on the 6 list? 7 MR. POWERS: I would say -- I don't 8 know. Ten, 15 I would say. 9 MR. CLOWE: And all of the information 10 that you've told us here this morning, did any of that 11 come out in this hearing that you attended? Did you 12 make any of these comments in the course of that 13 hearing? 14 MR. POWERS: Yes, sir, I did. And I 15 think that's one of the reasons that the judge said 16 what he said. I mean, it's the different between 17 reality and bureaucracy. 18 MR. CLOWE: Have you had any of these 19 discussions with Billy Atkins? 20 MR. POWERS: No. I don't know if I've 21 ever talked to Billy. I've talked to some of the 22 legal people down there and, you know -- but, again, 23 you can't make too many waves. 24 CHAIR MIERS: What legal people have 25 you talked to, sir? 80 1 MR. POWERS: Name some names and I'll 2 tell you if I've talked to them. Who's the head of 3 the legal... 4 MS. KIPLIN: I am. 5 MR. POWERS: Who? 6 MS. KIPLIN: And I've never talked to 7 you today -- before today. 8 MR. POWERS: Oh, no. Who was it 9 before -- 10 MS. KIPLIN: Missy Cary was the 11 Assistant General Counsel that represented the staff 12 at the hearing. Rusty Robbins is the investigator 13 who's -- who is located in the Dallas field office. 14 MR. POWERS: Right. 15 MS. KIPLIN: And I don't -- 16 MR. POWERS: I've talked to people ever 17 since '84. I mean, you can -- 18 MS. KIPLIN: I've never spoken with 19 you. 20 MR. POWERS: I've never spoken with 21 you. You're new, though, aren't you? 22 MS. KIPLIN: I've been here since 1993. 23 MR. POWERS: Oh, have you? 24 MS. KIPLIN: Yes, sir. 25 MR. POWERS: Oh, because you weren't at 81 1 the court. I thought that's what -- 2 MS. KIPLIN: No. I wasn't. 3 MR. POWERS: Okay. And I don't know 4 why I've never talked to you. Probably I've never got 5 that far. You know, when you call and you ask for 6 legal -- I usually -- can you name some of the names 7 of the people that are in the -- 8 MS. KIPLIN: I'll be glad to: 9 Kaye Schultz is an Assistant General Counsel -- 10 MR. POWERS: No. 11 MS. KIPLIN: Diane Morris is -- 12 MR. POWERS: They're two guys. 13 THE REPORTER: One at a time, please. 14 Would you please wait until she finishes her -- 15 MR. POWERS: Oh, I'm sorry. 16 THE REPORTER: Thank you. 17 MS. KIPLIN: Dianne Morris is an 18 Assistant General Counsel. Ridgely Bennett is the 19 Deputy General Counsel. A long time -- Terry Johnson. 20 He's no longer with the agency. And -- 21 MR. POWERS: That's not who I talked 22 to. 23 MS. KIPLIN: Those are the only 24 attorneys that have worked -- well, Colette. There 25 was another attorney -- 82 1 MR. POWERS: There's a short older man 2 that was in legal at Bingo? 3 MS. KIPLIN: No, sir. Not with this 4 agency. 5 MR. SADBERRY: You may be thinking -- 6 MR. ATKINS: Oh, you may be thinking 7 about Bob Falls at TABC. 8 MR. POWERS: Right. Yeah. Well, 9 that's who I used to talk to all the time. But I 10 haven't -- 11 CHAIR MIERS: Let me ask you a 12 question, Billy: I take it, as a result of all these 13 events, obviously there was a proceeding against the 14 licensee for conducting this occasion outside of the 15 licensed time. 16 MR. ATKINS: That's correct. 17 CHAIR MIERS: And was there any action 18 taken against the Bingo lessor that allowed it to 19 occur? 20 MR. ATKINS: No, ma'am. 21 CHAIR MIERS: Why not? 22 MR. ATKINS: Because the Bingo Enabling 23 Act stipulates that it's the responsibility of the 24 conductor. 25 CHAIR MIERS: And so your 83 1 interpretation of the act is that a Bingo lessor 2 knowingly can allow an occasion to occur and that's 3 just fine. It's not a violation of the act. 4 MR. ATKINS: It's -- the violation of 5 the act is against the licensed conductor. There is 6 nothing in the act, as I understand it, that holds a 7 lessor responsible if an illegal activity occurs at 8 the hall. 9 MR. SADBERRY: What about the general 10 catchalls? Faith, morals, and good character, and 11 that kind of thing? Does that not fit? 12 MS. KIPLIN: That's not part of this -- 13 that kind of language I've seen in other licensing 14 statutes; for example, insurance agent licensing 15 statutes. That's not part of the Bingo Enabling Act, 16 and for that matter not part of the State Lottery Act, 17 in terms of eligibility issues; eligible to hold a 18 license. 19 MR. POWERS: There is so many issues 20 about the groups and the halls, as is the rent. And 21 what the halls have to do -- sometimes the groups have 22 to buy all the equipment. They have to pay for the 23 cleanup and they pay for security. They have to pay 24 for -- they pay for everything. Some guy with a used 25 Safeway hall can make a quarter of a million dollars a 84 1 year while the organizations struggle. 2 And do you know who -- they doubled our 3 license fee this year to the organizations? How much 4 does it cost for a -- because I remember when I had a 5 hall, for me to be a leasor (sic), it didn't cost, 6 what, $900 or something? I can't remember. 7 MR. ATKINS: Well, license fees for 8 lessors now go up to $2,500 by statute -- 9 MR. POWERS: Up to 25. Okay. And ours 10 just went up. 11 MR. ATKINS: It was an increase, but it 12 wasn't doubled. 13 MR. POWERS: Right. 14 MR. ATKINS: There was a 25 percent 15 increase. 16 MS. KIPLIN: If I could interject. 17 I've listened to Mr. Powers, and I'm pretty certain 18 that up until these comments, in terms of money making 19 on commercial lessors and the license fees going up, 20 it's part of the transcript because I read the 21 transcript today, but that information was not part of 22 the record that you just heard. 23 MR. SADBERRY: Let me ask this 24 question, Billy: I take it the staff made a proposal 25 or took action that resulted in the administrative 85 1 proceedings? 2 MR. ATKINS: We proposed to deny the 3 license. 4 MR. SADBERRY: Deny a license or revoke 5 a license? 6 MR. ATKINS: Revoke. I'm sorry. 