1 1 TRANSCRIPT OF PROCEEDINGS 2 BEFORE THE 3 TEXAS LOTTERY COMMISSION 4 AUSTIN, TEXAS 5 6 16 TEXAS ADMINISTRATIVE CODE § §402.302 § 7 16 TEXAS ADMINISTRATIVE CODE § §402.321 § 8 16 TEXAS ADMINISTRATIVE CODE § §402.322 § 9 16 TEXAS ADMINISTRATIVE CODE § §402.323 § 10 16 TEXAS ADMINISTRATIVE CODE § §402.324 § 11 16 TEXAS ADMINISTRATIVE CODE § §402.325 § 12 16 TEXAS ADMINISTRATIVE CODE § §402.326 § 13 16 TEXAS ADMINISTRATIVE CODE § §402.327 § 14 16 TEXAS ADMINISTRATIVE CODE § §402.328 § 15 16 PUBLIC HEARING ON RULEMAKINGS WEDNESDAY, FEBRUARY 29, 2012 17 18 BE IT REMEMBERED THAT on Wednesday, the 29th 19 day of February 2012, the above-entitled public comment 20 hearing was held from 10:02 a.m. to 11:42 a.m., at the 21 Offices of the Texas Lottery Commission, 611 East 6th 22 Street, Austin, Texas 78701, before SANDRA JOSEPH, 23 SPECIAL COUNSEL. The following proceedings were 24 reported via machine shorthand by Aloma J. Kennedy, a 25 Certified Shorthand Reporter of the State of Texas. 2 1 APPEARANCES 2 SPECIAL COUNSEL: 3 Ms. Sandra Joseph 4 DIRECTOR, CHARITABLE BINGO OPERATIONS DIVISION: Phil Sanderson 5 6 7 8 9 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, WEDNESDAY, FEBRUARY 29, 2012........... 5 4 OPENING COMMENTS ON BEHALF OF THE COMMISSION (PHIL SANDERSON).................................... 6 5 OPENING COMMENTS ON BEHALF OF 6 RIVER CITY BINGO, ET AL (STEPHEN FENOGLIO).......... 8 7 COMMENTS ON BEHALF OF BOYS & GIRLS CLUB (JOHN ANDERSON)..................................... 33 8 COMMENTS ON BEHALF OF FORT WORTH BOOKKEEPING, INC. 9 (SHARON IVES)....................................... 34 10 COMMENTS ON BEHALF OF AMVETS POST 52 (CHARLES HUTCHINGS)................................. 38 11 COMMENTS ON BEHALF OF TEXAS CHARITY ADVOCATES 12 (EDDIE HEINEMEIER).................................. 39 13 COMMENTS ON BEHALF OF TEXAS CHARITY ADVOCATES (MELISSA YOUNG...................................... 40 14 COMMENTS ON BEHALF OF DALLAS TEXAS TEAM BINGO 15 (LARRY WHITTINGTON)................................. 42 16 COMMENTS ON BEHALF OF TREND GAMING SYSTEMS (STEVEN HIERONYMUS)................................. 45 17 COMMENTS BY TRACE SMITH............................. 46 18 COMMENTS ON BEHALF OF AMVETS AND AMVETS LADIES 19 AUXILIARY (STEPHANIE COLWELL)....................... 50 20 COMMENTS ON BEHALF OF THE BINGO INTEREST GROUP (STEVE BRESNEN)..................................... 52 21 CLOSING COMMENTS ON BEHALF OF 22 RIVER CITY BINGO, ET AL (STEPHEN FENOGLIO).......... 59 23 CLOSING COMMENTS ON BEHALF OF THE COMMISSION (PHIL SANDERSON).................................... 61 24 REPORTER'S CERTIFICATE.............................. 64 25 4 1 EXHIBIT INDEX 2 FENOGLIO IDENTIFIED 3 A 1/1/11 five-page document 4 entitled "Session Invoices" 24 5 IVES IDENTIFIED 6 A One-page document entitled 7 "Cashier Pay Rates per session basis working 12 sessions" 37 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 5 1 P R O C E E D I N G S 2 WEDNESDAY, FEBRUARY 29, 2012 3 (10:02 a.m.) 4 MS. JOSEPH: All right. Good morning. My 5 name is Sandra Joseph. I'm Special Counsel for the 6 Legal Services Division. Also sitting up here is Phil 7 Sanderson, Director of the Charitable Bingo Operations 8 Division. 9 This is a public hearing to receive 10 comments on nine proposed rulemaking actions. They 11 include the repeal of 16 TAC, Section 402.302, 12 concerning card-minding systems. In addition, they 13 include proposed new rules in 16 TAC, 402.321, 14 Card-Minding Systems--Definitions; 402.322, Card- 15 Minding Systems--Site System Standards; 402.323, 16 Card-Minding Systems--Device Standards; 402.324, 17 Card-Minding Systems--Approval of Card-Minding Systems; 18 402.325, Card-Minding Systems--Licensed Authorized 19 Organizations Requirements; 402.326, Card-Minding 20 Systems--Distributor Requirements; 402.327, Card-Minding 21 Systems--Security Standards; and 402.328, Card-Minding 22 Systems--Inspections and Restrictions. 23 As you look through the rules, your 24 packets, it has come to our attention that at least one 25 person had some duplicate pages in there. So if you're 6 1 reviewing the rules and you flip a page and it doesn't 2 seem to make sense, make sure that it's not a repeat of 3 a page, and that might help you. And we apologize if 4 there's any confusion about that. 5 Mr. Sanderson would like to make a comment 6 before we begin. 7 OPENING COMMENTS ON BEHALF OF THE COMMISSION 8 MR. SANDERSON: First off, good morning. 9 I would like to thank everyone that's here in attendance 10 today to make public comments on these rules. I really 11 appreciate the feedback and the comments. I would just 12 like to bring to the attention to those here and anyone 13 that may end up, you know, late one night reading the 14 transcript that, you know, we have a service, an email 15 subscription service, and I know there's several members 16 in here or people in here that are signed up to that 17 service. And that is one of the ways that we're 18 communicating with the industry. 19 And if you're part of that email 20 subscription service, then these rules were actually 21 presented to that group back in June of last year for 22 the first round of comments and drafts. And so, you 23 know, the rules have been out and available on our 24 website since at least June. There's been, you know, 25 several -- at least three revisions to that, based on 7 1 comments received. Initially the rules were submitted 2 to all the manufacturers for their comments, along with 3 the three major testing labs: GLI, Eclipse, and BMM. 4 And we received comments from those individuals, and 5 then we released it to the remaining group of people on 6 the email exchange. And I know several of y'all have 7 received those, and I've received several comments. 8 Some were incorporated; some were not. And, you know, 9 that's just the process of the rulemaking. 10 So I do appreciate everyone's comments. 11 And I think that, you know, one of the things that we're 12 trying to do with these rules is to -- first off is, 13 we're segregating them into individual rules, based on 14 topic, to assist with individuals looking for specific 15 information, also to try to bring them up with the 16 technological advances in the industry itself as it 17 relates to, you know, the WiFi and the Internet access. 18 And, you know, the current rule requires a dial-up modem 19 to be connected at all times, and I think those are 20 almost non-existent in today's standards. So one of the 21 things we're trying to do is bring it up to current 22 standards as it relates to that as well as security 23 protocol. 24 So with that, I'll turn it back over to 25 Sandy to, you know, begin the hearing and start 8 1 receiving comments. Once again, thank you. 2 MS. JOSEPH: All right. We do have some 3 additional copies, if there is anyone that did not get a 4 copy. Is there someone who did not get copies of the 5 proposed rules? We'll pass them out. 6 (No response) 7 MS. JOSEPH: All right. It looks like 8 everyone has a copy that wants one right now. 9 We have a number of witness affirmation 10 forms, and I would like to ask now that everyone who 11 plans to offer comment or testimony be sworn. If you 12 would raise your right hand. 13 (Witnesses sworn by Ms. Joseph) 14 MS. JOSEPH: All right. Thank you. 15 All right. I would like to call on 16 Mr. Stephen Fenoglio. 17 MR. FENOGLIO: Good morning. 18 MS. JOSEPH: Good morning. 19 COMMENTS ON BEHALF OF RIVER CITY BINGO, ET AL 20 MR. FENOGLIO: Is this on? I will speak 21 loud. 22 My name is Stephen Fenoglio. I'm an 23 attorney in Austin. I filed an appearances slip. And I 24 want to make it clear that we support the process, but 25 we don't support the rules as they're currently 9 1 published. 2 (Microphone technicality) 3 MR. FENOGLIO: Back on the record. 4 I'll take them in the order of 321 5 forward, for ease of reference. 6 MS. JOSEPH: Mr. Fenoglio, would you 7 repeat your opening statement. 8 MR. FENOGLIO: Sure. My name is Stephen 9 Fenoglio. I'm an attorney in Austin. I filed an 10 appearance slip. And I want to be clear that while we 11 support the process, we do not support the rules as 12 they're drafted. We request changes to the rules. 13 And, by the way, it's nice to have it 14 broken out the way Phil did, because the current rule on 15 card-minders is very difficult to follow. One section, 16 you think you get it right, and then you have to go to 17 another section, or subsection of the existing rule, and 18 then you're not sure. 19 With that in mind, I want to step back a 20 moment. And on the independent testing lab process 21 that's in the rule, having represented manufacturers in 22 trying to get modifications to the card-minding systems, 23 what I have seen in the past is, there is the rule 24 that's published, and this was within recent times. 25 There's some other rules that aren't published: We can 10 1 allow you to do this; we can't allow you to do that. 2 What I don't know, Phil -- and I've not 3 talked to any of the testing labs. I plan to talk to at 4 least two of them; I've got contacts. Are the standards 5 sufficient for them to actually go out and test? I know 6 back when, about five years ago there was an internal 7 book that the staff used, in addition to the published 8 rule, to test the card-minding system. 9 And I don't know what the current state is 10 in that regard. But one of the questions I would have 11 is, are they sufficient so an independent testing lab 12 can look at the rules and only the rules and say, "We 13 can approve Bingo King's card-minding" or Game Tech's 14 system. "We don't need to look at anything else. We 15 don't need to call the staff to see," et cetera. 