1 1 TRANSCRIPT OF PROCEEDINGS 2 BEFORE THE 3 TEXAS LOTTERY COMMISSION 4 AUSTIN, TEXAS 5 6 7 REGULAR MEETING OF THE § 8 TEXAS LOTTERY COMMISSION § THURSDAY, MARCH 31, 201l § 9 10 11 12 COMMISSION MEETING 13 THURSDAY, MARCH 31, 2011 14 15 16 17 BE IT REMEMBERED THAT on Thursday, the 31st 18 day of March 2011, the Texas Lottery Commission 19 meeting was held from 1:30 p.m. until 3:20 p.m., at the 20 Offices of the Texas Lottery Commission, 611 East 6th 21 Street, Austin, Texas 78701, before CHAIRMAN MARY ANN 22 WILLIAMSON and COMMISSIONER J. WINSTON KRAUSE. The 23 following proceedings were reported via machine 24 shorthand by Aloma J. Kennedy, a Certified Shorthand 25 Reporter of the State of Texas. 2 1 APPEARANCES 2 CHAIRMAN: 3 Ms. Mary Ann Williamson 4 COMMISSIONER: Mr. J. Winston Krause 5 GENERAL COUNSEL: 6 Ms. Kimberly L. Kiplin 7 EXECUTIVE DIRECTOR: Mr. Gary Grief 8 DIRECTOR, CHARITABLE BINGO OPERATIONS: 9 Mr. Philip D. Sanderson 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 1 TABLE OF CONTENTS 2 PAGE 3 PROCEEDINGS - THURSDAY, MARCH 13, 2011.............. 8 4 AGENDA ITEM NO. I - Meeting Called to Order......... 8 5 AGENDA ITEM NO. II - Consideration of and possible discussion and/or action on 6 external and internal audits and/or reviews relating to the Texas Lottery Commission, 7 and/or on the Internal Audit Department’s activities including Internal Audit report 8 of Claim Center prize validations and/or State Auditor’s Office Audit Report on 9 Selected State Entities’ Compliance with Requirements related to the Historically 10 Underutilized Business Program and the State Use Program................................... 8 11 AGENDA ITEM NO. III - Report by the Bingo 12 Advisory Committee Chairman, possible discussion and/or action on the Bingo 13 Advisory Committee’s activities, including the March 9, 2011 Bingo Advisory Committee 14 meeting............................................. 18 15 AGENDA ITEM NO. IV - Report, possible discussion and/or action on calendar year 16 2010 conductor information.......................... 21 17 AGENDA ITEM NO. V - Consideration of and possible discussion and/or action on a 18 petition for rulemaking regarding 16 TAC §402.200 regarding general restrictions 19 on the conduct of bingo............................. 27 20 AGENDA ITEM NO. VI - Consideration of and possible discussion and/or action, including 21 adoption, on amendments to 16 TAC §402.502 relating to Charitable Use of Proceeds.............. 32 22 23 24 25 4 1 TABLE OF CONTENTS (continued) 2 PAGE 3 AGENDA ITEM NO. VII - Consideration of and possible discussion and/or action, including 4 repeal, on existing 16 TAC §402.501 relating to Distribution of Proceeds for Charitable 5 Purposes, and/or adoption, on new rule 16 TAC §402.501 relating to Charitable Use of Net 6 Proceeds............................................ 33 7 AGENDA ITEM NO. VIII - Consideration of and possible discussion and/or action, including 8 adoption, on amendments to 16 TAC §402.205 relating to Unit Agreements......................... 35 9 AGENDA ITEM NO. IX - Consideration of and 10 possible discussion and/or action, including adoption, on amendments to 16 TAC §402.203 11 relating to Unit Accounting......................... 36 12 AGENDA ITEM NO. X - Consideration of and possible discussion and/or action, including 13 adoption, on amendments to 16 TAC §402.604 relating to Delinquent Purchaser.................... 38 14 AGENDA ITEM NO. XI - Report by the Charitable 15 Bingo Operations Director and possible discussion and/or action on the Charitable 16 Bingo Operations Division’s activities, including updates on staffing, licensing, 17 accounting and audit activities, pull-tab review, special projects, and upcoming 18 operator training................................... 39 19 AGENDA ITEM NO. XII - Report, possible discussion and/or action on lottery sales 20 and revenue, game performance, new game opportunities, advertising, market research, 21 trends, and game contracts, agreements, and procedures.......................................... 41 22 AGENDA ITEM NO. XIII - Report, possible 23 discussion and/or action on transfers to the State........................................... 45 24 25 5 1 TABLE OF CONTENTS (continued) 2 PAGE 3 AGENDA ITEM NO. XIV - Report, possible discussion and/or action on the 82nd 4 Legislature......................................... 46 5 AGENDA ITEM NO. XV - Consideration of and possible discussion and/or action, 6 including adoption, on amendments to 16 TAC §401.305 relating to “Lotto Texas” 7 On-line Game Rule................................... 49 8 AGENDA ITEM NO. XVI - Consideration of and possible discussion and/or action, 9 including adoption, on amendments to 16 TAC §401.315 relating to “Mega Millions” 10 On-line Game Rule................................... 49 11 AGENDA ITEM NO. XVII - Consideration of and possible discussion and/or action, 12 including adoption, on amendments to 16 TAC §401.317 relating to “Powerball” 13 On-line Game Rule................................... 49 14 AGENDA ITEM NO. XVIII - Consideration of and possible discussion and/or action, 15 including adoption, on new rule 16 TAC §401.372 relating to Display of License............. 52 16 AGENDA ITEM NO. XIX - Report, possible 17 discussion and /or action on agency’s contracts, including amendment to the 18 statistical consulting services contract............ 53 19 AGENDA ITEM NO. XX - Report, possible discussion and/or action on the agency's 20 HUB program and/or minority business participation, including the agency's 21 Mentor Protégé Program.............................. 54 22 AGENDA ITEM NO. XXI - Report, possible discussion and/or action on GTECH 23 Corporation......................................... 59 24 25 6 1 TABLE OF CONTENTS (continued) 2 PAGE 3 AGENDA ITEM NO. XXII - Report by the Executive Director and/or possible 4 discussion and/or action on the agency’s operational status, agency procedures, 5 and FTE status...................................... 59 6 AGENDA ITEM NO. XXIII - Consideration of the status and possible entry of orders in: 7 A. Docket No. 362-11-1670 – 755 Quick Stop #1 B. Docket No. 362-11-1671 – Super Food Mart #40 8 C. Docket No. 362-11-1673 – Neighborhood Citgo D. Case No. 2010-342 – Hallsburg Short Stop 9 E. Docket No. 362-11-3559 – 7-Eleven Store #32921 10 F. Docket No. 362-10-2668.B – Ysleta Del Sur Pueblo Volunteer Fire Department, Inc.... 60 11 AGENDA ITEM NO. XXIV - Public comment............... 59 12 AGENDA ITEM NO. XXV - Commission may meet 13 in Executive Session: A. To deliberate the duties and evaluation 14 of the Executive Director pursuant to Section 551.074 of the Texas Government 15 Code. B. To deliberate the duties and evaluation 16 of the Internal Audit Director pursuant to Section 551.074 of the Texas Government 17 Code. C. To deliberate the duties and evaluation 18 of the Charitable Bingo Operations Director pursuant to Section 551.074 of 19 the Texas Government Code. D. To deliberate the duties of the General 20 Counsel pursuant to Section 551.074 of the Texas Government Code. 21 E. To deliberate the duties of the Human Resources Director pursuant to Section 22 551.074 of the Texas Government Code. 23 24 25 7 1 TABLE OF CONTENTS (continued) 2 PAGE 3 AGENDA ITEM NO. XXV (continued) 4 F. To receive legal advice regarding pending or contemplated litigation 5 pursuant to Section 551.071(1)(A) and/or to receive legal advice regarding 6 settlement offers pursuant to Section 551.071(1)(B) of the Texas Government 7 Code and/or to receive legal advice pursuant to Section 551.071(2) of the 8 Texas Government Code, including but not limited to: 9 Texas Lottery Commission v. Leslie Warren, Texas Attorney General Child 10 Support Division, Singer Asset Finance Company L.L.C., and Great-West 11 Life & Annuity Insurance Company Department of Texas, Veterans of 12 Foreign Wars et al. v. Texas Lottery Commission et al. 13 John Doe v. Texas Lottery Commission and Greg Abbott, Texas Attorney General 14 Rafael Tapia a/k/a Rafael Demetrio Tapia-Bido v. 7-Eleven et al. 15 Employment law, personnel law, procurement and contract law, 16 evidentiary and procedural law, and general government law................. 68 17 AGENDA ITEM NO. XXVI - Return to open session 18 for further deliberation and possible action on any matter discussed in Executive Session........ 70 19 AGENDA ITEM NO. XXVII - Adjournment................. 70 20 REPORTER'S CERTIFICATE.............................. 71 21 22 23 24 25 8 1 P R O C E E D I N G S 2 THURSDAY, MARCH 31, 2011 3 (1:30 p.m.) 4 AGENDA ITEM NO. I 5 CHAIRMAN WILLIAMSON: Good afternoon. I 6 would like to call the meeting of the Texas Lottery 7 Commission to order. Today is March 31, 2011. The time 8 is 1:30. Commissioner Krause is present, so we do have 9 our quorum. 10 AGENDA ITEM NO. II 11 CHAIRMAN WILLIAMSON: Our first item is 12 consideration of and possible discussion and/or action 13 on external and internal audits and/or reviews relating 14 to the Texas Lottery Commission and the Internal Audit 15 Department's activities, including Internal Audit report 16 on Claim Center prize validations and State Auditor's 17 Office Audit Report on selected state entities' 18 compliance with requirements related to the HUB program 19 and the State Use Program. 20 Catherine, I believe this is yours. 21 And do we have the people from the SAO 22 here? 23 MS. MELVIN: Yes, we do; yes, ma'am. 24 CHAIRMAN WILLIAMSON: All right. 25 MS. MELVIN: Thank you, Chairman; thank 9 1 you, Commissioner. For the record, Catherine Melvin, 2 Director of the Internal Audit Division. 3 With us we have auditors from the State 4 Auditor's Office. I would like to invite them to come 5 up. I'll introduce them and then ask them to lay out 6 their report. With us is Mr. Verma Elliot. She is an 7 audit manager in the State Auditor's Office. And then 8 Mr. Willie Hicks was the project manager on that audit. 