7 MR. SADBERRY: Okay. Entirely as 8 opposed to suspend. 9 MR. ATKINS: Yes, sir. 10 MR. SADBERRY: So before us is the 11 issue of a proper penalty, if any, I take it? And I 12 now understand, Kim, perhaps a little more about your 13 observations of who is the body that decides that. 14 So if we were to presume that what the 15 judge has done is make a recommendation, let's say for 16 the sake of discussion, I understand the legal issues, 17 but, you know, taking that hat off for the minute. So 18 the issue is whether absolute suspension versus one 19 day -- or, absolute revocation versus one day of 20 suspension, or something in between, is the 21 appropriate remedy. Is that what is before us? 22 MS. KIPLIN: Yes. That's what's before 23 you. 24 MR. POWERS: I understand that prior to 25 me coming in, that most of the time they would either 86 1 take the recommendation of the judge or they would 2 lean more towards the organization. But it's kind of 3 hard to lean more towards us when we only got one day 4 from the judge. 5 And what would my recourse be if I 6 didn't feel that the -- today was fair? Is there 7 anything past this? Can I take this on to another 8 level? What is my recourse after today if -- say if 9 you were to revoke my license, what do I have -- I 10 mean, what are my choices? My options? 11 CHAIR MIERS: Well, let me ask you a 12 question, Mr. Powers: What was your purpose in coming 13 here today? What were you trying to accomplish by 14 coming here today? 15 MR. POWERS: I didn't want to come here 16 today. I came here because I understood that it 17 didn't matter what the judge said -- and I don't even 18 know why we went to court -- but it didn't matter what 19 the judge said; that if they wanted to revoke our 20 license they could. 21 And I had to call down here to tell 22 them to tell me. When it came to the court, and it 23 came to everything else, you-all sent me information. 24 I had to ask you to please tell me when this 25 Commissioner hearing was going to be to even get this 87 1 information. Not that anybody sent it to me. Not 2 that you even told me that if I -- that there was a 3 chance of me losing my license today. 4 I already got the thing from the judge. 5 I thought that was it. And if it hadn't been for Bob 6 Jones telling me what he knew, then I would still -- 7 you know, I would have been sitting at home right now. 8 MR. SADBERRY: Let me back up on that 9 same nature of the question and ask you: What was the 10 purpose of your going forward with the event prior to 11 the time specified in your license -- just a minute -- 12 prior to the time specified in your license? What was 13 your purpose in doing that? 14 MR. POWERS: I felt that even if we 15 lost our license at least we could be heard. It's 16 very seldom that the little guy gets heard. I just 17 wanted you to know what was going on and to -- and 18 somewhere down the line maybe somebody is going to 19 have a commission -- somebody is going to put 20 something together -- I'll volunteer my time to be on 21 any committee that you have. Anything that you want 22 me to do I will do just to right the wrongs that's 23 happening out there now. And I don't know if there's 24 an organization of these hall owners that makes this 25 so powerful. 88 1 MR. ATKINS: Have you ever heard of the 2 Bingo Advisory Committee? 3 MR. POWERS: Uh-huh. 4 MR. ATKINS: Have you ever submitted a 5 nomination for that? 6 MR. POWERS: No. Is that the one where 7 you put $100 apiece in? Each organization? Or is 8 that the -- and is that mostly organizations or is 9 that mostly hall owners? 10 MR. ATKINS: Well, it's a committee 11 that's authorized by statute to advise the Commission 12 on the needs and the problems in the Bingo industry, 13 and we routinely send out several thousand nomination 14 forms every year to all licensees. And I just 15 encourage you, in the future, to maybe consider that. 16 MR. POWERS: Yeah. Do you -- can you 17 tell me right now the majority of -- if they are hall 18 owners or if they are Bingo operators? 19 MR. ATKINS: Well, the statute requires 20 that it -- a broad representation of the Bingo 21 industry being split. There are general public 22 members, there are conductors, conductor lessors, 23 commercial lessors. 24 MR. SADBERRY: Before this incident, 25 sir, had you ever had an experience of -- similar to 89 1 this as being, as you saw it, coerced into starting an 2 event before the time listed on your license? 3 MR. POWERS: Oh, let me count the ways. 4 MR. SADBERRY: Have you ever reported 5 that to the Lottery Commission? 6 MR. POWERS: And get kicked out of the 7 hall? 8 MR. SADBERRY: My question is -- 9 MR. POWERS: No. No, sir. I'm sorry. 10 No, sir. 11 CHAIR MIERS: I'm sorry. I need to 12 make sure I understand what you're telling us: There 13 have been other occasions where you have been forced, 14 under a temporary license or a permanent license -- I 15 guess a temporary license because that would have the 16 specific time. So have you been forced at other times 17 to play when your license did not allow you to do so? 18 MR. POWERS: I can't remember any 19 specific time. But like I said, now, we've been doing 20 this since '84. I can probably guarantee you that 21 there's probably been dozens of times that something 22 has happened that has been one of those situations 23 where the hall owner has put pressure on us in one way 24 or another. I've even had to play with the hall owner 25 having their own cashiers. Letting us use the primary 90 1 operator but having their own cashiers, and if we 2 didn't go along with it then we don't play there. 