16 And I see you're nodding, Phil. I don't 17 know the answer to that, but that's how it works in 18 other gaming venues where, for different products -- and 19 usually the rules are maybe 50 or 100 pages of intense 20 standards. And so I don't know if they're there yet. 21 And we like the idea of having the authority to go to -- 22 or having the option of going to an independent testing 23 lab. It may be quicker, when time is of essence, even 24 though it would be more costly perhaps. But we don't 25 want to do it and then get halfway down the road and, 11 1 "Well, we can't approve it or deny it, because there's 2 some other standards out there." And I will supplement 3 my comments on that. 4 For Section 321, we do like the detail of 5 what a card-minding system can do. For example, in 6 Subparagraph (2), the system that identifies winning 7 bingo patterns and prize levels, that's good. Under 8 subsection of that same (2), Subparagraph (B), site 9 system, in the second sentence it states site systems 10 must include printers. And my question is, will 11 printers be tested and subject to a standard? I can 12 make an argument yes it has to be and no it doesn't have 13 to be. If it's a Dell printer or a Hewlett-Packard or a 14 Brother, I don't think the Commission ought to be 15 testing that. You know, it's just a printer. 16 Under Subparagraph (8), "End of occasion 17 log--Information stored in the site system database," 18 and my suggestion is, "or in other digital storage 19 devices." And the reason is that over -- and all this 20 data has to be stored for four years, 48 months. If you 21 have a hall with perhaps multiple site systems being 22 used, or 500 or 800 units, it may be a huge amount of 23 data that you don't necessarily want to store on the 24 site system, but if you'll think in terms of a thumb 25 drive or some external digital storage device. 12 1 Over time -- and there may be other 2 data -- and I'll talk about, for example, player awards 3 systems and cards, software -- that may run on top of or 4 along with the card-minder, and so there could be huge 5 volumes of data over a four-year period in the nature of 6 terabytes of data. So we shouldn't have it mandate just 7 that it be stored. You clearly want to be able to store 8 it; you clearly -- the regulator wants to be able to 9 retrieve it, but it may not be cost efficient on the 10 site system itself. There may be a download 11 periodically for secure storage. 12 We also like the fact that under an 13 earlier draft, all of those had to be printed. Now they 14 just have to be stored here. And again, if you think in 15 terms of a 500-unit hall, printing out one of those 16 would kill a lot of trees over a four-year, five-year 17 period. 18 Under 322, the Card-Minding Systems--Site 19 System Standards, there's no mention here or in 323, 324 20 and 327 of any reference to a player rewards card. What 21 I want to do is make clear, those are being used today. 22 In the case of River City Bingo, we use the player 23 awards card that has already been approved by the 24 Commission for the product we use. There are other 25 distributors, manufactures, that offer the same thing. 13 1 And my point on this is, I don't want to get, assuming 2 the Commission decides to adopt it and then someone 3 submits a player awards card and the staff would come 4 back or feel duty- bound to come back, since it wasn't 5 mentioned in the process, "We can't allow a player 6 awards card. You should have thought of that." Well, 7 we're thinking about it. 8 And to that extent, these rules should not 9 prohibit the implementation of establishment of 10 player -- customer rewards programs. And if you can 11 think in terms of frequent flier program at Southwest 12 Airlines, their frequent diner programs, some retailers 13 have awards cards. That's what we're talking about. 14 They're usually tracked via a plastic card that looks 15 like a credit card, with a customer's name imprinted on 16 it. And either they're swiped when the customer walks 17 in or they're swiped when the customer makes a purchase. 18 Again, there is no mention of it. They're existing 19 today. They're running alongside of or with the point 20 of sale. We want to make sure these rules don't 21 prohibit that. 22 They should track the deposit by the 23 customer of their funds into the customer account. And, 24 Phil, this is similar to a recent advisory opinion you 25 issued where it doesn't prohibit that. And again, we 14 1 don't want the rules to prohibit that or the history, 2 since it was silent, to say, "Well, we can't allow 3 that." We want to allow -- the rule shouldn't prohibit 4 the purchase by the customer of a bingo product from the 5 customer's deposited funds. They should be allowed to 6 reimburse to the customer any unused funds in that 7 account. Again, if a customer walks in, says, "I've got 8 an account. I'm going to give you $50. I'm going to 9 purchase $35 of bingo product. I've got $15 of my money 10 in this account. I want to be able to use that to 11 purchase additional product if I so choose. Or at the 12 end of the session, I want my $15 back," alternatively, 13 leave it in the account, that creates an accounting 14 problem for a charity right now, because is that $15 15 rung up as a sale or, you know, et cetera? There ought 16 to be the flexibility to handle that, is my point -- or 17 our point. 18 They ought to display that bingo game or 19 prizes, including tracking of the successful bingo game 20 to the customer, and they should allow conductors to 21 offer bingo games solely through a card-minding system 22 if a conductor or charity or bingo hall wants to do 23 that. Obviously, the card-minding rules already 24 prohibit a card-minder from directly dispensing cash, 25 coins or tokens. That's House Bill 3021, and it's in 15 1 the current law. We're not asking that to be changed in 2 any way. You can't do it. 3 So again, if it's necessary, we'll submit 4 language on these, but I don't believe it is necessary. 5 But what I don't want to do is, after the fact, a 6 distributor or a manufacturer -- manufacturer comes in 7 and says, "We've got this player rewards program. We're 8 going to implement it. Sorry. Since there was no 9 mention of it, we can't allow that." They're in 10 existence and operating today, with good results. 11 Under 322, the site system standards, 12 Subparagraph (a), like the last sentence: Any and all 13 reports maintained or available shall be capable of 14 being downloaded or otherwise accessed via remote. 15 Again, in an earlier version, it had to be printed. 16 There is no reason to have it mandatory, Phil. 17 Under Subparagraph (d), "The site system 18 must be capable of storing," and then Subparagraph 19 (3)(A), "the date, time, quantity of bingo cards 20 affected, price per card or package," et cetera, is this 21 only tracking electronic cards or any card, a paper or 22 an electronic? I'm not sure, because it suggests just 23 electronic cards, because it says "loading of cards" in 24 Subparagraph (A), but it's not clear. I think the 25 intent was, it would only be digital cards. 16 1 Under Subparagraph (n), again, the system 2 must be capable of printing a receipt and recording for 3 each sale. In an earlier version, it was mandatory. 4 By the way, many halls do not record data 5 for paper cards today in a site system. The daily cash 6 report or the occasion report, as it's called, will 7 track that. And there are going to be some other folks 8 who will address this, especially as it relates to the 9 conductor requirements, but it's a reference back to 10 this language as well. 11 And the same is true under Subparagraph 12 (p): "The site system must be capable of storing and 13 printing an Occasion Report and Occasion Summary Report 14 on demand." Again, there are some halls that don't do 15 this. This will add to their cost. 16 I've already talked about the player 17 rewards function of 323, so I won't address that. 18 Under 324, again, my question was, are 19 these sufficient for a third-party independent testing 20 lab to know exactly what they're going to approve? 21 325 -- and there will be several others 22 who will address these matters -- 325 does represent a 23 new requirement on conductors that has historically not 24 been; and that is, the daily cash report requires a 25 number of things to be tracked and reported on an 17 1 occasion basis, but it's never been required to store 2 that data into the card-minding system or the software 3 related to it. Somewhere here I have the occasion 4 report. 5 In the case of River City Bingo, we 6 actually record all -- we load all that data onto our 7 card-minding system. And by "all that data," I mean, 8 obviously, if we're selling a card-minder that can't be 9 activated without the use of the point-of-sale system 10 inherent with the card-minding system, so that is 11 automatically recorded. But what is not recorded at 12 River City Bingo here in Austin, Texas, is the sales of 13 paper and pull-tabs and event tickets. 14 Later, at the end of the session, we 15 actually load that data into our software or our card- 16 minding system. My point on that is, it at least 17 initially should be permissive for the charity, not 18 mandatory. There will be some charities that it will be 19 difficult. You're going to hear from some of them some 20 of the costs involved. 