9 MS. ELLIOTT: Commissioners, good 10 afternoon. As Catherine said, my name is Verma Elliot, 11 and I was the audit manager for this engagement. What 12 we're going to do is, I'm going to give a brief overview 13 of the results of the entire audit, and then Willie is 14 going to walk you through the results of the Lottery 15 Commission. 16 Overall we had six of eight entities 17 audited that fully or substantially complied overall 18 with the Historically Underutilized Business, or the HUB 19 program requirements. We tested specifically in the 20 areas of planning, outreach, subcontracting, reporting 21 and goal attainment. What we found in terms of all the 22 agencies was that the University of Texas Health Science 23 Center fully complied with the HUB requirements. 24 We had five entities that substantially 25 complied, which were the Office of the Attorney General, 10 1 the Department of Assistive and Rehabilitative Services, 2 Stephen F. Austin University, the University of North 3 Texas and the Lottery Commission. 4 We had two entities that minimally 5 complied, which were the Youth Commission and Parks & 6 Wildlife. In addition, seven of the eight entities 7 audited were non-compliant overall, with the purchasing 8 from people with disabilities program, or that's the 9 State Use Program. 10 Willie is going to talk to you about the 11 specific results of the Lottery Commission. 12 MR. HICKS: Good afternoon, Commissioners. 13 My name is Willie Hicks. I'm a project manager with the 14 State Auditor's Office. 15 Looking at the details of the report as it 16 relates to the Lottery Commission, the Commission 17 minimally complied overall with the five HUB program 18 planning requirements tested. The two areas that we 19 made recommendations on were that the Commission needed 20 to establish goals for contracting with HUB in each 21 procurement category that are based on a clearly 22 documented schedule of expenditures, fiscal year 23 expenditures, and availability of HUB vendors in each 24 procurement category. 25 In addition, we recommended that no later 11 1 than the 60th day of each fiscal year, create an 2 estimate of the total value of contract awards that it 3 expects to make for the fiscal year and revise its 4 estimate as new information requires. 5 In the next area of outreach, the Lottery 6 Commission substantially complied overall with the seven 7 outreach requirements that we tested. We made a 8 recommendation that the Lottery Commission fully comply 9 with the outreach requirements and Texas Government Code 10 2161, which is that the agency should modify its HUB 11 coordinator positions so that it's equal to the 12 procurement director's position. 13 In the area of subcontracting, the Lottery 14 Commission was fully compliant. We had no 15 recommendations in that area. 16 In the area of reporting, the Lottery 17 Commission was substantially compliance. And we made 18 the following recommendation, that the Lottery fully 19 comply with the reporting requirements related to 20 preparing a monthly HUB usage report. 21 And in the area of HUB utilization goals, 22 the Commission was substantially compliant. We made the 23 recommendation that the agency should identify and 24 consider the factors that affect disability, to meet 25 certain goals when it establishes its HUB utilization 12 1 goals. 2 The other program we looked at was the 3 State Use Program. And in the State Use Program, the 4 Lottery Commission was one of the seven agencies that 5 were determined to be non-compliant. We looked at four 6 particular requirements related to the program. And in 7 these four areas, the Commission was determined to be 8 non-compliant, and we made the following 9 recommendations, that the Lottery develop, document and 10 implement a process for checking the availability of 11 products or services offered by TIBH industries which 12 are the preferred vendors under the State Use Program; 13 prior to making procurement decisions, develop, document 14 and implement a process to identify and report 15 exceptions. 16 And our exceptions are those instances 17 where the Lottery has elected not to make a purchase 18 from a TIBH vendor, has chosen to purchase from a 19 different vendor. There is a requirement that each 20 agency report why -- there's certain categories, but 21 there is a requirement that agencies report to the 22 Comptroller's office why they elected not to purchase 23 from a TIBH vendor. 24 The third recommendation we made was to 25 ensure that its exception reporting process includes a 13 1 methodology for properly classifying exceptions that are 2 reported under the State Use Program requirements. 3 And, last, we recommended that they 4 develop a job description for a State Use coordinator 5 that defines the position's job duties and 6 responsibilities. 7 And that concludes my presentation on our 8 findings. I just wanted to recognize that the staff and 9 management was very helpful during the entire course of 10 the audit, and we really appreciate their assistance in 11 helping us complete the audit on time. 12 CHAIRMAN WILLIAMSON: Thank you for those 13 comments. 14 Commissioner, do you have any questions? 15 COMMISSIONER KRAUSE: So it sounds like 16 there were two different kinds of sets of criteria. And 17 on one of them, there was seven, and we got five out of 18 seven, and that made us barely compliant. Did I get 19 that right? 20 MR. HICKS: Well, there were two different 21 programs. 22 COMMISSIONER KRAUSE: Yes. 23 MR. HICKS: We had the HUB program and the 24 State Use Program. 25 COMMISSIONER KRAUSE: Okay. The HUB 14 1 program, seven criteria, and we satisfied five out of 2 seven. But that made us minimally compliant? 3 MS. ELLIOTT: No, sir. In the HUB 4 program, there are 22 or 23 things that we're looking 5 for, and you substantially complied with that program. 6 So when we looked at the HUB program -- 7 COMMISSIONER KRAUSE: Oh, okay. 8 MS. ELLIOTT: -- you were substantially 9 compliant, and you complied with 79 percent of the 10 things that we looked for. 11 COMMISSIONER KRAUSE: Excellent. 12 MS. ELLIOTT: The second thing we did was, 13 we looked at the State Use Program. The State Use 14 Program had four -- 15 COMMISSIONER KRAUSE: Four. 16 MS. ELLIOTT: -- requirements, and those 17 requirements are mainly documentation in nature and 18 things that you have to do as you're purchasing items. 19 And you didn't comply with any of those items, but you 20 did spend money in the State Use Program; it's just you 21 didn't comply with the requirements of the program. 22 COMMISSIONER KRAUSE: Oh, and then also 23 one of your recommendations is to hire another person to 24 do that? 25 MR. HICKS: Well, no. I think there was a 15 1 person that was responsible for that program. 2 COMMISSIONER KRAUSE: Oh, okay. 3 MR. HICKS: But the job description didn't 4 define their responsibilities under the program. 5 COMMISSIONER KRAUSE: Oh, gotcha! Okay. 6 Thanks. 7 CHAIRMAN WILLIAMSON: That was more of a 8 form versus substance sort of a thing? 9 MR. HICKS: Yes. 10 CHAIRMAN WILLIAMSON: Okay. All right. 11 MS. ELLIOTT: Thank you. 12 CHAIRMAN WILLIAMSON: Thank you very much. 13 Appreciate it. 14 MS. MELVIN: Thank you. 15 Commissioners, I do have one more item. 16 This is from the Internal Audit function. We recently 17 issued a report on a completed audit of the Texas 18 Lottery Commission Claim Center prize validations. A 19 copy of that report is placed before you. The purpose 20 of that audit was to evaluate the adequacy and 21 effectiveness of the system of internal control and the 22 quality of performance in carrying out assigned 23 responsibilities related to the payment of prizes by our 24 claim centers. So, accordingly, our audit focused on 25 those prizes paid, up to a million dollars. 16 1 Just to give you a little bit of more 2 background about our scope, we evaluated processes 3 designed to ensure, one, the reliability and integrity 4 of the information; two, the compliance with that 5 applicable requirement; 3, the safeguarding of assets; 6 4, the economical and efficient use of resources and 7 then, finally, the accomplishments of goals and 8 objectives. 9 More specifically, we examined processes 10 and controls designed to ensure accurate validation of 11 tickets, proper verification of winners and then 12 accurate, appropriate and timely payment of prizes and, 13 of course, excellent customer service. 14 Our overall conclusion is very positive 15 here. We state overall, based on the results of our 16 review, controls provide reasonable assurance that 17 claims paid by TLC Claim Center staff are paid 18 accurately, timely and appropriately. In addition, 19 Claim Center staff efforts are consistent with 20 management's goals and objectives to provide excellent 21 customer service. Responsible management has expressed 22 agreement with Internal Audit's conclusions and 23 recommendations, and those are detailed in the report, 24 and they've also included corrective actions in their 25 responses. 17 1 I would like to note that certain items 2 came to our attention during the audit that are directly 3 related to -- and I'm going to have to quote here -- 4 "security plans and procedures of the agency designed to 5 ensure the integrity and security of the operation of 6 the lottery, including ensuring the integrity and 7 security of the selection of winning tickets." And for 8 that reason, those items were communicated separately to 9 management in a confidential management letter. 10 In closing, Internal Audit would like to 11 express our appreciation to all the divisions that 12 assisted in conducting the audit but in particular to 13 the Lottery Operations Division, their Claim Center 14 staff, certainly, for their cooperation and assistance. 