3 And then if you go and you -- I've 4 talked a lot with Rusty about this. I've gone over on 5 -- 30 minutes to an hour, sometimes, we'll have 6 discussions. And I'll say, "Rusty, how come this is 7 this and how come this -- 8 MR. SADBERRY: Do you receive the Bingo 9 Bulletin, sir? 10 MR. POWERS: Yeah. But I don't read 11 it. 12 MR. SADBERRY: Okay. 13 MR. POWERS: I've stopped trying to do 14 the bureaucracy thing long ago. It's no good. I've 15 just -- I just wanted you to know what -- how a lot of 16 organizations feel, and you do what you have to do. 17 CHAIR MIERS: Okay. Any other 18 questions from the Commissioners or questions from -- 19 comments from staff? 20 MR. ATKINS: Well, Commissioners, if I 21 could, I would just like to make some brief comments. 22 First of all, you know, Mr. Powers, I 23 appreciate you coming down, and I want you to know I'm 24 happy to meet with you -- 25 MR. POWERS: I'm glad to meet you, too. 91 1 MR. ATKINS: -- anytime. I want to. 2 It's unfortunate we've never had the chance before 3 now. But, you know, I want to get together with you 4 and discuss the difference between the reality in hall 5 owners versus -- 6 MR. POWERS: What are you doing for 7 lunch today? 8 MR. ATKINS: -- because -- I'm going to 9 be in a Commission meeting. But I can show you a 10 number of the halls across -- 11 CHAIR MIERS: Let him finish his 12 remarks, sir. 13 MR. POWERS: Oh, I'm sorry. I'm sorry. 14 MR. ATKINS: I'll be happy to show you 15 a number of halls all across this state where 16 charities assume responsibility for their games and 17 make hundreds of thousands of dollars a year. So I 18 know it can happen, but the charities have to take 19 that responsibility. 20 And, Commissioners, the thing that 21 troubles me the most about what we've heard today, 22 what you've seen in the testimony, is the pattern that 23 has developed. By their own admission this 24 organization was previously expelled by 25 Melondye Green. They pleaded with Melondye Green to 92 1 let them back in. They're now here before you in this 2 situation, because of Melondye Green, and they've 3 admitted that the violations were because of Melondye 4 Green. And now I think they're asking for their 5 license back so they can go back to the hall where 6 Melondye Green is -- 7 MR. POWERS: No. 8 MR. ATKINS: -- and the staff has no 9 assurance -- 10 CHAIR MIERS: Sir, do not interrupt 11 again. 12 MR. ATKINS: The staff has no assurance 13 that this organization is going to assume the 14 responsibility for their Bingo operations, and I know 15 that this is something that I've discussed before the 16 Commission before. He's -- you know, he's now 17 referencing Bob Jones who has been before this 18 Commission. And from the staff's point of view, if 19 the organizations are not going to assume 20 responsibility for their games, then they have to 21 assume that -- you know, this is a potential situation 22 that they can get themselves in. 23 And I agree with what Kim said. From 24 staff's position, one of the most egregious violations 25 of the Bingo Enabling Act that can occur is an 93 1 unlicensed game. It's one of the few violations in 2 the act that's actually classified as a felony. 3 CHAIR MIERS: Well, how do you feel 4 about someone who is a lessor who urges that that then 5 occur in their hall? 6 MR. ATKINS: How do I feel about it? I 7 feel terrible about it. I don't -- 8 CHAIR MIERS: Have you taken any 9 action, Billy, against Melondye? Had you known before 10 today that she encouraged the conduct of a game 11 outside of the licensed period? 12 MR. ATKINS: Not from -- apart from the 13 findings in the ALJ's decision. But, again, I don't 14 know what actions I would take. I'm not aware of any 15 administrative or criminal actions that I could take. 16 MR. SADBERRY: Could you refer, to the 17 District Attorney's Office, such conduct? 18 MS. KIPLIN: We certainly could refer 19 based on the facts. Of course, it would be up to the 20 District Attorney to believe whether there is 21 something that is prosecutable. 22 I would like to follow up. I don't 23 want to, obviously, interrupt the Commission's 24 questions with Mr. Atkins, but I do want to say one 25 thing -- I guess a couple of things. 94 1 One, I've heard Mr. Powers today, and I 2 have read the transcript before today, and I think I'm 3 pretty familiar with the record. I do take issue with 4 the statement that it was Melondye Green that caused 5 the Respondent to violate the Bingo Enabling Act. 6 Certainly I'm not going to dispute the fact that there 7 was pressure that was applied by Melondye Green, but 8 this Respondent made a decision to go ahead and play 9 outside of licensed times knowing that they were -- 10 they only had six temporaries, anyway, and they were 11 going to be out. They made that decision. 12 And it seems to me that the licensee 13 must take responsibility for the licensee's conduct; 14 must accept that responsibility. And if the licensee 15 felt as though there was egregious conduct or conduct 16 by Melondye Green that was in violation of the Bingo 17 Enabling Act, then they had an absolute opportunity to 18 go ahead and file a complaint with this agency. I 19 think the Security Division's practice is that they 20 pursue any complaint. 21 And I would respectfully request that 22 the Commission enter an order that they believe, of 23 course, is appropriate given the findings. But the 24 staff would -- I believe the staff's position is that 25 because of the egregious violation of the act that the 95 1 Commission revoke the license. 2 CHAIR MIERS: With respect, could I ask 3 the question -- I understood there had been a criminal 4 charge filed or not? Is that -- can we get the facts 5 on that? 6 MS. KIPLIN: I will tell you that 7 before Mr. Powers made that statement today, I -- and 8 I think Mr. Atkins is in the same position I am -- I 9 am not aware of that at all; had no knowledge of that 10 whatsoever. Mr. Pitcock, who is the Commander of the 11 Security Division, is here and may be in a position of 12 shedding some information on that; shedding some light 13 on that. 14 CHAIR MIERS: I would tell you -- and 15 I'm going to personally move that this matter be 16 placed on our agenda in November, and I'm going to ask 17 that the investigator who was there on the scene that 18 evening be here to participate in this proceeding in 19 November. Mike, do you know whether charges were 20 filed? 