21 Again, in the case of River City -- and 22 there are other bingo halls that already do that. And 23 from my perspective as a board member for one of the 24 charities -- and we have a management team I've talked 25 about in other hearings -- it's a good management tool 18 1 to have that data so we can manipulate, if you will, 2 looking at ratios and trends and et cetera, not 3 manipulating in a bad way, but we want to look at 4 different management reports. It's very helpful for us 5 to have it. But there are other halls that they've 6 decided they don't need it. And so for it to be 7 mandatory from day one we think is the wrong way to go. 8 And again, there will be others who will address some of 9 those costs. 10 Under Subparagraph (c) of 325 -- and this 11 is, Sandy, the lawyer in me -- the last three -- or four 12 words, "all other required information," you're ensuring 13 that that report is going to display the name, the 14 location, time -- date, time and all other required 15 information. I'm assuming it's only in this rule, not 16 somewhere else that's not stated. And that's just -- I 17 don't know if you should say "all other required 18 information established below." So what is that? And 19 again, within that comment, make it permissive, at least 20 initially. 21 Subparagraph (d), you're going to hear a 22 lot about void transactions. And what I brought with me 23 as a handout is a report -- just a moment. It may be in 24 my briefcase. 25 (Brief pause) 19 1 MR. FENOGLIO: This is from an actual 2 card-minding software system. I've taken the name off 3 to protect the innocent, et cetera. But what I want to 4 bring to your point is, this is for a live time for 5 January 2, 2011, and it's point of sale. The first page 6 is Selling Station 1. And later if you'll turn to the 7 back, there is a Session 2 -- I'm sorry -- Point of Sale 8 2. So there are two point of sale stations. 9 And you can see at 10:10 p.m. -- and I've 10 pointed that with two arrows -- at 10:10 p.m. unique 11 invoice number -- last three digits are 322 -- a $32 12 sale was registered. One minute later it was voided; 13 again, the same unique invoice number. 14 What happened in that transaction, Phil, 15 was not a refund; it's a void, but there was no refund. 16 Instead, the system crashed, or maybe never worked, and 17 within a minute, it's voided and the customer is issued 18 a new product. It also could have been a case where the 19 customer in this particular hall, it's a complicated 20 process to figure out what you're going to purchase. 21 There are different offerings. A customer may have only 22 had $31, so they couldn't make the $32 sale, so they 23 voided it. And maybe the customer was the 325. We 24 don't know today. But the point is, there is no bad 25 fact going on here: Sale at 10:10 p.m., void at 20 1 10:11 p.m. 2 Subparagraph (d) would mandate, because 3 that's a void, and it had to do with the card-minding 4 device, the player has to present the original receipt 5 which was issued. What happens if the player lost the 6 receipt? Presumably they wouldn't have done it in a 7 minute, but we're going to get to some that are a few 8 minutes later. And then the word "void" has to be 9 printed on the receipt, and the player must write his or 10 her name, address, telephone number, signature and 11 amount of refund on the back of the void receipt before 12 the partial or full refund may be issued. Well, again, 13 this may not have been a refund; it may have been just 14 an exchange. 15 Nonetheless, someone could take the 16 position, "Well, we've got to stop the process." In 17 this particular situation, there may be 40 people behind 18 the customer, you know. Not every hall has the luxury 19 of people come in early enough, sit down -- buy their 20 product, sit down. Sometimes it's a raucous, busy 21 event. You're going to stop the process dramatically by 22 requiring a cashier to do that in this situation. 23 And I would suggest to you there is no 24 security concern in a situation like this. We know 25 what's going on: The system didn't work, for whatever 21 1 reason, or the customer didn't have the $32. It's 2 immediate; it's before the session ever began. The 3 concern I believe on the voids is, what happens if, two 4 hours after the fact there is a void? And there have 5 been situations, Phil, that we're aware of where there 6 have been an inordinate number of void transactions and 7 there was a finding in one of them that someone had 8 voided those after the fact and pocketed the money, 9 stole the money. We get that. But in this situation, I 10 would submit to you this is not a problem that needs a 11 solution. 12 If we can turn the page, there are some 13 other void transactions. And on Page 2 of 5, you see at 14 11:52, the same thing, $20 sale; 11:53, a $20 void. 15 Same page, 1:12 a.m. a $27 sale; 1:13 a.m. the void. 16 Again, the unique invoice numbers that track that. 17 1:13 a.m., unique transaction, last three digits 400, a 18 $27 sale and then at 1:40 a.m., the void. 19 That may be a situation where you want 20 additional data. As a manager or a supervisor of that 21 hall, I might well question the staff: What happened? 22 And we all know that card-minders can work fine for a 23 few minutes or 20 minutes, the battery wasn't fully 24 charged or maybe the battery fails, so that may have 25 been what went on. Nonetheless, there is this data that 22 1 has to be recorded. We think this ought to be at least 2 initially permissive, allow the charities, the 3 conductors to decide what to do. 4 I want to continue, though, with the 5 discussion on Page 3 of 5. Again, the last three 6 digits, 613, a $20 transaction, and that occurred at 7 11:33. And then at 12:03, there is the void 8 transaction. 9 A more troubling item is the one at -- I 10 had it here. Give me just a moment. It was 618. The 11 sale occurred at 11:44 for $50, and then at 1:43 a.m., a 12 $50 void. It seems to me that's the transaction that 13 the staff -- that this particular Subsection (d) is 14 trying to get at. There's huge questions that arise. 15 Two hours after the fact, the void occurs. Did that 16 occur after the session was over, in which case it 17 strongly suggests to me that there is an employee who 18 voided it after the fact and pocketed the $50. 19 Technology is a marvelous thing. One 20 thing you can do -- and again, this should be 21 permissive -- but one thing you can do is require that 22 type of a transaction, have the system designed such 23 that that type of a transaction is reported on Phil 24 Sanderson's desk the next day, or Phil Sanderson's 25 designee. And if you see repeated instances of that, 23 1 this two-hour after the fact, I think most people would 2 logically conclude, "There is a problem at that hall. 3 We need to alert and go have a visit." And I think 4 that's what you're trying to do here, but the way the 5 language in Subparagraph (d) is drafted, it catches too 6 much data and will slow down the process. 7 And what I've observed personally -- and I 8 think there are others here who will testify -- if you 9 make it difficult on the customer, the customer will 10 find some other place to go, and it may be to another 11 bingo hall. If they have the same problem, then guess 12 what? They're not going to play bingo. They will go 13 find another venue to spend their entertainment dollar. 14 And that's what a bingo hall is. It's an entertainment 15 venue, not much different than a movie theater or a 16 bowling center, a pool hall, a bar, restaurant. It's 17 entertainment. And if you make it too difficult on that 18 customer, you will offend your customer enough or 19 customers enough, they'll go somewhere else. We don't 20 want them to do that. 21 MS. JOSEPH: Mr. Fenoglio, for the record, 22 I'm marking your handout as Fenoglio Exhibit A. 23 (Exhibit Fenoglio A marked) 24 MR. FENOGLIO: Okay. Thank you. 25 The other thing that goes on -- and I 24 1 think Phil is very aware of this -- players don't want 2 to give out their data, ever. And so what you're 3 forcing us to do is to get our customers to do something 4 that they don't want to give us. The other thing is, 5 since this is now at the agency, is it now a part of the 6 public record process? Once it gets into the agency's 7 files, your lawyers say that's public information. 8 I'm assuming if you're going to store it, 9 at some point the agency is going to get it, get the 10 information, in which case you now have name, address, 11 telephone number of a customer. We don't like that. 12 Take an absurd example -- but it could turn out to be a 13 very real life example -- if I'm Competitor A and I 14 want to find out the customers of Competitor B, Hall B, 15 I file enough complaints, you get the data, require the 16 data, your auditor on this, then I as representative of 17 customer of Hall A file an open records, I get names, 18 addresses and telephone numbers of their customers. 19 That shouldn't be the process. 20 MR. SANDERSON: May I ask one question? 21 When you do the player tracking, what information do 22 y'all collect for player tracking? 23 MR. FENOGLIO: We track our name, address 24 telephone number, address, perhaps an email if they give 25 it to us, that data, sure, but that's our data and that 25 1 I would argue is trade secret data. It has yet to be, 2 to my knowledge at River City -- and we have about 850 3 customers on our player rewards, customer rewards 4 account. If the agency asks for that, as their lawyer 5 I'll say, "Well, before we provide this data to you, we 6 want a protective order or a confidentiality agreement," 7 because I don't want to have to fight later in an open 8 records proceeding where the burden is on me and the 9 charities are paying that money, to protect that data. 10 Now, as a representative of River City 11 Bingo, I would be happy to have the player account data 12 for Paul Burgman at Big Star, if he would give it to me, 13 but I know he won't, or any of the other bingo halls in 14 the greater Austin area. And, by the way, Big Star 15 doesn't have player tracking, but they certainly know 16 some of their customers. This is very sensitive 17 information. 