*************************************************** TEXAS LOTTERY COMMISSION MEETING NOVEMBER 9, 1999 *************************************************** 2 1 INDEX 2 Appearances ................................ 3 3 WITNESSES 4 Reginald Johnson............................ 12 5 Ruth Hutyra................................. 13 6 Juergen Fuerst.............................. 15 7 D.R. Carpenter.............................. 16 8 Clemmie Johnson............................. 18 9 Linda Molina................................ 25 10 San Moran................................... 29 11 Misael Montemayor........................... 36 12 George Smith................................ 40 13 Robin Givens................................ 43 14 Adrian Collins.............................. 46 15 Chris Mendell............................... 47 16 Brice Strain................................ 49 17 Tawny Sharp................................. 54 18 Doug Sturdevant............................. 56 19 Wayne Kelley................................ 59 20 Victor Bosley............................... 66 21 Joaquin Velasquez........................... 72 22 Phillip Artis............................... 72 23 John Gutta.................................. 78 24 25 3 1 A P P E A R A N C E S 2 Ms. Linda Cloud, Director of the Lottery Commission 3 Ms. Harriet Miers, Lottery Chair 4 Mr. Anthony Sadberry, Lottery Chair 5 Ms. Kim Kiplin, General Counsel 6 Ms. Toni Smith, Director of Marketing 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 4 1 MS. MIERS: Good evening and welcome 2 every one, and thank you so much for being here. This 3 is a great crowd. Now, we are looking forward to 4 hearing your comments, and that is the purpose of 5 tonight. We want to make that clear. We're going to 6 have some of our lottery staff here. The 7 commissioners are here. Our general counsel is here, 8 and we'll be here to answer questions; but we 9 certainly want, first and foremost, tonight to hear 10 your comments and your thoughts about the Texas 11 lottery. 12 So without any further delay, I would 13 like to first introduce myself. My name is Harriet 14 Miers. I chair the lottery commission. There are 15 three commissioners. I have had the great privilege 16 of serving on the lottery commission with one of your 17 hometowners here, Anthony Sadberry; and Tom Clowe 18 serves with us. Tom is from Waco, Texas, and he was 19 not able to be with us here tonight. 20 So without further ado, and because this 21 is his home, I'm going to turn the microphone over to 22 commissioner Sadberry, and he's going to preside 23 tonight. Both of us will be here, however, to answer 24 any questions, and we have a number of members of the 25 staff to answer questions; and mostly, we just want to 5 1 know what you think about our games and how we can 2 address any questions that you have tonight. So, 3 Mr. Sadberry? 4 MR. SADBERRY: Thank you very much, Chair 5 Miers. I am very pleased to be here, and thank you 6 for that very kind introduction and those kind words. 7 And thank you to all of you, each and every one of 8 you, who is here tonight. And we see people still 9 coming in. Please continue to come in. We're very 10 glad to have you here. 11 We have a number of members of our 12 staff, and I'm going to turn it over in a minute to 13 our executive director for her to introduce our staff. 14 I just want to say and -- and reiterate what Chair 15 Miers has said. Our general counsel will explain to 16 you in a minute that this is, in fact, an official 17 meeting of the Texas Lottery Commission. And because 18 we have three members of our commission -- anytime 19 that we have at least two of us present, we have to 20 follow the rules of the State regarding open meetings. 21 And Kim Kiplin, our general counsel, 22 will go over that in greater detail in a minute, but I 23 just want to say how pleased I am to have been given 24 this great privilege and high honor to serve the 25 people of the State of Texas on the Texas Lottery 6 1 Commission. I am privileged to have been a 2 commissioner since Day One of the -- the creation of 3 this agency as a state agency to operate the lottery, 4 and one of the things that occurred on my first day on 5 the job, so to speak, I had the pleasure and privilege 6 of meeting Linda Cloud. 7 We were taking our tours through the 8 facilities and getting acquainted and trying to come 9 to grips with what we were going to do to operate this 10 agency and do it in the interest of the people of 11 Texas. And I met Linda Cloud, who at that time was 12 the lottery operator and commission head, and now 13 she -- through many years of loyal and dedicated 14 service to our agency as our executive director, she 15 came to that post from the -- the Florida lottery 16 where she has had a great experience and brought to 17 the Texas lottery the wealth of that experience and 18 has been a very diligent worker. 19 Her presence here tonight demonstrates 20 that, and the -- the presence of a number of the 21 members of her staff also demonstrates that, and we 22 are very pleased to have them here this evening; but 23 most importantly, as our chair person Chair Miers has 24 said, your presence here tonight is what is important 25 to us. 7 1 Through our history, we have established 2 our procedures that we want to hear from the public. 3 If you have ever had occasion to come to Austin to 4 attend one of our meetings, you know that we always 5 listen to anyone who stands up and expresses a desire 6 to speak to us, and I'm very pleased that that's -- 7 that's our reputation, that's our history, and that's 8 our standing practice and procedure; but tonight, most 9 importantly, other than the presentations that we made 10 to you and the -- by video screen and -- and the 11 presentations that will be made by members of our 12 staff, what we really want to do is hear from you. 13 And what I hope at the end of the day 14 that you will come to understand is that we do listen. 15 That is our function. That's why we serve is to 16 listen to you and act accordingly by the adopting of 17 rules and procedures that run the lottery, which we 18 are very fortunate to have a very successful lottery 19 in the State of Texas. 20 Now, we as commissioners set the 21 policies and we meet and -- and make decisions for our 22 staff to carry out, but the people who really operate 23 the lottery, starting with our executive director and 24 her staff, are the people you want to hear from and 25 talk to because they're the ones who can listen and 8 1 tell you how it works; but also hear from you how you 2 would like to see it operate. 3 So I'll turn it over to Linda Cloud, and 4 ask you to introduce the members of your staff who are 5 gracious enough to be here with us tonight. 6 MS. CLOUD: We seem to have a little 7 difficulty with our microphones here tonight. I want 8 to welcome all of you and say how much we do 9 appreciate you coming tonight. This is very important 10 to the Texas lottery. This has been something that 11 has been very successful for us. 12 With our retailers -- we've been having 13 town hall meetings with our retailers for over a year 14 now, and it's given us an opportunity to interact with 15 our retailers and hear one on one how they feel about 16 what's going on in the field and how -- what 17 they're -- what we need to know that they're 18 interacting with our players; and they are our 19 lifeline for the lottery. They are the ones that you 20 have more contact with than we do. 21 So we welcome you here tonight. We are 22 here to hear what you have to say, and with that I 23 want to introduce the staff; and I want Kim Kiplin to 24 come up. She needs -- or to talk to you just a little 25 bit about how the meeting is going to take place 9 1 because it is an official meeting for the Texas 2 lottery. 3 MS. KIPLIN: Good evening. My name is 4 Kim Kiplin. I'm general counsel for the lottery 5 commission. The meeting has been -- as Linda 6 mentioned, this is a commission meeting. It is a 7 formal commission meeting. It is a formal meeting 8 under the Open Meetings Act -- the Texas Open Meetings 9 Act; a meeting where there is a quorum of a 10 governmental body, must be properly noticed, and we 11 must follow particular procedure. 12 A quorum in our case is two of the three 13 commissioners. Mr. Clowe -- Commissioner Clowe is 14 unable to be here, but we do have two commissioners 15 here. So, therefore, the -- the items that are to be 16 discussed tonight were noticed in the Texas Register 17 to give the public adequate notice, and I think we 18 tried to advertise that to give you-all an opportunity 19 to know that we're going to meet and that we're 20 soliciting information from the -- the public. 21 We do have a court reporter who is 22 reporting the meeting tonight, and we are required to 23 get an accurate report -- report of the meeting. So 24 for those of you that wish to come forward and provide 25 your comments to the commission, we ask that you fill 10 1 out a witness affirmation form. They -- they were in 2 the back. Those need to be provided -- those need to 3 be provided so that we can call your name. When your 4 name is heard, if you will come to the podium and 5 identify who you are for the record; and, if you're 6 representing somebody other than yourselves, who you 7 represent before you start making your comments, that 8 will be very helpful. 9 The reporter can only take one -- one 10 person talking at a time. So if we can have a clear 11 record; and for those of you that do want to speak, if 12 you will come to the microphone, that will really help 13 in getting a clear record. I appreciate y'all coming 14 out and look forward to hearing your comments. 15 MS. CLOUD: And just to add to what Kim 16 said, if we have anyone in the audience that does not 17 speak English, we have someone that can translate 18 Spanish. And -- and I'm not sure -- we may have 19 someone that could help with other languages as well, 20 because Houston is an international city. You have a 21 lot of different ethnic groups here, and we -- they're 22 all good customers of the lottery, and we want 23 everybody to be heard. So if you can't speak English 24 and need a translator, please let us know so we can 25 have the translator come up with you when it's your 11 1 turn to speak. 2 Now, let me introduce the staff. Behind 3 me is Toni Smith. Toni is our marketing director. We 4 have -- on the front row here is Pam Udall. Pam is 5 our online product manager. We have Ron Wilcox, our 6 customer service manager. We have Keith Elkins over 7 up against the wall over there. He's our 8 communications director. And we have Laura Pierce in 9 the back of the room, and Laura -- she sets up all 10 these places for us to meet. So she really does most 11 of the work. 12 So with that, I'm going to turn it over 13 to Ron and let him start our video. We're going to 14 show you just a short video, and we hope that this 15 will lead into our question segment or our discussion, 16 and we'll start with your comments from there. Thank 17 you. 18 (A video was shown) 19 MS. SMITH: If any of you who just 20 entered the room wish to speak to the commission, 21 you'll need to fill out a witness affirmation form. 22 And when we call your name, if you'll come up to the 23 microphone, and I apologize for any mispronunciations 24 of your name, please state your name and -- and we'll 25 get started. Reginald Johnson. 12 1 MR. JOHNSON: Good afternoon. Good 2 evening, I mean. 3 MS. SMITH: You can take it out of the 4 stand if it helps you. There you go. 5 MR. JOHNSON: All right. Good evening, 6 and my name is Reginald Johnson. And I just wanted to 7 say I really believe that the lottery has really did a 8 lot of good for Texas because I'm an avid 9 player myself and my hopes of winning a big jackpot 10 someday is -- is by my consistency of keeping playing. 