21 MS. KIPLIN: Can you come forward, 22 please? 23 MR. PITCOCK: I'm Mike Pitcock, for the 24 record. I'm Director of Security. 25 As far as charges on any of the cases, 96 1 we present to a DA's office. The DA's office then 2 interprets the investigative report and decides to 3 file charges. It's not really our discretion to file. 4 We present. 5 In the case that Mr. Sadberry said 6 about the lessor for -- the information in the report 7 details out what the lessor did in this case. If the 8 DA's office sees that she participated in a criminal 9 activity or a conspiracy, then they have the 10 discretion to file that criminal charge or take it to 11 a grand jury. 12 MS. KIPLIN: Mike, do you know the 13 timing on that referral? Was it at the time that the 14 referral came to Legal or was it a different time? 15 MR. PITCOCK: I don't know that. I 16 know that it's a standing process for us -- on these 17 cases where there's a possible criminal act take 18 place, it is referred both to administrative and to 19 the criminal courts. We try to do it in a timely -- 20 you know, same time basis as soon as it's completed. 21 I'm sure at that night, knowing Rusty 22 and all the investigators, that if there's a felony 23 being committed -- he is a peace officer -- in his 24 presence, that he advised them that, "You are 25 committing a felony in my presence as a police 97 1 officer." Not to threaten, but to advise that that's 2 what you're doing in that presence. And he takes a 3 discretionary call to tell them that so that they're 4 aware of that situation. And in any of those 5 occasions that's what he's obligated to do. 6 And he has -- he doesn't have a 7 discretion because he's not the judge. He has to 8 present his investigative facts, once he sees that has 9 taken place, to the proper jurisdiction. And I think 10 that Rusty does that very well. 11 And I heard his statements, and this is 12 not the first case like this. And if we get 13 complaints -- if they do complain or we find out about 14 illegal sessions, we will take them to the DA's office 15 and to our administrative process -- through that 16 process, you know, on every one of those cases. 17 That's their standing order. There is no discretion 18 for the investigator. He has the obligation to do 19 that. 20 CHAIR MIERS: And in your judgment, 21 would that present -- presentation to the District 22 Attorney's Office be forthwith? Would that be 23 presented right away after an occasion occurs? 24 MR. PITCOCK: That would be forthwith; 25 right away after he finishes his report, gets all the 98 1 interviews and statements because there's a process 2 that takes place. 3 When one of these occasions take place, 4 you have to interview the witnesses and get all -- and 5 identify who you're going to take as the primary 6 people that are the suspects. I mean, it's an 7 investigative process that may take a week or so to 8 get all that finished and get it to the courts and to 9 our administrative lawyers to handle on both sides. 10 It's not, like, the next day because it just takes a 11 while to get it all put together. 12 CHAIR MIERS: What would you say would 13 be an ordinary time? 14 MR. PITCOCK: If all the witnesses come 15 in within 30 days after it takes place, they will have 16 all their statements and affidavits and signed 17 information. And we've had occasion where we've had 18 to go and there is no operator -- or, it's ghost 19 sessions where we've arrested people and seized the 20 money. In those cases -- we can get those usually 21 within ten days, I would say, in the long range of 22 that process. 23 CHAIR MIERS: Are you aware, Mike, of 24 situations similar to the one that has been described 25 here today occurring on other instances? 99 1 MR. PITCOCK: Yes. We work undercover. 2 I'm aware of the ghost sessions, the sessions -- and 3 we talk to the operators, where they're in these 4 commercial halls, where the lessors have instructed 5 them to do what they're told to do or they will be 6 fired. We tell them, and try to be as clear, that 7 it's your obligation to follow the rules and the laws 8 of the Bingo Enabling Act. And when we get 9 complaints, we go and talk to them and try to be as 10 clear with them and instruct them and give them the 11 right advice. I can't tell them not to do something 12 because that's their decision. If they violate the 13 law, they make that decision. 14 But we go and we tell the lessors. 15 It's not just these people. We tell the lessors that, 16 you know, that's a violation of the law and instruct 17 them. 18 But yes, it does go on. His 19 explanation, when he was first speaking, was true to 20 fact, you know, not only in Dallas but throughout the 21 state of Texas in some of these commercial halls, and 22 I think Billy would say auditors see that. 23 MR. ATKINS: Well, I don't -- 24 CHAIR MIERS: Well, let me ask this 25 question, Mike: When you talk to -- first off, have 100 1 you ever, or any of your folks ever, talked to 2 Melondye Green? 3 MR. PITCOCK: I'm sure they have. 4 CHAIR MIERS: And they would have been 5 telling her, as well as the operator, not to violate 6 the law? 7 MR. PITCOCK: Yes. Our relation with 8 Melondye is from the beginning in 1994 when we 9 started. Some of the commercial lessors -- when we've 10 had complaints we've had -- you know, Bob Jones -- 11 we've had conversations with people. When we do an 12 investigation, we interview all of them. 13 CHAIR MIERS: So you would undertake to 14 prevent a lessor from coercing an operator into 15 playing when they shouldn't. 16 MR. PITCOCK: We will advise them what 17 the law says. 18 MR. POWERS: But what does the law say? 19 The law says that we take the blunt -- I mean, we're 20 disposable for Melondye Green. She could care less. 21 CHAIR MIERS: Okay. Well, I appreciate 22 your comments, Mike. Questions or comments further? 