18 As an alternative language under (d)(5), 19 the recording of information, you should only -- and 20 again, we don't want to have this information provided 21 but, if it has to be, it's only for the cash refund 22 situation. Again, if it's just an exchange, there is a 23 void involved. But if there is no, you know, exchange 24 of cash back to the customer, then, you know. And at 25 River City, for example, there are times when we'll have 26 1 50 to 75 customers in line, so we don't want to have to 2 stop the process. 3 Under Subparagraph (f) -- this is a new 4 standard -- the charity must record all bingo sales on 5 the card-minding system point of sale. Again, there 6 will be others who will address this. In the case of 7 River City, we already record this information. By the 8 way, it's unclear if it has to be instantaneous, in 9 which case we do not do that, and let me give you the 10 example. 11 The floor worker pull-tab salesperson 12 takes a stack of 50 or 200 event tickets, or instant 13 tickets, goes out and sells them, comes back. So let's 14 assume they had 200 at 50 cents each. They come back 15 with 10 unsold tickets and the correct change. There is 16 a record of that. The supervisor, the cashier who 17 issued those tickets to the floor worker has that 18 record. At the end of the session, that data is going 19 to be recorded. 20 It's unclear -- and I'm hoping you don't 21 insist that this be instantaneous, because that will not 22 happen at any hall. But again, at River City, we do 23 this. My point on this is that some hall -- and there 24 are going to be other halls that do the same thing. Big 25 Star does it here in Austin, by way of example -- but 27 1 make it permissive, not mandatory at this time. 2 Under subparagraph (l), after the last 3 game of the occasion has been completed, the licensed 4 authorized organization shall print an occasion report 5 from the site system, make it permissive. It's not 6 necessary -- if the data is stored -- and in the case of 7 River City, we do our daily or occasion report. Again, 8 that data is loaded into the system. But why are we 9 required to print out another document? There are other 10 requirements that it must be maintained -- stored and 11 maintained internally for four years. If we choose to 12 print it, fine. If the agency says, "We would like to 13 see the data," fine. We'll provide it to you either in 14 electronic or hard copy format. But again, another 15 requirement where you have to print it. Why? For what 16 purpose? 17 Under Subparagraph (k), "The card-minding 18 devices may not be reserved for players," my response to 19 that is: Why not? If I have a very good customer in my 20 bingo hall who likes a particular station or a unit and 21 that customer comes in and every Wednesday maybe makes a 22 phone call: Hey, I'm coming in. Tell Gary hello. I 23 would like Station 12," and Gary knows that customer, 24 knows they come in all the time on Wednesdays. Why 25 shouldn't we be allowed to make that decision? A 28 1 restaurant owner can do it; a bartender -- bar owner can 2 do it. Bowling centers reserve special lanes for 3 special customers. Again, we're an entertainment venue. 4 If we want to do it, why shouldn't we be able to? 5 The pushback that I've heard from staff in 6 the past is, "Well, we get a complaint from someone that 7 Susie always wins" -- I'm using that as an example -- 8 "you know, and she always gets her special seat" or her 9 special card-minder or whatever, "so the game is rigged 10 on behalf of Susie." 11 It's not. It may be that Susie rents or 12 buys four card-minders, so she's increased the odds in 13 her favor. That may be why. And I get the fact that 14 the Commission has to respond to or should respond to 15 all valid complaints. But this is more a hall issue 16 than it is a Commission issue, unless -- you know, I 17 don't know of anyone who has ever been able to 18 successfully manipulate a card-minder to their benefit. 19 As a matter of fact, there are standards in your rule 20 that say a charity can't do it, a distributor can't 21 manipulate whatever has been approved. 22 So this is in the nature of, it ought to 23 be up to the charity, the bingo hall, to make the 24 decision: Do we want to reserve a unit? And I can't 25 think of any reason not to. Again, I know you may get 29 1 some complaints, but this is the nature of commerce. 2 And if a charity wants to reserve Seat 12 for Susie, 3 that has a stationary unit in front of it, let that 4 charity make that decision. If the charity decides, 5 "We'll take the risk of offending some customers, 6 because Seat 12 is reserved," that's the charity or the 7 bingo hall's problem, it's not your problem. 8 Subparagraph (n), the second sentence that 9 begins with -- well, the first sentence says the charity 10 may not add to or remove any program. We get that; we 11 agree. And that's current law or current reg. And, by 12 the way, nor can the distributor or the manufacturer, 13 unless it's been approved by the Commission. 14 The second sentence, though, suggests to 15 me that if the Commission detects that there is a 16 software that's been changed, the card-minding system is 17 deemed to have an unauthorized modification. That's 18 true, but it shouldn't be in a conductor requirement; it 19 should be perhaps in Section 324, which is the section 20 dealing with approval of card-minding systems, or it 21 could be 323, the device standards. 22 It suggests to me that someone could use 23 that if, in fact, the system -- the software has been 24 manipulated. And in order to do that, you have to have 25 the underlying data software code in order to manipulate 30 1 it. I don't think many licensed authorized 2 organizations, if any, have that capability. And then 3 assuming they did, then they've got to be able to write 4 code to manipulate it. But if that happened, it 5 suggests to me that the charity could be punished in 6 some way, absent a showing that the charity had actually 7 modified it, so that's why we think that sentence should 8 be somewhere else. 9 MR. SANDERSON: There is the same language 10 in the distributor requirements. 11 MR. FENOGLIO: Yes. And again -- 12 MR. SANDERSON: And so the manufacturers, 13 of course, are the ones that submit the product, so they 14 have the right to make modifications and submit it. 15 MR. FENOGLIO: Correct. 16 MR. SANDERSON: And if we find out there 17 that they were the ones that have a product that was not 18 approved and there is no evidence that the distributor 19 or the manufacturer -- I'm sorry -- the distributor or 20 the organization made those changes, then that would go 21 back to the manufacturer. So I don't know if there's 22 some language that we can make that clearer. 23 MR. FENOGLIO: Yes. And my thought -- and 24 I'll be happy to visit later with some specific 25 language, but it ought to be in either the card-minding 31 1 standard or the manufacturer standard, not here and not 2 in the distributor, because it really doesn't have 3 anything to do with the fact that they shouldn't modify 4 it. We know for a fact that if it hasn't been approved 5 by the Commission, it's unauthorized. 6 Under Subparagraph (e) -- I'm going to 7 jump back -- the pre-sales are made and the associated 8 cards are not purchased, then they have to be voided by 9 the start of the second game. A suggested -- make it 10 either permissive or make it they can void it at the end 11 of the session. Again, if the hall is busy, it may 12 be -- they may not have time on a pre-sale to void that 13 before the second game begins. And I believe there will 14 be other people who will address that with some real 15 life examples. 16 The other thing is -- and again, it goes 17 back to the void issue -- if you have a power outage 18 while you're playing bingo, man, is it a mess. But as a 19 part of the mess, you've got to void everything and 20 start over. That's going to be hugely problematic, to 21 get all the customer's information, sign on a receipt. 22 So for extraordinary instances, there should be language 23 that they don't have to do that: You have an ice storm, 24 you lose power. Maybe you don't even -- you know, 25 you're not able to finish the entire games of bingo. 32 1 You're going to settle up with your customers. But if 2 you've lost power and you had 350 people there, you can 3 imagine the process to get everyone's name, address, 4 telephone number, signed and voided receipts. 5 Again, under 327, the security standards, 6 there is no reference to player tracking card awards 7 programs that should be allowed. This should be allowed 8 somewhere in your system. 9 MS. JOSEPH: Mr. Fenoglio? 10 MR. FENOGLIO: Yes. 11 MS. JOSEPH: Sorry to interrupt you, but 12 we would like to take a break for about five minutes. 13 MR. FENOGLIO: And I've finished my 14 presentation. 15 MS. JOSEPH: Oh, you have? All right. 16 Well, thank you very much. 17 I will take a five-minute break and then 18 we'll continue. And I have John Anderson up next. 19 (Recess: 10:46 a.m. to 10:57 a.m.) 20 MS. JOSEPH: All right. If y'all would 21 return, we'll get started. I appreciate your patience. 