11 I just want to understand what you're going to do to 12 make the game even more enticing like the Pick 6 13 lotto, and would you consider making the Texas Million 14 twice a week? I mean -- 15 MS. CLOUD: You like -- you like the 16 Texas Million game? 17 MR. JOHNSON: Well, it's a game that -- 18 seems like probably Pick 6 and Cash 5, Pick 3 -- I 19 mean, all of them are great games. It's just that I 20 think, like, Pick 6 is needed -- I mean, it's needed 21 more prize -- the prize needs to be larger, too. 22 The -- like the Cash 5, you guys made Cash 5 four 23 times a week. It was twice a week, and I think 24 that -- I mean, they're exciting games and all, and I 25 think that it needs a couple of games like -- the 13 1 lotto needs to have more prizes than the Texas Million 2 at least maybe twice a week because, I mean, people 3 are used to playing the game right now, and I think 4 it's a really -- like I said, it's going to help 5 sales, and I just think the price of the lotto needs 6 to be adjusted. That's all I want to say. 7 MS. CLOUD: Okay. 8 MR. JOHNSON: I mean, I think you people 9 do a really great job on advertising and all, and I 10 really appreciate the opportunity of getting to win a 11 big jackpot out of you. So you men and women do a 12 great job, and I appreciate that -- 13 MS. SMITH: Thank you. 14 MS. CLOUD: Thank you very much. 15 MS. SMITH: Ruth Hutyra. 16 MS. HUTYRA: That was pretty good. Being 17 a customer of the Texas lottery, what I've seen a lot 18 of is that when you fill out the -- the Texas lottery 19 Pick 6, if you don't choose the installment plan or 20 the cash value, it automatically defaults to the 21 installment plan. And a lot of people -- I have seen 22 a lot of times where a person says I didn't want the 23 installment plan. Well, you didn't pick it. Why does 24 it default to the installment plan? 25 And the second question is, is that you 14 1 have a Bucks and Trucks Ticket. How about a Home -- 2 No Place Like Home ticket? 3 MS. SMITH: That's a good idea. 4 MS. CLOUD: Sounds good. 5 MS. SMITH: Thank you. 6 MS. CLOUD: We -- we're going to allow 7 you-all to speak, and at the end of the speakers then 8 we will address your questions. As far as -- okay. 9 As far as -- I'm sorry, the default -- my mind drew a 10 blank there for a minute -- defaulting to the annuity, 11 the -- Pam, do you want to address that better? Yeah. 12 Do you want to -- Pam is our online 13 product manager. Let her address that for you real 14 quick. 15 MS. UDALL: In 1997, we made the 16 adjustment to the game because for years we had heard 17 from all of you that you wanted a choice of your 18 payment plan. You kept telling us that you'd like to 19 have that choice when you made your purchase, and so 20 we thought at that point in time it was the best to 21 stay with 25 as a default because that's what you were 22 used to at that point. That's how you were used to 23 playing it, and we didn't want to make that decision 24 to the cash-value option unless you made that 25 decision. 15 1 Now that you've been playing and making 2 your decision for the last couple of years, you're 3 much more educated on both decisions. By the time we 4 did that, we just basically -- you know, so we didn't 5 want to, you know, force someone to have a cash-value 6 option if that wasn't your choice. 7 MS. SMITH: Okay. Juergen Fuerst. 8 MS. MIERS: Sir, we were going to add 9 just -- let me just address a bit further on the last 10 question. One of the reasons that people take 11 installments is because if you take the money all at 12 once, you're taxed on the money all at once. So most 13 people would prefer -- or a lot of people would 14 prefer, I should say, taking the money in a way that 15 the tax is reduced. So -- but we can certainly look 16 at what the options are, and at what point people can 17 make those decisions, but that's the purpose of the 18 default. 19 MR. FUERST: Good evening. My name is 20 Juergen Fuerst. I just have one question as far as 21 what you pay out. The first time you have $4 million 22 if you have six right. If you have three right, you 23 get $3, right? If you have four right, you get 24 whatever amount comes. Now we don't have anybody 25 having six right, so it doubles more than slightly, 16 1 right, or a certain percentage it increases. Why 2 can't you -- in order to enhance the stuff -- or to 3 increase the three right, the four right, and the five 4 right? This is how you would enhance it. People say, 5 "Okay. I can play," but the other one gets $20 6 million having six right. I get three right, I still 7 only get $3. 8 It is not fair. That's the whole thing. 9 We're talking about fairness, and this is not fair. A 10 certain percentage you should increase it. That's 11 all -- it is -- it is simple. Common sense would help 12 a whole lot and will go a long way. Now, when it 13 comes to play the Texas, you win $20 million. Play 14 Texas, forget about it, right? Why do you want to 15 install it? Have a good evening. 16 MS. MIERS: Thank you. And, actually, I 17 think most people -- unless you're real tall, I don't 18 think you have to remove that mike from the holder. 19 Just pull it towards you, and I think that will be a 20 little easier to deal with. 21 MS. SMITH: D.R. -- is it Carpenter? 22 MR. CARPENTER: I'll leave it in there. 23 What do you think? 24 MS. MIERS: I like your hat. 25 MR. CARPENTER: Thank you. I won it 17 1 today. 2 My questions are on the same line as 3 his. It sounds like Reginald works for y'all. Like 4 the three out of six, you could make it 25 bucks. The 5 four out of six, $500. The five out of six, an even 6 5,000. Now, you want to get it going, I believe that 7 would get it going for the little guy. He's got 8 something to win. 9 The other question is: When $11 million 10 is not ever -- somebody wins it, but it's never 11 collected. Where does that go? Does that go back 12 into the pot, or does that just go to the State? 13 That's it. 14 MS. CLOUD: If a jackpot is not 15 claimed -- and we've only had one of those -- it goes 16 back into unclaimed prize money, and that goes back 17 into the prizes into the lottery -- into the lotto 18 game, into a prize reserve. 19 MR. CARPENTER: Into the Pick 6, Cash 5, 20 or scratch-offs? 21 MS. CLOUD: It goes into the -- the 22 lotto -- the lotto only, right, Pam? 23 MS. UDALL: Well, it's -- it's part of 24 our unclaimed prize pool, and goes back to the players 25 in the form of prizes. And so that was up to us last 18 1 legislative session. And so what we've done in the 2 past is we used it for -- like when we do this -- the 3 birthday special. We raised the jackpot to 4 $10 million. We did that with a second chance 5 drawing. We did other things to get it back to you in 6 the form of a prize. 7 MS. CLOUD: We have only had one 8 unclaimed prize jackpot, though. 9 MR. CARPENTER: I'll find it. 10 MS. SMITH: Clemmie -- Clemmie Johnson. 11 MS. JOHNSON: Good evening, Mr. Chairman 12 and members of the board. I have come as -- I found 13 some of the answers to my questions on this sheet 14 here, "Here is where your dollar goes when you buy a 15 Texas lottery ticket." I came here specifically to 16 find out what's happening to the money. I would just 17 like for you to tell me -- take one year, for 18 instance, 1998, and specifically tell me in actual 19 numbers what actually went for the school fund, 20 lottery prizes, administration, and retailers. 21 My overall view of the lottery is that 22 it's a scam, and I have that view because I have seen 23 too many people -- I happen to be a doctor, and I deal 24 with all groups of people, rich and poor -- of course, 25 I'm retired -- and I see too many people buy these 19 1 scratch-off tickets. And I have encouraged a lot of 2 them to get a notebook and put on one side what they 3 spent for lottery tickets, say, in a month, and then 4 what did they get in winnings after the end of the 5 month. 6 The reason why I'm concerned about this 7 is $3 will go a long ways toward buying a gallon of 8 milk, and a lot of people that I know that are buying 9 these tickets don't have food to eat. Now, those of 10 us who can spend money for recreation, it's okay if 11 you want to spend your money, if you want to give it 12 away; but I doubt if you kept a record of what you 13 spend on scratch-off tickets for one year and you kept 14 a record of what you spent and what you earned -- say 15 you spent $30 a week -- I don't think that at the end 16 of the year you would be showing a profit of what you 17 won on the -- the lottery tickets. 18 Now, this -- that's just my opinion. I 19 also think that you people ought to be ashamed of 20 yourselves for selling a lottery ticket to a person 21 for $1, and then the winning on that ticket is only 22 $1. He hasn't gotten anything for that. 23 Now, if you can answer my questions 24 about where the money is going, because I thought it 25 was a good idea that we were going to spend it for 20 1 education because I really believe in education; but I 2 would like to know in actual figures what went for 3 education, what went for administration. And another 4 thing I don't understand is why would you have to 5 spend so much money to advertise the lottery on the 6 television? That takes money per minute. Why not put 7 the same money on the tickets that you put on 8 advertising? That would be your advertisement right 9 there. 10 I could go on and on and on, but you get 11 my general idea why I said the lottery is a scam; that 12 is, for the average person. Those of you who want to 13 gamble can do it for recreation. Hey, spend all you 14 want to, but I want to assure you that there are a lot 15 of people down here who shouldn't even be playing the 16 lottery. They would do better if they would be 17 putting it in a savings account so they would have 18 something to fall back on. Thank you very much. 19 MR. SADBERRY: Linda, I'm going to call 20 on you and your staff to answer several aspects of the 21 question, but I think -- and I really -- incidentally, 22 we -- we want every type of comment, whether it's good 23 or bad or however you see it, because that's the only 24 way we -- that's why we're here. So thank you very 25 much for those comments. 21 1 There were several questions raised, and 2 I think Linda, rather than belabor it to the end, 3 there are several -- we can get the data on the -- the 4 receipts and expenditures now. Pam, do you have that? 5 Okay. Please, if you would. 6 MS. MIERS: And let us say now the 7 lottery was put in -- into Texas because of a vote of 8 the people of Texas, and the legislature, of course, 9 passed the law that calls for how it should be 10 operated. So, as we sit here tonight, the public 11 policy of this state is to have the lottery for 12 entertainment. There are some restrictions on how 13 forcefully the lottery can sell tickets. There are 14 quite a few restrictions on how it must be advertised. 15 And as you know, the proceeds go to the 16 school fund. So if you have views about that public 17 policy, we do want you to express those definitely, 18 and we will make a record tonight of all of those 19 opinions. And that record will be available to the 20 members of the legislature next when they meet. So we 21 appreciate, as Mr. Sadberry said, all of the comments. 22 Pam. 23 MS. UDALL: In fiscal year 1998, we 24 transferred over $1 billion to the school foundation 25 program. We paid out over $1.6 billion in prizes, and 22 1 we also gave our retailers a 5 percent commission plus 2 bonuses, and we paid out over $203,000 in retailer 3 commissions -- or 203 million. So that is -- does 4 that answer your question, commissioner? 5 UNIDENTIFIED SPEAKER: What is the school 6 foundation program? 