23 MR. CLOWE: I think you have indicated 24 how I feel about this issue, and it's not something 25 that we're prepared to deal with today or vote on, but 101 1 it needs to be examined and brought back to us and for 2 a full investigation to take place. I would like to 3 see it at the next meeting, but if it's not possible I 4 think we need to take time to determine what the facts 5 are around all of these statements that have been 6 made. There are some serious accusations that have 7 been made here today. 8 CHAIR MIERS: Well, Mr. Powers, we 9 appreciate you're effort to come and provide 10 information to the Commission. We understand that you 11 would prefer to have the matter resolved today. I 12 don't think that's in your best interest or Bingo's 13 best interest to do that, and, therefore, I'm not 14 recommending that we proceed today. 15 And it is not -- I hope you'll be in a 16 position to come back at the next meeting, despite the 17 fact that I understand that it's a hardship, but it 18 certainly is not essential that you come back because 19 we do have your testimony today. There is other 20 testimony that we need. 21 So it would be my motion that we defer 22 this matter and put it on the agenda for our next 23 meeting which I understand will be in November. 24 MR. SADBERRY: I would like to second 25 that and ask a question in that regard: Can we compel 102 1 testimony? Can we have the lessor here or do we have 2 that authority? 3 MS. KIPLIN: This matter went to the 4 State Office of Administrative Hearings for them to be 5 the trier of facts and to find facts, and the facts 6 are before you. And, you know, I'll research that 7 issue, but my initial reaction, just from my 8 understanding of administrative law, is that you 9 cannot do that. 10 MR. SADBERRY: If you would, look at 11 it. 12 MS. KIPLIN: I will be glad to. 13 MR. SADBERRY: I second the motion. 14 CHAIR MIERS: Well, and I think we can 15 post other matters, and in that connection request 16 testimony or information maybe after the disposition 17 of this particular issue. I think the issues that 18 have been raised are broader than the individual case 19 here, and I suspect the Commission, as whole, is going 20 to want to hear a lot more about the issues. 21 It is quite troubling to me, and maybe 22 it's a legislative matter for Nelda and Colin. It is 23 incredible to me that the game conductor could be 24 charged with a violation here and the lessor, who is 25 responsible for a hall, could be urging the conduct of 103 1 a game and be not at all responsible for that conduct. 2 And if the information we get is that our law doesn't 3 make that sort of conduct, on the part of the lessor, 4 a violation just as much as the conductor's conduct, I 5 would find that quite unfortunate and really difficult 6 to understand. And that's just one person's reaction 7 to that circumstance. 8 I also am troubled by the issues that 9 have been raised with respect to the forced use of 10 employees of the hall as well as the other 11 accusations. I also was quite concerned to hear that 12 this particular person -- and I would like a response 13 to this. I assume I could get this today. Was 14 Mr. Powers' organization notified of the Commission 15 hearing today or was he not? 16 MS. KIPLIN: He was. And if -- 17 MR. POWERS: I was because I requested 18 it. 19 MS. KIPLIN: If I might be able to 20 respond. The exceptions were filed. Mr. Powers 21 called, I think, in response to receipt of the 22 exceptions and indicated that he wanted to be notified 23 of the Commission meeting when this matter was taken 24 up. 25 And I don't know -- you know, my sense 104 1 is that our practice is that when we know that there's 2 a contested case proceeding -- and we do make an 3 effort to try to notify the parties, but we're not 4 required to do that under the Open Meetings Act or 5 under the Administrative Procedures Act. So I will 6 say that, you know, his message came in, but I'm not 7 going to say that we would not have called him 8 otherwise because I knew that this was a contested 9 case proceeding and we were taking issue with the 10 Administrative Law Judge's recommendations. 11 CHAIR MIERS: Well, we have no formal 12 process that ensures that someone whose license will 13 be considered in a contested case gets notice of the 14 fact that they are agendaed for a Commission meeting? 15 MS. KIPLIN: There is no formal process 16 with the exception of filing it with the Open 17 Meetings -- the Texas Register that goes on the 18 Internet. And I would -- I think before the 19 Commission were to direct that, I would want to have 20 more discussion on the requirement of notifying 21 parties regarding an Open Meetings Act issue at open 22 meetings. 23 MR. SADBERRY: Well, I'm concerned 24 about that. I agree that it may be the subject of 25 another item at another time, but I'm concerned about 105 1 that. 2 But if I may go back, I would like to, 3 on the record, state I share entirely, word for word, 4 the Chair's comments on this issue. I would like to 5 go further and say that I see this as an intentional 6 test case, and I think -- I have, I guess, two 7 reactions to that. 8 I have concern about a test case, in 9 the first instance as a philosophical concept, but on 10 the other hand I have concern where a licensee feels 11 the need to file a test case to have an issue heard. 12 And I'm not saying that is accurate in this instance, 13 but I have those two observations. I think the 14 findings of the judge, particularly 11, 12, and 13, 15 are -- I am somewhat concerned about that. I know 16 we'll take that up more specifically another day, but 17 just to be -- if I can't be here or something happens 18 to me, I want my observation on the record. 