15 Their courtesy and responsiveness allowed us to complete 16 our work effectively and efficiently. 17 CHAIRMAN WILLIAMSON: All right. Thank 18 you. 19 Commissioner, do you have any questions. 20 COMMISSIONER KRAUSE: No, ma'am. 21 CHAIRMAN WILLIAMSON: All right. Thank 22 you. 23 MS. MELVIN: Thank you. 24 25 18 1 AGENDA ITEM NO. III 2 CHAIRMAN WILLIAMSON: All right. The next 3 item is report by the Bingo Advisory Committee -- and I 4 know it's not the chairman this time -- any possible 5 discussion or action as a result of that meeting. 6 So, Earl, I believe you're here in Kim's 7 place. Right? 8 MR. SILVER: Yes, ma'am. 9 CHAIRMAN WILLIAMSON: All right. 10 MR. SILVER: Kim couldn't make it this 11 afternoon. 12 CHAIRMAN WILLIAMSON: Okay. 13 MR. SILVER: Good evening. My name is 14 Earl Silver, Vice Chair of the Bingo Advisory Committee. 15 We had a meeting on March 9th here is 16 Austin. All members were in attendance except for 17 Ms. Markey Ford Beilué, Mr. Joe Williams and Mr. Emile 18 Bourgoyne. 19 A report was given over the 2010 calendar 20 information. Also information was given for the new 21 Bingo Advisory email text update system. And on a side 22 note, that is a great system. I signed up for it, and 23 you can get up-to-the-minute updates. Thank you. 24 CHAIRMAN WILLIAMSON: I think you need to. 25 MR. SILVER: Well -- 19 1 CHAIRMAN WILLIAMSON: That man is the 2 driving over there for it also, so Phil. 3 MR. SILVER: We mentioned that in the 4 meeting, and it's very effective. 5 CHAIRMAN WILLIAMSON: Good; good. 6 MR. SILVER: Also bill status reports were 7 given on bills that are introduced into the legislative 8 process that will affect the bingo industry. 9 There was also discussion over license fee 10 increase to cover redesigning of the automated 11 charitable bingo system. There was concern over why the 12 industry should have to pay higher license fees to cover 13 this when it is figured almost -- or approximately 14 15 million is funneled from bingo into the general fund. 15 We figured these funds should be able to cover 16 $2.5 million need to update this system instead of 17 having a license fee or a tax hike, even though it's 18 temporary. 19 Mr. Joe Williams has resigned from the 20 Bingo Advisory Committee, so his unexpired term will 21 need to be filled. The seats of Mr. Francis 22 Ciancarelli, Thomas Weekley and Markey Ford Beilué are 23 set to expire August 31, 2011. 24 There were three rules that were discussed 25 at the Bingo Advisory Committee meeting. One was 20 1 402.501, which is the sale of bingo products to a bingo 2 player; 402.512, which is bingo occasion record 3 requirements; and 402.211, games of chance. 4 There were comments on all the rules. But 5 just to sum it up, comments over 402.512, which is the 6 bingo occasion record requirements, it was felt that 7 additional requirements that were added to this rule 8 will make bingo recordkeeping even more difficult at 9 this time on all involved, by having to keep additional 10 amounts of paper that it will cost the charities 11 additional money and additional storage. 12 Also they were talking about having to 13 determine a selling price of paper when it's arrived at 14 the bingo hall. We felt this could be a little bit 15 unnecessary. And the staff heard all the comments, and 16 they agreed to take a further look at this. 17 On 402.2ll, the game of chance, there were 18 concerns over the gift certificate part of the rule, 19 along with limitation of door prizes. But the staff 20 replied that it's taken the door prize limitation out 21 and looked into other concerns. 22 There was also public comment. The BAC 23 was asked to look into the smoking ban that could 24 possibly come to the state through the Legislature, and 25 we decided to put that on the next meeting, the next 21 1 agenda. 2 There's three agenda items so for, for our 3 next meeting. One is the smoking ban throughout the 4 state. The other one is the report from the Nomination 5 Committee for the three expired terms and the one new 6 vacancy, as well as the annual report. That information 7 should be available to me shortly. 8 The meeting was adjourned at 11:44 a.m. 9 And I'll be happy to answer any questions. 10 CHAIRMAN WILLIAMSON: Thank you. 11 Commissioner, do you have any questions? 12 COMMISSIONER KRAUSE: No, ma'am. 13 CHAIRMAN WILLIAMSON: Okay. You realize 14 we have no control over the smoking ban? 15 MR. SILVER: Oh, yes, we understand. 16 CHAIRMAN WILLIAMSON: Okay; okay. 17 MR. SILVER: That's just what transpired 18 in the meeting. 19 CHAIRMAN WILLIAMSON: Okay. All right. 20 Thank you; thank you very much for your report. 21 AGENDA ITEM NO. IV 22 CHAIRMAN WILLIAMSON: The next item is 23 report, possible discussion and/or action on Calendar 24 Year 2010 conductor information. 25 Bruce Miner, I believe this is your item, 22 1 please. 2 MR. MINER: Okay. Good afternoon, Madam 3 Chair, Commissioner. For the record, my name is Bruce 4 Miner, and I'm the Manager of the Taxpayer Services 5 Department, and I'm here to present to you an overview 6 of the 2010 information as reported by our licensed 7 authorized organizations as well as some information on 8 activities within the Charitable Bingo Division. 9 Let me begin by pointing out that in 2010, 10 charitable bingo in Texas was the highest grossing it 11 has been since the game was legalized in 1981. For 12 Calendar Year 2010, total receipts exceeded 13 $698.6 million, and players won a record $516 million in 14 prizes. 15 Despite the fact that distributions to 16 charitable organizations had increased each year from 17 2002 to 2009, last year we saw a downturn of 18 $2.3 million in distributions compared to the previous 19 year, going from $36 million to $37.7 million. However, 20 total distributions since 1981 now exceed $971 million. 21 This chart shows a comparison of gross 22 receipts for each year from 2007 through 2010. And, as 23 you can seem, gross receipts for instance bingo sales 24 have increased each year since 2007 from 273 point 25 million dollars to $326.9 million, for a 19.8 percent 23 1 increase, while at the same time gross receipts from 2 regular bingo card sales dropped from 385 point million 3 dollars in 2007 to $371.8 million in 2010, for a 4 decrease of 3.5 percent. The overall total gross 5 receipts for 2010 is approximately six percent greater 6 than it was in 2007. 7 This chart shows a comparison of net 8 receipts for the Calendar Years 2007 through 2010, and 9 this slide captures the trend of net receipts, which is 10 gross receipts minus prizes. Total net receipts shown 11 here in green has dropped slightly, to approximately 12 what it was in 2008. 13 This chart shows the year-by-year 14 comparison for disbursements. These disbursements do 15 not include prize payouts. Salaries account for over 16 28 percent of the total disbursements, while rent 17 payment accounts for just over 22 percent, and 18 charitable distributions are around 19 percent. 19 These next slides will overlay the 20 comparison between the required distribution, the net 21 proceeds and the actual reported distributions. First 22 we have the required distributions, using the 35 percent 23 calculation prior to October 1, 2009, and the net 24 proceeds calculation for 2010. This shows that the 25 required distributions dropped from around $10 million 24 1 for 2007, '08 and '09, to $8.4 million for 2010. We now 2 compare to that the net proceeds as defined in the 3 revised Bingo Enabling Act from House Bill 1474. This 4 is gross receipts minus prizes and expenses. This is 5 their bottom line and has dropped from a high of 6 $36.4 million in 2008 to the present amount of 7 $28.3 million for 2010. 8 And this slide overlays the actual 9 reported charitable distributions shown here by the blue 10 line, and it shows you how the reported distributions 11 compare to the amount required to be distributed and to 12 the net proceeds. Organizations continue to distribute 13 more than required for their charitable purposes. 14 Now for some general information about our 15 licensees. This slide reflects the decline of licensed 16 charities, from 1,312 to 1,254, and licensed lessors 17 from 432 to 418 over the past four years. 18 This slide shows the licensed 19 organizations by organization type. Fraternal 20 organizations continue to maintain its level, while all 21 other organizations show a continuing decline. 22 This slide is a snapshot of a number of 23 bingo playing locations as of the last day of each 24 calendar year. The number of locations has declined 25 14 percent in the last four years. 25 1 These next three slides will show the 2 activities of the Bingo Division, and this chart shows a 3 significant jump in applications processed and licenses 4 issued from 2009 to 2010. Applications processed 5 include number of licenses issued, denied, discontinued 6 or withdrawn. 7 The majority of the increase, if not all, 8 can be attributed to the increase in the number of 9 temporary licenses an organization may receive, which 10 increased from 12 to 24 as a result of House Bill 1474. 11 There was an increase of 36 percent over last year. 12 And this slide shows the audit activities 13 for the calendar years 2007 to 2010. The division 14 conducts compliance audits and reviews to determine if 15 the records and accounts of the organizations accurately 16 reflect financial and fiscal operations, whether 17 effective accounting and internal controls are 18 maintained and to determine if funds are received and 19 used for the purposes authorized by the Act and the 20 rules. The Commission also conducts game inspections 21 and investigates complaints. 22 In your notebook is additional information 23 from an analysis performed by Arlette Taylor, our 24 Operational Planning and Performance Coordinator. And 25 this completes my report, and I am available be answer 26 1 any questions you might have. 2 CHAIRMAN WILLIAMSON: Thank you. 3 Commissioner, do you have any questions? 