7 MS. KIPLIN: You really need to come 8 forward and -- and identify yourself for the record 9 and speak into the microphone so we can -- 10 UNIDENTIFIED SPEAKER: Well, that's 11 unusual, isn't it? I mean, does anybody know what 12 their rights are on testifying as a witness? 13 MS. MIERS: Well, let me -- let me just 14 say that there was a question of what is the school 15 fund, and this is -- the school foundation fund is a 16 fund that supports the public education here in the 17 State of Texas. 18 MR. SADBERRY: Let me add to what Chair 19 Miers said about the creation of the lottery. The 20 lottery commission does not determine the use of the 21 funds. That is decided by the legislature -- by law, 22 and it's -- the legislature who the citizens of the 23 state elect make that decision. And so we don't have 24 any say over -- over that, but we do report to our 25 elective officials formally and we are audited both by 23 1 state auditors as well as by outside auditors to 2 report to the legislature on our function, so... 3 UNIDENTIFIED SPEAKER: Well, that's 4 exactly what I'm getting at is like -- 5 MR. SADBERRY: Right. 6 UNIDENTIFIED SPEAKER: -- your state 7 highway funds, they've got signs up that says this -- 8 this -- these tax dollars is going towards this 9 highway -- your tax dollars. Well, we have never seen 10 anything that says your lotto funds are going to 11 this -- this road or this school, or anything like 12 that. See, that's -- that's -- you know, that's -- at 13 least that way we know -- 14 MS. MIERS: We actually -- 15 UNIDENTIFIED SPEAKER: -- some people 16 know it's going somewhere. 17 MS. MIERS: We actually do publish that 18 information, but let's do this. Let's continue 19 through the forms that have been signed and submitted, 20 and anyone who does want to speak needs to turn in one 21 of these forms so that we keep the official record 22 that we have to keep for an open meeting, which again 23 is state law. This commission didn't make that rule; 24 but when two of us are here, it's the rule we have to 25 follow, so... 24 1 UNIDENTIFIED SPEAKER: Well, you have to 2 advise them of their rights as a witness, don't you? 3 MS. MIERS: If people choose to come and 4 speak tonight, then they need to sign a form, just say 5 what your name is, and give us your address; and 6 that's all you have to say, and then you -- it's up to 7 you what you say, of course. 8 MR. SADBERRY: And -- and I might point 9 out, one of the reasons for that, as Chair Miers 10 points out, a large part of our function is providing 11 information to the legislature upon request or 12 invitation. And the legislature might well act upon 13 comments you make, and it is necessary that a record 14 reflecting the identity of those who wish to make 15 comments that you wish your legislature to act upon if 16 they so choose so that a credible record can be made. 17 And -- and I think that's reasonable and 18 we certainly have conducted ourselves that way over 19 the years we've been in existence, and I trust you 20 understand that. Were there -- I think that just 21 about exhausted the questions. I'm going to ask -- if 22 it doesn't, let's make sure before the evening is done 23 we come back to all of the questions with regard -- 24 and I think those are very important questions to ask, 25 but we are very carefully watched and held accountable 25 1 by the leadership of our state to account for every 2 dollar that comes into the lottery commission. 3 MS. SMITH: Okay. Linda Molina. 4 MS. MOLINA: Good evening. All I want to 5 say was 1993 to 1997 I was playing the Texas lottery, 6 and I played Lotto Texas and scratch-offs. Okay. And 7 the scratch-off game I bought one -- $300 worth of 8 scratch-off tickets in one time, and then the next 9 month, or whatever, I bought another $300. Okay. And 10 I made copies of all those scratch-off tickets and 11 signed my name and everything and mailed them to 12 you-all. Okay. From 1997 to now I haven't received 13 nothing -- well, I received two letters from you-all 14 saying I won, but my point is that -- I've called 15 you-all several times, too, and some of the questions 16 that you-all have answered me I didn't quite get it 17 until, you know, I got off the phone. And then later 18 on -- well, it dawned on me, you know, I won; but the 19 thing of it is, I came forward after 180 days to claim 20 my money. So that's where I lost out. 21 MS. SMITH: So after the game was closed 22 you tried to claim your winnings? 23 MS. MOLINA: Yeah, because -- see -- see, 24 back in '97 my son stole my lottery tickets, the ones 25 that -- it's not the ones that I mailed to you-all or 26 1 took to the retailer. The ones I took to the retailer 2 and the lottery headquarters I took them in, you know. 3 I signed the back of them, and I took them in, and 4 they mailed them to you-all. Okay. Well, with those 5 scratch-off tickets, I made -- I signed the back of 6 them, and -- you know, and mailed them to you-all in a 7 package, and I haven't received any response on those 8 tickets. In other words, all together I had $1,000 9 worth of scratch-off tickets within two months. 10 MS. SMITH: But when you sent them in, 11 were they beyond 180 days after the -- the official 12 close of the game? 13 MS. MOLINA: Yeah. Yeah. 14 MS. SMITH: Well, by law we cannot pay 15 those prizes. We publish in the newspapers and send 16 that information out to our retailers, and it's in our 17 player newsletters -- 18 MS. MOLINA: Right. 19 MS. SMITH: -- when a game is going to 20 close, and we -- we don't announce the close of the 21 game until it's pretty much sold out -- 22 MS. MOLINA: Right. 23 MS. SMITH: -- and no longer available to 24 players. And it clearly states on the back of the 25 ticket that they must be redeemed no later than 100 27 1 days -- 2 MS. MOLINA: Right. 3 MS. SMITH: -- from the official close. 4 So I -- 5 MS. MOLINA: Well, that's where I lost 6 out on because I didn't catch on, you know, to what 7 was going on, you know. 8 MS. SMITH: Yes, ma'am. 9 MS. CLOUD: You didn't claim these before 10 that 180 days because you were not in possession of 11 the tickets? Your son had them? 12 MS. MOLINA: Well, the scratch-off 13 tickets, my son didn't have them. He had the other 14 ones, the lotto with the six numbers. He stole those 15 from me. 16 MS. CLOUD: Well, we -- we call a game 17 closed, put the advertisements out, and it's 180 18 days -- 19 MS. MOLINA: Right. 20 MS. CLOUD: -- after the close of the 21 game that -- 22 MS. MOLINA: Right. 23 MS. CLOUD: -- you have to claim those 24 tickets. 25 MS. MOLINA: Right. I understand that. 28 1 That's where I lost out on everything, and I spent 2 over $4,000 from '93 to '97, you know. I really 3 played. I really played. 4 MR. SADBERRY: Was there any question as 5 to whether our staff responded to you in a manner that 6 was satisfactory and helpful to you? I mean, I 7 understand -- they have to follow the law. You 8 understand that -- 9 MS. MOLINA: Oh, no. 10 MR. SADBERRY: -- but they -- were they 11 helpful to you -- 12 MS. MOLINA: Yeah. 13 MR. SADBERRY: -- in explaining -- 14 MS. MOLINA: Yeah. Yeah. It was very 15 helpful to me, but you -- if -- if -- sometimes it's 16 hard to understand the game -- 17 MR. SADBERRY: Right. 18 MS. MOLINA: -- you know, but you've got 19 to kind of -- you know, like -- sort of start working 20 your brain, so to speak, you know, to figure it out, 21 what's going on. And that's what I used to do, stay 22 up all night and try to work my brain what -- to 23 figure out what's going on, and that's how I caught 24 on; but, you know, like I said, you know, it's hard. 25 No. Y'all are doing fine. You're doing fine. I 29 1 enjoyed all the checks that I received from you-all. 2 I enjoyed it. 3 MS. MIERS: Well, thank you very much. 4 MS. MOLINA: Thank you. 5 MS. MIERS: We appreciate it. 6 MS. MOLINA: Okay. 7 MS. SMITH: Son Moron -- or San Moran. 8 MS. MORAN: Good evening. I'm proud to 9 come -- you-all -- I'm very upset. You-all had set a 10 schedule, and I put it on my calendar, and you-all 11 advertised on TV, and I put it on my calendar and I 12 come all the way over here and you-all weren't even 13 here. I'm a working person. Okay? I just happened 14 to turn on Channel 2, and I rushed over here because I 15 am a sore loser but always an enthusiastic player. 16 So, please, for the working people, mother and 17 children, all of us -- 18 MS. CLOUD: For today -- 19 MS. MORAN: -- my God. 20 MS. CLOUD: For today's hearing? 21 MS. MORAN: That was the 24th or 27th of 22 October, something like that. It was on a Sunday. 23 MS. CLOUD: We did put word out to all 24 the media. We did have some that did not -- 25 MS. MORAN: The 800 number -- the 800 30 1 number was not on, and I called and I left a message. 2 They -- they did call back. 3 MS. MIERS: Well, we're very sorry about 4 that, and I'm sure you know by now that we cancelled 5 the rules that were being considered that were to be 6 discussed at that meeting. And so when that occurred, 7 we then determined that we would have this opportunity 8 and advertise for people to come and speak on any 9 topic. 10 MS. MORAN: Sure. 11 MS. MIERS: So really the players kept 12 telling us "We don't like those new rules." So we 13 pulled them down, and that's why that hearing did not 14 occur; but we are very sorry if you made an 15 unnecessary trip. 16 MS. MORAN: Unnecessary it was -- 17 MR. SADBERRY: And I will say -- I'm 18 sorry. Go ahead. 19 MS. MORAN: -- but it's okay. I'm here. 20 MR. SADBERRY: What -- that's what we -- 21 we care about that very much as well as all your 22 comments, but we took all of those comments as well 23 into account in scheduling these series of meetings; 24 and -- that's what we're trying to do is strike a 25 happy balance for as many people as we can, and that's 31 1 why we're having this meeting at this time. 2 MS. MORAN: I am here because I'm sure 3 that one of the focuses is to get people back into 4 that. I want to -- I want to focus on that, but I do 5 want to say this: As a player, when -- when it came 6 into being, I voted it in because I'm a gambler; and I 7 cannot speak for the population. I can only speak for 8 myself and the people that I hang around with who are 9 gamblers, but I do want to say that the lottery in 10 some way, fashion, or form does share in the burden of 11 negative publicity when it comes to the education 12 fund. 13 I feel good somewhere in this gambling 14 heart that some of this money is going into the 15 education fund; but when I hear these districts 16 needing more money, it disturbs me. It really does, 17 and perhaps maybe, just maybe, this has nothing to do 18 with you, but because it was the biggest -- I don't 19 forget. I'm a voter. That was how you-all won the 20 lottery to be because of the educational fund. Please 21 share in that negative burden. I do talk to my 22 senators. I do talk to my representatives and tell 23 them "Where is this money going?" If the poorest 24 school can get the commuters, well, that's the reason 25 why my -- my ticket's on the table to gamble. 32 1 Now, No. 1, I would like to suggest that 2 perhaps on the tickets, the lotto, the Cash 5 -- I 3 don't play the Pick 3's anymore, but somewhere in 4 there you have a second-chance drawing for a serial 5 number on the ticket for the dog. And on these serial 6 numbers, I -- I don't know what they call them; but 7 you've got these serial numbers and you keep them, or 8 something, and every time you have -- buy a ticket, 9 you get a serial number with it. Maybe once a month 10 you pull some serial numbers, right? You don't know 11 where they're going to come from; but I know that if 12 I've got a second chance off this ticket, I'm going to 13 buy some more. Okay? That's No. 1. 