19 And I agree with Commissioner Clowe. 20 This is a very serious matter, a very serious matter, 21 and I think we need to develop a full record and need 22 to do whatever we have to do to find out the facts, 23 and particularly because I agree they extend beyond 24 that particular case and yet that's the nature and 25 office of a test case. 106 1 And I understand the role of the test 2 case -- cases have played, and will play, in our 3 society of law where sometimes that becomes a vehicle 4 by which facts come to light and views are heard. I 5 certainly understand the need to be carefully chosen, 6 but there are times when perhaps they may be 7 appropriate. 8 CHAIR MIERS: Okay. Very briefly, sir. 9 MR. POWERS: Just that in going I just 10 want to say that I've put the organization and myself 11 on a -- walking the plank, and I know it's up to 12 y'all. To our credit I just want to say what the 13 judge found. I just want to say that I was here today 14 and I had to find out about it. Rusty is not here 15 today, and I will come back anytime you want to, and I 16 don't think that we have to get our license suspended 17 for everyone to learn something from all this. I 18 think we should get credit for all the trouble and the 19 time and everything that we've spent from the 20 bureaucracy's mistakes up to this point. 21 And -- but I credit everybody, and I 22 really appreciate the concern that I see from the 23 board on these matters, and maybe something will 24 happen, and I appreciate that. And whatever happens 25 from here on out at least we got it heard. 107 1 CHAIR MIERS: Okay. Before you leave 2 here, Mr. Powers, if you would do one thing for me it 3 would be appreciated, and maybe, Billy, this is 4 unnecessary. But I would like to know all of the 5 organizations in which Mr. Powers has been involved 6 over the course of time. 7 MR. ATKINS: In which Mr. Powers has 8 been involved? 9 CHAIR MIERS: Correct. 10 MR. ATKINS: We should be able to get 11 that off our system. 12 CHAIR MIERS: Okay. Good. Okay. And 13 we -- that's probably outside the record, you're about 14 to tell me, Ms. Kiplin, so I promise not to look at it 15 until we decide the case. 16 MS. KIPLIN: Thank you. 17 CHAIR MIERS: All right, sir. 18 MR. POWERS: Okay. Thank you. 19 CHAIR MIERS: Okay. I believe the only 20 two items we have for -- let me say we have moved for 21 deferral on that matter. I had a second. All those 22 in favor say, aye. 23 MR. CLOWE: Aye. 24 MR. SADBERRY: Aye. 25 CHAIR MIERS: Aye. If it can be posted 108 1 for November, I would like to move it as quickly as 2 possible. 3 With respect to our agenda, we only 4 have the report of the Executive Director, the report 5 of the Charitable Bingo Operations Director, the -- 6 other than our Executive Session and items that should 7 be acted on arising out of that particular Executive 8 Session. So I would like to go ahead and take the 9 report of the Executive Director at this time, item 10 number 15. 11 MS. CLOUD: Okay. Commissioners, we 12 had a transfer to the Foundation School Fund in 13 October amounting to $65,167,609, giving a total 14 transfers, from start-up to date, of $7,082,337,668. 15 Is Loretta -- Loretta, do you want to 16 come up and give a quick HUB report? 17 MS. HAWKINS: For the record I'm 18 Loretta Hawkins, and I'm the Minority Development 19 Coordinator for the Texas Lottery. Good morning, 20 Commissioners. 21 Basically I don't have a whole lot to 22 say. It's kind of in your notebook. We just, as 23 usual, give you a comparison of where we are each 24 month -- or, each time we meet with y'all where we are 25 for each -- from last fiscal year to this fiscal year. 109 1 And I also included, this time, some 2 prime vendor information because we were trying to 3 really work with our prime vendors to help them to 4 identify and utilize minority and HUB vendors. So 5 from now on you'll probably start seeing a lot of 6 prime vendor information telling how they're reporting 7 and how I'm working with them, trying to bring 8 Scientific Games on board to get their reporting and 9 bring up -- do a little bit more with subcontracting 10 with minorities and HUBs, and the same with Pollard, 11 and then also with Fogarty who has not submitted their 12 first report yet. So that's basically... 13 MR. SADBERRY: Thank you for that. Let 14 me ask a question, and it might take Nelda coming back 15 as well: Upon the occasions of our briefings to the 16 Legislature when we're presenting certain compliance 17 information and perhaps even prospective issues as 18 discussed earlier today, are we including, in those 19 briefings, data on these types of issues or matters? 20 MS. TREVIŅO: Commissioner, on the 21 legislative briefing that we held on October the 7th, 22 that was not one of the agenda items, but that is an 23 item that we have discussed including in a future 24 legislative briefing. 25 MR. SADBERRY: Okay. 110 1 CHAIR MIERS: How much, Loretta, of the 2 difference in what we see comparing this year to 3 last -- it seems like there are two issues that have 4 impacted the minority spending; one is the reduction 5 in sales, which obviously means there's a reduction 6 in -- related to just we're not selling as much. 7 Additionally there appears to be a significant 8 difference between one of the vendors' use of minority 9 resources. Are those the two factors that have 10 impacted the numbers the most, or are there others 11 that I'm missing? 