22 And I would like to call on John Anderson. 23 MR. ANDERSON: Is this one working now 24 (referring to microphone)? 25 MS. JOSEPH: Yes. 33 1 COMMENTS ON BEHALF OF BOYS & GIRLS CLUB 2 MR. ANDERSON: For the record, John 3 Anderson. I'm with the Boys & Girls Club in Killeen, 4 Texas, a playing charity. I would like to make two 5 brief comments. 6 One is the proposed changes under 325. 7 You know, I know there are good reasons behind the staff 8 recommendations in these proposals. I'm a little 9 worried about the time to vet these out. And as you're 10 already beginning to hear -- and I think some other 11 people will talk after me -- I'm hoping that the process 12 elongates and you have more time to listen to the 13 industry, find ways to accomplish the same kind of 14 requirements that I know that you have to, to have your 15 oversight. So I make that point. 16 And the second point is, I want to -- for 17 the Boys & Girls Club in Killeen, we operate nine halls, 18 and we've developed our own piece of software, so we're 19 talking from immediate experience right now. We don't 20 have it in anything more than maybe beta testing. 21 Eventually we hope to have a very sophisticated piece of 22 bingo hall management software developed. And in our 23 beta testing or field testing, we're doing the same 24 things we're talking about here, trying to have 25 everything on-line, done, during the conduct of that 34 1 occasion. And constant problems and difficulties. And 2 when you're trying to have people who are used to doing 3 it manually do it electronically, and then you get to 4 the end of the session and, you know, how do you 5 correct? 6 And so I'm envisioning, you know, the 7 problems of the realtime basis of this and maybe 8 encourage the staff to look to ways that things can be 9 entered at the end of an occasion without compromising 10 the integrity that you're looking for. 11 Thank you. 12 MS. JOSEPH: Thank you, Mr. Anderson. 13 Sharon Ives. 14 COMMENTS ON BEHALF OF FORT WORTH BOOKKEEPING, INC. 15 MS. IVES: Does it matter which one? No? 16 Good morning -- I guess it's still 17 morning. My name is Sharon Ives, Fort Worth 18 Bookkeeping, and I represent numerous unit bingo halls 19 in the Dallas/Fort Worth area. 20 On Rule 402.325, the licensed authorized 21 organization requirements, I am opposed to this rule as 22 it's proposed today. I first want to make sure that the 23 paper-only bingo halls are exempt from all these 24 rules -- correct? -- since they do not have electronic 25 bingo devices, let alone POS system. 35 1 MR. SANDERSON: These rules pertain only 2 to card-minding systems. 3 MS. IVES: Okay. 4 Okay. Paragraph (c), the licensed 5 authorized organization must ensure that the occasion 6 report displays the correct licensed authorized 7 organization name -- location, name and time. I had a 8 question on time. Is that the licensed playing time or 9 the time that the report is generated? 10 Paragraph (d)(1) regarding void 11 transactions, where they must be processed immediately, 12 what is the definition of a voided transaction? To me, 13 a transaction is a transaction only when money has taken 14 place. I had a question regarding that. 15 (d)(5), "The player must write his or her 16 name, address, telephone number," et cetera, my question 17 is, is that only if a refund took place? Or we'll take, 18 for instance, if a player changes their mind, they're 19 standing in line, they're holding the customers up, they 20 pick a particular package deal for their electronic 21 device. Once the cashier tells them how much that is, 22 then all of a sudden the player doesn't have that much 23 money. In order for the cashier to go to the next 24 screen, you have to void that transaction, but no money 25 has taken place. So that's why I had questions 36 1 regarding that, because it will hold up the line. 2 Paragraph (f), must record all bingo 3 sales, et cetera, my question is, is this done at the 4 point of the sale or the transaction? If it is, this is 5 going to be a cashier's nightmare, like Fenoglio had 6 explained, or can all these -- recording all these 7 transactions, can they be done at the end of the bingo 8 occasion? 9 With all that being said, as you well 10 know, the charities are trying so hard to keep their 11 expenses low and to keep the customers happy so the 12 customers keep coming back. They're trying to stay 13 afloat. Several of the halls only employ one cashier. 14 With this rule, 402.325 the way it's written right now, 15 that would add an unnecessary expense to the charity by 16 hiring an additional cashier to comply with this rule. 17 And I believe Steve Bresnen had passed a 18 sales spreadsheet on the cashier pay rates, because I 19 was just curious, to see: Okay. Well, it doesn't sound 20 too bad if a bingo hall has to hire another cashier, 21 that when you're struggling and trying to keep all your 22 expenses down, exactly how much are we talking about? 23 So I kind of crunched some numbers. If 24 you pay -- and keep in mind the pay rates change all 25 over the state. I mean, it even changes from Dallas 37 1 going to Fort Worth or even from Fort Worth to 2 Arlington. If you pay a cashier $25 a session -- and 3 typically they work six days a week at a full-time 4 schedule. That would be 12 sessions per week -- that 5 would be $300. The annual gross would be $15,600. Then 6 you would have to add in the employer portion of the 7 FICA and Medicare, the federal unemployment and the TWC, 8 State of Texas. Total cost to the charity of employing 9 one cashier, paying $25 a session, will be $16,904.30. 10 If you pay your cashier $50 a session, 11 that would amount to a total cost to the charity of 12 $33,697.70. So just for grins, I thought, "Well, 13 there's 1,096 charities so far licensed in the State of 14 Texas to conduct bingo. What would $25, one cashier for 15 all 1,096 charities, it's $18.5 million. For whatever 16 it's worth, we're talking a lot of money, especially 17 when you don't have it. 18 And I'm sure there's some bingo halls that 19 employ workers that have never had computer experience. 20 And with these POS systems and these requirements, they 21 would definitely need to have some training. 22 MS. JOSEPH: And I have marked that 23 handout Ives Exhibit A. 24 (Exhibit Ives A marked) 25 MS. IVES: Thank you. 38 1 Rule No. 402.321, card-minding 2 definitions, No. (7) is talking about the device played 3 after applying the void rules. I had a question to what 4 the void rules were. I was not able to find any 5 definition in the rules that are here today. 6 And that's all I have. 7 MS. JOSEPH: All right. Thank you. 8 MS. IVES: Thank you. 9 MS. JOSEPH: Charles Hutchings. 10 COMMENTS ON BEHALF OF AMVETS POST 52 11 MR. HUTCHINGS: Good morning. 12 MS. JOSEPH: Good morning. 13 MR. HUTCHINGS: Charles Hutchings 14 representing Amvets Post 52, Dallas, Texas. 15 As Sharon just touched on, the cost of 16 these employees -- and we will have to hire extra 17 employees to add this data, especially if it's 18 instantaneous -- and the amount of money it's going to 19 cost for employees is just going to throw the whole 20 thing out of whack. We're barely hanging on in the 21 Dallas area. This is just an expense that we have no 22 need for. 23 The voids, at the hall where we play, when 24 a computer is loaded incorrectly -- let's say a customer 25 comes in, he wants a $20 computer and we understand he 39 1 wants it for both sessions, we load that computer and 2 tell him $40. He says, "No. I just want one session." 3 Well, we don't stop and void that computer at the time. 4 We lay it right here, the hope being that some other 5 customer will come along, you know, before we actually 6 start the game and purchase that twenty twenty. I mean, 7 what's the rule -- what's the need to void it? 8 If they don't, well, then, by the time the 9 bingo session is really underway and you finally get 10 your line worked down -- because people come in late. 11 They like to get there last minute and run through the 12 line and sit down and play -- well, then, it's going to 13 be a little bit before you get around to voiding that. 14 So, you know, the instantaneous void thing is just not 15 reasonable at all as to the way we conduct bingo. And 16 I'm sure other people do it the time same way. 17 That's my comment. Thank you much. 18 MS. JOSEPH: Thank you, Mr. Hutchings. 19 Eddie Heinemeier. 20 COMMENTS ON BEHALF OF TEXAS CHARITY ADVOCATES 21 MR. HEINEMEIER: Good morning. I'm Eddie 22 Heinemeier. I'm Chairman of the Board of TCA, and I 23 wanted to make a few statements. 24 Since the absence of the Bingo Advisory 25 Commission (sic), we have sort of tried to take over 40 1 some of those things, and we have formed four committees 2 or subcommittees. One is on rules committee, and you'll 3 hear a report from our Executive Director about that. 4 We have one on social media, one on legislative 5 committee and Sunset committee, trying to work with the 6 Commission to handle these. 7 We're hoping this will be helpful in doing 8 this. And we appreciate what you're trying to do with 9 the rules. But I will then step back and let Melissa. 10 MS. JOSEPH: All right. For the record, 11 would you state what TCA stands for. 12 MR. HEINEMEIER: Texas Charity Advocates. 13 I'm sorry. 14 MS. JOSEPH: That's right. Thank you. 15 Melissa Young. 16 COMMENTS ON BEHALF OF TEXAS CHARITY ADVOCATES 17 MS. YOUNG: Good morning. My name is 18 Melissa Young for the record, and I'm the Executive 19 Director for Texas Charity Advocates. And I'm going to 20 try to speak slowly. 