4 COMMISSIONER KRAUSE: Very comprehensive 5 report. Thanks. 6 MR. MINER: Thank you. 7 CHAIRMAN WILLIAMSON: Bruce, just one 8 thing. In looking at the numbers, the gross is up, the 9 net is down, so that means the payout is greater? Are 10 there any sort of limitations in -- and whether it's you 11 or Phil. I'm trying to understand that relationship a 12 little better. 13 MR. MINER: There's no limits on regular 14 bingo; there are limits on pull-tab. 15 CHAIRMAN WILLIAMSON: So each game or each 16 charity can decide for themselves how much they want to 17 pay out or have a winner? Is that how that works? 18 MR. SANDERSON: The regular bingo has a 19 maximum of $2,500 per session, and that's where we're 20 seeing the percent of prize payout of income coming in 21 is starting to increase. There's a lot of organizations 22 that will actually give away more money than they take 23 in, because they do sell a lot of pull-tabs and instant 24 tickets. 25 So there is no statutory limit on the 27 1 amount of prizes they can award for instant bingo or 2 pull-tab bingo. And so we're continuing to see an 3 increase in the prize payout percentage for regular 4 bingo, and instant bingo is staying pretty well flat 5 between the 70 and 75 percent range payout-wise. Over 6 last year, there was about a two-and-a-half million 7 dollar decrease in net receipts, which is gross minus 8 prizes, and total expenses increased by about two and a 9 half million, which caused the actual net proceeds to 10 have about a $5 million decrease. 11 CHAIRMAN WILLIAMSON: What was the main 12 driving factor of that increase of just the expense part 13 of it? 14 MR. SANDERSON: Usually rent and salaries, 15 the amount of rent they pay for the playing locations 16 and the salaries they pay their staff. 17 CHAIRMAN WILLIAMSON: Okay. All right. 18 Thank you; thank you. 19 AGENDA ITEM NO. V 20 CHAIRMAN WILLIAMSON: Item V, it's the 21 consideration of and possible discussion and/or action 22 on a petitioner for rulemaking regarding 16 TAC 402.200 23 regarding general restrictions on the conduct of bingo. 24 Sandy, if you'll start, please. 25 MS. JOSEPH: All right. Good afternoon, 28 1 Commissioner. For the record, my name is Sandra Joseph. 2 I'm Special Counsel in the Legal Services Division. 3 This item does concern a petition for 4 rulemaking relating to Section 402.200, general 5 restrictions on the conduct of bingo. On February 23, 6 2011, the Commission received a petition for rulemaking 7 from Stephen Fenoglio, representing K&B Sales, Inc., 8 requesting amendment of this rule. 9 The Administrative Procedures Act provides 10 that not later than 60 days after the submission of a 11 petition for rulemaking, a state agency shall either 12 deny the petition in writing, stating its reason for the 13 denial, or initiate a rulemaking proceeding. The 60-day 14 period will expire on April 25, 2011. 15 The purpose, as stated by Mr. Fenoglio of 16 the amendment, is to clarify the terms "advertising" and 17 "promotion" as they are used in the Bingo Enabling Act. 18 In addition, Mr. Fenoglio states this amendment would 19 make clear that licensed authorized organizations may 20 seek to increase the charitable proceeds generated by 21 the conduct of bingo by availing themselves of the full 22 range of advertising and promotional services and 23 materials available to the general public. 24 Staff recognizes the need to clarify these 25 terms, "advertising" and "promotion," as they pertain to 29 1 charitable bingo licenses, in light of today's 2 technology. The staff does have some additional 3 thoughts and concerns about the draft as presented and 4 recommends that the Commission vote to initiate 5 rulemaking proceedings. However, we do not have a draft 6 rule for you today. We would bring that to you at a 7 future time, after we have had time to work with 8 Mr. Fenoglio and others that may be interested in this 9 rule. 10 CHAIRMAN WILLIAMSON: Okay. Thank you. 11 Commissioner, do you have any questions? 12 COMMISSIONER KRAUSE: Okay. So you're not 13 asking us to authorize the publishing of this rule, you 14 want us to just start a rulemaking process so that y'all 15 can go back and retool it? 16 MS. JOSEPH: That's correct. 17 MS. KIPLIN: But, Commissioner, at this 18 point, what's really before you is whether you grant the 19 petition for rulemaking or you deny. And if you grant, 20 it's a two-tiered process, and then we will come back 21 before at a later Commission meeting with a proposed 22 rule for you-all to consider. So there will be the 23 opportunity for public comment in connection with that 24 process. Today it's do you grant the petition for 25 rulemaking or do you deny? And, if you deny, stating 30 1 the reasons for doing so. 2 COMMISSIONER KRAUSE: I'm happy to do 3 that. 4 CHAIRMAN WILLIAMSON: Just a question. I 5 mean, are those terms used in the current Act? 6 MS. JOSEPH: Yes; yes, they are. 7 CHAIRMAN WILLIAMSON: And so briefly, why 8 are we having to -- what is driving this to reconsider 9 this or to make this clearer? Basically, what's the 10 problem here? 11 MS. JOSEPH: Well, I think there could be 12 a couple of things. One is that with the media we have 13 today through the Internet, you know, Twitter, Facebook, 14 all of that, that's outside of what probably was thought 15 of at the time these words "advertising" and "promotion" 16 were written, when everything was by paper or perhaps 17 telephone call or stand outside with the sandwich board. 18 So I think there are questions in some people's minds as 19 to how this new technology fits in with advertising and 20 what's acceptable and what's not. 21 CHAIRMAN WILLIAMSON: Okay. So this 22 relates to old rules and regulations as opposed to the 23 new Act that was passed last session that we've been 24 writing? 25 MS. JOSEPH: Yes; yes. 31 1 CHAIRMAN WILLIAMSON: Okay. All right. 2 Thank you. 3 MS. JOSEPH: Yes. And I would ask -- 4 CHAIRMAN WILLIAMSON: We need a motion on 5 this, don't we? 6 MS. JOSEPH: Yes. 7 CHAIRMAN WILLIAMSON: Sorry. 8 Commissioner? 9 COMMISSIONER KRAUSE: I make a motion that 10 we initiate a rulemaking process on this issue 11 pertaining to Section 402.200 and move that the staff 12 come back to us with specific language to publish later. 13 MS. JOSEPH: All right. Thank you. 14 CHAIRMAN WILLIAMSON: I second. 15 All in favor? 16 COMMISSIONER KRAUSE: Aye. 17 CHAIRMAN WILLIAMSON: Aye. 18 Motion passes 2-0. 19 MS. KIPLIN: And, Commissioners, I've got 20 a memo that will just reflect your vote today. You'll 21 initial it. 22 CHAIRMAN WILLIAMSON: Okay. 23 24 25 32 1 AGENDA ITEM NO. VI 2 CHAIRMAN WILLIAMSON: All right. Let's go 3 on to the next item, the consideration of and possible 4 discussion and/or action, including adoption, on 5 amendments to 16 TAC 402.502 relating to charitable use 6 of proceeds. 7 MS. JOSEPH: This item concerns 16 TAC 8 Section 402.502 and amendments that were proposed. And 9 public comment was held on these amendments. We did -- 10 and I will state for the rest of my presentations, 11 Mr. Fenoglio appeared at the hearing that was held for 12 each of these and did offer comments generally in 13 support. I'll say that for all of my items today so 14 that I won't be repeating it each time. 15 The purpose of the amendments is to 16 specify what documents and records must be maintained by 17 a licensed authorized organization to validate the use 18 of net proceeds for its charitable purposes. There are 19 some small changes to this rule, based on comments, for 20 clarification purposes. The staff does recommend that 21 you adopt this rule with the changes indicated in the 22 notebook. 23 CHAIRMAN WILLIAMSON: Now, Kim, do we want 24 to take this with the next item? 25 MS. KIPLIN: No. This one is separate. 33 1 CHAIRMAN WILLIAMSON: Okay. 2 MS. KIPLIN: The one -- 3 CHAIRMAN WILLIAMSON: The next one is the 4 one that -- okay. All right. 5 MS. KIPLIN: Two we're repealing and -- 6 CHAIRMAN WILLIAMSON: Okay. So I guess we 7 need a motion. 8 COMMISSIONER KRAUSE: I make a motion that 9 we adopt the amendments to 16 TAC Section 402.502 today. 10 CHAIRMAN WILLIAMSON: I second. 11 All in favor? 12 COMMISSIONER KRAUSE: Aye. 13 CHAIRMAN WILLIAMSON: Aye. 14 Motion passes 2-0. 15 MS. KIPLIN: Commissioners, I have an 16 order. 17 AGENDA ITEM NO. VII 18 CHAIRMAN WILLIAMSON: Okay. The next item 19 it consideration of and possible discussion and/or 20 action, including repeal, on existing 16 TAC 402.501 21 relating to distribution of proceeds for charitable 22 purposes, and then adoption of the new rule, 16 TAC 23 402.501 relating to charitable use of net proceeds. 24 MS. JOSEPH: Yes. Commissioners, this 25 Item VII does include both the recommended repeal of 34 1 Rule 402.501 and then adoption of a new 402.501. There 2 are no changes to the rules as they were published in 3 the Texas Register for public comment. 4 We did receive written comments from one 5 person that purportedly pertained to this rule; however, 6 they did not relate to the rule. So the staff 7 recommends that you adopt the repeal of 402.501 and also 8 adopt new 402.501. 9 CHAIRMAN WILLIAMSON: Thank you. 10 Commissioner, do you have any questions? 11 COMMISSIONER KRAUSE: No, ma'am. 12 CHAIRMAN WILLIAMSON: All right. Would 13 you like to make a motion, please? 14 COMMISSIONER KRAUSE: I make a motion that 15 we adopt an order repealing 16 TAC Section 402.501 in 16 its current form and also replacing it in its entirety 17 with the language for 16 TAC, Section 402.501, as 18 offered by the staff. 19 CHAIRMAN WILLIAMSON: Thank you. 20 I second. 21 All in favor? 22 COMMISSIONER KRAUSE: Aye. 23 CHAIRMAN WILLIAMSON: Aye. 24 The vote is 2-0. 