14 No. 2, lo and behold, it's just -- I 15 know it's in my head and it works overtime when it 16 comes to gambling, but there's a number that runs in 17 my head, 22, 48, whatever. Lo and behold that thing 18 is not going to run on the lotto, 48, 22. I ring 19 three -- three numbers pretty regularly, and maybe you 20 can kind of have a little Citizen's watch or something 21 like that of the people who feel, well, you know, this 22 number may come up or that number may come up. 23 We are always as gamblers seeking advice 24 from other gamblers who feel, well, this number's hot 25 or that number's hot. I don't know how that can come 33 1 about, but, you know, I'm -- I'm asked on occasion 2 what think -- who do you think -- what numbers are 3 hot, and I say: Well, I think 22, or I think this 4 number or that number. Somebody is always wanting to 5 feel like what numbers are hot. 6 No. 3, your publications are terrible. 7 I've asked repeatedly to please send me some 8 publications on a regular basis. I never get them. I 9 would like to see you-all have a gift shop. You know, 10 if you win something, you can go to this little 11 lottery gift shop and -- and get something for free. 12 Your retailers are very terrible in distributing the 13 gifts that you get -- you give them. Like the little 14 buttons and the hats and the banners, I'm not sure, 15 but, you know, maybe you can redeem them after 100 16 tickets. You can redeem these tickets for a hat. I 17 mean, I don't know. You want people to buy tickets, 18 I'm giving you my unsolicited advice. I wake up -- 19 I'm a working woman. I wake up at 6:00 o'clock in the 20 morning, and I don't know why those numbers the day 21 before are not there on your website. I would like to 22 see -- is there somebody who can get up right after 23 the lottery numbers are drawn and put them on the 24 website? Okay? 25 MS. CLOUD: We're working on automating 34 1 that feature right now with -- with -- from the studio 2 to the website through the internet. So we are 3 working on that. That should be done within two or 4 three minutes after the drawing. 5 MS. MORAN: These are all just 6 suggestions. Okay? I'm just -- I'd like -- as you 7 see, I'm a player, and I have a lot of things to say; 8 and I'm almost through. The Bingo, the lottery has a 9 policy that under $600 you can go to a retailer and 10 not get taxed and win the whole money. The Cash 5, 11 for example, will give you $535 for four out of five 12 numbers. Well, I go play Bingo, when I win $500, it's 13 taxed. I believe that the Bingo -- the Bingo should 14 still fall under the -- under 600 no tax liability and 15 let me win my $500 free and clear. 16 If -- in all fairness to gamblers all 17 over -- all over, I think the Bingo should fall under 18 the -- under -- if it's under $600 -- and I know there 19 are pots out there now that are 700 -- over 600, or 20 something -- those I can understand can be taxed; but 21 those that are winning 500, $100, that -- that should 22 not be taxed, because even -- a policy that if it's 23 under $600 or under a certain amount then you win it. 24 One more thing, your Money Maze was 25 horrible. It was awful. I don't know how many -- I 35 1 didn't like it, which brings me -- I stopped playing 2 it, which brings me to my -- my last suggestion. I 3 think -- I think I can count to ten, but some of your 4 lottery scratch tickets are very difficult to play. 5 One in particular -- one very recently I scratched, 6 and I didn't know there was a bonus scratch-off there, 7 then somehow I ran -- a couple of days later someone 8 was scratching it, and I said, "There's another 9 scratch thing there?" 10 And fortunately for me I had not thrown 11 my trash away and started digging in the trash and 12 started -- and sure enough I won whatever it was in 13 there, but I didn't like the Money Maze. I did not -- 14 something -- too many people were asking me how is it 15 played. And so when I'm asked how is it played, I 16 know that it was terrible. I, for one, did not like 17 it. 18 On -- on this -- on the scratch-offs -- 19 the only thing that I can say about the scratch-off is 20 that -- use what you already have there. The back of 21 those tickets you have a name, date, whatever. You 22 can put your name in there. There's no reason why 23 there shouldn't be any second chance drawings. 24 That -- that's what pulls your people in when they 25 know they have a second chance, when they know that 36 1 they have some way of winning. 2 We are players. We don't mind losing, 3 okay, but it seems like we're -- we're left hanging. 4 You've got the means right there for a second chance 5 drawing, and I think in 1997 you had some drawings for 6 $10,000, or something. You sent something in. I 7 don't even remember what it was. I think it would be 8 nice if you-all had those again. Thank you very much. 9 I continue to play. 10 MR. SADBERRY: Thank you. 11 MS. CLOUD: Thank you. 12 MS. SMITH: Misael Montemayor. 13 MR. MONTEMAYOR: Good evening. 14 MR. SADBERRY: Good evening. 15 MS. CLOUD: Good evening. 16 MS. MIERS: Good evening. 17 MS. SMITH: Good evening. 18 MR. MONTEMAYOR: Ladies and gentlemen, 19 I'd like to introduce myself. My name is Misael 20 Montemayor. I am the promoter crusader opponent of 21 the Texas State Lottery since 1963 when John Conley 22 was first elected. And I'd like to emphasize I spent 23 my money, time, effort, energy, and shoe leather to 24 get this here. These are my predictions, and I'm -- 25 I'm synonymous in Texas, but I'm not very happy of the 37 1 politicians getting control of this -- the lottery 2 system, because I structured it in a manner where the 3 working people would benefit, the educational 4 department would benefit from it; and they all avoided 5 me, restructured the law, and I can name them. 6 They're so devious up there, and that 7 answers any material all the way up to their shoulder, 8 and I'm against that. We need to clean this up. We 9 need to clean -- I am the man. I am the -- I'm not 10 very happy, and you people advertise through the 11 system -- through the system. You people advertise 12 too -- spend too much money on certain projects and 13 keep that money squandered. That's the -- a 14 politician's hobby. I realize the politicians have to 15 live, too, but they -- they -- they're too devious, 16 and I'd appreciate it if you people could straighten 17 this thing out because you're losing money. 18 The State of Florida has encountered the 19 same problem, and they finally changed when Martinez 20 elected Rebecca Paul and she -- the other guy who had 21 a Ph.D., Marcel, or something. Now they're short of 22 funds, and it's not good. We need to have a 23 correction from there -- from there up in Austin. I'm 24 really upset about it. I created a monster, and I'll 25 spend $100,000 to fight against the lottery if -- if 38 1 you people can't handle it properly. I'll spend 150-, 2 $200,000 I know to handle it. 3 So I'm asking you -- you people are 4 elected -- are nominated to these positions. I'd 5 appreciate it if you could try to correct the mistakes 6 that have occurred over -- since the inception of the 7 lottery, because the politicians are very devious, and 8 I'll say that in a federal courthouse, anywhere, if 9 they challenge me. I don't care. 10 And this evening I brought something for 11 you to prove. I've structured it for -- off the 12 New York State Lottery for the educational system, and 13 this is from 1977 to '81, because I was in New York 14 then. And I went up to Albany and got the late senate 15 bill, the house bill, and I structured the lottery for 16 Texas off this bill here; but their politicians 17 when -- even Mr. Polk (phonetic) rest -- may he rest 18 in -- in peace, but I just -- he was very strange 19 willed. 20 And once it passed, the politicians took 21 control of the funds, and that was it. It needs to be 22 publicized. The gentlemen that walked out, I agree 23 with him. When you -- when the -- when the commission 24 came up with the -- with the bill for a school 25 foundation, that's -- I structured that -- I had it -- 39 1 every one -- every time I won 50,000 and I 2 travelled -- I'd go to the university, I'd give it to 3 them. I'd give every elected official in the -- in 4 the house, in the senate, and the workers around the 5 capital a copy. Everything. 6 I spent a lot of money, and it's -- it 7 needs to be corrected. And we're losing a lotto 8 percentage, and it's not proper. When I structured 9 it, I didn't believe the politicians would have taken 10 control of it. They took control, and that's it. So 11 what can I do? I created a monster, and I'm really 12 not upset. It's not my concern of not winning 13 1 million, 2 million, 3 million, no; because I'm a 14 gambler. I'm a loser, too, a born loser. So for them 15 I wanted to thank you ever so much, and if you would 16 be kind enough to accept this, I'll walk over there 17 and give it to Ms. Smith. 18 MS. MIERS: That would be fine, or you 19 can give it to the court reporter to be part of the 20 record. 21 MR. MONTEMAYOR: Thank you. Thank you, 22 ma'am. Thank you. 23 MS. SMITH: Thank you very much. 24 MR. MONTEMAYOR: Thank you. 25 MR. SADBERRY: I want to say that we -- 40 1 we have a good working relationship with the 2 legislature. We appear at their meetings and 3 committee hearings as invited. They're considering 4 what's in the best interest of the people. We -- they 5 are aware of this meeting tonight. We know that there 6 is at least one and maybe other representatives -- or 7 members of our legislature who are here, so rest 8 assured your comments will be heard. And we 9 appreciate that we can serve as a vehicle for you to 10 pass those comments on and -- and receive them in the 11 spirit of which you all -- thank you for coming. 12 MS. SMITH: George Smith. 13 MR. SMITH: I have a couple of questions. 14 One is about the percentages given back to the players 15 from the lotto. I read a Newsweek report that Texas 16 is only averaging in the nation that they only gave 17 5 percent back to the players. So why did Newsweek 18 not give the right information? 19 MS. CLOUD: We have that happen a lot 20 with a lot of the media in releases that are out 21 there. It's 50 percent of the prize money goes back 22 to the players. 23 MR. SMITH: The players or the people 24 including school and... 25 MS. CLOUD: 50 percent of the prize 41 1 money -- 2 MR. SMITH: Well, I mean -- 3 MS. CLOUD: 50 percent of sales go back 4 in prizes. 5 MR. SMITH: Okay. They list it every 6 state. In every state, most of them were 5 percent. 7 California was like 12 percent. There was one out in 8 the east that was 7, but every other state was 9 5 percent. 10 MS. CLOUD: 5 percent goes to commissions 11 to our retailers. The administrative funds that the 12 lottery operates on is 7 percent. 13 MR. SMITH: Okay. I personally spend 14 about $1,000 a year on lotto tickets, and have you 15 changed the odds yet, or is this what this meeting is 16 about? 17 MS. CLOUD: Lotto Texas odds have not 18 been changed, and will not be changed at this time. 19 MR. SMITH: I feel that -- it's like an 20 investment, that some day if it's possible, you might 21 hit the six numbers. So you spend X amount of dollars 22 trying to achieve this, and all of a sudden you -- in 23 midstream you change the odds from 17,000 -- I mean, 24 17 million to one to 26 million to one. It's not 25 like -- to me that's -- that's cheating. That's all 42 1 you've invested here, and now it's almost quadrupole 2 impossible to win the lotto with those kind of odds. 3 MS. CLOUD: That rule was pulled down. 4 MR. SMITH: Ma'am? 5 MS. CLOUD: That rule was -- the proposal 6 we made to change the odds -- or change the Lotto 7 Texas matrix has been pulled down. 8 MR. SMITH: So it's -- it's going -- it's 9 going to stay the way it -- 10 MS. CLOUD: It's going to stay the way it 11 is. 12 MR. SMITH: Great. Fantastic. I didn't 13 know that. Sorry. 14 So my next statement would be wrong. I 15 was going to suggest maybe that you try generosity 16 instead of greed, but you're going to be generous, 17 right? 