21 I don't want to get into too much 22 repeating, because basically our concerns are the same 23 as what you've already heard this morning. But we did 24 form a workgroup, and that workgroup came back with 25 concerns about one rule, which is the 402.325, the 41 1 organization requirement. 2 The first item that we had concerns with 3 was Section (a). And part of the concern there is that 4 the industry would like to know what information will be 5 available via open records request and what won't. And 6 I think the main concern is that they would like their 7 sales information to remain proprietary. 8 The next section will be Section (e), and 9 it's about the presales and the voids. And we really 10 just share the same concerns as everyone else. We're 11 worried that it will slow down the point-of-sale 12 purchase, we'll get the lines backed up, we'll have 13 angry customers. In addition to that, we're concerned 14 about the voids, that if somebody just brings back 15 something that's not working, they're going to be asked 16 to give personal information. And we already have 17 enough trouble collecting that information from people 18 when it is warranted. 19 And then the last item is Section (f). 20 And the basic concern here is that it's kind of double 21 duty for people who are already running a card-minding 22 system. So what we would like to see is, if we're going 23 to require this, we would like to replace that, replace 24 the occasion cash report requirement with that so that 25 we're not having the cash report requirement in addition 42 1 to capturing that information on the card-minding 2 device. And It didn't specifically address that, so we 3 just wanted to bring that up. 4 And that's everything I have. Thank you 5 very much. 6 MS. JOSEPH: Thank you, Ms. Young. 7 Larry Whittington. 8 MR. WHITTINGTON: As soon as y'all get 9 through talking. 10 MS. JOSEPH: Yes. Please proceed. 11 MR. WHITTINGTON: Good to see y'all. 12 MS. JOSEPH: Thank you. 13 COMMENTS ON BEHALF OF DALLAS TEXAS TEAM BINGO 14 MR. WHITTINGTON: My name is Larry 15 Whittington. I represent Dallas, Texas, Team Bingo, 16 which we are currently involved in five bingo halls now. 17 Let's talk about the void situation. When 18 it comes to voids, I really think that a void is what we 19 do if a computer come in and we got it rung up already, 20 we void it out. We have never had an occasion except on 21 two situations maybe, like Steve said, the power might 22 go out, we do a refund, or a computer might break down 23 during the end of one session or end of the second 24 session and we don't have anymore computers to give that 25 person, we will give them money back. That's the only 43 1 situation I've ran into in 20 years, dealing with 2 computers. 3 But when it comes to all this receipt 4 stuff, giving somebody a receipt back and keeping all of 5 these voided receipts, we pre-ring our computers so we 6 don't have to worry about that 10- to 25-second lag in 7 between each customer when we sell it, because it takes 8 a lot of time to ring up a computer. It might not seem 9 like a lot, but that customer in line will know: "Hey, 10 wait a minute. What are you doing?" So we pre-ring 11 everything. If we don't sell that computer, I agree. 12 Maybe about the third or fourth game, it should be taken 13 down before that session is over. 14 When a session is played completely and a 15 computer is taken down in my hall or a computer is taken 16 down after the second session when it's rung up before 17 the first session starts, yes, I got a question. They 18 better have some documentation on why that computer was 19 taken down. 20 It's very important for the distributor to 21 know if a void is made after bingo, because it's their 22 money, too, and they will check. And I will check with 23 that distributor, check and see if a void had been made 24 after a session is played or after a day is over. If it 25 is, I got a big question about that. And, of course, I 44 1 don't want to have a lot of receipts piled up on a daily 2 waiting for y'all to come check this out when I might 3 have a thief in my hall. I want to know. We will check 4 and the distributor will check, because they're losing 5 money, too. 6 Basically what I'm saying I think is for 7 the charity and the bingo hall to decide that. If they 8 want to lose money like that, it's their fault, but they 9 shouldn't, they should check and see if that's happening 10 in any bingo hall that they're involved in. So that's 11 my main thing. 12 I think this language is fine. We can 13 work with this. We can come up with some kind of rule 14 to make it very, I guess, good for the charity so they 15 don't have to go through a lot of paperwork. Okay? I 16 think it's good like it is now, and each hall should be 17 checking on voids and everything -- okay? -- with the 18 distributor as well as protecting their hall. 19 That's what I wanted to say. Thank you 20 very much. 21 MS. JOSEPH: Thank you, Mr. Whittington. 22 Steven Hieronymus? 23 24 25 45 1 COMMENTS ON BEHALF OF TREND GAMING SYSTEMS 2 MR. HIERONYMUS: Good morning. My name is 3 Steven Hieronymus, Trend Gaming Systems, and I have two 4 main comments. 5 One, it's not specific to the rule, but 6 it -- or any specific rule. I don't see where we 7 address multiple site systems. There's a number of 8 halls in Texas that utilize more than one card-minding 9 system, and so that would be problematic for requiring 10 all this recordkeeping on do they have to enter it into 11 both site systems, or would one be designated primary 12 and one secondary? Or in some cases, there may be three 13 in the hall. I've talked to Phil about this before. 14 This is an issue that needs to be addressed. 15 Secondly, I see nothing in here that talks 16 about the actual implementation aspect of this: How is 17 this rolled out? Are the systems that are currently in 18 place, are they, you know, in until the next submission, 19 et cetera? We need to know time lines. A lot of the 20 manufacturers will have to do programming work, so we 21 need to know -- there needs to be some sort of guidance 22 on that. 23 And I would just second a lot -- 24 particularly the void language. I would agree a lot 25 with what Mr. Fenoglio said earlier, the void language 46 1 is definitely problematic. 2 Thank you. 3 MS. JOSEPH: Thank you. 4 Trace Smith. 5 COMMENTS BY TRACE SMITH 6 MR. SMITH: Good morning. My name is 7 Trace Smith, and I've just got a few things to go over 8 on 403.325. 9 I guess in the voids, I feel like the 10 customers have a right to their privacy for their 11 telephone and their address and everything, not to 12 mention a lot of my customers in particular don't have 13 telephones, so that might create a problem if they don't 14 have a telephone or if they refuse to give that 15 information. 16 Also to give an example, Wal-Mart, Target, 17 Sears, all the major corporations that require you to 18 give your name, telephone and address, they have a 19 separate section of their building and their business to 20 deal specifically with that. They have a returned 21 department or exchange or refunds, whatever that is they 22 want to call that, that they don't have to clog up their 23 sales lines with. They're able to handle that in a 24 separate section. 25 Bingo doesn't have that luxury. Normally 47 1 in bingo halls, we have one or two points of sale, 2 sometimes three at the most. That would really hold up 3 the selling, and that makes a difference when we only 4 have a certain amount of time period to sell and conduct 5 our games anyway. 6 Another thing is, I know sometimes one 7 point of sale will sell on the wrong session, they'll 8 have to go back and void every one of those computers. 9 That would take a lot of time to have to go back and get 10 all the players' names, addresses, telephone numbers and 11 such. 12 Also on 402.325(f), additional 13 requirements for inputting paper and pull-tabs. How do 14 you correct it if there was a mistake made? If it's in 15 a locked entry where you can only enter it once, you 16 can't edit it -- which I think that's what you're trying 17 to get at -- how do you correct a wrong input? Do we 18 have to call staff and get permission? Do we have to 19 call the distributors and get an access code? How do we 20 address that, would be my question. 21 Let's talk about cost for a second. In 22 addition, something that no one has addressed yet, in 23 addition to the cost of the person entering the data, 24 the data entry person, the distributors and the 25 manufacturers are going to have to update this, they're 48 1 going to have to maintain this. They're going to pass 2 that cost along to the charities. I know now with the 3 card-minding systems we have, we have to pay them for 4 that. I mean, that's an allowable expense that we have 5 to use, but that's going to go up incrementally as the 6 data increases. They're not going to give us that 7 service for free. I don't know of any distributor or 8 manufacturer that's just going to say, "Here. Merry 9 Christmas." I don't feel like that's going to happen. 10 Then to address what the time frames are 11 from session end to the input of the data. It doesn't 12 address player rewards. My main concern is the privacy 13 of the sales data. There is not a way to keep the 14 distributor or the manufacturer from getting our sales 15 data. And what I mean by that is, right now we have to 16 provide to the Commission a quarterly report, which I 17 have no problem with. It's also required. The 18 information on that is not very specific. 