25 MS. KIPLIN: And, Commissioners, I've got 35 1 two orders, one that's the adoption of the repeal, and 2 the other one is the adoption of the new rule. 3 CHAIRMAN WILLIAMSON: All right. Thank 4 you. 5 AGENDA ITEM NO. VIII 6 CHAIRMAN WILLIAMSON: The next item, 7 consideration of and possible discussion and/or action, 8 including adoption, on amendments to 16 TAC 402.205 9 relating to unit agreements. 10 MS. JOSEPH: Commissioners, the purpose of 11 the proposed amendments to this rule, the purpose is to 12 change language that is duplicated in another rule, the 13 definitions rule, 402.100, and to add language that 14 requires an accounting unit to notify the Commission of 15 a change in unit membership prior to the date unit 16 membership changes. 17 A public comment was held on this also. 18 Comments were received at the hearing but no written 19 comments. The staff recommends that the rule be adopted 20 without changes to the proposed rule. 21 CHAIRMAN WILLIAMSON: Commissioner, do you 22 have any questions? 23 COMMISSIONER KRAUSE: No, ma'am. 24 CHAIRMAN WILLIAMSON: Would you make a 25 motion, please? 36 1 COMMISSIONER KRAUSE: I make a motion we 2 adopt an order amending 16 TAC, Section 402.205, 3 relating to unit agreements and incorporating the 4 language proposed by the staff. 5 CHAIRMAN WILLIAMSON: I second. 6 All in favor? 7 COMMISSIONER KRAUSE: Aye. 8 CHAIRMAN WILLIAMSON: Aye. 9 Motion passes 2-0. 10 MS. KIPLIN: Commissioners, I've got an 11 order adopting that rulemaking. 12 CHAIRMAN WILLIAMSON: And, Sandy, we're 13 still with you. 14 MS. JOSEPH: Yes. 15 AGENDA ITEM NO. IX 16 CHAIRMAN WILLIAMSON: Consideration of and 17 possible discussion and/or action, including adoption, 18 on amendments to 16 TAC 402 -- is that the one we just 19 did? 20 MS. JOSEPH: No. 203. 21 CHAIRMAN WILLIAMSON: -- 203 related to 22 unit accounting. 23 MS. JOSEPH: All right. The purpose of 24 the amendments to 402.203 is to clarify the 25 requirements, process and timelines a licensed 37 1 authorized organization must follow relating to 2 expending net proceeds in its bingo account when joining 3 an accounting unit. 4 The rule was published in the Texas 5 Register for 30 days. No written comments were 6 received. Comments at the hearing were generally in 7 favor of the changes. 8 Staff recommends that the Commission adopt 9 amendments, with a few small changes that have been made 10 for clarification, changes that were needed as a result 11 of comments that were received at the hearing. 12 CHAIRMAN WILLIAMSON: All right. Thank 13 you. 14 Commissioner, do you have any questions? 15 COMMISSIONER KRAUSE: No. 16 CHAIRMAN WILLIAMSON: Would you make our 17 motion, please. 18 COMMISSIONER KRAUSE: I make a motion that 19 we adopt the amendments -- we make an order adopting the 20 amendments to 16 TAC, Section 402.203, as published in 21 the Texas Register but is otherwise modified by staff, 22 relating to unit accounting. 23 CHAIRMAN WILLIAMSON: I second. 24 All in favor? 25 COMMISSIONER KRAUSE: Aye. 38 1 CHAIRMAN WILLIAMSON: Aye. 2 Passes 2-0. 3 MS. KIPLIN: And, Commissioners, I have an 4 order adopting that rulemaking. 5 AGENDA ITEM NO. X 6 CHAIRMAN WILLIAMSON: Next item, 7 consideration of and possible discussion and/or action, 8 including adoption, on amendments to 16 TAC 402.604 9 relating to delinquent purchaser. 10 MS. JOSEPH: Yes. This is the last bingo 11 rule for your consideration today. It is a rule that 12 concerns delinquent purchasers. No written comments 13 were received. Mr. Fenoglio commented favorably on the 14 rule at the hearing. The purpose is to clearly set 15 forth for licensees the process and timelines to follow 16 related to payments for the sale or lease of bingo 17 supplies and equipment made by licensed authorized 18 organizations on the delinquent purchaser list. 19 The staff recommends that the Commission 20 adopt the amendments to this rule, without changes to 21 the rule as it was proposed. 22 CHAIRMAN WILLIAMSON: Commissioner, do you 23 have any questions. 24 COMMISSIONER KRAUSE: No, ma'am. 25 CHAIRMAN WILLIAMSON: Would you make a 39 1 motion, please. 2 COMMISSIONER KRAUSE: I make a motion that 3 we adopt an order to accept the amendments to 16 TAC, 4 Section 402.604, as recommended by the staff. 5 CHAIRMAN WILLIAMSON: I second. 6 All in favor? 7 COMMISSIONER KRAUSE: Aye. 8 CHAIRMAN WILLIAMSON: Aye. 9 Motion passes 2-0. 10 MS. KIPLIN: And, Commissioners, for the 11 record. I'm getting an order. I'm missing one on this 12 one, and we'll get it down to you and we'll put that on 13 the record. 14 CHAIRMAN WILLIAMSON: Okay. Thank you, 15 Sandy. 16 AGENDA ITEM NO. XI 17 CHAIRMAN WILLIAMSON: All right. Now 18 moving on -- we've done our orders -- report by the 19 Charitable Bingo Operations Director and any discussion 20 or action as a result of his report or activities, 21 including updates on staffing, licensing, accounting, 22 audit activities, pull-tab review, special projects and 23 upcoming operator training. 24 Mr. Sanderson, please. 25 MR. SANDERSON: Good afternoon, Chairman 40 1 and Commissioner. In your notebook is the report of the 2 bingo activities for the month of February. And two 3 items I would like to bring to your attention is, the 4 nomination period for BAC members is open through April 5 the 30th. We have three terms expiring on August the 6 31st, and we have one unexpired term from Mr. Joe 7 Williams, who submitted his resignation about four weeks 8 ago. 9 And then also, as Mr. Silver mentioned 10 earlier, the email subscription service that we have, we 11 now have 108 individuals signed up for that, which is I 12 believe about 40 more than what we had at the end of 13 February, so it's starting to take off a little bit. 14 CHAIRMAN WILLIAMSON: Great! I strongly 15 encourage the industry to do that. I think it's a 16 wonderful tool, so I'm just real pleased and I commend 17 y'all for doing that. 18 MR. SANDERSON: Well, thank you, and thank 19 Information Resources. They did a lot of work, too. 20 CHAIRMAN WILLIAMSON: Thank you, 21 Information Resources, if any of you guys are here. 22 MR. SANDERSON: And that's all I have to 23 report, be glad to answer any questions. 24 CHAIRMAN WILLIAMSON: All right. 25 Commissioner, do you have any questions? 41 1 COMMISSIONER KRAUSE: No, ma'am. 2 CHAIRMAN WILLIAMSON: Thank you, Phil. 3 MR. SANDERSON: Thank you. 4 AGENDA ITEM NO. XII 5 CHAIRMAN WILLIAMSON: The next item, 6 report, possible discussion and/or action on lottery 7 sales and revenue game performance, new game 8 opportunities, advertising, market research, trends, 9 game contracts, agreements and procedures. 10 Kathy and Robert, please. 11 MS. PYKA: Good afternoon, Commissioners. 12 My name is Kathy Pyka. I'm the Controller for the 13 Commission. And with me to my right is Robert Tirloni, 14 our Products Manager. 15 Commissioners, our first chart that we 16 have for you this afternoon is comparative sales 17 information through the week ending March 26, 2011. 18 This is our 30th week of the fiscal year, and total 19 sales for this period are $2.18 billion, which is an 20 increase of $25 million over the $2.156 billion figure 21 where we were at the same point in Fiscal Year 2010. 22 Our Fiscal Year 2011 instant ticket sales 23 are noted on the chart in the second blue bar at 24 $1.618 billion, which is a $14.4 million increase over 25 the $1.6 billion last fiscal year. And our on-line 42 1 ticket sales are reflected on the second red bar, at 2 $563 million, which is a $10.6 million gain over where 3 we were last fiscal year at this same point in time. 4 Commissioners, last month when we appeared 5 before you, we noted that our on-line sales decline was 6 at $620,000. And, as you can see, we're now up 7 $10.6 million over that five-week period, and this is 8 attributed to the most recent Mega Millions jackpot roll 9 that we had. It was advertised at $312 million, and the 10 jackpot paid $319 million on that jackpot for March the 11 25th. At this point in time, we also have a Powerball 12 roll that is increasing. Our current advertised jackpot 13 for Powerball is $187 million, so I'm looking forward to 14 seeing some continued on-line sales increases. 15 Now let me move on to the next chart, and 16 this reflects our cumulative average daily sales for 17 Fiscal Year 2009, Fiscal Year 2010 and Fiscal Year 2011. 18 As reflected by the total cumulative sales figure, our 19 daily sales average for Fiscal Year 2011 is at 20 $10.5 million. That's a four-tenths of a percent 21 decrease from Fiscal Year 2010 and a 4.3 percent 22 increase over Fiscal Year 2009 sales. 23 We'll focus first on the on-line games. 24 The jackpot games are highlighted with the white font. 25 And you'll see there that we have a daily average of 43 1 $1.6 million for this fiscal year, with a $172,000 2 decline from last fiscal year and a $301,000 increase 3 over Fiscal Year 2009. 4 As noted on the slide, the only game that 5 has an actual decline from the prior fiscal year is the 6 $258,000 decline for Lotto Texas, and that's attributed 7 to the $76 million jackpot that we had in October of 8 2009, and we are at the point of a $63 million roll at 9 this point in Fiscal Year 2010. 10 Our daily games are highlighted with the 11 green font, and you'll see there that we're right at 12 $1.1 million as our daily average, and that exceeds 13 Fiscal Year 2010's average by 1.5 percent and just below 14 the Fiscal Year 2010 average -- or '09 average -- by two 15 percent. 16 I wanted to highlight within this grouping 17 our Pick 3 sales which are up just at one and a half 18 percent over the prior fiscal year and Daily 4 sales 19 which are up 9 percent over last fiscal year. 20 And then closing out with our instant 21 ticket games which are at $7.8 million, which is an 22 increase of $107,000 over the prior fiscal year. 23 So with that, Robert will now go over 24 actual sales by product. 25 MR. TIRLONI: Good afternoon, 44 1 Commissioners. For the record, my name is Robert 2 Tirloni, Products Manager for the Commission. 