18 MS. CLOUD: So you're not going to say 19 that, right? Thank you. We're not saying it. 20 MR. SMITH: Then I was also going to ask 21 did you learn anything from the scratch-off? When you 22 started downing the prizes, the people, the 23 participants went down. I don't have to ask that. So 24 I guess everything is okay. 25 MS. CLOUD: Thank you. 43 1 MS. SMITH: Robin Givens. 2 MS. GIVENS: Good evening. 3 MR. SADBERRY: Good evening. 4 MS. GIVENS: I got here a little late, so 5 I didn't get to hear all the questions that had 6 already been presented or posed. I was also here on 7 October 27th with Channel 13 waiting to speak to 8 you-all. I've been working numbers for 21 years. I 9 probably know more about numbers than the average 10 person and how lotteries actually operate. 11 The doctor said she thought it was a 12 scam. Lotteries are a controlled mechanism. They are 13 very controlled. You put your money in, your odds are 14 16 million. That's what you're told, but the reason 15 you do not have every state with the same amount of 16 numbers and -- like let's say Louisiana play 1 through 17 50, California play 1 through 50, Oklahoma, or 18 whatever other state, Colorado, 1 through 50; because 19 you have the same odds in every state, you will never 20 see a number that falls in Texas fall in Michigan, 21 New York, Ohio, or any other state that has a lottery. 22 You'll never see it because out of that 23 16 million they take a group of numbers, and that -- 24 each state is assigned those numbers. What happens 25 with people who get tired of playing the lottery is 44 1 this: Your -- your sales drop when people pay and pay 2 and don't win. They get tired of paying, because they 3 do not win. When you take the drawing of the six 4 balls off the lottery machines, let the last lottery 5 players hand pick the balls, you won't have one winner 6 in the state of Texas. You'll have 3- or 400 people 7 sharing the pot, and I think that's a fair wager; and 8 I think that's what most people really want out of the 9 lottery. 10 If you've got a pot that's 30 million, 11 one person gets the whole 30 million, it took how many 12 people to make that 30 million; but only one person is 13 going to reap the benefit of the 30 million. Take it 14 off the drawing machine and you will see how many 15 people will actually hit the lottery. That's what I 16 would like to see happen in Texas and across the 17 United States. It is a controlled lottery, and people 18 need to know this is not random. They call it random, 19 but it is not random. 20 Would you like to answer my question, 21 and my question is: Can we take the lottery drawing 22 off your machines -- you have three machines, or two 23 drawing machines and five sets of balls. You draw 24 those balls six times before you draw the numbers. 25 You have numbers that will go a whole year and never 45 1 come out. So if you're playing one of those numbers, 2 you're just wasting your money because it ain't going 3 to show. You're going to play the No. 49, and 49 goes 4 a whole year without ever surfacing; but there's 50 5 balls. 6 I would like to know what your 7 statistician has to say about those odds. It's 8 impossible, but the people responsible for drawing 9 those balls if they see one ball repeat itself or two 10 balls repeat itself in drawing No. 1. Drawing No. 2, 11 they keep drawing, according to your rules and 12 regulations, so they can draw and draw and draw and 13 your numbers may have hit, but because it's not the 14 draw they pick your numbers never come out. If you 15 put it on hand drawing, the State of Texas will take 16 in more money for a lottery than anybody else in the 17 United States. In the seven years that this lottery 18 has been in you've already taken in so many billion 19 more than any other state in a faster period of time. 20 Take it off the machines, give everybody a fair shot 21 at the pot and in dividing the pot and you will take 22 in far more money and you won't have to change the 23 game. Thank you. 24 MR. SADBERRY: Thank you. At this time I 25 am pleased to acknowledge a member of the staff -- a 46 1 member of the staff of one of our senators in Houston 2 who we all know has been very active in our 3 legislature and interested in the lottery among others 4 who was invited to attend this evening as a -- as a 5 member of his staff Mr. Adrian Collins who is director 6 of constituent services. We would like to recognize 7 you. Thank you for being here. I don't know if you 8 wish to give us greetings. And least we'd like to 9 give -- give the senator our regards and thank him for 10 sending you in for providing the interest that you 11 show tonight. 12 MR. COLLINS: Sure. Absolutely. Once 13 again, my name is Adrian Collins, and I'm with Senator 14 Rodney Ellis's office, and we're -- we're here to hear 15 the concerns of our -- our constituents about the 16 lottery and about any concerns that you have. So feel 17 free to give our office a call if you have any 18 concerns. And also, once again, we'll be requesting a 19 copy of the -- the transcript from today because we 20 are concerned. We want to make the lottery better for 21 you. And if you -- just -- just give us a call and 22 let us know your concerns because the legislature 23 does -- we make decisions that -- that affect the 24 lottery and the other state agencies in Texas. Thank 25 you. 47 1 MR. SADBERRY: Thank you very much. We 2 appreciate that. Thank you. 3 MS. SMITH: Okay. Chris Mendell. 4 MR. MENDELL: Hi. My name is Chris 5 Mendell. First, let me express my confidence in the 6 Texas Lottery Commission and your support staff. 7 MR. SADBERRY: Thank you. 8 MR. MENDELL: I know it's kind of tough 9 to take the time being up here and take some tough 10 questions from the folks, and -- and my experience has 11 been that you're -- you're doing a fine job and -- 12 MR. SADBERRY: Thank you. 13 MR. MENDELL: -- and I don't have a 14 problem with that so far. I think the objective of 15 your meeting is to -- is to see what we can do to 16 boost sales, and so I'll try to address those issues 17 based on my experience as a player. 18 First of all, this is just an echo of 19 what's already been mentioned, is in the Lotto Texas 20 where you've got the six numbers, if you were, say, to 21 tripple the value of the three rate, four rate, and 22 five rate, we would be motivated more likely to -- you 23 know, to win. And when I -- my experience is when I 24 win four numbers, boy that hundred bucks just seems to 25 go right back into the lottery. Yeah. How does that 48 1 happen? So that's one thing. And I have a question. 2 I want to -- will we be able to play the lotto or 3 Cash 5 on the internet? 4 MS. CLOUD: No, not in -- in the near 5 future. That is not in the plan. 6 MR. MENDELL: Okay. Next, I would -- I 7 know that some states publish in their lottery results 8 the dates that winning numbers were pay-out numbers 9 also when somebody had -- got the number and got paid 10 for the -- the number. I would wish that the Texas 11 lottery would make that information available to us. 12 MS. CLOUD: Okay. 13 MR. MENDELL: I'm sort of a dabbler in 14 statistics and numbers, and so this would be kind of 15 fun for me. Then in terms -- you know, I guess 16 advertising psychology must be a real tricky thing, 17 what's really going to get the people out there; but I 18 remember that goofy guy you had a couple of years ago 19 that was -- I thought he was okay. Whatever happened 20 to him? 21 MS. CLOUD: The goofy guy called Scratch 22 Man? 23 MR. MENDELL: Yes. 24 MS. CLOUD: Well, our legislature decided 25 that Scratch Man could be a bad influence on children, 49 1 and that was the reason that we didn't do it. It was 2 very similar at the time to Joe Camel and the 3 cigarette commercials, so they perceived it not being 4 a good image for the lottery. So we -- we don't have 5 Scratch Man anymore. We buried Scratch Man. 6 MR. MENDELL: Well, I think that some 7 kind of a mascot, you know, focal, associate -- that 8 we can see on the screen briefly and say, yeah, lotto, 9 I'll play, you know, that might be helpful for you. 10 And finally to one of the members, and obviously, the 11 good doctor, I want to thank you for our -- that's all 12 I have. 13 MR. SADBERRY: Thank you. 14 MR. MENDELL: Thank you. 15 MS. SMITH: Brice Strain. 16 MR. STRAIN: Good evening. 17 MS. SMITH: Good evening. 18 MR. SADBERRY: Good evening. 19 MS. CLOUD: Good evening. 20 MR. STRAIN: The -- one of the biggest 21 problems I see -- I find that with your Texas lottery 22 is your retailers. Like when the lottery first 23 started, I used to stop at just about every store I 24 passed and buy a lottery ticket. Okay. You could 25 spend $1,000 on lottery tickets and luck up and win 50 1 $50 and go back to the store where you bought the 2 ticket from, and they try to put you across town 3 somewhere. They don't want to pay you. 4 And like your regular -- or the 5 lottery -- well, like when I be playing, I really 6 don't be expecting to win the big lottery; but if I 7 hit four numbers, four numbers range from about $80 to 8 $125. I go back to the store where I bought the 9 ticket, they don't want to pay me. That's one of the 10 biggest things that -- or problems with your lottery 11 that I find. 12 MS. CLOUD: Can I respond to that real 13 quick, sir? The -- when those complaints are brought 14 to our attention and the retailer name is given to us, 15 our security investigators go out to those stores and 16 they give them a warning that they have to pay those 17 prizes. 18 MR. STRAIN: Well, they don't. 19 MS. CLOUD: And so we need to -- we need 20 to know who the retailer is to be able to respond to 21 that. 22 MR. STRAIN: Well, see now -- like some 23 of those stores, they are -- they call themselves -- 24 dropping the money in the safe or something. When I 25 go in the store, I've got more money in my pocket than 51 1 they got in their cash register. I'm taking a chance 2 of getting robbed when I walk in the -- in the store. 3 MS. CLOUD: Well, I'm sure you know 4 that's why they do that so -- that's why they do 5 that -- why they put that money in the safe, it's to 6 keep from getting robbed, but they're supposed to pay 7 you. If -- if you'll accept it, then you -- if you 8 don't accept it and -- and they don't have the cash on 9 hand, they're supposed to post that, that they won't 10 have the cash after a certain hour of the night, 11 because some of these stores don't carry the cash; but 12 they're supposed to pay you with a cashier's check or 13 with a money order without charging you for either if 14 you'll accept it. 15 MS. MIERS: So if -- if you have that 16 experience again, and I guess what we're saying is -- 17 MS. CLOUD: Yes. 18 MS. MIERS: -- if you'll let us know 19 who's doing it, we'll take action against them, and we 20 do -- we have taken action -- 21 MS. CLOUD: Right. 22 MS. MIERS: -- against some retailers 23 where they have done that. And we have heard that 24 complaint before, so I'm sure it's happening; but if 25 someone will report it to us and who's doing it, we'll 52 1 take action. 2 MR. STRAIN: Okay. Well, another thing I 3 wanted to say is I've been reading in the paper where 4 you-all be talking about the -- what the size of the 5 lottery should be. Like you be talking like 6 $4 million is not a lot of money. The average person 7 that is playing the lottery can work all his life and 8 not going to earn $1 million. So $1 million is a lot 9 of money. 10 MS. CLOUD: What we're trying to do is 11 tell our players $4 million is a lot of money. 12 They're not -- the players don't think it is because 13 they don't buy tickets at the $4 million level. 