12 MS. HAWKINS: There may be some others, 13 but the main impact is the total expenditures which 14 have been reduced. What you're talking about is sales 15 related. And also I would think that some of the 16 impact with the prime vendors -- you had contracts 17 expire that it's taking time to get contracts started 18 up again, so it takes time to get subcontractors and 19 it takes time to spend money with them. So, you know, 20 that all kind of ties in together. So it does tie 21 into what you're saying. And it just -- frankly it 22 takes time to bring the new prime vendors on board and 23 to start getting all their reports and start getting 24 the -- you know, for them to pay subcontractors. You 25 know, just to do business. So... 111 1 CHAIR MIERS: Are there any of our 2 prime contractors, in your view and experience in 3 working with them, that are not as committed to these 4 issues as they should be in your judgment? 5 MS. HAWKINS: In my judgment all of 6 them have shown a lot of commitment to subcontracting 7 with minority HUB vendors and working with myself and 8 trying to identify potential minority and HUB 9 subcontractors. 10 CHAIR MIERS: Loretta, I assume you 11 would report to us if you ever came up against a 12 situation where that was not the case. 13 MS. HAWKINS: Yes, ma'am. 14 CHAIR MIERS: And do you make any 15 effort -- is there information available to you 16 through the experience of other agencies that gives 17 you a sense for how successful your efforts are 18 compared to others similarly situated in other 19 agencies? 20 MS. HAWKINS: Yes, ma'am. I attend -- 21 the General Services Commission has a committee called 22 the HUB Cooperative Committee, and it's a committee 23 with all State -- every State agency and institution 24 of higher education is invited to attend these 25 meetings. And what we do is we share information, and 112 1 we also get updated on, you know, HUB legislation or 2 new GSC rules or whatever. But at that time we do 3 share information about how to do a good faith effort, 4 how to work with prime vendors. 5 Just this past week they are having a 6 discussion committee on the new HUB legislation that's 7 going on, and one of the things is talking about the 8 subcontracting business plans that is part of that 9 law. We already have a minority participation plan, 10 but we're getting ideas about how we may can even 11 enhance our plan to make sure that our prime vendors 12 are going out and getting -- and trying to do business 13 with -- they talk about HUBs, but for us, minority and 14 HUB vendors. So, yes, to your question. 15 MR. SADBERRY: Let me ask the next line 16 of inquiry: In that regard, and as an example where 17 we have a procurement, are you interfacing directly 18 with the procurement committee? Are you serving on 19 those committees? Are you being requested for input? 20 Are you making input? "A," put that aside. I'm 21 seeing you nod affirmatively. 22 Are you, say -- take these specific 23 examples but don't get too specific because it's an 24 issue in front of us -- but where a procurement is -- 25 a contract is let based on a procurement but there are 113 1 issues challenging that and good faith representations 2 have been made with regard to a minority vendor usage, 3 do you monitor that? Do you have systems in place to 4 determine compliance with the concept of good faith 5 where that exists? A new vendor, as you have pointed 6 out? 7 MR. HAWKINS: Yes, sir. I am. I'm now 8 working with the contract compliance coordinator who 9 is in the process of developing procedures, and I will 10 be involved -- incorporated into those procedures to 11 see the proposals up front and to also get them at the 12 end to help monitor what is in agreement with the 13 Lottery Commission as it relates to the minority 14 participation. 15 MR. SADBERRY: And when audit issues 16 may raise issues concerning compliance and assurance 17 of compliancy in subcontracting situations, are you 18 involved in the process of responding, from management 19 standpoint, to those audit issues? 20 MS. HAWKINS: I believe I am, unless 21 there is something that I don't know about it. I do 22 know that we do have policy and procedures put in 23 place, and there has been a task force assigned so 24 that Linda is involved. And so any issues that I'm 25 being confronted with, the task force is looking at 114 1 it. 2 And as far as RFP, I've been asked to 3 serve on a couple of RFP evaluation committees. But I 4 have had calls come from other committee members 5 regarding minority participation, and I have answered 6 those questions for them. So I think I am in the 7 process. 8 MR. SADBERRY: Is this House 9 committee -- what committee are you talking about? 10 MS. HAWKINS: The evaluation committee. 11 MR. SADBERRY: Evaluation committee. 12 MS. HAWKINS: Of the RFPs that I may 13 not be serving on but they may have had a question 14 regarding minority participation. 15 MR. SADBERRY: And going back to the 16 question the Chair asked you: If you perceived a 17 problem -- let's just leave it at that -- in your 18 scheme of reporting responsibility, do you, in your 19 own management office, make certain that there is a 20 process set up where you would bring that to the 21 attention, even as far as to our attention if it 22 becomes necessary, so that that issue is known about 23 and something is done about it? 24 MS. HAWKINS: I would take it to 25 management's attention, and I would hope that 115 1 management would assure that the Commissioners was 2 aware of it. I guess I'm answering the question. 3 MR. SADBERRY: You are. 4 MS. HAWKINS: Okay. 5 MR. SADBERRY: And I want to know that 6 you feel that, one, as part of your responsibility in 7 your office, and also that you're committed, as I'm 8 sure you are. 9 MS. HAWKINS: Uh-huh. 10 MR. SADBERRY: And I appreciate the 11 work that you've done. And I understand it has a 12 history and you've brought it forward, and I'm sure 13 you will continue to do so. 14 MS. HAWKINS: Yes, sir. 15 MR. SADBERRY: Thank you. 16 MS. HAWKINS: Thank you. 17 CHAIR MIERS: Thank you very much. 18 MS. HAWKINS: Thank you. 19 CHAIR MIERS: Anything else, Linda? 