3 So this is our fiscal year comparison, 4 2011 compared to Fiscal 2010. And, again, this is 5 through the week ending Saturday, this past Saturday, 6 March 26th. As Kathy mentioned, we have a lot of 7 positives. In our year-over-year comparison, the only 8 jackpot game that is down is Lotto Texas. And, again, 9 that's due to jackpots. We're seeing very positive 10 results on the Mega Millions and Powerball games, 11 including the add-on features of megaplier and 12 Powerplay. So jackpot games are up $8.3 million year- 13 over-year. 14 Again, many positives for the daily games. 15 The only two games that are down are Daily 4-Sum It Up 16 and Cash 5. But overall, that category as a whole is up 17 $2.3 million. And we continue to have very strong 18 instant sales weeks. Our two $20 Block Buster games are 19 doing extremely well. Last month I told you that we are 20 getting ready to bring on our second Texas Lottery Black 21 ticket. 22 Our Series 2 ticket started on March 14th. 23 That's doing very well. And we're already looking to a 24 potential Series 3 game, and we're working with 25 Scientific Games to get that game ordered and printed 45 1 and delivered so that we can continue to capitalize on 2 these very, very good sales we're seeing from that 3 product. So instants are up over $14 million year-over- 4 year. And as a whole, our sales in Fiscal 2011 are up 5 $25 million compared to last year. 6 CHAIRMAN WILLIAMSON: Great! 7 Commissioner, do you have any questions? 8 COMMISSIONER KRAUSE: No, ma'am. 9 CHAIRMAN WILLIAMSON: Must be that ad in 10 Texas Monthly. 11 MR. TIRLONI: I think that contributed to 12 it, yes, ma'am. 13 MS. PYKA: Thank you, Commissioners. 14 CHAIRMAN WILLIAMSON: Thank you. 15 All right. Kathy, if you'll give us the 16 transfers to the state report, please. 17 AGENDA ITEM NO. XIII 18 MS. PYKA: Again for the record, Kathy 19 Pyka, Controller for the Commission. 20 Commissioners, Tab XIII of your notebook 21 includes information on the agency's transfers to the 22 state. The first report reflects the transfers and 23 allocations to the Foundation School Fund, the Texas 24 Veterans Commission, as well as the allocation of 25 unclaimed prizes for the period ending February 28, 46 1 2011. Our total cash transfers to the state amounted to 2 $479.3 million through this six months of the fiscal 3 year. And the breakdown on that amount includes 4 $443.7 million transferred to the Foundation School 5 Fund, $4.2 million transferred to the Texas Veterans 6 Commission, with a balance of $31.5 million transferred 7 from unclaimed lottery prizes. 8 This represents a 6.2 percent decrease, or 9 29.4 million under the amount that we transferred to the 10 Foundation School Fund through this same period last 11 fiscal year. And this brings our cumulative transfers 12 to the Foundation School Fund to $13.1 billion. 13 I would be happy to answer any questions 14 that you might have. 15 CHAIRMAN WILLIAMSON: Thank you. 16 Commissioner, do you have any questions? 17 COMMISSIONER KRAUSE: No, ma'am. 18 CHAIRMAN WILLIAMSON: Thank you. 19 MS. PYKA: Thank you. 20 AGENDA ITEM NO. XIV 21 CHAIRMAN WILLIAMSON: Next item, report, 22 discussion or any action on the 82nd Legislature. 23 Nelda, this is your item, please. 24 MS. TREVINO: Good afternoon, 25 Commissioners. For the record, I'm Nelda Trevino. I'm 47 1 the Director of Governmental Affairs. 2 In your notebook you have a Legislative 3 Bill Tracking Report of all the bills that the agency is 4 tracking. And this afternoon we provided you with an 5 updated tracking report of only those bills that are 6 specific to the Lottery, Bingo or gaming in general. 7 As you are aware, the House Licensing and 8 Administrative Procedures Committee met earlier this 9 week and considered gaming-related legislation. In 10 addition to various bills authorizing video lottery 11 terminals at pari-mutuel tracks, on Indian reservations 12 and in bingo halls, legislation authorizing casinos and 13 poker gaming were also considered. All those bills 14 remain pending in that committee. 15 There are several bills that were also 16 considered by the House Licensing Committee that I would 17 like to highlight, and these include House Bill 1955 by 18 Rep. Senfronia Thompson. This is the bill that would 19 allow the Lottery Commission to contract or license with 20 the lottery operator to act as a retailer. This bill 21 was voted favorably out of committee and has been 22 recommended to be considered on the House local and 23 uncontested calendar. 24 The next bill is House Bill 3042, and this 25 is a bill by Rep. Tim Kleinschmidt. This bill would 48 1 require the Lottery Commission to create and market a 2 scratch-off game in which the net revenue from this 3 ticket would be dedicated for breast cancer research, 4 education and patient support. This bill was also left 5 pending in the House Licensing Committee. 6 And, lastly, House Bill 3282 by Rep. Ryan 7 Guillen. This is a bill of authorizes a new bingo game 8 referred to as a 24-number bingo, and this bill was also 9 left pending in the committee. 10 There is one other bill that I want to 11 mention, and that is Senate Bill 626 by Sen. John 12 Carona, and this is the bill that clarifies provisions 13 in the Lottery Act pertaining to the assignment of 14 lottery prizes. And this bill was considered earlier 15 this month in the Senate State Affairs Committee. It 16 was voted favorably out of the committee. It's also 17 been recommended for the local and uncontested calendar. 18 Lastly, House Bill 1, the general 19 appropriations bill for the 2012-2013 biennium, is 20 scheduled to be considered on the House floor tomorrow. 21 There are several prefiled amendments that pertain to 22 the Lottery Commission and to state agencies across the 23 board. We'll be monitoring the actions of the House 24 floor and any of those amendments that might be adopted, 25 and we'll keep you updated on any actions. 49 1 This concludes my report, and I will be 2 glad to answer any questions. 3 CHAIRMAN WILLIAMSON: Thank you. 4 Commissioner, do you have any questions? 5 COMMISSIONER KRAUSE: I do not. Thank 6 you. 7 CHAIRMAN WILLIAMSON: All right. Thank 8 you. 9 AGENDA ITEM NOS. XV, XVI AND XVII 10 CHAIRMAN WILLIAMSON: Okay. We will take 11 the next three items, and they will be consideration of 12 and possible and action, including adoption, on 13 amendments to 16 TAC 401.305 relating to Lotto Texas 14 on-line game rule, 16 TAC 401.315 relating to Mega 15 Millions on-line game rule, and 16 TAC 401.317 relating 16 to Powerball on-line game rule. 17 Pete, if you'll take these, please. 18 MR. WASSDORF: Good afternoon, 19 Commissioners. For the record, my name is Pete 20 Wassdorf, Assistant General Counsel in the Legal 21 Services Division. I direct your attention to Agenda 22 Items XV, XVI and XVII, which I will present together. 23 At your January 29, 2011 meeting, you 24 proposed amendments to the on-line game rules for Texas 25 Lotto, Mega Millions and Powerball, which appear at 50 1 Title 16 in Texas Administrative Code, Sections 401.305, 2 401.315 and 401.317, respectively. 3 At your last meeting, you directed that a 4 public hearing be held on February 16th. The hearing 5 was duly noticed and held. And no members of the public 6 appeared to comment, and there were no written comments 7 that were received during this period. 8 The purpose of these proposed rules is to 9 provide for the differences in the default method of 10 payment between the old and new retail sales terminals 11 and self-service terminals which will both be in 12 existence during the lottery operators' conversion 13 period over the next few months. 14 Purchases from the old machines will 15 default to annuitized payments if no payment method is 16 selected. And purchases from the new machines will 17 default to a single cash value payment if no payment 18 method is selected. 19 The staff recommends that you adopt these 20 rules -- amendments at this time. And I would be happy 21 to answer any questions. 22 CHAIRMAN WILLIAMSON: Thank you. 23 Commissioner, do you have any questions? 24 COMMISSIONER KRAUSE: No, ma'am. 25 CHAIRMAN WILLIAMSON: Do you want us to 51 1 make these motions one at a time and vote on them or do 2 all three at once? 3 MS. KIPLIN: It doesn't matter to me as 4 long as you identify each one of the rules. 5 CHAIRMAN WILLIAMSON: Okay. 6 MS. KIPLIN: I've got three orders. 7 CHAIRMAN WILLIAMSON: Okay. Thank you. 8 Commissioner, would you mind making a 9 motion, please. 10 COMMISSIONER KRAUSE: I make a motion that 11 we adopt the amendments that were published and that we 12 had a hearing on to the following three rules: 16 TAC 13 401.305 relating to Lotto Texas, 16 TAC Section 401.315 14 relating at Mega Millions, and 16 TAC Section 401.317 15 related to Powerball. All those are related to the 16 on-line game rule. 17 CHAIRMAN WILLIAMSON: I second. 18 All in favor? 19 COMMISSIONER KRAUSE: Aye. 20 CHAIRMAN WILLIAMSON: Aye. 21 All three motions pass 2-0. 22 MS. KIPLIN: Commissioners, I have those 23 three orders, and I also have the order on the 24 delinquent purchaser list bingo rule, so you have four 25 coming your way. 52 1 CHAIRMAN WILLIAMSON: All right. 2 AGENDA ITEM NO. XVIII 3 CHAIRMAN WILLIAMSON: Let's go on to the 4 next item, consideration of and possible discussion and 5 action or adoption on new rule 16 TAC 401.372 relating 6 to display of license. 7 MR. WASSDORF: Again for the record, my 8 name is Pete Wassdorf, Assistant General Counsel in the 9 Legal Services Division. 10 At your January 29th meeting, you proposed 11 a new rule at 16 Texas Administrative Code 401.372 12 entitled "Display of License." The purpose of the new 13 rule is to establish criteria for the display of lottery 14 retailer sales licenses in the place of business at 15 which the sales agents will sell lottery products. 