19 If a distributor -- let me give you an 20 example. If I'm using one distributor for my paper and 21 pull-tabs and another distributor for my electronics, 22 and the distributor for the electronics says, "Hey, 23 look. I've got a new hall coming in that's going to use 24 my electronics and my paper and my pull-tabs," my sales 25 data would then be available to them for them to look 49 1 over, comb over, in a daily cash report type situation. 2 So if they're able to look at my day-to-day operations, 3 I seriously have objections to that. I don't have a 4 problem with the staff or the Commissioners themselves 5 looking at that. That's something that they have a 6 right to. 7 The distributors and the manufacturers I 8 do not believe have a right to my daily cash reports. 9 That seriously would violate the integrity of my 10 proprietary information, stuff that I feel is a trade 11 secret. That should not be made available to anyone but 12 the staff. Also, if that comes to the staff, does that 13 become public information? I personally wouldn't want 14 my checking account being made personal -- my personal 15 information. What I spend my checks on, who I make 16 donations to, who I don't make donations to made public. 17 I'm sure the charities themselves wouldn't want their 18 trade secret stuff made public. I'm pretty sure of 19 that. 20 Well, I think that wraps up my stuff. 21 Okay. Thank you very much. 22 MS. JOSEPH: Thank you, Mr. Smith. 23 Stephanie Colwell. 24 MS. COLWELL: Hi. 25 MS. JOSEPH: Good morning. 50 1 COMMENTS ON BEHALF OF AMVETS 2 AND AMVETS LADIES AUXILIARY 3 MS. COLWELL: Stephanie Colwell, 4 representing Amvets and Amvets Ladies Auxiliary. 5 I agree with several of the comments 6 already made here today. I am opposed to 402.325 as 7 it's written. A couple of reasons why. And going back 8 to the voids immediately, the pre-selling. If we load a 9 bunch of computers and we're waiting on our customers to 10 show up, then anything that's left over before the 11 session starts has to be voided. There is not a 12 customer to take their information from. I'm not sure 13 how that would be handled if we had to void transactions 14 immediately with customer's name and phone number on it. 15 Also voiding immediately holds up the 16 line, it holds up the game, and it holds up the session. 17 We have a limited window in order to sell to these 18 customers and to get these customers through our line 19 and to get them in their seats spending their money. 20 The bingo counter is a hurried process, and I think that 21 anything that slows down that process is detrimental to 22 the charity and to our organizations. 23 The main goal is to get the customers 24 their merchandise and to get them in their seats 25 spending their money, and stopping the flow of money is 51 1 not good. Voiding immediately also ties up the computer 2 system so you can't sell while a void is being 3 processed. And asking for players' personal information 4 is not a good idea, because I feel like customers are 5 not going to give that to us, or they won't give it to 6 us truthfully. 7 Keeping the original voided receipts I 8 think is excessive. And the reason why I think that is 9 because on our printed occasion report, it already lists 10 the voids that occur during that session on that printed 11 report. 12 Going to inputting information during our 13 occasion, again I think that we have a limited time 14 available to get all the information into the computer 15 and to make our sales and that that information is 16 already on our daily cash report. And to input it on a 17 POS would mean another employee, which is another cost. 18 And again, we're already cutting corners and trying to 19 keep a way to keep our costs down. There is a big time 20 crunch in selling to our customers, and we don't want 21 our employees stuck behind the counter inputting stuff 22 in the computer when they could be out there selling 23 items to our customers. 24 I think that's it. Thank you for 25 listening. 52 1 MS. JOSEPH: All right. Thank you, 2 Ms. Colwell. 3 And I have an appearance slip from Mr. Don 4 Webb, indicating he does not wish to testify at this 5 time. 6 Is that accurate? 7 MR. WEBB: Yes. 8 MS. JOSEPH: All right. Thank you. 9 All right. And one more, and that is 10 Mr. Steve Bresnen. 11 COMMENTS ON BEHALF OF THE BINGO INTEREST GROUP 12 MR. BRESNEN: Thank you. My name is Steve 13 Bresnen. I'm here on behalf of Bingo Interest Group. 14 I'm going to do my best not to be repetitious, but I 15 would like to focus on a couple of things by way of 16 emphasis. 17 Generally we understand and approve of the 18 process of breaking this rule out into separate rules, 19 and I think there is a consensus that that's a good 20 thing to do, to make it more accessible to people and 21 understandable, so we would support that and generally 22 would support the rules in general, with the exception 23 of a few things that I'll mention in a minute. 24 Obviously, we support the repeals of the existing rules 25 that these would replace, so that may be helpful for 53 1 your record. I don't know. 2 Several things that I would like -- I 3 would like to address process just a second. And, you 4 know, we're focusing on the conductor-related rules 5 primarily on Subsections (d) and (f). There have been a 6 couple of suggestions about how to go forward from here. 7 We understand that there are some specific problems that 8 the agency is trying to address. We understand that 9 there are some legitimate problems that need to be 10 addressed. It's the way they're being addressed that we 11 would be in disagreement with. 12 So it seems that there are two ways to go 13 forward for the agency. One would be to eliminate (d) 14 and (f), and then we can all work together to come back 15 and clearly identify those problems and put in place the 16 things that need to be done to solve those problems but 17 also make it work out on the day-to-day operations of 18 the halls. 19 Alternatively, it may be possible to make 20 (d) and (f) voluntary and allow the marketplace to come 21 into compliance as the new -- as the equipment is 22 updated, to provide the functions that are in these 23 rules. People -- I think some people will naturally 24 gravitate in that direction. They probably won't do 25 that unless we eliminate some of the existing 54 1 requirements that make the new proposals redundant. 2 Just an example of that is, it appears to me that what's 3 colloquially called the daily cash report is redundant 4 of some of the requirements that will now be inputted 5 into the machine. So it may be that the additional cost 6 concerns that people have can be alleviated by 7 eliminating some additional requirements. 8 And I know I've heard the Chair express 9 before, not with respect to these particular rules, but 10 in general the idea of maybe identifying some things 11 they will be getting rid of. And I think, Phil, you've 12 already put some stuff out there that I think has been 13 gotten rid of. So I think if we can work together on 14 the two aspects that are addressed by (d) and (f), then 15 we could come back while the manufacturers and 16 distributors are updating the equipment. 17 I would like to second what Mr. Hieronymus 18 said. I think it's a very astute observation, that 19 there is no implementation guideline in your time frame 20 in here. So I don't know if you intend on handling that 21 in some administrative procedure, but it would seem to 22 me that if this were made final on March 18th, when it 23 could be, everybody would be required to do something 24 that the equipment would not support at that point in 25 time, because I'm assuming as soon as these rules are 55 1 made final, then there will be a succession of 2 manufacturers that are having their equipment updated 3 and tested and approved for use. So it's unclear to me 4 how that transition would take place under the rules as 5 proposed, much less how the individual personnel out 6 there in the field would get trained in individual bingo 7 halls to do these things. 8 So I would suggest that we need some sort 9 of transition time period anyway. To get rid of (d) and 10 (f) would allow the manufacturers and distributors the 11 time to come up with that and get it approved and to 12 give us time to work out the issues that are addressed 13 by (d) and (f) and then come back and fix those. 14 I might also add that if you eliminate (d) 15 and (f), most of the problems that people in the 16 conducting world have would go away. But you've got 17 whatever -- by my printout, 30 pages of new rules and 18 new formatting that could go into effect. If we try to 19 address all of the things that were being addressed 20 today in a workman like manner, it's probably going to 21 cause you to have to republish anyway, which will, you 22 know, take a time period and delay when all the great 23 bulk of this could become effective. 24 Just to hit a couple of more high points. 25 I want to emphasize what Mr. Fenoglio raised on 56 1 402.325(n); that's "N" like Nancy. The first sentence 2 and the second sentence don't really seem to go 3 together. The likelihood of a charity being able to 4 modify the programming on a card-minder, I think, is 5 very remote. And so the second sentence of (n) really 6 probably ought to go somewhere else. And I would let 7 y'all figure it out, but that seems more like something 8 for a manufacturer or a distributor rather than for the 9 organization. 