14 They -- a few core players still continue to buy at 15 the $4 million level, but most of our players wait 16 until the jackpot is in the double digits before they 17 start to play; and that's a commercial you probably 18 saw that the commercial says $4 million is a lot of 19 money. 20 MR. STRAIN: It is a lot of money. 21 MS. CLOUD: We're -- we're trying to get 22 the players to realize that so that they will come 23 into the game at the $4 million level. 24 MR. STRAIN: Okay. I want to say one 25 more thing. You have to -- to get the realization of 53 1 the whole thing is rich people don't play the lottery; 2 poor people play the lottery. 3 MS. CLOUD: Not according to the surveys 4 that we've done -- have done all over the state. Most 5 of the lottery players in Texas are mid-level income 6 to higher level. We do have the low-level income 7 playing, but not at the percentage that people think 8 it would be. It's -- it's the -- it's the 9 middle-income level that is playing the most. 10 MR. SADBERRY: Let -- let me add to that. 11 I'm glad you raised that point. One of the things 12 that we do have to do is report to the legislature. 13 We have to conduct surveys and do a study and -- 14 continually and report to the legislature whether 15 there is, in fact, a higher percentage of poor people 16 who are playing the lottery as one of our charges. 17 And we have submitted those reports. They're 18 available to the public. 19 And -- and so what Linda Cloud is saying 20 to you is -- is something that we can verify. That it 21 is not an unusually high incidence of poor people who 22 are playing the lottery. And, of course, that's -- 23 that is one of the things we would be interested in 24 and concerned about if that were the case, but that's 25 not the case, and we have numbers to back it up. 54 1 MS. MIERS: But that doesn't mean also 2 that some people who shouldn't be spending money on 3 the lottery don't do so. What our responsibility is, 4 is to make sure that we present the games as 5 entertainment and not over sale participating -- not 6 entice people to play when they shouldn't be, and the 7 legislature watches very closely to make sure that, in 8 fact, our advertising doesn't do that. And if there's 9 ever an add that is concerning to a legislator, we get 10 a letter, or we get a call. And they'll say, "Wait a 11 minute. We don't think this is the right thing." 12 So I hope anyone in the audience will do 13 that, too, when you think there is something that's in 14 our advertising that shouldn't be, that we'll hear 15 from them, but we sure don't want people to play who 16 shouldn't; but it's a free country, and obviously 17 people spend their money the way they want to. And 18 the studies do show that the medium income is the 19 predominant buyer. 20 MR. STRAIN: Okay. That's all I have. 21 MS. MIERS: Thank you. 22 MS. SMITH: Tawny Sharp. 23 MS. SHARP: Hello. I'm a retailer -- I'm 24 one of the retailers. 25 MS. CLOUD: Welcome. 55 1 MS. SHARP: Yeah. No, I don't have any 2 problems with it. As a matter of fact, most of your 3 LSR's out there are doing a good job in informing us, 4 but a lot of the retailers are having problems by not 5 informing the public about the tickets. They're not 6 educating the public about the tickets. That's why 7 they don't understand the tickets. A lot of the 8 players don't take the time to read it, so they don't 9 understand it; but I know in my store we take the time 10 to explain to them when they don't understand it; but 11 one of the -- one of the main -- major things I want 12 to talk about is I know the lottery is doing like TABC 13 with stings, checking to see if we're selling to 14 minors, or cashing in tickets from minors. 15 My main concern is we need to advertise 16 to the public that it's illegal for them to let their 17 children play these things; because when I have a 18 child standing next to the mother and she says, "Buy 19 me this," and I tell her I can't do that, the mother 20 says, "It's my money. I can do what I want, and it's 21 legal for me to buy this ticket for her." They don't 22 know that it's not legal. 23 And one more thing. You-all have -- 24 need to have another contest for the scratch-offs, 25 because that generates a lot of business for it; but 56 1 my business has picked up -- back up on the 2 scratch-offs. 3 MS. MIERS: Good. 4 MS. SHARP: But one area you are losing 5 money on is the Texas Million. People don't like it. 6 There's not enough winners on it, okay; but as you can 7 see, I play Cash 5. That's better -- it's better 8 odds, and it pays better; but I also agree with 9 everybody else about the lotto. $3 isn't enough, 10 because the average customer spends at least $5 every 11 time they come in on a ticket for the drawing. 12 MS. SMITH: Thanks. 13 MS. CLOUD: Thank you. 14 MS. SMITH: Doug Sturdevant. 15 MR. STURDEVANT: Madam Chair, commission, 16 thank you. I'm a retailer and a player, and I think 17 that you should keep the lottery the way it is because 18 I play for the jackpot, and a lot of people have spoke 19 against that and changed the -- the three number 20 winnings. Most of my customers are there for the 21 jackpot, and they would like to keep it that way, and 22 they've told me so. That's why I'm here tonight. I 23 think just -- if you change it -- we learn from the 24 scratch-offs -- which my sales are starting to come 25 back also -- that we may hurt the game -- the lotto 57 1 also. 2 On the advertising, like several people 3 talked about educating. The one gentleman remembered 4 Scratch Man. All of my customers could tell me every 5 stupid thing he did. That's what they always said, 6 "He did this. Did you see that?" They could tell 7 you -- they would tell you how dumb it was, but they 8 would tell you every detail about what Scratch Man 9 did. So that was successful. Unfortunately, the 10 legislature didn't like it, but if you could come up 11 with something like that -- that they -- everybody 12 knew everything. 13 As for your advertising hands up. You 14 did the Houston International Festival where you 15 passed out hand-outs to tell you how to play. Do you 16 know where they all were? On the street, because 17 people take them and just throw them down. Maybe 18 there's some other way we can advertise on TV, you 19 know, just a little throw-in there like -- like the 20 lady said, you know, "Don't sell to minors. Don't 21 give them to your children," or something like that. 22 We could save the money on the fliers and the 23 pamphlets and -- and do something with that there. 24 One of the other states I played the 25 lottery in, the $3 -- when you get three, you win $3. 58 1 It automatically prints out. You don't get $3 back. 2 You automatically get a $3 ticket for the next 3 drawing. Now -- okay? Saturday you had 103,000 -- a 4 little over 103,000 winners of three numbers on the 5 lotto. So if you did that, an average of 100,000 6 times 104 draws just over $1 million back into the 7 lottery. So there's another way to generate sales. 8 Something to think about, because I'm not in it for 9 $3. I'm in it for the jackpot. 10 I don't know what else I had here. Let 11 me check these notes; but the advertising and the 12 education, we educate our customers, too, and that's 13 one of the hardest things because they don't -- they 14 don't take the time to read it even though everything 15 is right on the ticket. Thank you. 16 MS. CLOUD: How many -- tell us how many 17 lotto -- lotto tickets have you -- winning tickets 18 have you sold? 19 MR. STURDEVANT: One. 20 MS. CLOUD: You've sold one? 21 MR. STURDEVANT: I've sold one. 22 Unfortunately -- all right. I'm in Baytown, and 23 unfortunately it was not the $38 million. It was 24 $4 million, but I'm starting slow. The next one will 25 be the big one. 59 1 MS. SMITH: Thank you. 2 MS. MIERS: I'd like to take a quote 3 here -- 4 MS. MORAN: Where's your store at? 5 MR. STURDEVANT: In Baytown. Oh, and I 6 do give away all the stuff to my customers and I pay 7 everybody. 8 MS. SMITH: There you go. 9 MS. MIERS: How many players are in the 10 audience? How many of you play? Okay. Those who are 11 players, how many of you have responded positively and 12 are buying more tickets since the prize pay-out was 13 restored on the instant games -- on the instant games? 14 Now, on the scratch-offs, how many of you have 15 increased buying tickets because of the increased 16 pay-out? 17 MS. SMITH: Okay. Wayne Kelley. 18 MR. KELLEY: I'd like to say good evening 19 to everyone. 20 MS. SMITH: Good evening. 21 MR. SADBERRY: Good evening. 22 MS. CLOUD: Good evening. 23 MR. KELLEY: I'm an active player. I 24 don't have a lot of questions or a lot of comments. 25 My main concern is buying scratch-off tickets. I buy 60 1 a ticket that's a winner, I take it into a retailer, 2 it doesn't show up in the computer where they can pay 3 it. I take it to the lottery commission office over 4 on 610, they tell me the batch number is not 5 activated. 6 They said something like the retailer 7 didn't activate the batch, and this I do not 8 understand. If I have the ticket three months, the 9 batch is not activated. I can't get paid. If I keep 10 it past six months when the game is closed, I still 11 can't get paid. So I have to tear the ticket up and 12 just throw it away. If I can't get paid for it, I 13 definitely don't want to leave it lying around for 14 somebody else to collect on it in case I'm wrong or 15 someone else is wrong for some reason. Would you-all 16 explain that to me? What do they mean by the batch of 17 tickets being activated? 18 MS. CLOUD: Sir, in all of our retailers, 19 when a retailers receive the -- the games -- the new 20 packs of tickets, they -- the first thing they do is 21 confirm the pack, that they received it. When they 22 get ready to sell that pack, they have to activate the 23 pack. That keeps that pack of tickets from being a 24 huge liability to the retailer. When it's activated, 25 it's their pack of tickets. So they activate it 61 1 before they start selling it. That will allow you 2 then to be able to cash the tickets. 3 If a retailer hasn't activated a pack, 4 you should not have been sent away from the claim 5 center. They should have been able to get ahold of 6 security or themselves contact the retailer the pack 7 belonged to to find out why the pack wasn't activated. 8 A clerk in the store may have just failed to activate 9 it when they put it into service. Things like that 10 have happened in the past, but we do follow up on 11 those. We get those packs activated. G-Tech hotline 12 is usually contacted immediately, and their instant 13 ticket coordinators get on that phone and find out why 14 that pack wasn't active. 15 If the pack had been stolen while it was 16 in a confirmed status and it was in the hands of a 17 wrong person, that might be why it wasn't active. So 18 there's a reason why we have to maintain this type of 19 a procedure to protect the retailer that got the 20 ticket, but it's his responsibility to activate that 21 pack before he starts selling tickets; but you should 22 not have been turned away. You should -- we should 23 have handled that for you. I don't understand why 24 that happened, and I'd like to talk to you some more 25 about that after this meeting. 62 1 MR. KELLEY: Okay. This happened to -- 2 to me on more than one occasion. And my other main 3 concern is that if a retailer -- it's just a procedure 4 that the retailer does before he sells the ticket. 5 Well, there's -- there's no way -- it's a scratch-off 6 ticket. So no computer is involved with the sales or 7 anything. It's just a ticket lying there. They can 8 tear it off and sell it. They can sell -- they can 9 sell a whole batch without activating them; am I 10 correct? 