16 Texas Government Code Section 466.157 requires the 17 Commission to adopt such a rule. 18 The Commission received no comments during 19 the public comment period with respect of this rule. 20 And the staff recommends that the Commission adopt the 21 new 16 TAC 401.372. 22 I would be happy to answer any questions. 23 CHAIRMAN WILLIAMSON: Commissioner, do you 24 have any questions? 25 COMMISSIONER KRAUSE: I have no questions. 53 1 CHAIRMAN WILLIAMSON: Would you make a 2 motion, please. 3 COMMISSIONER KRAUSE: I make a motion that 4 we adopt the rule change to 16 TAC Section 401.372 5 relating to display of license. 6 CHAIRMAN WILLIAMSON: I second. 7 Is there a vote? 8 COMMISSIONER KRAUSE: Aye. 9 CHAIRMAN WILLIAMSON: Aye. 10 Motion passes 2-0. 11 MS. KIPLIN: And I have an order 12 reflecting that vote. 13 AGENDA ITEM NO. XIX 14 CHAIRMAN WILLIAMSON: Let's go on to the 15 next item, report, possible discussion and/or action on 16 agency's contracts, including amendment, to the 17 statistical consulting services contract. 18 Mr. Fernandez. 19 MR. FERNANDEZ: Good afternoon, 20 Commissioners. For the record, my name is Mike 21 Fernandez. I'm the Director of Administration. 22 On this agenda item, there were two 23 informational pieces. The first is the quarterly 24 reports, status reports for contracts. And if you have 25 any questions regarding those, I would be happy to 54 1 answer them. 2 CHAIRMAN WILLIAMSON: I have none. 3 Commissioner, do you have any questions? 4 COMMISSIONER KRAUSE: No, ma'am. 5 MR. FERNANDEZ: The second being to advise 6 the Commission of staff's intent to amend our current 7 contract with Eubank Young statistical consultants to 8 take advantage of a invol- -- of voluntary cost 9 reduction. 10 (Laughter) 11 CHAIRMAN WILLIAMSON: You almost said 12 "involuntary." 13 MR. FERNANDEZ: I did. 14 CHAIRMAN WILLIAMSON: All right. 15 Commissioner, do you have any questions? 16 COMMISSIONER KRAUSE: I do not. 17 CHAIRMAN WILLIAMSON: Please thank them 18 for what -- they've helped up with that. 19 MR. FERNANDEZ: I will. Thank you. 20 AGENDA ITEM NO. XX 21 CHAIRMAN WILLIAMSON: All right. Next 22 item, report, possible discussion and/or action on the 23 agency's HUB program and/or minority business 24 participation, including the agency's Mentor Protégé 25 Program. 55 1 Joyce, please. 2 MS. BERTOLACINI: Good afternoon, 3 Commissioners. For the record, my name is Joyce 4 Bertolacini, Coordinator of the TLC's Historically 5 Underutilized Business program. 6 A copy of the agency's finalized Fiscal 7 Year 2010 Minority Business Participation report has 8 been included in your notebooks today. This report, 9 which is required by Section 466.107 of the State 10 Lottery Act, must be made available annually to the 11 Governor and Lt. Governor, Speaker of the House and 12 members of the Legislature. The report requires your 13 formal approval prior to being printed and published on 14 our website. 15 The current Minority Business 16 Participation report documents the level of minority and 17 HUB participation in the agency's contracting activity 18 during Fiscal Year 2010. It also includes information 19 on the number of licensed minority lottery retailers. 20 During Fiscal Year 2010, the agency 21 achieved an overall participation rate of 22.22 percent 22 in its minority HUB contracting activity. In addition, 23 of the 18 largest spending state agencies, the TLC 24 ranked sixth by overall HUB percentage. Finally, during 25 Fiscal Year 2010, the agency had 7,065 minority 56 1 retailers, which represented 42.16 percent of the total 2 lottery retailer base. 3 I would be happy to answer any questions 4 you have regarding the report at this time. And if you 5 have none -- 6 CHAIRMAN WILLIAMSON: Commissioner, do you 7 have any questions? 8 MS. BERTOLACINI: And if you have one -- 9 COMMISSIONER KRAUSE: I -- 10 MS. BERTOLACINI: -- I will be happy to 11 answer. 12 CHAIRMAN WILLIAMSON: Okay. I don't 13 believe we have any questions. 14 Is this the action item? 15 MS. KIPLIN: Yes. I'm sorry. This is an 16 action to approve the Minority Business Report. The 17 Commission is required to report that, so that's before 18 you for your consideration. 19 CHAIRMAN WILLIAMSON: We need to make a 20 motion. 21 COMMISSIONER KRAUSE: I make a motion that 22 we adopt this report. 23 CHAIRMAN WILLIAMSON: I second. 24 All in favor? 25 COMMISSIONER KRAUSE: Aye. 57 1 CHAIRMAN WILLIAMSON: Aye. 2 Motion passes 2-0. 3 Thank you, Joyce. 4 MS. KIPLIN: Commissioners, there is a 5 letter that's a cover letter. And, Chairman Williamson, 6 you sign it, and you sign it in your representative 7 capacity on behalf of the Commission in connection with 8 the vote you just took. 9 CHAIRMAN WILLIAMSON: Okay. All right. 10 MS. BERTOLACINI: Thank you. And I have 11 one more remark regarding the agency's Mentor Protégé 12 Program. We currently still have one mentor protégé 13 relationship in place that will be expiring in December 14 of this year. And I will continues working to establish 15 additional relationships during the coming months. 16 That concludes my remarks. And if you 17 have any other questions. 18 COMMISSIONER KRAUSE: Can you give me the 19 30-second rundown on that program? 20 MS. BERTOLACINI: On the Mentor Protégé 21 Program? 22 COMMISSIONER KRAUSE: Yes, ma'am. 23 MS. BERTOLACINI: It's a matching program 24 where we have several of our prime vendors that are 25 approved to be mentors. We get applications from 58 1 interested protégés and try to match them, based on what 2 the protégés' needs are and what the mentors can offer 3 as far as assistance. 4 And if we have a match, we provide the 5 applications from the protégés to the mentors and allow 6 them to kind of come to a decision on who they would 7 like to work with. It's a strictly voluntary program 8 for both parties. 9 COMMISSIONER KRAUSE: What does a protégé 10 look like? Who are those people? 11 MS. BERTOLACINI: They are required to be 12 certified as a historically underutilized business by 13 the State of Texas. I believe there are some other 14 minimal requirements like I think they have to have been 15 in business for about a year, at least a year. 16 COMMISSIONER KRAUSE: So these are 17 companies, not people? 18 MS. BERTOLACINI: Right. 19 COMMISSIONER KRAUSE: Okay. Thank you, 20 ma'am. 21 CHAIRMAN WILLIAMSON: All right. Thank 22 you, Joyce. 23 MS. BERTOLACINI: Thank you. 24 25 59 1 AGENDA ITEM NO. XXI 2 CHAIRMAN WILLIAMSON: The next item is 3 report, possible discussion and action on GTECH 4 Corporation. 5 Gary. 6 MR. GRIEF: Commissioners, other than 7 what's in your notebooks, I have nothing further to 8 report on that item. 9 CHAIRMAN WILLIAMSON: Commissioner, do you 10 have any questions? 11 COMMISSIONER KRAUSE: Not at this time. 12 AGENDA ITEM NO. XXII 13 CHAIRMAN WILLIAMSON: The next item is 14 report by the Executive Director and any discussion or 15 action on the agency's operational status, agency 16 procedures and FTE status. 17 Gary, please. 18 MR. GRIEF: Again, Commissioners, other 19 than what's in your notebooks, I have nothing further. 20 AGENDA ITEM NO. XXIV 21 CHAIRMAN WILLIAMSON: All right. I'm 22 going to skip over to Item XXIV which is public comment. 23 And I have no witness affirmation forms, so there will 24 be none. 25 60 1 AGENDA ITEM NO. XXIII 2 CHAIRMAN WILLIAMSON: So we'll go back to 3 Item XXIII, consideration of the status and possible 4 entry of order in cases posted on the meeting agenda. 5 Kim, that is your item. 6 MS. KIPLIN: Commissioners, if I could, I 7 would like to take Letters A, B and C together. These 8 are lottery retail cases that are revocations in each of 9 these cases. The allegation was insufficient funds 10 being available at the time the lottery swept their 11 accounts. The State Office of Administrative Hearings 12 Administrative Law Judge in each case recommended 13 revocation of the license, and the staff requests that 14 you vote to approve that and revoke their licenses. 15 Those are in Letters A, B and C. 16 CHAIRMAN WILLIAMSON: Thank you. 17 Commissioner, do you have any questions? 18 COMMISSIONER KRAUSE: No, ma'am. 19 CHAIRMAN WILLIAMSON: We need to make a 20 motion to -- 21 COMMISSIONER KRAUSE: I make a motion that 22 we adopt the Administrative Law Judges' recommendation 23 in these three cases. 24 Do you want me to say the docket numbers 25 or not? 61 1 MS. KIPLIN: No, that's fine. Just in 2 Letters A, B and C, and we'll link those back to the 3 open meeting notice. 4 COMMISSIONER KRAUSE: A, B and C, Docket 5 Nos. A, B and C here. 6 CHAIRMAN WILLIAMSON: All right. I 7 second. 8 Is there a vote? 9 COMMISSIONER KRAUSE: Aye. 10 CHAIRMAN WILLIAMSON: Aye. 11 Motion passes 2-0. 12 MS. KIPLIN: Commissioners, I'll hold 13 those orders until we go through all of them, if that's 14 fine with you. 15 And then I would like to go to Letters D 16 and E. These are two cases against retailers. The 17 allegations are similar, that the retailers' employee 18 accepted a credit card in exchange for the purchase of a 19 lottery ticket, and that's a violation of the state 20 Lottery Act. 21 The staff has recommended a 10-day 22 suspension in connection with each of those cases. The 23 retailer has agreed to it, and the staff recommends that 24 you vote to approve those proposed orders. 25 CHAIRMAN WILLIAMSON: All right. Thank 62 1 you. 2 Commissioner, do you have any questions? 3 COMMISSIONER KRAUSE: No, ma'am. 4 CHAIRMAN WILLIAMSON: Would you make a 5 motion, please. 6 COMMISSIONER KRAUSE: I make a motion that 7 we adopt the proposed orders recommended by the staff in 8 connection with these Cases, D, E and F on Item No. 9 XXIII of our agenda. 10 CHAIRMAN WILLIAMSON: I second -- no. 11 Wait. It's just D and E. Right. 12 MS. KIPLIN: If I could just limit it to D 13 and E. That's Hallsburg Short Stop 7-Eleven store. 