10 Also one thing that's become less clear to 11 me during the hearing, after Mr. Sanderson said that 12 this is all about card-minding systems, some of the 13 language, particularly -- just as an example, 14 402.325(b), like "boy," says, "The licensed authorized 15 organization must ensure that the receipts for its bingo 16 occasion display the correct licensed authorized 17 organization name, location name, time, and date." 18 We don't have any concern about the 19 substance of that, but that would seem to be a good 20 requirement without regard to the card-minding system, 21 and the language of the provision itself doesn't really 22 tie it to card-minding systems. 23 (c), I think the same thing could be said 24 about (c) in that regard. So there might need to be a 25 little tightening of the language to make sure that this 57 1 is a limitation down to card-minding systems. I don't 2 know. I know in the statutory law, the headings do not 3 govern the statutory law under the Code Construction 4 Act. I'll leave it to the administrative law experts to 5 say whether the heading for 402.325 is governing, if 6 that means that everything below it is only related to 7 card-minding systems or if it has no legal effect, and 8 so we have some freestanding provisions out there that 9 would really go beyond that, even though it wasn't 10 intended. 11 If you'll give me just a second, I just 12 want to make sure that I'm not -- I want to highlight 13 the concern about there is no authorization, if you're 14 entering this data into the system, there is no 15 authorization to be able to correct it, which you could 16 easily do in the paper format that's used today, and 17 that needs to be fixed. 18 And just one moment, and I think I'm about 19 done. 20 I would subscribe to Mr. Fenoglio's 21 comments in whole, Mr. Smith's comments in whole, 22 Ms. Young's. And I don't think there is really anybody 23 that I disagreed with, so I would just subscribe to 24 those comments. 25 In particular, we would like to focus on 58 1 additional changes to these proposed rules that fully 2 take into account the operational concerns of the bingo 3 hall. Just as we were concerned about the fees that 4 could have been raised to provide for the new computer 5 system -- and we recognize the need for the computer 6 system -- but in the actual world on the street out 7 there and the way that the economics in bingo are 8 working these days, additional costs just cannot be 9 shouldered. 10 So although it probably has no governing 11 effect, I would question the preamble on each one of 12 these rules where it says there will be no additional 13 economic cost to persons required to comply with the new 14 rule as proposed. I'm not sure what the legal 15 definition of "economic cost" is for that purpose, but I 16 can assure you that people are going to incur additional 17 costs, and we would like to minimize if not eliminate 18 that, working with you. 19 Also outside the parameters of comment on 20 this rule, many of us have talked about, as 21 Mr. Heinemeier did, about sort of constituting an 22 informal Bingo Advisory Committee so we can avoid the 23 unfortunate situation that I find myself in of having 24 things out there for a long time and not having been 25 vetted by us in an organized manner, and I apologize for 59 1 that. I wish I had a really good excuse, but I don't. 2 So going forward, we would like to be able 3 to avoid that. And many of us have talked about putting 4 together a group of people. We understand you wouldn't 5 be obligated by law or custom, or even goodwill, to work 6 with us on that, and we understand the reasons that the 7 Bingo Advisory Committee is no longer in place. But I 8 also feel like on many occasions it served a good 9 function in vetting these rules ahead of time. And I 10 pledge to do a better job personally on that in the 11 future. 12 Thank you very much. That's all I've got 13 to say. 14 MS. JOSEPH: Thank you, Mr. Bresnen. 15 All right. Mr. Fenoglio, I believe you're 16 indicating you would like to add something? 17 CLOSING COMMENTS ON BEHALF OF RIVER CITY BINGO, ET AL 18 MR. FENOGLIO: Yes, one more thing, Sandy 19 and Phil -- my name is Stephen Fenoglio. I appeared 20 earlier . 21 Under the rule, there is no roll-out 22 period. And under the rule, if they were adopted, the 23 rules if they were adopted, the existing card-minders 24 that are out there -- I don't remember how many, Phil, 25 but there are tens of thousands -- would be 60 1 automatically invalid, because they can't meet the 2 current standards. So assuming you're going to adopt -- 3 or recommend the adoption. Of course, the Commissioners 4 have the final say -- there has to be a phase-in period 5 and a period by which existing card-minders are 6 authorized under the old rules for some period of time, 7 a reasonable period. And sitting here today, I don't 8 know what that would be. 9 But literally, if you adopt the rules 10 tomorrow, all existing card-minders do not meet the new 11 rule. Surely you don't intend to decide all those are 12 no longer any good. And because the new rules, but 13 there is no machines that meet it, so no bingo halls can 14 use any card-minder. I know that's not what you 15 intended, but there needs to be a phase-in and a period 16 by which existing card-minders can be replaced, assuming 17 you adopt the new rules. 18 I will be happy to answer any questions. 19 Thank you. 20 MR. SANDERSON: No, but I want to make a 21 statement. 22 MS. JOSEPH: Thank you. 23 I have no other appearance sheets that 24 were submitted. Is there anyone else wishing to make 25 comments at this time? 61 1 All right. We greatly appreciate your 2 taking the time to come and assist us with these rules. 3 And Mr. Sanderson would like to add a comment. 4 CLOSING COMMENTS ON BEHALF OF THE COMMISSION 5 MR. SANDERSON: I, too, would like to 6 thank everyone for their input and their comments. They 7 were very enlightening and very good, and I think that's 8 what the public comment period is all about. 9 As we go back and review the transcript, I 10 may contact individuals that provided the comment for 11 some additional clarification or help respond to some of 12 those things. 13 There are a couple of things that I would 14 like to mention that I think may answer some of the 15 comments that were provided today, to a certain extent. 16 And I know we had the questions about the sites that had 17 multiple card-minding systems and the process. And my 18 initial intent was to have that addressed in the 19 preamble of one of the rules indicating, you know, what 20 the policy is on having multiple locations, but we can 21 definitely add some language in the rule. 22 The implementation time period, my initial 23 thought once again was that the card-minding systems 24 that are approved today would remain to be approved. 25 And the only time that the requirements for the new 62 1 card-minding systems would come into play is when they 2 submitted a new system for testing and approval. So any 3 modifications or new systems that are submitted after 4 the effective date of the rule would have to follow 5 these standards. And we can definitely look at, you 6 know, that as well as far as, you know, a roll-out 7 period. And I don't know if it's necessarily at this 8 point in time, my intent to, you know, completely get 9 rid of all the current systems and only have new systems 10 or vice versa, but that's one thing that we'll look at. 11 As it relates to the voided transactions 12 and the Paragraphs (d) and (f) in 402.325 that did 13 receive several comments, the initial thought on those 14 was avoided transactions in Paragraph (d) was limited 15 strictly to those transactions where there was a cash 16 refund. The other voided transactions are for those 17 that were like pre-sales. And, you know, that was one 18 of the things that we know people use pre-sales. And 19 the goal in that and the numerous individuals that were 20 involved in developing these standards, you know, North 21 American-wide, came up with the second game of the first 22 session as what they wanted to look at as far as having 23 pre-sales voided. 24 There are definitions and there are 25 standards for reloading devices that would, I think, 63 1 address your concerns about power outages, card-minding 2 malfunctions. Those would go under a reloaded 3 transaction, which is the requirement that the card- 4 minding systems have to have as a capability to reload 5 the card-minder with the same cards that were initially 6 loaded into a different card-minding device. 7 So I think, you know, if you overlook some 8 of the site system language in reviewing these and 9 concentrated on only 402.325, that that may help address 10 some of your concerns. I don't want to address all of 11 them. As Melissa mentioned, one of the ultimate goals 12 as well was that that report that is generated off the 13 card-minding system would replace the daily occasion 14 report, it would replace your schedule of prizes. That 15 report would have all that information already on it, 16 once you put it into the system and print that report 17 out, so it would replace those documents. 18 So anyway, we'll take a look at these 19 comments. And, like I said, as we go through the 20 process, I may be getting in touch with the individuals 21 that provided those comments. And once again, I thank 22 you very much. 23 MS. JOSEPH: All right. It's now 11:42, 24 and this hearing is adjourned. 25 (Hearing adjourned: 11:42 a.m.) 64 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 9th day of March 2012. 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