11 MS. CLOUD: No, because the pack will not 12 go through the system if it's not active, and that -- 13 he could sell them, but it's -- he's selling them 14 illegally if he's selling them that way. That's 15 another reason we have to know about it so we can send 16 security out to check on it. If the wrong retailer 17 has that pack, then we need to know why he does have 18 it. I mean, there's -- there's reasons why these -- 19 these procedures are in place. These tickets are like 20 cash, and we have to protect the lottery. We have to 21 protect the player, and we have to protect the 22 retailer. 23 MR. KELLEY: If I might ask you: At what 24 point does the retailer activate the ticket? 25 MS. CLOUD: When he opens the pack to put 63 1 it into his dispenser, he should activate that pack at 2 that time. 3 MR. KELLEY: How does he do that? 4 MS. CLOUD: On the terminal. He 5 swipes -- there's a bar code on the pack. He'll swipe 6 that bar code to activate that pack, and he'll hit a 7 key that says "activate." 8 MR. KELLEY: Thank you. I want to move 9 on. Does the numbers -- does the machines pick the 10 winning lottery numbers? 11 MS. CLOUD: Does the machines pick the 12 winning lottery numbers? 13 MR. KELLEY: The six numbers that we play 14 for the jackpot. 15 MS. CLOUD: When you do the Quick Pick -- 16 when you get a Quick Pick from the store? 17 MR. KELLEY: No, no, no, no, no, the 18 winning numbers. 19 MS. CLOUD: The ball machine? 20 MR. KELLEY: Yes. 21 MS. CLOUD: We don't pick the numbers. 22 It is randomly drawn. There is no picking the 23 numbers. It is a random selection. The ball 24 machines -- we -- we have the balls that are in the 25 machine dropped into the -- into the chamber, and then 64 1 the air comes in and the balls are floating around in 2 the chamber, and then we have -- the security 3 specialist will press a button and it will drop a 4 ball, whatever ball is nearest the hopper. 5 MR. KELLEY: Okay. Each one of these -- 6 these chambers will get the -- the same number of 7 balls? I'm talking about we -- we have 50 numbers 8 that we play, you know, for -- right? 9 MS. CLOUD: Right. 10 MR. KELLEY: Don't we play 1 through -- 1 11 through 50? 12 MS. CLOUD: 6 through 50 is what's 13 drawn -- 6 numbers out of 50. 14 MR. KELLEY: 6 numbers out of 50 is 15 drawn? 16 MS. CLOUD: That's right. 17 MR. KELLEY: For each number? What I'm 18 concerned about, how -- if this is happening -- and, 19 you know, I'm sitting there looking at this on TV, and 20 I see, say, for instance, the No. 6 is the first 21 number that's -- that's selected. Then comes, say, 22 the No. 24. Why can't 6 come again? If all of these 23 balls are in there -- 24 MS. CLOUD: There's -- there's not two 6 25 balls in the chamber. There's 1 through 50 -- No. 1 65 1 through No. 50 is in that chamber. There's not two 2 numbers -- two -- two balls of the same number. 3 MR. KELLEY: Okay. Okay. So in -- each 4 different chambers has different numbers, I guess? 5 MS. CLOUD: Are you talking about Pick 3? 6 MR. KELLEY: No, ma'am. I'm talking 7 about the -- 8 MS. CLOUD: It's not the lotto. 9 MR. KELLEY: The -- there are six 10 numbers -- the lotto -- 11 MS. CLOUD: Right. 12 MR. KELLEY: -- there are six numbers. 13 Okay. You have -- you have -- you have six machines 14 to pick each number? 15 MS. CLOUD: We only use one machine per 16 draw. 17 MR. KELLEY: Oh, okay. Okay. 18 MS. CLOUD: So we use one -- 19 MR. KELLEY: And each number is in there 20 one time? 21 MS. CLOUD: Right. Right. 22 MR. KELLEY: Okay. I got you. 23 MS. CLOUD: We'd love for you to come to 24 Austin and witness the draw. 25 MR. KELLEY: Thank you. 66 1 MS. CLOUD: We'd be glad for you to. 2 MR. KELLEY: I'll except -- I'll accept 3 that paid invitation. Thank you. 4 MS. CLOUD: All right. 5 MR. KELLEY: That concludes my questions. 6 What would you like to talk to me about? 7 MS. CLOUD: I would like you -- if you'll 8 stay around until after the meeting, I'd like to talk 9 to you some more about your problem with your tickets. 10 MR. KELLEY: Thank you, ma'am. 11 MS. SMITH: Victor Bosley. 12 MS. MIERS: We are approaching the last 13 two forms. So if you are in the audience and you 14 haven't filled out a form and would like to speak, 15 then you need to do that. Otherwise, we will be 16 completing the speakers, and we can speak to some of 17 the questions -- some of the issues that have been 18 raised. 19 MR. BOSLEY: Hi. My name is Victor 20 Bosley. I'm a Houstonian, and I welcome here to 21 Houston all of you-all from Austin, or wherever you're 22 from. My No. 1 concern is first when the lottery 23 started, the first thing out of you-all's mouth was 24 the live -- the live Pick 3, Cash 5, and lottery 25 drawing. What happened? What happened? 67 1 Wednesday night, Saturday night I 2 flipped the channels for the first two years. One 3 night it's on Channel 11, and the next night it's on 4 ABC, CBS. All of a sudden it stopped happening. Then 5 it went to Fox -- then I had to run and go to Fox. 6 It's not on Fox anymore. 7 Now, in the last four years I haven't 8 seen -- I've seen one or two Texas Million drawings, 9 and that's deplorable. That shouldn't happen. If you 10 say live Pick 3, Cash 5, or lotto, it should be one. 11 That means the television set should come on, the 12 people should be standing there, the balls should be 13 floating up out of the chamber. I have a real problem 14 with -- I'm an avid Pick 3 player. I have won, too. 15 I mean, that's why I'm here. I haven't been winning 16 lately, but my point is this: If you're going to say 17 something in the beginning, stick to what you say. 18 You say it's live. 19 No. 1, I think everybody in here is in 20 agreement with me that we hear that song "There's a 21 winner every day." You know, we hear that on the 22 radio enough. Do you know how much you are spending 23 on advertising costs? Put that money -- if it's going 24 to go to the schools, send it to the schools; but I 25 see a billboard up on the -- on the freeway every day. 68 1 I go to Intercontinental every day, and I see four or 2 five billboards. That's fine. People walk into 3 Stop-N-Go, people walk into Conoco, they can see those 4 tickets there. You don't need to spend this much 5 money, and I know advertising takes a big, big bite 6 out of the lotto. 7 Secondly, some have mentioned the Texas 8 Million. The Texas Million -- I do the statistics. 9 You-all haven't given a million dollars away since -- 10 I think it was July 30. This is what? This is 11 November 9th. July, that's like three months. Come 12 on. And then -- then when you do -- somebody does 13 win, it's 25,000 or 10,000 and nobody -- sometimes 14 nobody wins that either. 15 Now, I've talked to my state 16 representative, and I've pointed that out to him, and 17 he said he's looking into it; but, of course, you 18 know, that's -- that's life. It takes time to do 19 things, but my basic thing is this: Live -- I'll feel 20 a lot better when I can turn that television on and I 21 can see those balls come up. And I want to choose 22 your player games. 23 In the last three months -- I chart my 24 numbers on the Pick 3 -- 485 has ran three times in 25 one month. Out of a 999 possibility, I don't think 69 1 that's going to happen. 923 ran on the 27th of last 2 month, and then it came right back, 923 eight days 3 later. Now, that's a little kind of suspicious to me. 4 That's three -- that's five within a month's span 5 where the numbers repeated themselves. And you mean 6 to tell me 999 has not shown -- 229 has not shown yet? 7 Those are the only two numbers that has not ran in 8 this lottery. So it's not like I don't -- don't know 9 what I'm talking about. I pay close attention, and I 10 am a concerned citizen and a taxpayer. 11 So basically if you're doing what you're 12 doing with the money as far as the kids are concerned 13 and, you know, sending it to the schools, I'm happy 14 for you; but, yeah, I would really like to win. The 15 Texas Million, pump it up to 250,000 and 100,000 16 instead of 10,000 and 25, because we're not winning it 17 anyway. And it's -- as far as your invitation, yes, I 18 would -- if I can't see it on TV, I'd like to be a 19 citizen's advocate and come out and just get -- I can 20 get a job doing that, just sitting there watching you 21 guys play ball. Then I won't play the lottery. I'll 22 have an income. Thank you. God bless you. You-all 23 have a nice evening. 24 MS. CLOUD: Can I address part of it on 25 the television? We -- when we started the lottery, 70 1 the television stations were very anxious to be a part 2 of our drawings, and every one of them would air our 3 drawings. 4 MR. BOSLEY: I remember. 5 MS. CLOUD: And since that time, the 6 television networks have gone to what they call 7 seemless broad -- broadcasting, and they don't have 8 commercial time in between their program and the news. 9 So they cut the lottery out of their programming 10 because we were -- we could not fit into that seemless 11 broadcasting. Okay? 12 MR. BOSLEY: Yes, ma'am. 13 MS. CLOUD: We have some stations that 14 still carry live drawings. We are -- we are very 15 aware of the fact that our players are very concerned 16 about the fact that they're not getting to see those 17 drawings anymore, and we are working on that as we 18 speak today. What the lottery does -- we do not pay 19 the stations to air the drawings. We -- we have the 20 studio that we're in -- our broadcast studio that 21 actually tapes our drawings, puts that tape up on -- 22 on the -- through a satellite feed while it's actually 23 happening through the live feed. It goes up through 24 the satellite, and the stations pull it down, the ones 25 that want to air it live. 71 1 MR. BOSLEY: Okay. 2 MS. CLOUD: We can't make them do it at 3 this point, because we're not paying them to do it. 4 MR. BOSLEY: The internet. A lot of 5 people have computers. 6 MS. CLOUD: Well -- and we are -- we are 7 looking at that. 8 MR. BOSLEY: They could go to -- if it's 9 coming -- 10 MS. CLOUD: Right. 11 MR. BOSLEY: -- through on the internet, 12 just give me that number and I'll watch it on the -- 13 MS. CLOUD: We are looking at that as 14 well. Believe me, we know this is a problem for our 15 players, and we are working on trying to do something 16 about it. 17 MR. BOSLEY: It's very unsettling when 18 you -- you think you picked the right numbers, and 19 then you go "Wow, I've got 598, and it's 599." 20 MS. CLOUD: Well, I'd much rather you be 21 able to see those numbers coming out of that hopper. 22 MR. BOSLEY: Right. Yes, ma'am. 23 MS. CLOUD: I agree with that. 24 MR. BOSLEY: Okay. God bless. You-all 25 have a nice evening. 72 1 MS. CLOUD: Thank you -- 2 MS. SMITH: Joaquin Velasquez. 3 And Pauline if I can ask you to come up and help us. 4 MS. PAULINE: Hi. My name is Pauline and 5 I'm interpreting for Mr. Joaquin Velasquez, a 6 life-long resident of Houston, Texas. He lives in the 7 Heights area here in Houston, and he's been playing 8 lotto since 1992. He said that it is very important 9 to give loyal weekly lotto players who are committed 10 to playing Texas Lotto to win at the lower price level 11 of matching three, four, and five numbers. We want to 12 keep on playing, but you must pay in order to keep us 13 playing. Thank you. 14 MS. MIERS: Thank you very much. 15 MS. SMITH: Phillip Artis. 16 MR. ARTIS: Good evening to the board. 17 MR. SADBERRY: Good evening. 18 MS. CLOUD: Good evening. 19 MR. ARTIS: My name is Phillip Artis. 20 Just a general observation and comment on some of the 21 speakers that have been up here already indicating 22 that -- I think one of the ladies indicated it was a 23 scam -- that the lotto was a scam. Someone else 24 indicated that they referred to it as an investment, 25 and also indicating that the numbers were not random. 73 1 I certainly hope they are, and I would certainly hate 2 to see in the major lotto -- I would hate to see the 3 same number come in on the lotto drawing. I think 4 that would be a total disaster. 