14 COMMISSIONER KRAUSE: Oh, I'm sorry. 15 MS. KIPLIN: No. That's all right. 16 COMMISSIONER KRAUSE: Items D and E, 17 No. XXIII on our agenda, that I make our motion or amend 18 my motion to adopt staff's recommendation and adopt the 19 orders recommended by the staff. 20 CHAIRMAN WILLIAMSON: I second the motion. 21 All in favor? 22 COMMISSIONER KRAUSE: Aye. 23 CHAIRMAN WILLIAMSON: Aye. 24 Motion passes 2-0. 25 MS. KIPLIN: Commissioners, that leaves a 63 1 remaining docket, and that's Docket No. 362-10-2668.B, 2 the Ysleta Del Sur Pueblo Volunteer Fire Department, 3 Incorporated, and that's the application to conduct 4 bingo, on application for licenses to conduct bingo. 5 And, Commissioners, if I could lay this 6 out. You'll recall in an earlier Commission meeting the 7 matter was presented to you and you-all voted to deny 8 that bingo license, and that was after there was a 9 hearing at the State Office of Administrative Hearings 10 where both the staff and the volunteer fire department 11 put on evidence, and the ALJ had found facts and 12 conclusions of law and recommended denying the license. 13 Subsequent to that, the respondent and the 14 volunteer, or the applicant -- pardon me -- the 15 volunteer fire department filed a motion for rehearing. 16 The point of the motion for rehearing was to have that 17 matter reopened for the taking of additional evidence. 18 You-all did grant. The motion for rehearing in that 19 matter was remanded back to the State Office of 20 Administrative Hearings for the purpose of taking 21 additional evidence. 22 The real crux of the matter is whether the 23 volunteer fire department did actively engage in fire- 24 fighting for the 12 months immediately preceding the 25 date of the application. Based on the evidence that was 64 1 taken into the record at that time, another proposal for 2 decision was issued. And in that proposal for 3 decisions, the Administrative Law Judge did find facts 4 that supported the conclusion that the volunteer fire 5 department did engage, actively engage in fire-fighting 6 in the 12 months immediately preceding the 7 application -- the filing of the application. 8 The staff does not oppose the proposal for 9 decision. The Administrative Law Judge has recommended 10 granting the license to the volunteer fire department 11 for the department to -- the volunteer fire department 12 to conduct bingo. There was a discussion on what is the 13 evidence that really needs to be found to support that. 14 And the volunteer fire department did present evidence 15 that indicated that it had participated -- it provided, 16 in fighting fires, it had provided six firefighters, 17 including firefighters from California and the U.S. 18 Forest Service. 19 And also it -- I'm going to find these now 20 if I can. So the findings -- it would probably be 21 better just to be more specific on that -- is during May 22 and June 2009, the applicant fought three fires. And at 23 the second hearing, the applicant did provide 24 documentation that lists participation in fighting these 25 fires. 65 1 It also has provided first aid and EMS 2 type services and fire prevention and was present at the 3 annual 4th of July fireworks show that was held on the 4 reservation, in order to provide first aid and EMS type 5 services. 6 There was discussion about an inactive 7 fire truck. And I think the narrative of the discussion 8 indicated by the State Office of Administrative Hearings 9 Administrative Law Judge, one purpose, it seems that 10 raising funds for these activities is the very purpose 11 for licensing, so that they can get the funds for 12 equipment and training. 13 And so with that, I will tell you that the 14 applicant is here and their lawyer, Mr. Rigano, in the 15 event you have any questions. I will be happy to answer 16 any questions and, of course, the agency counsel that 17 represented staff, and then Mr. Sanderson is here. 18 I will say at this point that the staff 19 does not opposed the license application. 20 CHAIRMAN WILLIAMSON: Okay. We may have a 21 couple of questions. 22 MR. RIGANO: I guess I should make an 23 appearance on the record. Hayward Rigano for the 24 volunteer fire department. 25 And we, of course, would ask the Court, or 66 1 the Commission, to adopt the Administrative Law Judge's 2 decision in this case as well. But I would present 3 myself for any questions you might have. 4 CHAIRMAN WILLIAMSON: Commissioner, do you 5 have any questions? 6 COMMISSIONER KRAUSE: Was it a different 7 judge? 8 MR. RIGANO: Same judge. 9 COMMISSIONER KRAUSE: Same judge. Okay. 10 So you had new evidence for the judge? 11 MR. RIGANO: Yes, we did. The new 12 evidence basically consisted of, we had kind of 13 restricted ourselves at the first run at this, to things 14 that had occurred on the reservation. The volunteer 15 fire department had actually fought a couple of fires at 16 their ranch, which is several miles away, actually in 17 another county. 18 And we didn't include that, because I 19 thought things would be restricted to the reservation 20 where they would normally conduct their operations, and 21 so that was kind of a probably misstep on my part not to 22 include that. But in finding out about it, we decided 23 to include it and also cover the other things that they 24 also did, which were activities that were conducted on 25 the reservation itself. 67 1 COMMISSIONER KRAUSE: Well, you can 2 appreciate that we're not really in a position to be 3 able to make factual findings like that and that kind of 4 thing, which is why we sent you back to the ALJ. 5 MR. RIGANO: Absolutely. And we 6 appreciate the opportunity to do that. 7 CHAIRMAN WILLIAMSON: Okay. And I know 8 there's a couple more of you here. So whoever can 9 answer this: When are y'all going to buy a fire truck? 10 MR. RIGANO: As soon as they can; as soon 11 as they can. 12 COMMISSIONER KRAUSE: As soon as they get 13 some bingo money. 14 MR. RIGANO: Yes. 15 CHAIRMAN WILLIAMSON: Okay. I would love 16 to know when that occurs, so if you would please let 17 Phil know. 18 MR. RIGANO: Absolutely. 19 CHAIRMAN WILLIAMSON: Okay. 20 FROM THE AUDIENCE: Send you a picture and 21 everything. 22 CHAIRMAN WILLIAMSON: That would be even 23 better. Great! Okay. 24 COMMISSIONER KRAUSE: I make a motion to 25 adopt the ALJ's recommendation in this case to grant the 68 1 license. 2 CHAIRMAN WILLIAMSON: I second the motion. 3 All in favor? 4 COMMISSIONER KRAUSE: Aye. 5 CHAIRMAN WILLIAMSON: Aye. 6 Motion passes 2-0. 7 FROM THE AUDIENCE: Thank you. 8 MS. KIPLIN: Commissioners, I have orders 9 in all the enforcement cases, and I'll present this to 10 you now. 11 MR. SANDERSON: And also, Commissioner, I 12 believe Bruce Miner, our Taxpayer Services Manager, has 13 been in contact with the representatives from the fire 14 department so they can bring their application up to 15 date. There may be a few items they've got to complete 16 and fill out -- 17 CHAIRMAN WILLIAMSON: Okay. 18 MR. SANDERSON: -- depending on any 19 changes that may have transpired. 20 CHAIRMAN WILLIAMSON: Great! All right. 21 I believe at this time -- yes? Okay. 22 AGENDA ITEM NO. XXV 23 CHAIRMAN WILLIAMSON: At this time I move 24 the Texas Lottery Commission go into executive session 25 to deliberate the duties and evaluation of the Executive 69 1 Director, Internal Audit Director and Charitable Bingo 2 Operations Director and deliberate the duties to the 3 General Counsel and Human Resources Director, pursuant 4 to Section 551.074 of the Texas Government Code and to 5 receive any legal advice regarding pending or 6 contemplated litigation pursuant to Section 7 551.071(1)(A) and to receive legal advice regarding 8 settlement offers pursuant to Section 551.071(1)(B) of 9 the Texas Government Code and to receive legal advice 10 pursuant to Section 551.071(2) of the Texas Government 11 Code, including but not limited to those items posted on 12 the open meetings notice for purposes of receiving legal 13 advice. 14 Is there a second? 15 COMMISSIONER KRAUSE: Second. 16 CHAIRMAN WILLIAMSON: All in favor, say 17 "Aye." 18 COMMISSIONER KRAUSE: Aye. 19 CHAIRMAN WILLIAMSON: Aye. 20 Vote is 2-0. The lottery Commission will 21 go into executive session. The time is 2:37, and today 22 is March 31, 2011. 23 (Off the record for executive session: 24 2:37 p.m. to 3:20 p.m.) 25 70 1 AGENDA ITEM NO. XXVI 2 CHAIRMAN WILLIAMSON: The Texas Lottery 3 Commission is out of executive session. The time is 4 3:20 p.m. And there is no action to be taken as a 5 result of executive session. 6 AGENDA ITEM NO. XXVII 7 CHAIRMAN WILLIAMSON: So at this time I 8 believe -- 9 COMMISSIONER KRAUSE: I make a motion. 10 CHAIRMAN WILLIAMSON: -- this concludes 11 the business of the Commission. Is there a motion to 12 adjourn? 13 COMMISSIONER KRAUSE: I move that we 14 adjourn. 15 CHAIRMAN WILLIAMSON: I second the motion. 16 All in favor? 17 COMMISSIONER KRAUSE: Aye. 18 CHAIRMAN WILLIAMSON: Aye. 19 Vote carries 2-0. 20 (Commission meeting adjourned at 21 3:20 p.m.) 22 23 24 25 71 1 C E R T I F I C A T E 2 STATE OF TEXAS ) 3 COUNTY OF TRAVIS ) 4 I, Aloma J. Kennedy, a Certified Shorthand 5 Reporter in and for the State of Texas, do hereby 6 certify that the above-mentioned matter occurred as 7 hereinbefore set out. 8 I FURTHER CERTIFY THAT the proceedings of 9 such were reported by me or under my supervision, later 10 reduced to typewritten form under my supervision and 11 control and that the foregoing pages are a full, true 12 and correct transcription of the original notes. 13 IN WITNESS WHEREOF, I have hereunto set my 14 hand and seal this the 11th day of April 2011. 15 16 17 ________________________________ 18 Aloma J. Kennedy Certified Shorthand Reporter 19 CSR No. 494 - Expires 12/31/12 20 Firm Registration No. 276 Kennedy Reporting Service, Inc. 21 8140 North Mo-Pac Expressway Suite II-120 22 Austin, Texas 78759 23 24 25