20 MS. CLOUD: On the FTE status, at this 21 time we have five newly filled positions; we have nine 22 in the selection/acceptance pending; we have 13 that 23 are in recruiting, screening, and interviewing; and we 24 have four positions being processed for posting at 25 this time. We have a total of 31 vacancies in all 116 1 this, and the number of applications right now in 2 Human Resource is 977. So they're continuing to be 3 pretty busy in this area. 4 Our next town hall meetings for our 5 retailers is in Harlingen on November the 18th. And 6 we will be -- that will be the last meeting for this 7 year because of the holidays, so we'll start up again 8 in January with the town hall meetings. And that, 9 Commissioners, is my report. 10 CHAIR MIERS: Okay. Let me back up, 11 just for a minute, in connection with Linda's report. 12 Kim, you were out of the room when we called item 13 nine. I don't know that there's a whole lot more to 14 say on that other than that we have withdrawn the 15 proposed amendments. And subject to further 16 consideration, do you have anything else you need to 17 add on that? 18 MS. KIPLIN: No, I don't. 19 MR. SADBERRY: I did have a procedural 20 question. I didn't mind it at all. I'm in total 21 concurrence with it, but just from a procedural 22 standpoint: I take it where the proposer is the 23 Executive Director -- even though the Commissioners 24 have proposed the rule for publication and 25 consideration for adoption, I take it the proposer who 117 1 brought it to the Commission can unilaterally withdraw 2 it and take it down? 3 MS. KIPLIN: Well, that's an 4 interesting issue, and I did discuss that with the 5 Executive Director. The -- we have a unique provision 6 in the State Lottery Act that does give the Executive 7 Director the authority to propose a rule. It doesn't 8 say anything about withdrawal, but if you're going to 9 propose you can withdraw. 10 In this instance, the Commission 11 actually voted to propose this rule. 12 MR. SADBERRY: Right. 13 MS. KIPLIN: It was kind of -- it could 14 have gone either way in terms of whether the Executive 15 Director had the authority to withdraw the rule. The 16 Executive Director did withdraw the rule. No 17 Commissioner, that I'm aware of, had -- took issue 18 with that. In abundance of caution the Commission 19 could ratify that action if they wish. 20 MR. SADBERRY: No. I'm not trying to 21 make work. I just -- 22 MS. KIPLIN: Sure. 23 MR. SADBERRY: But I did want to make 24 certain that that is on the table. You've dealt with 25 it, and if Linda has dealt with it, and everything, 118 1 then it's appropriate in that regard. 2 MS. CLOUD: I can assure you I would 3 have not done that without my General Counsel's 4 advice. 5 MS. KIPLIN: I think the issue was 6 before the Executive Director. 7 CHAIR MIERS: Okay. Mr. Atkins, your 8 report. 9 MR. ATKINS: Commissioners, the only 10 thing that I wanted to call your attention to is 11 Roy Gabrillo, who was the Dallas Regional Manager, has 12 accepted the position in the Bingo Division as the 13 Senior Audit Manager and will be relocating here -- 14 should be here by November 8th, and we're glad to get 15 that position filled. 16 CHAIR MIERS: Okay. We have one other 17 item on the agenda that we have not taken up yet, and 18 that is the item number eight. But we're going to 19 decide, I guess after we come back out of Executive 20 Session, whether any action needs to be taken on that 21 particular item. 22 Unless there are further comments or 23 questions, I would move that we go into Executive 24 Session pursuant to the items on the agenda, 12 25 through -- well items 12A through F, and to deliberate 119 1 the duties and evaluation of the Executive Director 2 pursuant to Section 551.074; to deliberate the duties 3 and evaluation of Internal Auditor pursuant to Section 4 551.074; to deliberate the duties and evaluation of 5 the Charitable Bingo Operations Director pursuant to 6 Section 551.074; to deliberate the duties of the 7 General Counsel, 551.074; to deliberate the duties of 8 the Security Director pursuant to Section 551.,074; to 9 receive legal advice regarding pending or contemplated 10 litigation, and/or to receive legal advice pursuant to 11 551.071(1)(A) or (B), or Section 551.071(2) concerning 12 those items but not limited to the items under 12F as 13 contained in the agenda; and to consider issues of the 14 implementation and/or application of 16 TAC 401.312 15 relating to acceleration of Lottery prizes; matters 16 involving appeal of the determination of the Executive 17 Director of a protest of contract awards pursuant to 18 Section 446.101 (sic). All of those items sections of 19 the Texas Government Code. 20 MR. CLOWE: Second. 21 CHAIR MIERS: All those in favor say, 22 aye. 23 MR. CLOWE: Aye. 24 MR. SADBERRY: Aye. 25 CHAIR MIERS: We'll adjourn to 120 1 Executive Session and return at the conclusion of that 2 session. 3 MS. KIPLIN: Note the time is 10:57, 4 and today is October 26th, 1999. 5 (Executive Session) 6 (Commissioner Sadberry left the meeting 7 (at 3:13.) 8 CHAIR MIERS: We are coming out of 9 Executive Session at 3:15. The record should reflect 10 that Commission Sadberry had to leave. Is there a 11 motion to -- any motions necessary as a result of the 12 Executive Session? 13 MR. CLOWE: I believe not. 14 CHAIR MIERS: I have none. Any other 15 motion? 16 MR. CLOWE: Move we adjourn. 17 CHAIR MIERS: All those in favor? 18 MR. CLOWE: Aye. 19 CHAIR MIERS: It's two to zero. 20 MS. KIPLIN: Commissioners, I'll add 21 the LULAC item for the next Commission meeting so 22 you-all can look at that and make sure you're happy 23 with the changes. 24 CHAIR MIERS: Thank you very much. 25 (Proceedings concluded) 121 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 1st day of 17 November, 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. 991026LPB