5 I think it's better to have the lotto 6 and have people be able to control their own gambling 7 instincts. I think that's the only appropriate way to 8 do it. What I'm -- what I was reminded of as some of 9 the people were making their comments was prohibition. 10 That's what came to mind immediately. When you try to 11 stop people from doing something by legislation or 12 restricting them in some way, something they want to 13 do, something that's needed, you're going to have some 14 severe repercussions and a lot of illegal activity. 15 A couple of questions that I had, and I 16 noted them down on the form that I submitted. I had 17 an article -- I think it was October of '98 that made 18 a reference to a multi-state pool or a jumbo jackpot. 19 I'd like to know if there's any thought being given to 20 that to -- to attempt to do that? 21 MS. CLOUD: We looked at that about a 22 year ago and had a presentation on both Powerball as 23 well as the big game, and at that time Lotto Texas was 24 very strong and we didn't -- we didn't feel like it 25 was the right time for us to be looking at a 74 1 multi-state game because it will have an impact on 2 sales with Lotto Texas. So we didn't do it. We 3 took -- we decided not to do it at that time. 4 It probably would be a good option for 5 us today, and that may be something we look at down 6 the road; but right at this moment, we're not 7 anticipating going in this direction, but we will -- 8 because we do have to look at -- at, you know, what it 9 might do with Lotto Texas. We need to look at all 10 that first. 11 MS. MIERS: There also was consideration, 12 wasn't there, Linda, of a Millennium game, which -- 13 MS. CLOUD: Right. 14 MS. MIERS: -- probably is the one that 15 you saw that recently -- and, again, the decision was 16 to back off and not do a game of that sort because of 17 the potential impact; and also is something that is an 18 issue of public policy and whether you want to 19 introduce something that is still yet that different 20 than what we have. So there are a lot of questions 21 around whether the lottery would, in fact, embrace 22 that sort of game. 23 MR. ARTIS: Okay. Another -- well, this 24 is a decision I made on my own about playing in the 25 games of chance is I do not play any scratch-off 75 1 games, not any of them. And my concern is -- which I 2 hope you -- you might speak to this, is that in 3 controlling how these spools of tickets are sent out 4 to various retailers. My understanding -- or my 5 thinking is that winning tickets that the lottery 6 commission and lottery people detect, whoever is in 7 control of it, would know to which retailer the 8 winning ticket -- where that's sent to, what location. 9 They may not know the person that's going to buy that 10 ticket or exactly when it will come up, but they would 11 know, I believe, that that ticket is at X location; is 12 that correct? 13 MS. SMITH: No, sir, and I'd like to -- 14 to explain the process. The -- the ticket 15 manufacturer runs the program and produces the 16 tickets, prints the tickets, and creates an inventory 17 tape and a validation tape to represent that game. 18 That information on those tickets is encrypted -- or, 19 in other words, scrambled so that anyone couldn't just 20 go in and see where any winners were. Those tapes 21 then are delivered to our security department at the 22 lottery, and they are transported to the G-tech data 23 center where our security staff witnesses the loading 24 of those tapes. 25 And so no one at that time knows where 76 1 the winners are. They load the tapes. So only the 2 system that those tapes represent when you scan your 3 ticket at the retailer recognizes whether it's a 4 winning ticket or not. We don't know, nor does 5 G-tech. And to further insure that, as -- as the 6 tapes are loaded, there's an instant ticket specialist 7 that enter the ticket orders for each retailer. They 8 have no idea what pack is going to go anywhere. They 9 just enter the order that you, Mr. Retailer, are going 10 to get five packs of this particular game. 11 An invoice then and a packing slip comes 12 out at the warehouse -- and these people are not 13 connected in any way. The invoice comes out there. 14 The people on the packing line then pack those tickets 15 just in numerical sequence, and -- and they just print 16 out that way. Then they're sorted by ZIP code, and go 17 out to the retailers via courier based on what -- 18 their ZIP code areas. See, there's several ways there 19 that -- that truly assure that we don't know nor would 20 we want to know. We want the games to be fun and to 21 be fair for our players. So I can assure you that we 22 don't know where the winners are, nor would we want to 23 know where they are. 24 MR. ARTIS: Okay. I appreciate your 25 response. I think I'd like to correspond with the 77 1 commission in writing on that issue. 2 One last question I had is that on the 3 recent games, it's been my general observation on the 4 big lotto game that it takes several drawings -- 5 between three and six drawings in the recent pay-offs 6 before anyone hits -- it gets up to 18 million and 7 above. No one has been hitting at 4, 7, 10, 11, in 8 that area. Is that off base? Is it -- is that a 9 correct observation? 10 MS. CLOUD: That's not off base. 11 That's -- for the last couple of weeks that's been the 12 case, but that's not been -- that's not been the norm. 13 We have been getting hit at the $4 million level, and 14 that's one of the reasons the jackpot hasn't been 15 growing; because when you get hit at the $4 million 16 level, then you're not -- you know, you're not able to 17 create a higher jackpot. And when it doesn't get hit, 18 then it rolls; but then -- you know, that's something 19 that is what you call the luck of the draw. That's -- 20 that's -- it's all random, and that's how it happens. 21 We have -- you know, from our security 22 from the drawing standpoint, we have -- we pride 23 ourselves in making sure that our draws are the 24 highest security and the highest integrity that we 25 could possibly make it. We welcome the opportunity 78 1 for any of our players to come to those drawings and 2 see for yourselves what we go through to make sure the 3 machines are drawing properly, the ball sets are 4 working like they should be, and that there is no way 5 that that drawing can be compromised. 6 MR. ARTIS: Thank you. 7 MR. SADBERRY: We also have security 8 agencies whose job it is to oversee the security. 9 They are out -- both internal and outside who oversees 10 that. 11 MR. ARTIS: Thank you. 12 MS. CLOUD: Thank you. 13 MR. SADBERRY: I want to know -- Toni, 14 excuse me. 15 MS. SMITH: We've got one more speaker. 16 MR. SADBERRY: Is there more, okay, 17 because I think there are some goodies that we don't 18 want anybody to miss out on these door prizes. So 19 hang around. We have some door prizes for you. Who's 20 in charge of that? Okay. Go ahead with the last 21 speaker. 22 MS. SMITH: John Gutta. 23 MR. GUTTA: John Gunna. 24 MS. SMITH: Gutta, I'm sorry. 25 MR. GUTTA: Thank you for allowing me a 79 1 few minutes. Last is not always the best. I'd like 2 to say, first, I have very limited hearing, so I heard 3 about 5 percent of what -- what went on, and I bring 4 my ears along with me. So if I say something that's 5 been repeated, excuse me. And after I make just a 6 couple of comments or suggestions, you don't have to 7 comment right off. I couldn't probably hear you 8 anyway. 9 One of them concerns the lotto -- the 10 six number lotto, and I think some of the other ones 11 said: Pay in 3 -- or pick 3 numbers or 4 to pay 12 higher, and that's been generally a lot of the 13 comments you hear. And other states do this -- fixed 14 numbers they pick. Well, my suggestion here is -- is 15 a person that buys $5 worth, which I normally do, 16 that's 30 numbers. You're drawing 50; and out of the 17 $5 and 30 numbers, you don't get a one. The odds are 18 tremendous for the people that spend $5 and not get 19 one number. Why don't the lottery commission say, 20 "You -- if that happens to you, we'll pay you $10"? 21 If you go to Las Vegas and -- and play 22 keno, they pay you for not getting -- it's -- it's 23 common sense. It's not one in 15 billion likely to 24 get a winner, but it's happened to me about three 25 times in the last six months. It happens. I'd like 80 1 it to happen the other way, too, but I think that they 2 should look -- look into it. You can go to play keno 3 in many of the gambling cities, and they'll pay you -- 4 if you pick 15 numbers and don't get one, you'll win 5 some money. It's high odds. It's something to think 6 about. 7 The other thing I -- the Texas 8 Million -- it's been -- my friend here and I, we keep 9 stats on the thing pretty -- pretty thorough stats 10 that are furnished by the -- the lottery commissions 11 on a weekly basis. And through the end of 12 October it's been 74 weeks of -- of the -- the Friday 13 nights Texas Million. Of 74 weeks, there's been 14 14 people that won $1 million. The first week there was 15 four. Since that time there's only been 10. So the 16 last 70-something weeks, there's only been 17 $10 million. 18 Of course, the first week is -- is a big 19 hullabaloo where they only took in 6.1 and paid out 20 $6.3 million; but since then, ladies and gentlemen, 21 the State has been making money. The State makes 63, 22 65 percent, and you're paying off about 35 percent. 23 And that's how you -- it's the $10 ones. I think the 24 State started with the -- selling the odds of only 20, 25 but I believe that with seven numbers you can win 120, 81 1 and I think they were thinking the $10 winners. 2 I can tell you exactly. I won't go 3 through -- I know all your records. I have them here. 4 I think that the Texas Million is a real poor game to 5 play for the public. You can make it -- make it 6 better if you can use the million dollars. If you 7 can't drop it down some, but use 60 numbers. Do you 8 know how hard it is to get 0 -- 0 to 99 numbers how to 9 get 2? Tremendous odds, but you do -- some people did 10 it last -- last -- well, like I say -- 11 I think that game has to be looked into. 12 I think it's -- I use -- I hate to use the words "rip 13 off," but I think it's a poor -- a poor game for the 14 public. And the commission here is supposed to listen 15 to our suggestions, and I think that's one area you 16 need to listen in; but thank you for talking -- 17 listening to me. 18 MS. CLOUD: Thank you. 19 MS. MIERS: Thank you very much. 20 MS. CLOUD: Okay. Go ahead, Anthony. 21 MR. SADBERRY: Linda, okay. Ladies and 22 gentlemen, we really appreciate all of you. You have 23 been attentive and participated. You've stayed. 24 You've given us your honest and earnest opinions and 25 that's what really matters to us. Now, we want to 82 1 give a little back. We have some door prizes, and 2 Keith and Laura, go ahead and -- and proceed. 3 (Proceedings concluded at 8:57 p.m.) 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 83 1 The State of Texas ) 2 County of Harris ) 3 4 I, Lettie Witter, Certified 5 Shorthand Reporter in and for the State of 6 Texas, do hereby certify that the above and 7 foregoing contains a true and correct 8 transcription of all portions of evidence and 9 other proceedings requested in writing by 10 counsel for the parties to be included in the 11 statement of facts, in the above-styled and 12 numbered cause, all of which occurred in open 13 court or in chambers and were reported by me. 14 I further certify that this 15 transcription of the record of the proceedings 16 truly and correctly reflects the exhibits, if 17 any, offered by the respective parties. 18 Given under my hand and official seal 19 of office this the 18th day of November, 1997. 20 21 ______________________ LETTIE WITTER, CSR 22 No. 6772 - Expiration: 12-31-00 Southwest Reporting & Video, Inc. 23 909 Fannin, Suite 1630 Houston, Texas 77010 24 (713) 650-1800 25